UNITED STATES
                       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 March 23, 2003

                                       OR

     ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                                  -------------

                        Commission file number 333-57931

                                TUMBLEWEED, INC.
             (Exact name of registrant as specified in its charter)

                 DELAWARE                              61-1327945
     (State or other jurisdiction of     ( I.R.S. Employer Identification No.)
      incorporation or organization)


             2301 River Road, Suite 200, Louisville, Kentucky 40206
                    (Address of principal executive offices)

                                 (502) 893-0323
               (Registrants telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes ____ No X


The number of shares of common stock,  par value of $.01 per share,  outstanding
on April 30, 2003 was 5,916,153.












<PAGE>



                                TUMBLEWEED, INC.

                                      INDEX


PART I.     FINANCIAL INFORMATION                                       PAGE
      Item 1. Financial Statements (Unaudited)
         a) Consolidated Statements of Operations for the twelve
            weeks ended March 23, 2003 and March 24, 2002                 3
         b) Consolidated Balance Sheets as of March 23, 2003 and
            December 29, 2002                                             4
         c) Consolidated Statements of Cash Flows for the twelve
            weeks ended March 23, 2003 and March 24, 2002                 5
         d) Notes to Consolidated Financial Statements                    6

      Item 2. Management's Discussion and Analysis of Financial
              Condition and Results of Operations                        13


      Item 3. Quantitative and Qualitative Disclosures About Market
              Risk                                                       18

      Item 4. Controls and Procedures                                    18

PART II.    OTHER INFORMATION

      Item 1.     Legal Proceedings                                      18
      Item 6.     Exhibits and Reports on Form 8-K                       19

Signature                                                                20

Certifications                                                           20





                                        2

<PAGE>



                                Tumbleweed, Inc.
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>




                                                                    Twelve Weeks       Twelve Weeks
                                                                       Ended               Ended
                                                                     March 23,           March 24,
                                                                        2003               2002
                                                                  ----------------   -----------------
Revenues:
<S>                                                              <C>                <C>
   Restaurant sales                                              $      12,645,330  $       13,463,593
   Commissary sales                                                        508,789             381,886
   Franchise fees and royalties                                            284,847             249,848
   Other revenues                                                          114,203              89,427
                                                                  ----------------   -----------------

Total revenues                                                          13,553,169          14,184,754

Operating expenses:
   Restaurant cost of sales                                              3,680,737           4,072,607
   Commissary cost of sales                                                441,789             346,935
   Operating expenses                                                    6,867,551           7,390,657
   Selling, general and administrative expenses                          1,513,169           1,437,077
   Depreciation and amortization                                           463,866             457,319
                                                                  ----------------   -----------------

Total operating expenses                                                12,967,112          13,704,595
                                                                  ----------------   -----------------

Income from operations                                                     586,057             480,159

Interest expense, net                                                     (321,139)           (234,078)
                                                                  ----------------   -----------------

Income before income taxes and cumulative effect of a
    change in accounting  principle                                        264,918             246,081
Provision for income taxes - current and deferred                          116,562             108,276
                                                                  ----------------   -----------------

Income before cumulative effect of a change in
    accounting principle                                                   148,356             137,805
Cumulative effect of a change in accounting  principle, net
    of tax ($845,873)                                                            -          (1,503,773)
                                                                  ----------------   -----------------
Net income (loss)                                                $         148,356  $       (1,365,968)
                                                                  ================   =================

Basic and diluted earnings (loss) per share:
    Income before cumulative effect of a change in
        accounting principle                                     $            0.03  $             0.02
    Cumulative effect of a change in accounting  principle,
        net of tax                                                               -               (0.25)
                                                                  ----------------   -----------------
    Net income (loss)                                            $            0.03  $            (0.23)
                                                                  ================   =================
</TABLE>

See accompanying notes.


