---

FORM 10-QSB

U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

| | [x] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | --- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2001

| | [  ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934
| | ---- | ----------------------------------------------------------------------------------------------------

For the transition period from __________ to __________.

Commission file number: 0-27219

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FAMOUS FIXINS, INC.(Name of small business issuer in its charter)

---

| | New York
(State or other jurisdiction ofincorporation or organization) |  | 13-3865655
(I.R.S. Employer
Identification No.) | 
| | ---------------------------------------------------------------------- |  | ----------------------------------------------- | 

250 W. 57th St., Suite 1112, New York, NY 10107
(Address of principal executive offices)

(212) 245-7773
(Issuer's telephone number)

---

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 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 90 past days.  YES [X] NO [  ]

As of September 30, 2001, the issuer had 14,197,903 shares of common stock, par value $.001 per share,
outstanding.

Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]

---

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FAMOUS FIXINS, INC.

FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 2001

TABLE OF CONTENTS

|        |  |                                                                                                                           | Page
|------- |  | ------------------------------------------------------------------------------------------------------------------------- | ----
|PART I. |  | FINANCIAL INFORMATION                                                                                                     |     
|Item 1. |  | Financial Statements                                                                                                      | 3   
|        |  | Balance Sheets as of September 30, 2001 and December 31, 2000                                                             | 3   
|        |  | Interim Statements of Operations for the Three Months and Nine Months Ended
                  September 30, 2001 and 2000 | 5   
|        |  | Interim Statements of Cash Flows for the Nine Months Ended September 30, 2001 and 2000                                    | 6   
|        |  | Interim Statement of Stockholders' Equity (Deficit) for the Nine Months Ended
                  September 30, 2001        | 8   
|        |  | Notes to Interim Financial Statements for the Nine Months Ended September 30, 2001                                        | 9   
|Item 2. |  | Management's Discussion and Analysis of Financial Condition and
         Results of Operations                            | 12  

|         |  |                                  |   
|-------- |  | -------------------------------- | --
|PART II. |  | OTHER INFORMATION                |   
|Item 1.  |  | Legal Proceedings                | 16
|Item 5.  |  | Other Information                | 16
|Item 6.  |  | Exhibits and Reports on Form 8-K | 21

---

# PART I.  
FINANCIAL INFORMATION

## ITEM 1.  
FINANCIAL STATEMENTS

# FAMOUS FIXINS, INC.
BALANCE SHEETS
(UNAUDITED)

`SEPTEMBER 30, DECEMBER 31,
                                                                         2001          2000
                                                                      ----------    ----------
                                   A S S E T S
                                   -----------

CURRENT ASSETS
--------------

   Cash and cash equivalents                                          $  349,644    $  343,164
   Investments in marketable equity trading securities                         -        77,578
   Accounts receivable, less $5,000 allowance for doubtful accounts      163,556       527,840
   Merchandise inventory                                                 115,362       321,116
   Unused barter credits - current portion                                36,297        75,618
   Prepaid expenses                                                       40,500        25,200
                                                                      ----------    ----------

     TOTAL CURRENT ASSETS                                                705,359     1,370,516
                                                                      ----------    ----------

PLANT AND EQUIPMENT
-------------------

   Furniture and fixtures                                                 15,804        15,804
   Machinery and equipment                                                28,777        34,077
                                                                      ----------    ----------
                                                                          44,581        49,881
     Less: Accumulated depreciation                                       19,316        17,165
                                                                      ----------    ----------

     NET PLANT AND EQUIPMENT                                              25,265        32,716
                                                                      ----------    ----------

OTHER ASSETS
------------

   Deferred debenture issuance costs, net of accumulated
      amortization (2001 - $3,353;  2000 - $3,175)                            45           723
   Unused barter credits - noncurrent portion                            108,889       226,853
   Security deposits                                                       6,482         6,482
                                                                      ----------    ----------

     TOTAL OTHER ASSETS                                                  115,416       234,058
                                                                      ----------    ----------

                                                                      $  846,040    $1,637,290
                                                                      ==========    ==========`

See accompanying notes to financial statements.

---

# FAMOUS FIXINS, INC.
BALANCE SHEETS (CONTINUED)
(UNAUDITED)

`SEPTEMBER 30,   DECEMBER 31,
                                                                       2001           2000
                                                                   -----------    -----------


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------

CURRENT LIABILITIES
-------------------

   4% convertible debentures                                       $ 1,575,000    $ 1,575,000
   Short term loan payable                                                   -         46,385
   Accounts payable                                                    128,237        272,401
   Accrued royalties payable                                            16,465         54,637
   Accrued interest payable                                             63,897         12,273
   Due to customers                                                     38,447         39,567
   Deferred officer's compensation payable                              75,140        115,626
   Taxes payable - other than on income                                      -         11,335
   Income taxes payable                                                    580            580
                                                                   -----------    -----------

     TOTAL CURRENT LIABILITIES                                       1,897,766      2,127,804
                                                                   -----------    -----------

LONG-TERM LIABILITIES
---------------------

   5% convertible debentures, due October, 2002
     (principal amount - $33,975 in 2001; $38,975 in 2000)              33,821         37,600
   Deferred rent                                                         7,394          8,777
                                                                   -----------    -----------

     TOTAL LONG-TERM LIABILITIES                                        41,215         46,377
                                                                   -----------    -----------

STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------

   Common stock, $.001 par value per share:
      Authorized                           25,000,000 shares
      Issued and outstanding
        14,197,903 shares in 2001; 13,941,264 shares in 2000            14,197         13,940
   Additional paid-in capital                                        4,053,669      3,905,379
   Accumulated deficit                                              (5,136,807)    (4,406,210)
                                                                   -----------    -----------
                                                                    (1,068,941)      (486,891)
      Less: Unused advertising barter credits issued in exchange
                   for common stock                                    (24,000)       (50,000)
                                                                   -----------    -----------

     TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                           (1,092,941)      (536,891)
                                                                   -----------    -----------

                                                                   $   846,040    $ 1,637,290
                                                                   ===========    ===========`

See accompanying notes to financial statements.

