<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                   FORM 10-Q


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

                 For the quarterly period ended July 31, 1999
                                                -------------
                                      OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

     For the transition period from _________________to _________________

                      Commission file number     0-21406
                                             ----------------

                               Brookstone, Inc.
           ---------------------------------------------------------
            (Exact name of registrant as specified in its charter)

          Delaware                                         06-1182895
          --------                                         ----------
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                         Identification No.)

                     17 Riverside Street, Nashua, NH 03062
                     -------------------------------------
              (address of principal executive offices, zip code)

                                 603-880-9500
                                 ------------
             (Registrant's telephone number, including area code)


  __________________________________________________________________________
       (Former name, former address and former fiscal year, if changed
                              since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes   X    No_______
    -----

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed, by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes________ No_______

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 8,168,838 shares of common
                                                 ---------
stock as of September 3, 1999.
            -----------------
<PAGE>

                               BROOKSTONE, INC.

                              Index to Form 10-Q

<TABLE>
<CAPTION>
Part I:  Financial Information                                                                   Page No.
         ---------------------                                                                   --------
<S>                                                                                              <C>
Item 1:
         Consolidated Balance Sheet
         as of July 31, 1999, January 30, 1999 and August 1, 1998                                    3

         Consolidated Statement of Operations for the thirteen and twenty-six weeks
         ended July 31, 1999 and August 1, 1998                                                      4

         Consolidated Statement of Cash Flows for the thirteen and twenty-six
         weeks ended July 31, 1999 and August 1, 1998                                                5

         Notes to Consolidated Financial Statements                                                6 - 7

Item 2:
         Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                                       8 - 10

Part II: Other Information
         -----------------

Item 1:
         Legal Proceedings                                                                           11

Item 2:
         Change in Securities                                                                        11

Item 3:
         Defaults by the Company upon its Senior Securities                                          11

Item 4:
         Submission of Matters to a Vote of Security Holders                                         11

Item 5:
         Other Information                                                                           12

Item 6:
         Exhibits and Reports on Form 8-K                                                            12


Signatures                                                                                           13
</TABLE>

                                       2
<PAGE>

                               BROOKSTONE, INC.
                          CONSOLIDATED BALANCE SHEET
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                        (Unaudited)                              (Unaudited)
                                                       July 31, 1999       January 30, 1999     August 1, 1998
                                                       -------------       ----------------     --------------
<S>                                                    <C>                 <C>                  <C>
Assets
------

Current assets:
    Cash and cash equivalents                            $   1,773            $  17,391           $   2,510
    Receivables, net                                         5,389                6,256               6,115
    Merchandise inventories                                 39,620               37,444              39,927
    Deferred income taxes                                    4,782                1,781               6,491
    Other current assets                                     5,323                4,623               5,144
                                                         ---------            ---------           ---------
        Total current assets                                56,887               67,495              60,187

Deferred income taxes                                        3,643                3,643               2,916
Property and equipment, net                                 42,036               42,124              37,770
Intangible assets                                            6,506                   --                  --
Other assets                                                   842                1,299                 665
                                                         ---------            ---------           ---------
                                                         $ 109,914            $ 114,561           $ 101,538
                                                         =========            =========           =========

Liabilities and Shareholders' Equity
------------------------------------

Current liabilities:
     Short-term borrowings                               $   1,840            $      --           $   8,860
     Accounts payable                                       15,770               10,727              11,820
     Other current liabilities                              11,183               18,950              10,696
                                                         ---------            ---------           ---------
           Total current liabilities                        28,793               29,677              31,376

Other long-term liabilities                                 10,193                9,962               9,861
Long-term obligation under capital lease                     2,565                2,612               2,652