                                        3

<PAGE>



                                Tumbleweed, Inc.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                            As of
                                                                          March 23,               As of
                                                                             2002              December 29,
                                                                         (Unaudited)               2002
                                                                        --------------        --------------
Assets
Current assets:
<S>                                                                    <C>                   <C>
   Cash and cash equivalents                                           $     4,525,536       $     1,334,631
   Accounts receivable                                                         967,906               942,241
   Inventories                                                               1,764,623             1,786,207
   Prepaid expenses and other assets                                           631,143               601,751
                                                                        --------------        --------------
Total current assets                                                         7,889,208             4,664,830
Property and equipment, net                                                 26,942,536            26,699,920
Goodwill                                                                       174,657               174,657
Intangible assets, net                                                       1,524,171             1,524,530
Deferred income taxes                                                          258,564               281,840
Other assets                                                                   877,379               631,365
                                                                        --------------        --------------
Total assets                                                           $    37,666,515       $    33,977,142
                                                                        ==============        ==============

Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                                    $     1,384,320       $     1,292,871
   Accrued liabilities                                                       3,082,070             2,951,024
   Deferred income taxes                                                       251,884               153,249
   Current maturities on long-term
     debt and capital leases                                                   859,747             1,191,874
                                                                        --------------        --------------
Total current liabilities                                                    5,578,021             5,589,018

Long-term liabilities:
   Long-term debt, less current maturities                                  17,040,144            13,251,083
   Capital lease obligations, less current maturities                        1,200,636             1,437,683
   Other liabilities                                                            65,000                65,000
                                                                        --------------        --------------
Total long-term liabilities                                                 18,305,780            14,753,766
                                                                        --------------        --------------
Total liabilities                                                           23,883,801            20,342,784

Commitments and contingencies (Note 11)

Stockholders' equity:
   Preferred stock, $.01 par value, 1,000,000
     shares authorized; no shares issued
     and outstanding                                                                 -                     -
   Common stock, $.01 par value, 16,500,000 shares authorized;
     5,958,553 shares issued at March 23, 2003 and
     December 29, 2002                                                          59,587                59,587
   Paid-in capital                                                          16,393,235            16,393,235
   Treasury stock, 42,400 shares                                              (254,695)             (254,695)
   Retained deficit                                                         (2,415,413)           (2,563,769)
                                                                        --------------        --------------
     Total stockholders' equity                                             13,782,714            13,634,358
                                                                        --------------        --------------
Total liabilities and stockholders' equity                             $    37,666,515       $    33,977,142
                                                                        ==============        ==============
</TABLE>

See accompanying notes.






                                        4

<PAGE>



                                   Consolidated Statements of Cash Flows
                                                (Unaudited)

<TABLE>
<CAPTION>


                                                                         Twelve Weeks         Twelve Weeks
                                                                             Ended               Ended
                                                                           March 23,           March 24,
                                                                             2003                 2002
                                                                       -----------------    ----------------

Operating activities:
<S>                                                                   <C>                  <C>
   Net income (loss)                                                  $          148,356   $      (1,365,968)
   Adjustments to reconcile net income (loss) to net
       cash provided by operating activities:
        Depreciation and amortization                                            463,866             457,319
        Deferred income taxes                                                    121,911            (557,852)
        Loss on disposition of property and equipment                              7,978              19,496
        Cumulative effect of a change in accounting principle                          -           2,349,646
        Changes in operating assets and liabilities:
          Accounts receivable                                                    (25,665)            (53,240)
          Income tax receivable                                                   (5,347)           (154,968)
          Inventories                                                             21,584              19,084
          Prepaid expenses                                                       (32,297)             16,951
          Other assets                                                          (249,940)           (129,685)
          Accounts payable                                                        91,449             384,972
          Accrued liabilities                                                    131,046            (473,633)
                                                                       -----------------    ----------------
Net cash provided by operating activities                                        672,941             512,122

Investing activities:
    Purchases of property and equipment                                         (701,923)            (72,707)
   Business acquisition                                                                -            (267,000)
                                                                       -----------------    ----------------
Net cash used in investing activities                                           (701,923)           (339,707)

Financing activities:
   Proceeds from issuance of long-term debt                                   18,000,000           1,113,394
   Payments on long-term debt and capital lease obligations                  (14,780,113)         (1,325,754)
                                                                       -----------------    ----------------
Net cash provided by (used in) financing activities                            3,219,887            (212,360)
                                                                       -----------------    ----------------

Net increase (decrease) in cash and cash equivalents                           3,190,905            (39,945)

Cash and cash equivalents at beginning of period                               1,334,631             757,266
                                                                       -----------------    ----------------
Cash and cash equivalents at end of period                            $        4,525,536   $         717,321
                                                                       =================    ================

</TABLE>

See accompanying notes.