---

# FAMOUS FIXINS, INC.
INTERIM STATEMENTS OF OPERATIONS
(UNAUDITED)

`THREE MONTHS ENDED          NINE MONTHS ENDED
                                                     SEPTEMBER 30,               SEPTEMBER 30,
                                                ----------------------    -------------------------

                                                   2001         2000         2001          2000
                                                ---------    ---------    ----------    -----------

NET SALES                                       $ 120,663    $ 337,687    $1,433,838    $ 1,724,617
                                                ---------    ---------    ----------    -----------

COST OF GOODS SOLD
------------------
   Merchandise inventory at beginning of period   159,156      417,714       321,116         69,542
   Purchases                                        1,291      248,326       556,434      1,268,962
   Other direct costs                              25,037       43,770        62,356        169,374
                                                ---------    ---------    ----------    -----------
                                                  185,484      709,810       939,906      1,507,878
      Less: Merchandise inventory at end of
                 period                           115,362      487,382       115,362        487,382
                                                ---------    ---------    ----------    -----------

TOTAL COST OF GOODS SOLD                           70,122      222,428       824,544      1,020,496
                                                ---------    ---------    ----------    -----------

GROSS PROFIT                                       50,541      115,259       609,294        704,121
                                                ---------    ---------    ----------    -----------

OPERATING EXPENSES
------------------
   Selling expenses                                27,831      126,897       248,660        951,859
   General and administrative expenses            147,459      233,184       824,496        792,179
                                                ---------    ---------    ----------    -----------

TOTAL OPERATING EXPENSES                          175,290      360,081     1,091,156      1,744,038
                                                ---------    ---------    ----------    -----------

OPERATING LOSS                                   (124,749)    (244,822)     (481,862)    (1,039,917)
                                                ---------    ---------    ----------    -----------
OTHER INCOME (EXPENSE)
----------------------
   Interest income                                  1,608        1,190         3,091         11,798
   Interest expense and financing costs           (21,089)     (47,542)      (53,944)      (462,930)
   Realized and unrealized loss on investments
      in marketable equity trading securities        --         (9,207)      (13,134)        (7,502)
   Loss on disposal of plant and equipment           --           --            (883)          --
   Impairment charge - unused barter credits     (183,285)        --        (183,285)          --
                                                ---------    ---------    ----------    -----------

TOTAL OTHER INCOME (EXPENSE)                     (202,766)     (55,559)     (248,155)      (458,634)
                                                ---------    ---------    ----------    -----------

LOSS BEFORE PROVISION FOR
   INCOME TAXES                                  (327,515)    (300,381)     (730,017)    (1,498,551)

PROVISION FOR INCOME TAXES                           --           --             580            455
                                                ---------    ---------    ----------    -----------

NET LOSS                                        $(300,412)   $(300,381)   $ (703,494)   $(1,499,006)
                                                =========    =========    ==========    ===========

BASIC NET LOSS PER COMMON SHARE                 $   (.023)   $   (.022)   $    (.052)   $     (.117)`

See accompanying notes to financial statements.

---

# FAMOUS FIXINS, INC.
INTERIM STATEMENTS OF CASH FLOWS
(UNAUDITED)

`NINE MONTHS ENDED
                                                                                        SEPTEMBER 30,
                                                                                 --------------------------

                                                                                     2001           2000
                                                                                 -----------    -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                      $  (730,597)   $(1,499,006)
   Adjustments to reconcile net loss to net cash used in operating activities:
      Noncash items:
         Depreciation                                                                  6,568          6,516
         Amortization and write off of bond discounts and finance costs                  918        102,885
         Deferred rent expense                                                        (1,383)         8,199
         Interest expense paid by issuance of common stock                               397          9,638
         Component of interest expense attributable to beneficial
            conversion feature of debentures issued                                        -        325,000
         Value of common stock issued for services received by the Company               360        212,924
         Value of warrants issued and amortized for services received by
            the Company                                                              143,771        439,661
         Realized and unrealized loss on investments in marketable
            equity trading securities                                                 13,134          7,502
         Loss on disposal of plant and equipment                                         883              -
         Impairment charge - unused barter credits                                   183,285              -
         Unused barter credits                                                             -       (272,224)
      (Increase) decrease in assets:
         Accounts receivable                                                         364,284        (20,742)
         Merchandise inventory                                                       205,754       (417,840)
         Prepaid expenses                                                            (15,300)       (19,854)
         Decrease in security deposits                                                     -             22
      Increase (decrease) in liabilities:
         Accounts payable and accrued expenses                                      (130,712)      (218,971)
         Due to customers                                                             (1,120)      (126,556)
         Taxes payable - other than on income                                        (11,335)          (837)
         Deferred officer's compensation payable                                     (40,486)             -
                                                                                 -----------    -----------

NET CASH USED IN OPERATING ACTIVITIES (CARRIED FORWARD)                              (11,579)    (1,463,683)
                                                                                 -----------    -----------

                                  (CONTINUED)`

See accompanying notes to financial statements.

