---

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 June 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)

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| | 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 June 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 JUNE 30, 2001

TABLE OF CONTENTS

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

|         |  |                                  |   
|-------- |  | -------------------------------- | --
|PART II. |  | OTHER INFORMATION                |   
|Item 2.  |  | Changes in Securities            | 16
|Item 5.  |  | Other Information                | 17
|Item 6.  |  | Exhibits and Reports on Form 8-K | 17

---

# PART I.  
FINANCIAL INFORMATION

## ITEM 1.  
FINANCIAL STATEMENTS

# FAMOUS FIXINS, INC.
BALANCE SHEETS
(UNAUDITED)

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

                                          A S S E T S

CURRENT ASSETS

   Cash and cash equivalents                                                    $   359,193            $   343,164
   Investments in marketable equity trading securities                                                      77,578
   Accounts receivable, less $5,000 allowance for doubtful accounts                 461,089                527,840
   Merchandise inventory                                                            159,156                321,116
   Unused barter credits - current portion                                           74,106                 75,618
   Prepaid expenses                                                                  14,347                 25,200
                                                                                -----------            -----------

     TOTAL CURRENT ASSETS                                                         1,067,891              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                                                  17,127                 17,165
                                                                                -----------            -----------

     NET PLANT AND EQUIPMENT                                                         27,454                 32,716
                                                                                -----------            -----------

OTHER ASSETS

   Deferred debenture issuance costs, net of accumulated
      amortization (2001 - $3,341;  2000 - $3,175)                                       57                    723
   Unused barter credits - noncurrent portion                                       222,316                226,853
   Security deposits                                                                  6,482                  6,482
                                                                                -----------            -----------

     TOTAL OTHER ASSETS                                                             228,855                234,058
                                                                                -----------            -----------

                                                                                 $1,324,200             $1,637,290
                                                                                ===========            ===========`

See accompanying notes to financial statements.

---

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

`JUNE 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                                                                 261,083                272,401
   Accrued royalties payable                                                         71,607                 54,637
   Accrued interest payable                                                          42,853                 12,273
   Due to customers                                                                  66,705                 39,567
   Deferred officer's compensation payable                                           97,535                115,626
   Taxes payable - other than on income                                                   -                 11,335
   Income taxes payable                                                                 580                    580
                                                                                -----------            -----------

     TOTAL CURRENT LIABILITIES                                                    2,115,363              2,127,804
                                                                                -----------            -----------

LONG-TERM LIABILITIES

   5% convertible debentures, due October, 2002
     (principal amount - $33,975 in 2001; $38,975 in 2000)                           33,792                 37,600
   Deferred rent                                                                      7,631                  8,777
                                                                                -----------            -----------

     TOTAL LONG-TERM LIABILITIES                                                     41,423                 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                                                     4,011,509              3,905,379
   Accumulated deficit                                                           (4,809,292)            (4,406,210)
                                                                                -----------            -----------
                                                                                   (783,586)              (486,891)
      Less: Unused advertising barter credits issued in exchange
              for common stock                                                      (49,000)               (50,000)
                                                                                -----------            -----------

     TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                          (832,586)              (536,891)
                                                                                -----------            -----------

                                                                                $ 1,324,200            $ 1,637,290
                                                                                ===========            ===========`

See accompanying notes to financial statements.

---

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

`THREE MONTHS ENDED                SIX MONTHS ENDED
                                                                     JUNE 30,                          JUNE 30,
                                                           -----------------------------     ----------------------------
                                                              2001             2000             2001             2000
                                                           -----------      -----------      -----------      -----------

NET SALES                                                  $   870,938      $ 1,125,887      $ 1,313,175      $ 1,386,930

COST OF GOODS SOLD
   Merchandise inventory at beginning of period                247,647           89,398          321,116           69,542
   Purchases                                                   386,379          836,918          555,143        1,020,636
   Other direct costs                                            8,557           62,039           37,319          125,604
                                                           -----------      -----------      -----------      -----------
                                                               642,583          988,355          913,578        1,215,782
      Less: Merchandise inventory at end of
                 period                                        159,156          417,714          159,156          417,714
                                                           -----------      -----------      -----------      -----------

TOTAL COST OF GOODS SOLD                                       483,427          570,641          754,422          798,068
                                                           -----------      -----------      -----------      -----------

GROSS PROFIT                                                   387,511          555,246          558,753          588,862
                                                           -----------      -----------      -----------      -----------

OPERATING EXPENSES
   Selling expenses                                            135,152          171,444          220,829          824,962
   General and administrative expenses                         345,566          300,284          695,037          558,995
                                                           -----------      -----------      -----------      -----------
TOTAL OPERATING EXPENSES                                       480,718          471,728          915,866        1,383,957
                                                           -----------      -----------      -----------      -----------