Commitments and contingencies

Shareholders' equity:
Preferred stock, $0.001 par value:
   Authorized - 2,000,000 shares; issued and
   outstanding - 0 shares at July 31,
   1999, January 30, 1999 and August 1, 1998
Common stock, $0.001 par value:
   Authorized 50,000,000 shares; issued and
   outstanding - 8,133,838 at July 31, 1999,
   8,064,586 shares at January 30, 1999 and
   7,994,067 shares at August 1, 1998                            8                    8                   8
Additional paid-in capital                                  48,997               48,330              47,899
Retained earnings                                           19,405               24,019               9,789
Treasury stock, at cost - 3,616 shares at July
   31, 1999, January 30, 1999 and August 1, 1998
                                                               (47)                 (47)                (47)
                                                         ---------            ---------           ---------
      Total shareholders' equity                            68,363               72,310              57,649
                                                         ---------            ---------           ---------
                                                         $ 109,914            $ 114,561           $ 101,538
                                                         =========            =========           =========
</TABLE>

                                       3
<PAGE>

                               BROOKSTONE, INC.

                     CONSOLIDATED STATEMENT OF OPERATIONS
                     (In thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                         Thirteen Weeks Ended                       Twenty-six Weeks Ended
                                                 ----------------------------------------- --------------------------------------
                                                     July 31, 1999       August 1, 1998       July 31, 1999       August 1, 1998
                                                     -------------       --------------       -------------       --------------
<S>                                              <C>                     <C>               <C>                    <C>
Net sales                                              $  64,104            $  53,756           $ 106,204            $  91,675

Cost of sales                                             41,059               36,453              72,878               65,485
                                                       ---------            ---------           ---------            ---------

Gross profit                                              23,045               17,303              33,326               26,190

Selling, general and administrative expenses              22,682               17,622              40,334               33,568
                                                       ---------            ---------           ---------            ---------

Income (loss) from operations                                363                 (319)             (7,008)              (7,378)

Interest expense, net                                        348                  464                 483                  694
                                                       ---------            ---------           ---------            ---------

Income (loss) before taxes                                    15                 (783)             (7,491)              (8,072)

Income tax provision (benefit)                                 6                 (308)             (2,877)              (3,180)
                                                       ---------            ---------           ---------            ---------

Net income (loss)                                      $       9            $    (475)          $  (4,614)           $  (4,892)
                                                       =========            =========           =========            =========

Earnings (loss) per share - basic/diluted              $    0.00            $   (0.06)          $   (0.57)           $   (0.62)

Weighted average shares outstanding - basic                8,134                7,984               8,115                7,945
                                                       =========            =========           =========            =========

Weighted average shares outstanding - diluted              8,413                7,984               8,115                7,945
                                                       =========            =========           =========            =========
</TABLE>

                                       4
<PAGE>

                               BROOKSTONE, INC.

                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                (In thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                       Twenty-Six Weeks Ended
                                                                                -------------------------------------
                                                                                   July 31, 1999     August 1, 1998
                                                                                ------------------ ------------------
<S>                                                                             <C>                <C>
Cash flows from operating activities:
Net loss                                                                             $  (4,614)         $ (4,892)

Adjustments to reconcile net loss to net cash used by operating activities:

  Depreciation and amortization                                                          4,311             3,700
  Amortization of debt issuance costs                                                       75                69
  Deferred income taxes                                                                 (3,001)           (3,686)
  Decrease in other assets                                                                 382               400
  Increase in other long-term liabilities                                                  231                49

Changes in working capital:
   Accounts receivable, net                                                                867              (583)
   Merchandise inventories                                                                 227            (2,642)
   Other current assets                                                                    579            (4,258)
   Accounts payable                                                                      5,043            (2,620)
   Other current liabilities                                                            (8,498)           (5,906)
                                                                                     ---------          --------
Net cash used by operating activities                                                   (4,398)          (20,369)
                                                                                     ---------          --------