---

# FAMOUS FIXINS, INC.
INTERIM STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)

`NINE MONTHS ENDED
                                                                               SEPTEMBER 30,
                                                                        --------------------------

                                                                           2001           2000
                                                                        -----------    -----------

  NET CASH USED IN OPERATING ACTIVITIES (BROUGHT FORWARD)               $   (11,579)   $(1,463,683)
                                                                        -----------    -----------

  CASH FLOWS FROM INVESTING ACTIVITIES:
     Payments for plant and equipment additions                                --           (8,501)
     Proceeds from sale of marketable equity trading securities              64,444           --
     Proceeds from borrowing against investments in marketable equity
        trading securities                                                     --           47,000
                                                                        -----------    -----------

  NET CASH PROVIDED BY INVESTING ACTIVITIES                                  64,444         38,499
                                                                        -----------    -----------

  CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of convertible debentures, net                     --          990,000
     Repayments of borrowings against investments in marketable
        equity trading securities                                           (46,385)
     Proceeds of stock subscriptions receivable                                --           47,500
                                                                        -----------    -----------

  NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                       (46,385)     1,037,500
                                                                        -----------    -----------

  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        6,480       (387,684)

  CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                            343,164        475,325
                                                                        -----------    -----------

  CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $   349,644    $    87,641
                                                                        ===========    ===========

  Supplemental information about cash payments is as follows:
     Cash payments for interest                                         $     1,005    $      --
     Cash payments for income taxes                                     $       580    $       455

  Supplemental disclosure of noncash financing activities:
     Issuance of warrants in connection with convertible debentures
        issued by the Company                                           $      --      $   675,000
     Conversion of debentures to common stock - net                     $     4,019    $   413,753`

See accompanying notes to financial statements.

---

# FAMOUS FIXINS, INC.
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2001

`COMMON STOCK        ADDITIONAL                      UNUSED
                                                         -------------------------     PAID-IN     ACCUMULATED     ADVERTISING
                                             TOTAL          SHARES       AMOUNT        CAPITAL       DEFICIT      BARTER CREDITS
                                          -----------    -----------   -----------   -----------   -----------    -----------
BALANCE (DEFICIT) - JANUARY 1, 2001       $  (536,891)    13,941,264   $    13,940   $ 3,905,379   $(4,406,210)   $   (50,000)

Issuance of common shares on conversion
   of 5% convertible debentures, net            4,416        232,639           233         4,183          --             --

Issuance of common shares for
   services received                              360         24,000            24           336          --             --

Value of warrants issued and amortized
   for services received                      143,771           --            --         143,771          --             --

Net loss - Nine months ended
   September 30, 2001                        (704,597)          --            --            --        (730,597)        26,000
                                          -----------    -----------   -----------   -----------   -----------    -----------

BALANCE (DEFICIT) - SEPTEMBER 30, 2001    $(1,092,941)    14,197,903   $    14,197   $ 4,053,669   $(5,136,807)   $   (24,000)
                                          ===========    ===========   ===========   ===========   ===========    ===========`

See accompanying notes to financial statements.

---

# FAMOUS FIXINS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS

`NOTE 1.   STATEMENT OF INFORMATION FURNISHED
          ----------------------------------

               The accompanying unaudited interim financial statements have been
          prepared in accordance with Form 10-QSB instructions and in the
          opinion of management contains all adjustments (consisting of only
          normal recurring adjustments) necessary to present fairly the
          financial position of Famous Fixins, Inc. as of September 30, 2001,
          and the results of operations for the three months and nine months
          ended September 30, 2001 and 2000, and the statements of cash flows
          for the nine months ended September 30, 2001 and 2000, and the
          statement of stockholders' equity (deficit) for the nine months ended
          September 30, 2001. These results have been determined on the basis of
          accounting principles and practices generally accepted in the United
          States and applied consistently with those used in the preparation of
          the Company's 2000 financial statements.

               Certain information and footnote disclosures normally included in
          the financial statements presented in accordance with accounting
          principles generally accepted in the United States have been condensed
          or omitted. It is suggested that the accompanying financial statements
          be read in conjunction with the financial statements and notes thereto
          incorporated by reference in the Company's 2000 financial statements.


NOTE 2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          ------------------------------------------

               BUSINESS ACTIVITIES OF THE COMPANY
               ----------------------------------

                    The Company is a promoter and marketer of celebrity licensed
               consumer products for sale in supermarkets, other retailers and
               over the Internet. The Company develops, markets and sells
               licensed consumer products based on the diverse professional,
               cultural and ethnic backgrounds of various celebrities. The
               Company enters into licensing agreements with high profile
               celebrities and creates consumer products which include various
               product lines consisting of salad dressings, candy products,
               cosmetic products, adhesive bandages and other novelty products
               endorsed by the licensors. The Company utilizes a network of
               consumer products brokers to distribute its products throughout
               the United States. Third party manufacturers produce the
               Company's various consumer products.`

---

# FAMOUS FIXINS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS

`NOTE 2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
          ------------------------------------------

               STOCK-BASED COMPENSATION - WARRANTS

                    The Company accounts for warrants issued to purchase common
               stock in connection with services rendered to the Company using
               the fair value method prescribed in SFAS No. 123 "Accounting for
               Stock-Based Compensation". Compensation cost for all stock
               warrants issued by the Company is (a) measured at the grant date
               based on the fair value of the warrants and (b) recognized over
               the service period. Stock-based compensation cost charged to
               operations for the nine months ended September 30, 2001 was
               $143,771.

               REVENUE RECOGNITION AND SALES RETURNS

                    Revenue from sales of celebrity endorsed products is
               recorded at the time the goods are shipped, with provision for
               uncollectible accounts, when appropriate. Provision for sales
               returns and allowances are recorded in the period in which the
               related revenue is recognized. When sales returns and allowances
               are in excess of customer receivable balances, such excess amount
               is reflected as a current liability under the category "Due To
               Customers".

               USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

                    The preparation of financial statements in conformity with
               accounting principles generally accepted in the United States
               requires management to make certain 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.

               MERCHANDISE INVENTORY

                    Merchandise inventory is stated at the lower of cost or
               market value on a first-in, first-out basis.`

---

# FAMOUS FIXINS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS

`NOTE 2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
          ------------------------------------------

               PLANT AND EQUIPMENT

                    Plant and equipment are stated at cost, less accumulated
               depreciation. The cost of major improvements and betterments to
               existing plant and equipment are capitalized, while maintenance
               and repairs are charged to expense when incurred. Upon retirement
               or other disposal of plant and equipment, the profit realized or
               loss sustained on such transaction is reflected in income.
               Depreciation is computed on the cost of plant and equipment on
               the straight-line method, based upon the estimated useful lives
               of the assets.