OPERATING INCOME (LOSS)                                        (93,207)          83,518         (357,113)        (795,095)

OTHER INCOME (EXPENSE)
   Interest income                                               1,407            2,855            1,483           10,608
   Interest expense and financing costs                        (15,832)         (57,607)         (32,855)        (415,388)
   Realized and unrealized gain (loss) on
      investments in marketable equity trading
      securities                                                     -           (5,200)         (13,134)           1,705
   Loss on disposal of plant and equipment                           -                -             (883)               -
                                                           -----------      -----------      -----------      -----------
TOTAL OTHER INCOME (EXPENSE)                                   (14,425)         (59,952)         (45,389)        (403,075)
                                                           -----------      -----------      -----------      -----------

INCOME (LOSS) BEFORE PROVISION FOR
   INCOME TAXES                                               (107,632)          23,566         (402,502)      (1,198,170)

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

NET INCOME (LOSS)                                          $  (107,632)     $    23,566      $  (403,082)     $(1,198,625)
                                                           ===========      ===========      ===========      ===========

Net income (loss) per common share, basic                  $     (.008)     $      .002      $     (.029)     $     (.097)
Net income (loss) per common share, assuming
   full dilution                                           $     (.008)     $      .002      $     (.029)     $     (.097)
Weighted average number of common shares
   outstanding,
      basic                                                 14,042,810       13,056,313       14,000,037       12,395,940
      assuming full dilution                                14,042,810       14,346,964       14,000,037       12,395,940`

See accompanying notes to financial statements.

---

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

`SIX MONTHS ENDED
                                                                                          JUNE 30,
                                                                                -----------------------------
                                                                                  2001               2000
                                                                                ---------         -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                     $(403,082)        $(1,198,625)
   Adjustments to reconcile net loss to net cash used in operating activities:
      Noncash items:
         Depreciation                                                               4,379               4,344
         Amortization and write off of bond discounts and finance costs               877              62,567
         Deferred rent expense                                                     (1,146)             11,057
         Interest expense paid by issuance of common stock                            397               6,817
         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                                                           101,611             367,945
         Realized and unrealized (gain) loss on investments in marketable
            equity trading securities                                              13,134              (1,705)
         Loss on disposal of plant and equipment                                      883                   -
         Unused barter credits                                                      7,049            (302,472)
      (Increase) decrease in assets:
         Accounts receivable                                                       66,751            (376,855)
         Merchandise inventory                                                    161,960            (348,172)
         Prepaid expenses                                                          10,853             (13,368)
         Decrease in security deposits                                                  -                  22
      Increase (decrease) in liabilities:
         Accounts payable and accrued expenses                                     36,232              62,221
         Due to customers                                                          27,138             (61,833)
         Taxes payable - other than on income                                     (11,335)              6,270
         Deferred officer's compensation payable                                  (18,091)                  -
                                                                                ---------         -----------
NET CASH USED IN OPERATING ACTIVITIES                                              (2,030)         (1,243,863)
                                                                                ---------         -----------

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
   Payments for plant and equipment additions                                           -             (8,501)
   Proceeds from sale of marketable equity trading securities                      64,444                  -
                                                                                ---------         ----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                64,444             (8,501)
                                                                                ---------         ----------

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
   Proceeds from issuance of convertible debentures, net                                -            990,000
   Repayments of borrowings against investment 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                               16,029           (214,864)

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

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $ 359,193         $  260,461
                                                                                =========         ==========

                                  (CONTINUED)`

See accompanying notes to financial statements.

---

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

`SIX MONTHS ENDED
                                                                                          JUNE 30,
                                                                                -----------------------------
                                                                                  2001               2000
                                                                                ---------         -----------

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                                     $   5,397         $   366,609`

See accompanying notes to financial statements.

---

# FAMOUS FIXINS, INC.
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
SIX MONTHS ENDED JUNE 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              4,416      232,639        233        4,183             -                 -
conversion of 5% convertible
debentures, net

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

Value of warrants issued and            101,611            -          -      101,611             -                 -
amortized for services received

Net loss - Six months ended            (402,082)           -          -            -      (403,082)            1,000
June 30, 2001                         ---------   ----------    -------   ----------   -----------    --------------

BALANCE (DEFICIT) - JUNE 30, 2001     $(832,586)  14,197,903    $14,197   $4,011,509   $(4,809,292)   $      (49,000)
                                      =========   ==========    =======   ==========   ===========    ==============`

See accompanying notes to financial statements.