Cash flows from investing activities:
   Expenditures for property and equipment                                              (4,064)           (3,616)
   Expenditure for Gardeners Eden acquisition                                           (9,616)             ----
                                                                                     ---------          --------
Net cash used for investing activities                                                 (13,680)           (3,616)
                                                                                     ---------          --------
Cash flows from financing activities:
   Borrowings from revolving credit                                                      1,840             8,860
   Payments for capitalized lease                                                          (47)              (46)
   Proceeds from exercise of stock options and related tax benefits                        667               775
                                                                                     ---------          --------
Net cash provided by financing activities                                                2,460             9,589
                                                                                     ---------          --------
Net decrease in cash and cash equivalents                                              (15,618)          (14,396)

Cash and cash equivalents at beginning of period                                        17,391            16,906
                                                                                     ---------          --------
Cash and cash equivalents at end of period                                           $   1,773          $  2,510
                                                                                     =========          ========
</TABLE>

                                       5
<PAGE>

                               BROOKSTONE, INC.

                  Notes to Consolidated Financial Statements


1.   The results of the twenty-six week period ended July 31, 1999 are not
     necessarily indicative of the results for the full fiscal year. The
     Company's business, like the business of retailers in general, is subject
     to seasonal influences. Historically, the Company's fourth fiscal quarter,
     which includes the winter holiday selling season, has produced a
     disproportionate amount of the Company's net sales and all of its income
     from operations. The Company expects that its business will continue to be
     subject to such seasonal influences.

2.   The accompanying unaudited consolidated financial statements have been
     prepared in accordance with generally accepted accounting principles and
     practices consistently applied. In the opinion of the Company, these
     financial statements contain all adjustments (consisting of only normal
     recurring adjustments) necessary to present fairly the financial position
     and the results of operations for the periods reported. Certain information
     and footnote disclosures normally included in financial statements
     presented in accordance with generally accepted accounting principles have
     been condensed or omitted. It is suggested that the accompanying
     consolidated financial statements be read in conjunction with the annual
     financial statements and notes thereto which may be found in the Company's
     Fiscal 1998 annual report.

3.   The exercise of stock options which has been granted under the Company's
     stock option plans gives rise to compensation which is includable in the
     taxable income of the optionees and deductible by the Company for tax
     purposes upon exercise. Such compensation reflects an increase in the fair
     market value of the Company's common stock subsequent to the date of grant.
     For financial reporting purposes, the tax effect of this deduction is
     accounted for as a credit to additional paid-in capital rather than as a
     reduction of income tax expense. Such exercises resulted in a tax benefit
     to the Company of approximately $124,000 for the twenty-six week period
     ended July 31, 1999.

4.   Business conducted by the Company can be segmented into two distinct areas
     determined by the method of distribution channel. The retail segment is
     comprised of all full-year stores in addition to all temporary stores and
     kiosks. Retail product distribution is conducted directly through the store
     location. The direct marketing segment is comprised of the Hard-to-Find
     Tools, Brookstone Gift Collection and Gardeners Eden catalogs, products
     promoted via SkyMall and the interactive Internet site www.Brookstone.com.
                                                            ------------------
     Direct marketing product distribution is conducted through the Company's
     direct marketing call center and distribution facility located in Mexico,
     Missouri. Both segments of the Company sell similar products, although not
     all Company products are fully available within both segments.

                                       6
<PAGE>

     All costs directly attributable to the direct marketing segment are charged
     accordingly while all remaining operating costs are charged to the retail
     segment. The Company's management does not review assets by segment.