                                        5

<PAGE>



                                TUMBLEWEED, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 March 23, 2003


1.  BASIS OF PRESENTATION

Restaurant Facilities

As of March 23, 2003,  the Company  owned,  franchised or licensed 57 Tumbleweed
restaurants.  The Company owned and operated 31 restaurants in Kentucky, Indiana
and Ohio.  There were 20 franchised  restaurants  located in Indiana,  Illinois,
Kentucky and Wisconsin and six licensed  restaurants  located outside the United
States in  Germany,  Jordan,  Egypt,  England and Turkey.  The  following  table
reflects  changes  in  the  number  of  Company-owned,  franchise  and  licensed
restaurants during the twelve weeks ended March 23, 2003.


Company-owned restaurants:
     In operation, beginning of period                31
     Restaurants opened                                0
     Restaurants closed                                0
                                                --------
     In operation, end of period                      31

Franchise and licensed restaurants:
     In operation, beginning of period                25
     Restaurants opened                                1
     Restaurants closed                                0
                                                --------
     In operation, end of period                      26
                                                --------
         System Total                                 57
                                                ========

Interim Financial Reporting

The  accompanying  consolidated  financial  statements have been prepared by the
Company without audit,  with the exception of the December 29, 2002 consolidated
balance  sheet  which  was  derived  from  the  audited  consolidated  financial
statements  included in the  Company's  Form 10-K.  The  accompanying  unaudited
consolidated   financial  statements  have  been  prepared  in  accordance  with
accounting  principles  generally  accepted  in the United  States  for  interim
financial  reporting and in accordance  with Rule 10-01 of Regulation S-X. These
consolidated financial statements, note disclosures and other information should
be read in  conjunction  with the  Company's  Annual Report on Form 10-K for the
fiscal year ended December 29, 2002.

In the opinion of  management,  the  unaudited  interim  consolidated  financial
statements  contained in this report  reflect all  adjustments,  consisting of a
change  in  accounting  principle  and  normal  recurring  accruals,  which  are
necessary  for a fair  presentation.  The results of  operations  for the twelve
weeks ended March 23, 2003 are not  necessarily  indicative  of the results that
may be expected for the fiscal year ended December 28, 2003.

Recently Issued Accounting Standards

In April 2002, the FASB issued SFAS No. 145  "Rescission of FASB  Statements No.
4,44, and 64,  Amendment of FASB  Statement No. 13, and Technical  Corrections,"
which is effective for the Company in 2003.  SFAS No. 145 eliminates SFAS No. 4,
which required all gains (losses) from  extinguishment  of debt to be classified
as an  extraordinary  item,  net of related income tax effect,  and thus,  gains
(losses) from extinguishment of debt should be classified as extraordinary items
only if they meet the  criteria  in APB Opinion No. 30. SFAS No. 145 amends SFAS
No. 13 to  eliminate  an  inconsistency  between  the  required  accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions. Additionally, SFAS No. 145 rescinds SFAS No. 44 and 64 because the
statements are no longer  applicable.  Tumbleweed plans to adopt SFAS No. 145 in
2003 which will  result in  reclassifying  its loss on  unamortized  loan costs,
which occured during the fourth quarter of 2002, from an  extraordinary  item to
an operating  item in the  Consolidated  Statement of Operations  for the fiscal
year ended December 29, 2002.

                                        6

<PAGE>



1.  BASIS OF PRESENTATION (continued)

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
With Exit or  Disposal  Activities,"  which is  effective  for exit or  disposal
activities  that are initiated  after December 31, 2002.  SFAS No. 146 nullifies
EITF  Issue  94-3,  "Liability  Recognition  for  Certain  Employee  Termination
Benefits and Other Costs to Exit an Activity  (including  Certain Costs Incurred
in a  Restructuring)."  SFAS  No.  146  requires  that  a  liability  for a cost
associated  with an exit or disposal  activity be  recognized at fair value when
the  liability is incurred.  A commitment  to an exit or disposal plan no longer
will be sufficient  basis for recording a liability  for those  activities.  The
adoption of SFAS No. 146 in the first quarter of 2003 had no immediate impact on
the Company's financial condition or results of operations; however, the Company
may have future exit or disposal activities to which SFAS No. 146 would apply.