---

# FAMOUS FIXINS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2001

`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 June 30, 2001, and
             the results of operations for the three months and six months ended
             June 30, 2001 and 2000, and the statements of cash flows for the
             six months ended June 30, 2001 and 2000, and the statement of
             stockholders' equity (deficit) for the six months ended June 30,
             2001. These results have been determined on the basis of generally
             accepted accounting principles and practices 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 generally
             accepted accounting principles 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
                  and athlete 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 athletes and other
                  celebrities and creates consumer products which include
                  various product lines consisting of salad dressings, candy
                  products, cosmetic products and adhesive bandages endorsed by
                  the licensors. The Company utilizes a network of consumer
                  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
SIX MONTHS ENDED JUNE 30, 2001

`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 six months
                  ended June 30, 2001 was $101,611.

                  REVENUE RECOGNITION AND SALES RETURNS

                        Revenue from sales of celebrity and athlete endorsed
                  food 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 generally accepted accounting principles 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
SIX MONTHS ENDED JUNE 30, 2001

`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.      EARNINGS PER SHARE

                 In accordance with the provisions of Statement of Financial
             Accounting Standards ("SFAS") No. 128, "Earnings Per Share", basic
             earnings per share is computed by dividing net income or loss by
             the number of weighted-average common shares outstanding during the
             period. Earnings per share, assuming dilution, is computed by
             dividing net income by the number of weighted-average common shares
             and common stock equivalents outstanding during the period.

                  No effect has been given to the conversion of warrants and
             debentures to common stock for the three month ended June 30, 2001;
             and the six months ended June 30, 2001 and 2000 inasmuch as such
             conversion would be anti-dilutive.

NOTE 4.      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 June
             30, 2001 which raise substantial doubt about its ability to
             continue as a going concern. The financial statements do not
             include any adjustments that might result from the outcome of this
             uncertainty.`

---

## 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.

## MANAGEMENTS
DISCSSION AND ANALYSIS OR PLAN OF OPERATIONS

## Results of
Operations

Sales for the three months ended June 30, 2001 decreased approximately 23% to $870,938 from $1,125,887 for the
three months ended June 30, 2000.  Sales for the six months ended June 30, 2001 decreased approximately 5% to
$1,313,175 from $1,386,930 for the six months ended June 30, 2000. The decrease in sales is attributable to our
focus on the sale of three products in fiscal year 2001 that we introduced after March 31, 2000 and the
discontinuation of six products in three months ended June 30, 2000.

Cost of goods sold for the three months ended June 30, 2001 was $483,427, approximately 56% of sales, as compared
to $570,641, approximately 51% of sales, for the comparable period in fiscal year 2000.  Cost of goods sold for
the six months ended June 30, 2001 was $754,422, approximately 57% of sales, as compared to $798,068,
approximately 58% of sales, for the comparable period in fiscal year 2000.  Although the cost of goods sold
for the six months ended June 30, 2001 compared to the six months ended June 30, 2001 remained comparable, we
experienced a decrease in cost of goods sold as a percentage of sales for the three months ended June 30, 2001 in
connection with the expiration of certain licenses and the discontinuation of sales of several cereal product
lines that we offered in the three and six months ended June 30, 2000.  We expect our cost of goods sold to
increase as we enter new licenses and make more products available for sale.  We expect cost of goods sold to
decrease as a percentage of total sales as our sales volume for particular product lines grows.

Gross profit on sales for the three months ended June 30, 2001 was $387,511, a decrease of 30%, as compared to
gross profit of $555,246 for the three months ended June 30, 2000.  Gross profit on sales for the six months
ended June 30, 2001 was $558,753, a decrease of 5%, as compared to gross profit of $588,862 for the six months
ended June 30, 2000.  The decrease in gross profit is attributable to less sales resulting from our focus on
three products in fiscal year 2001, and the expiration of certain licenses and the discontinuation of several
cereal products in fiscal year.

For the three months ended June 30, 2001 as compared to the three months ended June 30, 2000, operating expenses
increased to $480,718 from $471,728, which represents a 2% increase in operation expenses and an increase to 55%
of sales from 42% of sales. For the six months ended June 30, 2001 as compared to the six months ended June 30,
2000, operating expenses decreased to $915,866 from $1,383,957, which represents a 34% decrease in operation
expenses and a decrease to 70% of sales from 100% of sales. The decrease in our operating expenses is
attributable to a decrease in selling expenses, associated with a focus on selling a smaller number of products
in fiscal year 2001 than in fiscal year 2000, to $135,152 and $220,829 for the three and six months ended June
30, 2001, respectively, from $171,444 and $824,962 for the three and six months ended June 30, 2000, offset by an
increase in general and administrative expenses to $345,566 from $300,284 for the three months ended June 30,
2001 and 2000, respectively, and to $695,037 from $558,995 for the six months ended June 30, 2001 and 2000,
respectively.  Operating expenses are expected to increase as new product lines are created and as more products
are sold; however, operating expenses are expected to decrease as a percentage of total sales as our sales volume
grows for a particular product line.