     The tables below disclose segment net sales and pre-tax income (loss) for
     the thirteen and twenty-six week periods ended July 31, 1999 and August 1,
     1998, respectively (in thousands):

<TABLE>
<CAPTION>
Thirteen Weeks:
(in thousands)                         Net Sales                                   Pre-tax Income (Loss)
                            ---------------------------------                -------------------------------
                                 July 31,      August 1,                         July 31,      August 1,
                                   1999          1998                              1999           1998
                            ---------------------------------                -------------------------------
<S>                         <C>                <C>                           <C>               <C>
Reportable segment:
   Retail                      $    53,824     $   49,082                      $        570    $      68
   Direct marketing                 10,280          4,674                              (207)        (387)


Reconciling items:
   Interest expense                    ---            ---                              (348)        (464)
                            ---------------------------------                -------------------------------

Consolidated:                  $    64,104    $    53,756                      $         15    $    (783)
                            =================================                ===============================

<CAPTION>
Twenty-six Weeks:
(in thousands)                         Net Sales                                      Pre-tax Loss
                            ---------------------------------                -------------------------------
                                 July 31,    August 1,                           July 31,      August 1,
                                   1999        1998                                1999           1998
                            ---------------------------------                -------------------------------
<S>                         <C>                <C>                           <C>               <C>
Reportable segment:
   Retail                      $    91,126    $    83,143                      $     (6,107)   $  (6,209)
   Direct marketing                 15,078          8,532                              (901)      (1,169)


Reconciling items:
   Interest expense                    ---            ---                              (483)        (694)
                            ---------------------------------                -------------------------------

Consolidated:                  $   106,204    $    91,675                      $     (7,491)   $  (8,072)
                            =================================                ===============================
</TABLE>


5.   Effective May 3, 1999 the Company acquired certain assets relating to the
     Gardeners Eden catalog from Williams-Sonoma, Inc. at a purchase price of
     approximately $9.6 million. The acquisition was accounted for as a
     purchase. The assets acquired were comprised of inventory valued at
     approximately $2.4 million and deferred catalog costs valued at
     approximately $1.3 million. The value of these assets was offset by a
     liability of approximately $0.7 million for open customer orders under the
     Gardeners Eden continuity program. The Company allocated the remaining
     purchase price, approximately $6.6 million, to the valuation of intangible
     assets consisting of trade name and customer lists.

                                       7
<PAGE>

                               BROOKSTONE, INC.

                    Management's Discussion and Analysis of
               Financial Condition and Results of Operations for
       the Thirteen-Week and Twenty-Six Week Periods Ended July 31, 1999

Results of Operations
---------------------

     For the thirteen-week and twenty-six week periods ended July 31, 1999, net
sales increased 19.3% and 15.8% respectively over the comparable periods last
year. Comparable store sales for the thirteen-week and twenty-six week periods
increased 6.2% and 3.8% respectively. The sales increase reflected the results
of opening 15 new stores in Fiscal 1998 subsequent to the second quarter of
Fiscal 1998 and six new stores during Fiscal 1999, offset by the closing of one
store subsequent to the second quarter of Fiscal 1998. The total number of
Brookstone stores open at the end of the twenty-six week period ended July 31,
1999 was 202 versus 182 at the end of the comparable period in Fiscal 1998.
Direct marketing sales increased 76.7% over the comparable twenty-six week
period last year. This increase was driven by sales from the recently acquired
Gardeners Eden catalog and increased Hard-to-Find Tools and Brookstone Gift
Collection catalog circulation.

     Gross profit as a percentage of net sales was 35.9% and 31.4% for the
thirteen and twenty-six week periods ended July 31, 1999 versus 32.2% and 28.6%
for the comparable periods last year. The increase in the percentage was
primarily attributable to a decrease in net material costs resulting from lower
sourcing costs, combined with a decrease in occupancy percentage resulting from
the strong comparable store sales performance and the increase in direct
marketing sales.

     Selling, general and administrative expenses as a percentage of net sales
were 35.4% and 38.0% for the thirteen and twenty-six week periods ended July 31,
1999 versus 32.8% and 36.6% for the comparable periods last year. This increase
in percentage was primarily the result of costs associated with the acquisition
and integration of the Gardeners Eden catalog, the increased Hard-to-Find
Tools and Brookstone Gift Collection catalog circulation and costs associated
with new information processing systems.