In November 2002,  the Emerging  Issues Task Force (EITF) reached a consensus on
Issue No. 02-16,  "Accounting  by a Customer  (Including a Reseller) for Certain
Consideration  Received from a Vendor." EITF Issue No. 02-16 clarified that cash
consideration  received by a customer  from a vendor is a reduction of the price
of the vendor's products or services and therefore, should be characterized as a
reduction of cost of sales when  recognized in the customer's  income  statement
(Issue 1). The EITF Issue No. 02-16 also  clarified that a rebate of a specified
amount of cash consideration  should be accrued and recognized as a reduction of
cost of sales as terms of a binding  arrangement are met by the customer and the
amount of the rebate is reasonably estimable (Issue 2). The consensus on Issue 1
should be applied to fiscal  periods  beginning  after  December 15,  2002.  The
consensus on Issue 2 is effective for  arrangements  entered into after November
21, 2002.  The adoption of EITF Issue No. 02-16 in the first quarter of 2003 had
no impact on the Company's  consolidated  statement of operations as the Company
accounted  for rebates in the manner  prescribed by Issue No. 02-16 prior to the
EITF's consensus on this matter.

Stock-Based Compensation Costs

The  Company  has a  stock-based  compensation  (stock  option)  plan  which  is
described more fully in the Company's  annual report.  The Company  accounts for
the plan using the intrinsic value method of APB Opinion No. 25, "Accounting for
Stock Issued to Employees"  ("APB 25").  Because all options  granted under this
plan had an exercise  price equal to the market value of the  underlying  common
stock on the date of grant, no stock-based compensation cost has been recognized
in the consolidated statements of operations.  Had stock-based compensation cost
for the plan been  determined  using the fair value  recognition  provisions  of
Statement of Financial  Accounting  Standards ("SFAS") No. 123,  "Accounting for
Stock-Based  Compensation," the effect on the Company's  consolidated net income
and  earnings  per share would have been as follows  for the twelve  weeks ended
March 23, 2003 and March 24, 2002:


                                                 2003               2002
                                            ---------------   ----------------
Net income (loss) as reported              $        148,356  $      (1,365,968)
Stock-based compensation cost using fair
   value method, net of related tax effects         149,899            224,369
                                            ---------------   ----------------
Pro forma net loss                         $         (1,543)  $     (1,590,337)
                                            ===============   ================

Earnings (loss) per share:
   Basic and diluted, as reported          $           0.03  $           (0.23)
   Pro forma basic and diluted                         0.00              (0.27)


2. GOODWILL AND INTANGIBLE ASSETS

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 141,  "Business  Combinations," and SFAS No. 142, "Goodwill
and Other  Intangible  Assets."  During the first  quarter of 2002,  the Company
determined  that all  goodwill  as of January 1, 2002  related to two  reporting
units was impaired. The fair value of each unit was determined using appropriate
valuation  techniques.  As a result  of the  transitional  impairment  test,  an
impairment  loss in the amount of  $1,503,773,  net of tax,  was  recorded  as a
cumulative  effect of a change in accounting  principle during the first quarter
of 2002.

During the fourth  quarter of 2002,  the  Company  completed  the annual test of
impairment and determined that there was no impairment of the $174,657  goodwill
acquired  during the purchase of the remaining 50% interest in TW-  Springhurst.
See Note 7 for further discussion of this transaction.

                                        7

<PAGE>



2. GOODWILL AND INTANGIBLE ASSETS (continued)

The Company acquired Tumbleweed International, LLC (see Note 8) during the first
quarter of 2002, which resulted in the acquisition of an intangible asset in the
amount of $1,525,966  and is included in the corporate  segment.  The intangible
asset  consists of  $1,455,966  in  international  licensing  rights,  which are
indefinitely  lived assets not subject to  amortization  under SFAS No. 142, and
$70,000  of  existing  franchise  contracts,  which are  definite  lived  assets
amortized  over the 45 year contract  period.  During the first quarter of 2003,
the Company recorded  amortization  expense totaling $359 for the definite lived
intangible.  The  amortization  expense  for each of the next  five  years  will
approximate $1,555 per year.