---

For the three months ended June 30, 2001, we operated at a net loss of $107,632,
or a loss of $.008 per share basic and diluted, as compared to net income of
$23,566, or net income of $.002 per share basic and diluted for the three months
ended June 30, 2000. For the six months ended June 30, 2001, we operated at a
net loss of $403,082, or a loss of $.029 per share basic and diluted, as
compared to a net loss of $1,198,625, or a loss of $.097 per share basic and
diluted, for the six months ended June 30, 2000. The decrease in net loss for
the six months ended June 30, 2001 is mainly due to a decrease in non-cash
charges related to stock and warrant issuances and interest expense and
financing costs. Included in the net loss of $403,082 for the six months ended
June 30, 2001 are several non-cash charges to income related to non-cash charges
related to stock and warrant issuances and interest expense and financing costs
aggregating approximately $103,000 as compared to approximately $975,000 for the
six months ended June 30, 2000. There is no assurance that additional warrants
or other securities will not be issued, or that additional charges will not be
incurred for future transactions. We anticipate the continuance of these types
of charges against earnings when we make additional licensing transactions or
when we enter service or financing agreements.

In fiscal year 2000, we discontinued ten cereal products in connection with the expiration of several short-term
licenses for products that we sold primarily in selected regions associated with the athlete or sports entity,
and in the first six months of fiscal year 2001 we have focused our efforts on a smaller number of products that
we believe have broader territorial appeal and that have longer license terms.  In the three months ended June
30, 2001, we entered into one new license, and we expect to complete transactions for about three more licenses
in the quarter ended September 30, 2001.  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 products that have potentially
broad territorial appeal and licenses with longer license periods may have a favorable impact on income and
liquidity.

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 June 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.  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 2.  
CHANGES IN SECURITIES

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
Famous Fixins' common stock. On June 5, 2001, a debenture holder converted
debentures with a principal amount of $5,000 and accrued interest of $397.22, as
we presently do not have a current registration statement effective for the
resale of the shares, into 232,639 shares of restricted common stock, leaving a
balance of a principal amount of $33,975 in 5% convertible debentures.

In January 2001, we entered
into an agreement with Castle Capital Partners, LLC for management consulting
services. Under the agreement, Castle Capital was entitled to compensation at
the rate of 12,000 shares of our restricted common stock per month for at least
a two month period and a maximum of a four month period. The shares have
piggyback registration rights. As of March 1, 2000, we issued Castle Capital
24,000 shares of restricted common stock in a transaction deemed to be exempted
under Section 4(2) of the Securities Act of 1933. We made a determination that
Castle Capital was a sophisticated investor with enough knowledge and experience
in business to evaluate the risks and merits of the transaction.

In May 2001, we granted
to Jody King-Cheifetz, an employee of Famous Fixins, warrants to purchase up to
100,000 shares of common stock in a transaction deemed to be exempted under
Section 4(2) of the Securities Act of 1933. The warrants are to vest at a rate
of 25,000 per year on August 1, 2001, August 1, 2002, August 1, 2003 and August
1, 2004, and the warrants expire on June 30, 2005. The exercise price for the
warrants is at a 50% discount to the average closing bid price of our common
stock for the five consecutive business days preceding the respective vesting
dates. If King-Cheifetzs employment with Famous Fixins is terminated, at
any time, for whatever reason, all unexercised warrants and all rights to such
warrants, as of the date of termination, shall be immediately forfeited. We made
a determination that King-Cheifetz was a sophisticated investor with enough
knowledge and experience in business to evaluate the risks and merits of the
investment.

In May 2001, we granted
to Rich Seery, an employee of Famous Fixins, warrants to purchase up to
150,000 shares of common stock in a transaction deemed to be exempted under
Section 4(2) of the Securities Act of 1933. The warrants are to vest at a rate
of 37,500 per year on August 1, 2001, August 1, 2002, August 1, 2003 and August
1, 2004, and the warrants expire on June 30, 2005. The exercise price for the
warrants is at a 50% discount to the average closing bid price of our common
stock for the five consecutive business days preceding the respective vesting
dates. If Seerys employment with Famous Fixins is terminated, at any time,
for whatever reason, all unexercised warrants and all rights to such warrants,
as of the date of termination, shall be immediately forfeited. We made a
determination that Seery was a sophisticated investor with enough knowledge and
experience in business to evaluate the risks and merits of the investment.

---

## ITEM 5.  
OTHER INFORMATION

We entered into a
non-exclusive license agreement, dated May 30, 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. As consideration, we are to
pay Hershey royalty 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.

## 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 | License Agreement with Hershey Foods Corporation
|---------- | ------------------------------------------------

|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.

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# 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:  August 15, 2001 | By:      /s/ Jason Bauer
      Jason Bauer
      Chief Executive Officer and President
|----------------------- | --------------------------------------------------------------------------------------

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