     Net interest expense for the thirteen-week and twenty-six week periods
ended July 31, 1999 was $348,000 and $483,000, compared to $464,000 and $694,000
during the comparable periods last year. The decrease for the thirteen and
twenty-six week periods was related to decreased borrowings under the revolving
credit agreement during comparable periods for Fiscal 1999 compared with Fiscal
1998.

     As a result of the foregoing, the Company reported net income of $9,000 or
$0.00 per basic/diluted share for the thirteen-week period ended July 31, 1999,
as compared to a net loss of $475,000 or $0.06 per basic/diluted share for the
comparable period last year. For the twenty-six week period ended July 31, 1999
the Company reported a net loss of $4,614,000 or $0.57 per basic/diluted share,
compared to a net loss of $4,892,000 or $0.62 per basic/diluted share for the
comparable period last year.


Financial Condition
-------------------

     For the twenty-six week period ended July 31, 1999, net cash used by
operating activities totaled $4.4 million, reflecting primarily the net loss and
the payment of income taxes, offset by an increase in the accounts payable
balance due to the timing of expense and merchandise payments. Cash used for
investment activities during the twenty-six week period of Fiscal 1999,
representing the purchase of property and equipment and the acquisition of the
Gardeners Eden catalog, amounted to $13.7 million. Cash from financing
activities during the twenty-six week period of Fiscal 1999 amounted to $2.5
million, acquired primarily through borrowings under the Company's revolving
credit agreement and the exercise of stock options and related tax benefits.

     For the twenty-six week period ended August 1, 1998, net cash used by
operating activities totaled $20.4 million, primarily as a result of the net
loss, purchase of inventory and payment of income taxes. Cash used for
investment activities during the twenty-six week period of Fiscal 1998,
representing the purchase of property and equipment,

                                       8
<PAGE>

amounted to $3.6 million. Cash from financing activities during the twenty-six
week period of Fiscal 1998 amounted to $9.6 million, acquired primarily through
borrowings under the Company's revolving credit agreement.

     Merchandise inventories were $39.6 million at July 31, 1999 compared to
$37.4 million at January 30, 1999. The increase in inventory was primarily due
to the acquisition of the Gardeners Eden catalog. The accounts payable balance
was $15.8 million at July 31, 1999 compared to $10.7 million at January 30,
1999. This increase was primarily due to the timing of expense and merchandise
payments.

     For the twenty-six week period ended July 31, 1999, the Company's capital
expenditures were principally related to the remodeling of three retail stores
and the opening of six new stores. The Company anticipates opening approximately
14 to 18 new stores, including as many as six airport locations, and remodeling
approximately 10 stores during Fiscal 1999.

     The Company maintains a revolving credit agreement to finance inventory
purchases, which historically peak in the third quarter in anticipation of the
winter holiday selling season. At July 31, 1999, the Company had $1.8 million in
outstanding borrowings under its revolving credit agreement as compared to an
outstanding balance of $8.9 million at August 1, 1998.

     The Company believes that available borrowings, cash on hand and
anticipated cash generated from operations will be sufficient to finance planned
retail store openings / remodelings and other capital requirements throughout
Fiscal 1999.

Outlook: Important Factors and Uncertainties
--------------------------------------------

     Statements in this quarterly report which are not historical facts,
including statements about the Company's confidence or expectations, plans for
opening new stores, capital needs and liquidity and other statements about the
Company's operational outlook, are forward-looking statements subject to risks
and uncertainties that could cause actual results to differ materially from
those set forth in such forward-looking statements. Such risks and uncertainties
include, without limitation, risks of changing market conditions in the overall
economy and the retail industry, consumer demand, the availability of
appropriate real estate locations and the ability to negotiate favorable lease
terms in respect thereof, customer response to the Company's direct marketing
initiatives, availability of products, availability of adequate transportation
of such products, unforeseen difficulties arising from the Company's or its
vendors' systems as a result of the Year 2000 problem, and other factors
detailed from time to time in the Company's annual and other reports filed with
the Securities and Exchange Commission. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
thereof. The Company undertakes no obligations to publicly release any revisions
to these forward-looking statements or reflect events or circumstances after the
date hereof.