NOTE 3.   NET LOSS PER COMMON SHARE
          -------------------------

               Net loss per common share was calculated under SFAS No. 128,
          "Earnings per Share". Basic net loss per share is computed by dividing
          the net loss by the weighted average outstanding shares of 14,197,903
          and 14,065,992 for the three months and nine months ended September
          30, 2001, respectively and 13,458,194 and 12,750,024 for the three
          months and nine months ended September 30, 2000, respectively. No
          effect has been given to the conversion of warrants and debentures to
          common stock inasmuch as such conversions would be anti-dilutive.


NOTE 4.   IMPAIRMENT CHARGE - UNUSED BARTER CREDITS
          -----------------------------------------

               In the quarter ended September 30, 2001, the Company recorded an
          impairment charge of $183,285 to write-down unused barter credits to
          net realizable value based upon management's estimate of future
          utilization of the unused credits.

NOTE 5.   GOING CONCERN
          -------------

               The accompanying financial statements have been prepared assuming
          that the Company will continue as a going concern. The Company has
          incurred substantial losses from operations and has deficiencies in
          working capital and stockholders' equity at September 30, 2001 which
          raise substantial doubt about its ability to continue as a going
          concern. Management believes that it can achieve profitable operations
          in the future and that it can continue to raise adequate capital and
          financing as may be required. However, there can be no assurance that
          future capital contributions and/or financing will be sufficient for
          the Company to continue as a going concern or that it can achieve
          profitable operations in the future. The financial statements do not
          include any adjustments that might result from the outcome of these
          uncertainties.`

---

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

## FORWARD-LOOKING
INFORMATION

This report on Form 10-QSB
contains certain forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. Generally, the words
anticipates, expects, believes,
intends, could, may, and similar expressions
identify forward looking statements. Forward-looking statements involve risks
and uncertainties. We caution you that while we believe any forward-looking
statement are reasonable and made in good faith, expectations almost always vary
from actual results, and the differences between our expectations and actual
results may be significant.

The following discussion
and analysis of our results of operations and our financial condition should be
read in conjunction with the information set forth in the financial statements
and notes thereto included elsewhere in this report.

## Results of
Operations

Sales for the three months ended September 30, 2001 decreased approximately 64%
to $120,663 from $337,687 for the three months ended September 30, 2000. Sales
for the nine months ended September 30, 2001 decreased approximately 17% to
$1,433,838 from $1,724,617 for the nine months ended September 30, 2000. The
decrease in sales is attributable to the slowdown in sales of two product lines
in the three months ended September 30, 2001.

Cost of goods sold for the
three months ended September 30, 2001 was $70,122, approximately 58% of sales,
as compared to $222,428, approximately 66% of sales, for the comparable period
in fiscal year 2000. Cost of goods sold for the nine months ended September 30,
2001 was $824,544, approximately 58% of sales, as compared to $1,020,496,
approximately 59% of sales, for the comparable period in fiscal year 2000. The
decrease in cost of goods sold as a percentage of sales for the three months
ended September 30, 2001 can be attributed to our focus on higher margin
products in that we had offered in the three months ended September 30, 2001
than in the prior year. The decrease in the cost of goods sold for the three
months ended September 30, 2001 compared to the three months ended September 30,
2000 is attributable to the decrease in the number of products that we offered
for sale. We expect our cost of goods sold to increase in the near future as we
incur expenses associated with the development and the introduction of up to six
new products over the next nine months.

Gross profit on sales for the three months ended September 30, 2001 was $50,541,
a decrease of 56%, as compared to gross profit of $115,259 for the three months
ended September 30, 2000. Gross profit was approximately 42% of sales for the
three months ended September 30, 2001 as compared to gross profit as a
percentage of sales for the three months ended September 30, 2000 of 34%. Gross
profit on sales for the nine months ended September 30, 2001 was $609,294, a
decrease of 13%, as compared to gross profit of $704,121 for the nine months
ended September 30, 2000. The decrease in gross profit is attributable to less
sales resulting from the slowdown in sales of two product lines in the three
months ended September 30, 2001. The increase in gross profit as a percentage of
sales is attributable to the decrease in costs associated with the products
produced.

For the three months ended
September 30, 2001 as compared to the three months ended September 30, 2000,
operating expenses decreased to $175,290 from $360,081, which represents a 51%
decrease in operation expenses and an increase to 145% of sales from 107% of
sales. For the nine months ended September 30, 2001 as compared to the nine
months ended September 30, 2000, operating expenses decreased to $1,091,156 from
$1,744,038, which represents a 37% decrease in operation expenses and a decrease
to 76% of sales from 101% of sales. The decrease in our operating expenses is
attributable to a decrease in selling expenses, associated with the
slowdown in sales of two product lines in the three months ended September 30,
2001, to $27,831 for the three months ended September 30, 2001, from $126,897
for the three months ended September 30, 2000. The decrease in operating
expenses is also attributable to a decrease in general and administrative
expenses to $147,459 from $233,184 for the three months ended September 30, 2001
and 2000, respectively, due to a change and reduction in our workforce in the
three months ended September 30, 2001. Operating expenses are expected to
increase over the next nine months as we introduce up to six new product lines;
however, operating expenses are expected to decrease as a percentage of total
sales over time as our sales volume grows and as we incur less marketing and
selling expenses for a particular product line.

---

For the three months ended
September 30, 2001, we operated at a net loss of $327,515, or a loss of $0.023
per share basic, as compared to net loss of $300,381, or a loss of $0.022 per
share basic for the three months ended September 30, 2000. For the nine months
ended September 30, 2001, we operated at a net loss of $730,597, or a loss of
$0.052 per share basic, as compared to a net loss of $1,499,006, or a loss of
$0.117 per share basic, for the nine months ended September 30, 2000. The
increase in net loss for the three months ended September 30, 2001 is mainly due
to an impairment charge for unused barter credits of $183,285. Included in the
net loss of $327,515 for the three months ended September 30, 2001 are several
non-cash charges to income related to non-cash charges related to interest
expense and financing costs aggregating approximately $21,089 as compared to
approximately $47,452 for the three months ended September 30, 2000. There is no
assurance that additional interest expense and financing costs will not be
incurred for future transactions. We anticipate the continuance of these types
of charges against earnings when we make additional financing arrangements.