3.   ACCRUED LIABILITIES

Accrued liabilities consist of:
<TABLE>
<CAPTION>


                                                                 March 23,         December 29,
                                                                   2003                2002
                                                              ---------------     --------------

<S>                                                          <C>                 <C>
Accrued payroll, severance and related taxes                 $      1,105,256    $       979,082
Accrued insurance and fees                                            168,350            178,117
Accrued taxes, other than payroll                                     843,673            609,900
Gift card and certificate liability                                   307,293            524,870
Reserve for loss on guarantees of indebtedness                         64,393             74,573
Reserve for store closing costs                                       269,758            290,990
Other                                                                 323,347            293,492
                                                              ---------------     --------------
                                                             $      3,082,070    $     2,951,024
                                                              ===============     ==============
</TABLE>

4.   LONG-TERM DEBT

Long-term debt consists of:
<TABLE>
<CAPTION>


                                                                 March 23,         December 29,
                                                                   2003                2002
                                                              ---------------     ---------------
<S>                                                          <C>                 <C>
Secured mortgage payable, bearing interest at LIBOR plus
4.20% (5.54% at March 23, 2003), payable in monthly
installments through January 1, 2018                         $      7,322,826    $              -

Secured mortgage payable, bearing interest at 8.52%,
payable in monthly installments through January 1, 2018             7,079,871

Secured mortgage payable, bearing interest at 8.32%,
payable in monthly installments through January 1, 2013             1,730,524                   -


Secured mortgage payable, bearing interest at LIBOR plus
4.20% (5.54% at March 23, 2003), payable in monthly
installments through January 1, 2013                                1,727,535                   -

Secured  $5,960,000  mortgage revolving line of credit note,
bearing interest at prime rate plus .25%, due December 31,
2003                                                                        -           5,801,148


Secured mortgage note payable, bearing interest at
commercial paper rate plus 2.65%, due April 1, 2003                         -           2,130,342

                                      (Continued next page)


</TABLE>


                                        8

<PAGE>



4.  LONG-TERM DEBT (continued)
<TABLE>
<CAPTION>


                                                                 March 23,         December 29,
                                                                   2003                2002
                                                              ---------------     ---------------
<S>                                                          <C>                 <C>
Secured  mortgage  payable,   bearing  interest  at  7.5%,
payable in monthly installments through January 22, 2007
with a lump sum payment due February 22, 2002                $              -    $      1,395,253

Secured mortgage note payable, bearing interest at prime
rate plus 1%, payable in monthly installments through
October 1, 2017                                                             -             972,916

Secured mortgage note payable, bearing interest at 8.75%,
payable in monthly installments through February 15, 2008                   -             838,428


Secured $875,000 mortgage revolving line of credit note,
bearing interest at prime rate plus 2.0%, due April 1, 2003                 -             874,868

Secured  mortgage  note  payable,  bearing  interest at prime
rate,  payable in monthly installments through March 1,
2006                                                                        -             570,604

Secured  mortgage  note  payable,  bearing  interest  at prime
rate plus  1.25%, payable in monthly installments through
November 27, 2016                                                           -             521,875

Secured mortgage note payable, bearing interest at 10.52%,
payable in monthly installments through August 18, 2005                     -             319,373

Unsecured note payable bearing interest at 7.5%, due
February 22, 2007                                                           -             282,113

Other installment notes payable                                             -             288,733
                                                              ---------------     ---------------

                                                                   17,860,756          13,995,623
Less current maturities                                               820,612             744,540
                                                              ---------------     ---------------
Long-term debt                                               $     17,040,144    $     13,251,083
                                                              ===============     ===============
</TABLE>

Based on the borrowing  rates  currently  available to the Company for mortgages
with  similar  terms and  average  maturities,  the fair value of long term debt
approximates carrying value.

On December 31, 2002, the Company  completed an $18.0 million  financing package
with  GE  Capital   Franchise   Finance   Corporation.   The  financing  package
consolidated all of the Company's  outstanding debt and equipment capital leases
and provided approximately $2.9 million for the remodel and expansion of Company
restaurants.  The debt bears  interest at both fixed rates ranging from 8.32% to
8.52%  ($8,872,000)  and a variable rate of LIBOR plus 4.20%  ($9,128,000)  with
terms of 10 to 15 years.  The debt is secured by fifteen  fee simple  properties
and  substantially  all of the  equipment  owned by the Company  with a net book
value of  approximately  $22,500,000  at  March  23,  2003.  The  Company  is in
compliance with various  financial  covenants at the end of the first quarter of
2003 and,  management  expects to be in  compliance  with the various  financial
covenants throughout 2003.