Year 2000 Software Compliance
-----------------------------

     Many computer programs in use today were originally written using two-digit
fields to identify years instead of four digits to define century and year.
These programs were written without considering the impact of the upcoming
change in the century and may experience difficulty in handling dates beyond
December 31, 1999. This phenomenon, sometimes referred to as "the year 2000
problem" or "the Y2K problem", could cause computer software to fail or create
erroneous results unless corrective or alternative measures are instituted.

     The Company relies on software for the efficient operation of many of its
important functions, including inventory purchasing, shipping and receiving,
logistics, inventory forecasting and replenishment, payroll and human resource
record-keeping, direct marketing operations, point-of-purchase transaction
recording and financial reporting. Nearly all of the software relied upon in the
Company's operations is purchased from outside sources (who, in some instances,
modify or customize pre-packaged software to fit the Company's needs).
In addition, the Company has entered into maintenance contracts from such
vendors to ensure that such programs will remain operable or will be upgraded at
marginal incremental cost to the Company in the event that such a program is not
functioning optimally. Since 1996, the Company has been working with its outside
software vendors to (i) assess the Y2K readiness of their products,
(ii) implement changes and upgrades necessary to eliminate the risk of Y2K
problems and (iii) test the Company's systems and components to ensure proper
functionality.

     During the second quarter of Fiscal 1999, the Company completed the
implementation and testing of a year 2000 compliant point-of-purchase system.
The Company is currently in the process of upgrading its employee timekeeping
system, which it expects to complete in the fall of 1999. With the exception of
the timekeeping software, each of the software products involved in the
Company's significant operations has been represented to be year 2000 compliant,
or has been upgraded to versions that have been represented to be year 2000
compliant, by their respective vendors. In addition, the Company has received
representations from its primary bank and its credit card processors that the
software programs they operate to facilitate services provided to the Company
are, or are in the process of becoming, year 2000 compliant.

     Because the Y2K problem is often not immediately apparent, the Company
believes that the evaluation of its systems and the assessment of their
readiness must be a continuous process. During Fiscal 1999, the Company has
continued to test and evaluate its systems for year 2000 compliance and will
continue to perform this testing and evaluating process through the remainder of
the fiscal year.

     As part of that testing program, the Company leased an additional IBM
AS/400 computer system and transferred to it copies of the Company's key
software applications and their associated data. Starting in June 1999, the
Company used this system to test its key operational systems (including point of
sale, inventory planning and tracking, product

                                       9
<PAGE>

distribution, financial reporting, and payroll and other human resources
systems) on several "high-risk" dates identified by the Company, including
September 9, 1999 ("9/9/99"), December 31, 1999, January 1, 2000, January 31,
2000 (the end of the Company's 1999 fiscal year) and February 29, 2000.
The Company conducted similar tests using the Hewlett-Packard computer systems
that are used to operate the Company's direct marketing operations. The testing
disclosed only minor problems, all of which have been addressed. Finally, the
actual September 9, 1999 date has now passed without any incidents relating to
the Company's computer systems date.

     The Company expects that the combined incremental cost of testing and
hardware and software upgrades relating to the Year 2000 problem will not exceed
$1,000,000.