In the nine months ended September 30, 2001, we entered into six new license
agreements for the introduction of six new products. We have begun developing
these new product lines and anticipate that we will launch four products in the
next two to three months. We expect to launch an additional two new products in
the second or third quarter of fiscal year 2002. We have reorganized our company
personnel and intend to focus our efforts on new
product lines which we believe may have broader appeal in all classes of trade.
While the addition of new product lines may also create liquidity issues and
demands on our limited resources, it is anticipated that our focus on these
products may have a favorable impact on income and liquidity. The successful
launch of all six new product lines is closely tied to our ability to raise
additional capital or restructure our current debts.

Our food sales business is
not seasonal in nature. Inflation is not deemed to be a factor in our
operations.

## Financial
Condition or Liquidity and Capital Resources

To date, we have funded our
operations through a line of credit, bank borrowings, and borrowings from, and
issuances of warrants and sales of securities to, stockholders, and from
operating revenues. Our inability to obtain sufficient credit and capital
financing has limited our operations and growth from inception.

In October 1999, we entered into agreements pursuant to which certain investors agreed to purchase an aggregate
of $550,000 principal amount of 5% convertible debentures due October 19, 2002 and 139,152 warrants to purchase
shares of our common stock. At the initial closing date, we received gross proceeds of $450,000, and in February
2000, we received the remaining $100,000 when a registration statement in connection with the resale of the
underlying common stock became effective. The warrants are exercisable between October 30, 1999 and October 30,
2004 at a purchase price of $.494 per share, which was 125% of the market price on the closing date. Through September 30, 2001,
debenture holders have converted debentures with an aggregate of $526,032 in principal and interest into
3,136,279 shares of common stock.

In March 2000, we entered into an agreement pursuant to which certain investors agreed to purchase an aggregate
of $1,000,000 principal amount of 0% convertible debentures due March 13, 2005 and warrants to purchase 2,500,000
shares of our common stock. We received gross proceeds of $1,000,000 from the transaction. The holders of the
convertible debentures were entitled to convert the debentures into shares of common stock at a conversion price
of $.40 per share. The warrants are exercisable before March 13, 2005 at a purchase price of $.75 per share. In
October 2000, we entered into an agreement for the sale of $1,500,000 principal amount of 4% convertible
debentures pursuant to which the outstanding principal amount of the 0% convertible debentures were surrendered.

---

In October 2000, we entered into an agreement pursuant to which certain
investors agreed to purchase an aggregate of $1,500,000 principal amount of 4%
convertible debentures and warrants to purchase 250,000 shares of common stock.
The principal amount of the 4% convertible debentures of $1,500,000, consists of
principal in the amount of $500,000 and the surrender of outstanding 0%
convertible debentures with a principal amount of $1,000,000 issued in March
2000. The 4% convertible debentures matured unpaid on August 7, 2001 with a 5%
premium on the principal and the accrued unpaid interest. To date, we have not
paid any accrued interest in cash. The investors have the right to convert the
interest into shares of common stock based on the average of the 5 lowest
closing bid prices of the common stock over a 22 trading day period immediately
prior to the interest payment date. The warrants are exercisable before November
7, 2003 at a purchase price per share of $0.0588. We agreed to enter into an
equity line of credit type of transaction within 10 days of this transaction. If
we are unable to pay the amounts due on the maturity date but we can draw down
on the equity line of credit, we are to draw down the maximum amount each draw
down period to pay the investors the full amount due. To date, we are unable to
draw down upon the equity line of credit. Beginning August 7, 2001, the
investors may convert the 4% convertible debentures into shares of common stock
because a registration statement for the equity line of credit was not effective
on the maturity date and because we are not able to draw down the maximum amount
permitted each month under the equity line under an effective equity line of
credit registration statement. The conversion price shall equal the lesser of
$0.054 or 85% of the average of the 5 lowest closing bid prices during the 22
trading days preceding the applicable conversion date. At the investors'
election, we shall redeem the 4% convertible debentures, including interest and
a redemption premium of 30%, using up to 50% of the net proceeds received
pursuant to the equity line of credit and any other equity financing permitted
under the agreement, and all proceeds received in an equity financing not
permitted under the future financing restrictions. At the closing of the
transaction, we received gross proceeds of $500,000, less payment to the escrow
agent of $10,000 for the investors' legal, administrative and escrow costs, and
less payment of a 10% placement agent fee. We also issued to the placement agent
75,000 shares of restricted common stock and a warrant to purchase 100,000
shares of common stock as part of the placement agent fee. The warrants are
exercisable before November 7, 2003 at a purchase price per share of $0.0588.