     There can be no assurance that the Company's operating results would not be
adversely affected if any of its largest vendors were unable to fill the
Company's orders. The Company has received written statements from each of its
largest vendors which represent that each such vendor has addressed, or is in
the process of addressing, the year 2000 issue such that manufacturing and
shipping activities will not be disrupted by the Y2K problem. The Company's
merchandising team is also considering other sources for similar products in the
event that such vendors are unable to meet the Company's needs. Because the
products sold by the Company are oftentimes unique in the marketplace, however,
there can be no assurance that adequate substitute products will be available.
See "Outlook: Important Factors and Uncertainties -- Dependence on Innovative
Merchandising" on pages 21 - 23 of the Company's 1998 Annual Report on Form 10-
K. The Company does not currently use advance shipping notification ("ASN")
technology with its vendors. The Company is currently implementing an electronic
purchase order confirmation system that uses standard email systems to exchange
orders and confirmations with its vendors.

     The Company believes that it has established appropriate measures to
minimize the risk of disruption to its business as it approaches the year 2000.
This belief is a forward-looking statement and is premised, in part, on
representations provided to the Company by third-party sources and vendors, the
accuracy of which is in many cases difficult or impossible for the Company to
validate. If any such representation relating to a software product relied upon
for a significant business function, or a representation from a significant
vendor, ultimately proves inaccurate, the Company could incur material
remediation expenses and/or lost sales. In addition, like most other retailers,
the Company could be materially adversely affected by disruption in the
externally controlled distribution channel (including ports, United States
Customs and transportation vendors), the banking and credit systems and electric
and other utility suppliers.

                                       10
<PAGE>

                                    PART II

                               Other Information


Item 1:        LEGAL PROCEEDINGS
               -----------------

               The Company is involved in various legal proceedings arising in
               the normal course of business. The Company believes that the
               resolution of these matters will not have a material effect on
               the Company's financial condition or results of operations.


Item 2:        CHANGES IN SECURITIES
               ---------------------

               None


Item 3:        DEFAULT UPON SENIOR SECURITIES
               ------------------------------

               None


Item 4:        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
               ---------------------------------------------------

               A)   The 1999 Annual Meeting of Stockholders of the Company was
                    held on June 15, 1999.

               B)   The following persons were elected Directors at the 1999
                    Annual Meeting for a one-year term expiring at the 2000
                    Annual Meeting of Stockholders.

                                                  For             Withheld
                                               ---------          --------
                    Michael F. Anthony         7,777,647           57,193
                    Mone Anathan III           7,114,295          720,545
                    Adam Kirsh                 7,302,365          532,475
                    Michael L. Glazer          7,811,561           23,279
                    Robert F. White            7,811,461           23,379

               C)   Approval and adoption of the Company's 1999 Equity Incentive
                    Plan.

                             For         Against       Abstain       No Vote
                          ---------     ---------     ---------    -----------
                          4,639,766      807,107        17,455      2,370,512


               D)   The appointment of PricewaterhouseCoopers LLP as the
                    independent accountants to examine the financial statements
                    of the Company and its subsidiaries for the fiscal year
                    ending January 29, 2000 was ratified.

                              For        Against       Abstain
                           ---------    ---------     ---------
                           7,825,715      5,097         4,028

                                       11
<PAGE>

Item 5:        OTHER INFORMATION
               -----------------

               None

Item 6:        EXHIBITS AND REPORTS ON FORM 8-K
               --------------------------------

          A)   Exhibits

               11 - Computation of Basic and Diluted Earnings (Loss) Per Common
               Share


         B)    Reports on Form 8-K

               On May 14, 1999, a report on Form 8-K was filed by the Company,
               reporting the issuance of a press release dated May 12, 1999
               relative to the agreement of the Company to acquire certain
               assets of the Gardeners Eden division of Williams-Sonoma, Inc.

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<PAGE>

                                  Signatures
                                  ----------

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                     Brookstone, Inc.
                                     ----------------
                                       (Registrant)




                                      /s/  Philip W. Roizin
                                     -------------------------------------
       September 14, 1999                      (Signature)

                                     Philip W. Roizin
                                     Executive Vice President Finance and
                                     Administration, Treasurer and Secretary
                                     (Principal Financial Officer
                                     and duly authorized to sign on behalf of
                                     registrant)

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