In October 2000, we entered into an agreement for the future issuance and purchase of shares of our common stock
which establishes what is sometimes termed an equity line of credit or an equity drawdown facility. In general,
the drawdown facility operates as follows: the investor has committed to provide us with up to $5 million as we
request it over a 24 month period, in return for shares of common stock we issue to the investor. Subject to a
maximum of 16 draws, once every 29 trading days, we may request a draw of up to $5 million of that money,
however, no single draw can exceed $5 million. We must wait at least 7 trading days after each 22 trading day
drawdown period before requesting another drawdown. The maximum amount we actually can draw down upon each
request will be determined by 4.5% of the volume-weighted average daily price of our common stock for the 3 month
period prior to our request and the total trading volume for the 3 months prior to our request. Each draw down
must be for at least $100,000. The number of shares registered under the registration statement for the resale of
the common stock upon each drawdown may limit the amount of money we receive under the common stock purchase
agreement. Moreover, the funds we may receive could be further limited by a provision of the common stock
purchase agreement that prevents us from issuing shares to the investor to the extent the investor would
beneficially own more than 9.9% of our then outstanding common stock. At the end of a 22-day trading period
following the drawdown request, the final drawdown amount is determined based on the volume-weighted average
stock price during that 22-day period. We then use the formulas contained in the common stock purchase agreement
to determine the number of shares we will issue to the investor in return for that money. The per share dollar
amount the investor pays for our common stock for each drawdown includes a 17.5% discount to the average daily
market price of our common stock for the 22-day period after our drawdown request, weighted by trading volume. We
will receive the amount of the drawdown less an escrow agent fee equal to $1,500 per drawdown and less a 10%
placement fee. In lieu of making a commitment to the investor to draw a minimum aggregate amount, on October 31,
2000, we issued to the investor a stock purchase warrant to purchase up to 500,000 shares of our common stock and
we also agreed to issue additional warrants to purchase a number of shares equal to 50% of the shares purchased
by the investor on the settlement date of each drawdown. The warrants to purchase 500,000 shares of common stock
have an exercise price of $0.0636 and expire on October 31, 2003. The additional warrants issuable at each
settlement date will be exercisable for 35 calendar days and have an exercise price equal to the weighted average
of the purchase prices of the common stock during the applicable settlement period. At the closing we paid the
escrow agent $10,000 for the investor's legal, administrative and escrow costs. A registration statement for the shares underlying the equity line of credit is presently not effective. Until an effective registration statement is in place, we cannot use
and will not receive any funds from the equity line.

---

We believe that the funds from the 4% convertible debentures, in conjunction with revenues from our operations,
will be sufficient to fund our operations for the next three months, subject to our ability to resolve the
repayments due on maturity of existing obligations, including the 4% convertible debentures with a principal
amount of $1.5 million which matured on August 7, 2001 without repayment. The $5 million equity line of credit
may be sufficient to fund our operations for the next twelve to twenty four months, depending upon our ability to
draw down on the equity line, which we are not presently able to do, and if we are able to draw down on a
substantial portion of the $5 million equity line of credit to fund our operations as well as to repay the 4%
convertible debentures with a principal amount of $1.5 million, if the debentures are not converted into equity.
If we do not resolve the debts on the matured obligations, and if the creditors elect to foreclose on existing
debts, which is likely to occur, we will not have sufficient funds to operate.

We believe that our future
growth is dependent on the degree of success of current operations in generating
revenues, borrowings under our current credit facility, the ability to resolve
our unfulfilled obligations under the contractual terms of our existing debts,
which matured on August 7, 2001 without repayment, in part due to our inability
to satisfy the contractual terms of, and draw down on, a substantial portion of
the $5 million equity line of credit, and the ability to obtain additional
credit facilities. We are exploring various options to resolve our existing debt
burden, including by merger, consolidation, sale of assets, reorganization or
restructuring, as well as by trying to obtain additional financing. There can be
no assurance that we will be able to obtain any additional financing that we
require.

The auditors report
to our financial statements for the year ended December 31, 2000 cites factors
that raise substantial doubt about our ability to continue as a going concern.
The factors include that we have incurred substantial operating losses since
inception of operations and as at December 31, 2000 reflect deficiencies in
working capital and stockholders equity. The financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.

---

# PART II.  
OTHER INFORMATION

## ITEM 1.  
LEGAL PROCEEDINGS

On or about June 2000, Site2Shop.com, Inc. commenced an action against us in the
Circuit Court of the 17th Judicial Circuit, in and for Broward County, Florida,
in which Site2Shop claims that it is entitled to payment of $19,700 pursuant to
a written agreement for advertising services, plus interest, costs and
attorneys' fees. We interposed an answer denying the claim. Subsequently, in
August 2001, we made an offer of judgment for $6,500, which was accepted but has
not yet been paid.

## ITEM 5.  
OTHER INFORMATION

`We entered into a non-exclusive license agreement, dated May 30, 2001, and as
amended July 31, 2001, with Hershey Foods Corporation. Under the license, we
have the right to use the names, symbols, trademarks and associated trade dress
colors, copyrighted material and logos of "Hershey's" and "Jolly Rancher" in
connection with the manufacture, retail sale and distribution of lip balm. The
license territory is the United States, its territories and possessions, and
Canada. As consideration, we are to pay Hershey royalties equal to seven percent
of net sales, without deduction for our costs. The minimum royalty payment is
$5,000 and we paid a $2,500 non-refundable advance when we entered into the
license, which is credited against royalty payments. The license term is June 1,
2001 to May 31, 2003. The license may be earlier terminated, including for the
following reasons:

     o    we fail to make any royalty payment or deliver any sales statements or
          to perform any term or condition of the license;
     o    we use the licensed property in a manner likely to deceive or mislead
          the public or endanger the validity of the licensed property;
     o    any transfer of our interest in the license is made by execution or
          similar legal process;
     o    a petition is filed to adjudicate us a bankrupt or insolvent, or for a
          corporate reorganization or any arrangement with our creditors;
     o    a receiver or trustee is appointed for our business or assets;
     o    we make an assignment or deed of trust for the benefit of our
          creditors; or
     o    our interest under this license shall pass to another by operation of
          law.

Under the license, we agreed to indemnify Hershey from, and to be solely
responsible for, any claims, demands, suits, causes of action, loss or damage
arising out of the design, use, manufacture, sale, storage or advertising of the
licensed articles. Either party may renew the license for an additional twelve
months upon thirty days notice, subject to the other party's right to reject,
provided that the license was not already terminated and we have paid royalty
payments of at least the minimum royalty payment for the term just ended. If we
do not begin commercial production within 180 days from entering the agreement,
Hershey has the right to terminate this license. We may not assign, sublicense
or otherwise transfer the license.`

---

`We entered into a non-exclusive merchandise license agreement, dated as of March
15, 2001, with MTV Networks, Trans Continental Television Productions, Inc. and
Trans Continental Records, Inc. Under the license, we have the right to
manufacture, distribute, sell and advertise the O-Town name, trademark and logo,
and the names, images, likeness, symbols, and designs of the musical group
O-Town in connection with lip balm and sour sprays or sour drops. The license
territory is the United States. As consideration, we are to pay royalties on a
quarterly basis equal to ten percent of net sales, without deduction for our
costs. The guaranteed minimum royalty payment is $15,000, of which $8,000 was
payable upon execution of the license agreement and $7,000 is payable by
December 31, 2002, which are to be credited against royalty payments. The
license term expires on May 31, 2003. The license may be earlier terminated if
we are in default of certain provisions of the license agreement, which includes
for the following reasons:

     o    we fail to actively manufacture, advertise, distribute or sell the
          licensed products;
     o    we fail to make a payment or furnish a sales report;
     o    we fail to comply with the approval, quality, and safety requirements
          under the license or the products do not comply with such requirement,
          or the products become the subject matter of adverse or negative
          publicity due to such failure;
     o    we fail to comply with any other of the material obligations under the
          license agreement or we breach any warranty or representation we made
          in the license agreement;
     o    we sell or otherwise dispose of all or substantially all of our
          business or assets to a third party, or control or ownership of Famous
          Fixins is changed or transferred;
     o    we sell or cause others to sell the products outside of the authorized
          channels of distribution outside of the United States;
     o    we fail to obtain or maintain the requisite insurance;
     o    we contest or assist others to contest the licensor's rights or
          interests in the licensed property;
     o    we fail to comply with any provision of any other agreement with the
          licensor;
     o    if a petition in bankruptcy is filed by or against us;
     o    we are adjudicated bankrupt;
     o    we make any assignment for the benefit of creditors or becomes
          insolvent;
     o    we are placed in the hands of a trustee or receiver;
     o    we fail to satisfy any judgment against us; or
     o    we are unable to pay our debts as they become due.

Under the license, we agreed to indemnify the other parties, and their
respective officers, directors and employees harmless from and against any and
all claims, damages, liabilities, costs and expenses, including reasonable
counsel fees, arising out of or relating to any breach or alleged breach by
Famous Fixins of any representation, warranty or undertaking made herein, or out
of any defect, latent or patent, in the licensed products. We may not assign,
sublicense or otherwise transfer the license without the prior approval of the
licensor.`

---

`We entered into a non-exclusive license agreement, effective as of June 30,
2001, with Marvel Enterprises, Inc. and Marvel Characters, Inc. Under the
license, we have the right to use certain property of Marvel in connection with
the manufacture, promotion, sale and distribution of liquid candy drops. The
property of Marvel that we can use includes: certain X-Men characters, certain
Spider Man and Friends characters, certain Generation X characters, certain
Fantastic Four characters, The Incredible Hulk, The Avengers, Captain America,
Iron Man and Friends, Thor and Friends, and certain other Marvel characters. The
license territory is the United States and Canada. As consideration, we are to
pay Marvel royalties, payable each quarter, equal to 7.5% of net sales, without
deduction for our costs. The minimum royalty payment is $25,000, of which a
nonrefundable advance of $10,000 was due with the execution of the license
agreement, $7,500 is due by March 1, 2002, and $7,500 is due by December 15,
2002. The license term expires December 31, 2003. The license may be earlier
terminated, including for the following reasons:

     o    we fail to make any royalty payment or furnish any royalty reports;
     o    we become insolvent or fail to pay our debts and obligations on a
          current basis;
     o    we make an assignment for the benefit of creditors;
     o    we become involved in a receivership, bankruptcy or other insolvency
          or debtor relief proceedings, or any similar proceedings, voluntary or
          forced;
     o    we cease to do business;
     o    we attempt to assign any of our rights under the license;
     o    if the license agreement is held invalid or unenforceable by the
          determination of any government or any court of competent
          jurisdiction; or
     o    if any licensed articles become the subject of a recall by the Federal
          Consumer Product Safety Commission or any corresponding state or
          federal agency and Licensee fails to take immediate action to recall
          such products.

Under the license, we agreed to defend, indemnify and hold Marvel, its parents,
subsidiaries, associate and affiliate companies, harmless of, from and against
any charges, suits, damages, costs, expenses, judgments, penalties, claims,
liabilities or losses of any kind or nature, which may be sustained or suffered
by or secured against Marvel in connection with the licensed articles, or
arising out of the unauthorized use of any patent, trade secret, process, idea,
method or device, or any copyright or trademark, other than under this license,
or the packaging, distribution, promotion, sale or exploitation of the licensed
articles, any actual or alleged defect in the licensed articles or their
packaging, including failure of said licensed articles or their packaging,
distribution, promotion, sale or exploitation to meet any Federal, State or
local, or other applicable laws or standards; or any other actual or alleged
unauthorized action of Famous Fixins, including a breach of any term of the
license agreement. Marvel agreed to defend, indemnify and hold us harmless of,
from and against any charge, suits, damages, costs, expenses, judgments,
penalties, claims, liabilities or losses of any kind or nature, which may be
sustained or suffered by or secured against us based upon or arising out of any
actual or alleged trademark or copyright infringement arising solely out of the
use by us of the licensed property. Marvel has the rights to any of the artwork
that we use in connection with the license agreement. We may not assign,
sublicense or otherwise transfer the license.`

---

`We entered into a non-exclusive license agreement, effective July 31, 2001 with
PRIMEDIA Magazines, Inc. and PRIMEDIA Magazines Finance, Inc. Under the license,
we have the right to use the names, symbols, designs, logos, artwork,
copyrights, trade dress and trademarks associated with SEVENTEEN in connection
with the distribution, sale and marketing of candles. The license territory is
the United States and Canada. As consideration, we are to pay Primedia royalties,
to be paid quarterly, equal to eight percent of net sales, without deduction for
our costs. The minimum royalty payment is $20,000, of which a nonrefundable
advance payment of $10,000 was due upon signing the license agreement, $5,000 is
due September 1, 2002, and $5,000 is due June 30, 2003. The minimum royalty is
to be credited against royalty payments. The license agreement provides that we
must maintain minimum net sales per annual period of $125,000 with a minimum
royalty per unit sold of $.092. The license term is through December 31, 2003.
The license may be earlier terminated by Primedia, including for the following
reasons:

     o    we fail to make any payment;
     o    we discontinue our business;
     o    we make any assignment for the benefit of creditors;
     o    we file any petition under Chapters 10, 11 or 12 of Title 11, United
          States Code;
     o    we file a voluntary petition in bankruptcy;
     o    we are adjudicated a bankrupt or insolvent;
     o    if any receiver is appointed for our business or property;
     o    if any trustee in bankruptcy, or insolvency is appointed under the
          laws of the United States government or of the several states;
     o    we fail to maintain minimum net sales;
     o    we fail to perform any other material term or condition of the
          license;
     o    we fail to diligently and commercially distribute and sell the product
          for any three month period; or
     o    we do not begin the bona fide manufacture, distribution and sale of
          the product on a national basis on or before January 2002.

Under the license, each party agreed to hold the other harmless and indemnify
the other, its controlling persons and their respective officers, directors,
employees and agents from and against any and all losses, claims, damages,
liabilities and expenses incurred in the investigating, preparing, or defending
any litigation, proceeding, investigation or governmental inquiry, commenced
threatened or any claim arising out of a material breach of the license
agreement. We assigned all of our rights to any of the artwork that we use in
connection with the license agreement to Primedia. We may not assign or
sublicense the license.`

---

`In September 2001, we entered into a non-exclusive license agreement with
Signatures Network, Inc. as agent for members of the musical group The Doors.
Under the license, we have the right to use the names, symbols, images and
likenesses of The Doors in connection with the distribution, sale and marketing
of disposable lighters in the United States. As consideration, we are to pay
Signatures Network royalties, to be paid quarterly, equal to twelve percent of net
sales. The minimum royalty payment is $20,000, inclusive of an advance of
$20,000, of which a nonrefundable advance payment of $10,000 was due upon
signing the license agreement, and $10,000 is due by June 30, 2003. The license
term expires on June 30, 2003. The license may be earlier terminated by
Signatures Network, including for the following reasons:

     o    we make, sell, offer for sale, use or distribute any product without
          prior written approval or continue to make, sell, offer for sale, use
          or distribute any product after receipt of notice withdrawing
          approval;
     o    we become subject to any voluntary or involuntary order of any
          government agency involving the recall of any of the products because
          of safety, health or other hazard or risks to the public;
     o    we fail to immediately discontinue the advertising, distribution or
          sale of products which do not contain the appropriate legal legend or
          notice;
     o    we breach any of the provisions of the license relating to the
          unauthorized assertion of rights in the licensed subject matter;
     o    we fail to make timely royalty payments;
     o    we fail to obtain or maintain insurance;
     o    we fail to distribute, ship and sell the product by December 1, 2001,
          and to use best efforts in distribution, shipment and sale;
     o    we fail to timely submit preliminary samples of the product for
          approval;
     o    a petition in bankruptcy is filed by or against us; we are adjudicated
          bankrupt or insolvent, or make an assignment for the benefit of
          creditors or an arrangement pursuant to any bankruptcy law; we
          discontinue our business; or a receiver is appointed for us or our
          business and such receiver is not discharged within 30 days;
     o    our corporation or any of our controlling shareholders, officers,
          directors or employees take any actions in connection with the
          manufacture, sale, distribution or advertising of the product which
          damages or reflects adversely upon licensor or the licensed subject
          matter; or
     o    we violate any of our other obligations or breach any of our
          covenants, agreements, representations or warranties.

The licensor is to indemnify, hold harmless and defend us and our affiliates,
officers, directors and employees against any claims, liabilities, demands, and
expenses arising solely out of our use of the licensed subject matter. It is not
liable for any consequential damages or loss of profits that we may suffer from
the use of the licensed subject matter. We are to indemnify and hold harmless
the licensor, including its respective parents, subsidiaries, affiliates,
officers, directors, representatives, employees and agents from and against any
and all claims, liabilities, demands, causes of action, judgments, settlements
and expenses that arises in connection with the design, manufacture, packaging,
distribution, shipment, advertising, promotion, sale, or exploitation of the
products, our breach of any representation, warranty, or covenant, or our
failure to perform any covenants or obligations contained in the license. The
intellectual property rights in the product and the marketing materials that use
the licensed subject matter belong to the licensor. We may not assign the
license unless otherwise previously agreed in writing by the licensor.`

---

## ITEM 6.  
EXHIBITS AND REPORTS ON FORM 8-K

(a)        Exhibits.

The following exhibits are filed with this report:

|Exhibit Number | Description of Exhibit
|-------------- | ----------------------

|Exhibit 10.1 | License Agreement with Hershey Foods Corporation, as Amended
|------------ | ------------------------------------------------------------

|Exhibit 10.2 | License Agreement with MTV
|------------ | --------------------------

|Exhibit 10.3 | License Agreement with Marvel
|------------ | -----------------------------

|Exhibit 10.4 | License Agreement with PRIMEDIA Magazine                              
|------------ | ----------------------------------------------------------------------
|Exhibit 10.5 | License Agreement with Signature Networks, Inc. as agent for The Doors

|Exhibit 11 | Statement Concerning Computation of Per Share Earnings is hereby incorporated
by reference to Financial Statements of Part I - Financial
Information, Item 1  Financial Statements, contained in this Form 10-QSB.
|---------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)        Reports on Form 8-K.

None.

---

# SIGNATURES

In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | FAMOUS FIXINS, INC.
| | -------------------

|Dated:  December 3, 2001 | By:      /s/ Jason Bauer
      Jason Bauer
      Chief Executive Officer and President
|------------------------ | --------------------------------------------------------------------------------------

---