                                        9

<PAGE>



5.  EARNINGS PER SHARE

The following is a  reconciliation  of the Company's basic and diluted  earnings
(loss) per share data for the twelve  weeks  ended  March 23, 2003 and March 24,
2002 in accordance with FAS 128, "Earnings per Share."
<TABLE>
<CAPTION>


                                                                        Twelve Weeks        Twelve Weeks
                                                                           Ended                Ended
                                                                         March 23,            March 24,
                                                                            2003                2002
                                                                      ----------------    -----------------
Numerator:
<S>                                                                  <C>                 <C>
    Income before cumulative effect of a change in accounting
      principle                                                      $         148,356   $          137,805
    Cumulative effect of a change in accounting principle, net of tax                -           (1,503,773)
                                                                      ----------------    -----------------
    Net income (loss)                                                $         148,356   $       (1,365,968)
                                                                      ================    =================

Denominator:
   Weighted average shares
      outstanding - basic                                                    5,916,153            5,916,153
   Effect of dilutive securities:
      Director and employee stock options                                        9,000                3,463
                                                                      ----------------    -----------------
   Denominator for diluted earnings per share -
      adjusted weighted average and assumed conversions                      5,925,153            5,919,616
                                                                      ================    =================
</TABLE>


6.   SEGMENT INFORMATION

The  Company  has  three  reportable  segments:   restaurants,   commissary  and
corporate.   The   restaurant   segment   consists  of  the  operations  of  all
Company-owned  restaurants  and  derives  its  revenues  from  the  sale of food
products to the general public. The commissary segment derives its revenues from
the sale of food  products  to  Company-owned  and  franchised  restaurants  and
non-affiliated  restaurant concepts. The corporate segment derives revenues from
sale of franchise  rights,  franchise  royalties  and related  services  used in
restaurant  operations,  and contains the  selling,  general and  administrative
activities of the Company.

Generally,  the Company evaluates  performance and allocates  resources based on
pre-tax  income.  The accounting  policies of the segments are the same as those
described in the summary of  significant  accounting  policies in the  Company's
Annual Report on Form 10-K.

Segment information for the twelve weeks ended March 23, 2003 is as follows:

<TABLE>
<CAPTION>

                                                       Restaurant       Commissary        Corporate         Totals
                                                      -------------    ------------     -------------    -------------
Revenues from external
<S>                                                 <C>              <C>               <C>              <C>
   customers                                        $    12,645,330  $      508,789    $      399,050   $  13,553,169
Intersegment revenues                                             -         561,946                 -         561,946
General and
   administrative expenses                                        -               -         1,081,988       1,081,988
Advertising expenses                                              -               -           431,181         431,181
Depreciation and amortization                               375,109          22,841            65,916         463,866
Net interest expense                                              -          34,179           286,960         321,139
Income (loss) before income taxes                         1,602,533          67,000        (1,404,615 )       264,918

</TABLE>









                                       10

<PAGE>



6.   SEGMENT INFORMATION (continued)

Segment information for the twelve weeks ended March 24, 2002 is as follows:
<TABLE>

<CAPTION>


                                                       Restaurant       Commissary        Corporate         Totals
                                                      -------------    ------------     -------------    -------------
Revenues from external
<S>                                                 <C>              <C>               <C>              <C>
   customers                                        $    13,463,593  $      381,886    $      339,275   $  14,184,754
Intersegment revenues                                             -         572,829                 -         572,829
General and
   administrative expenses                                        -               -           983,162         983,162
Advertising expenses                                              -               -           453,915         453,915
Depreciation and
   amortization                                             374,613          18,831            63,875         457,319
Net interest expense                                              -          35,292           198,786         234,078
Income (loss) before income taxes and
 cumulative effect of a change in accounting
 principle                                                1,499,699          13,300        (1,266,918 )       246,081
</TABLE>

7.  INVESTMENT IN TW-SPRINGHURST

During the year ended December 31, 2000, the Company made a $200,000  investment
in  TW-Springhurst,  LLC  ("TW-Springhurst"),   the  owner  and  operator  of  a
Tumbleweed  restaurant in Louisville,  Kentucky.  Through December 31, 2001, the
Company  had a 50%  interest  with  the  remaining  50%  held by  TW-Springhurst
Investors,   LLC.  A  current  and  former   director   of  the  Company   owned
TW-Springhurst  Investors,  LLC. On January 1, 2002,  the Company  acquired  the
remaining  50% interest  held by  TW-Springhurst  Investors  for  $267,000.  The
Company  also assumed  TW-Springhurst,  LLC's note payable to a bank which had a
balance  of  approximately  $161,000  on the date of  purchase.  An  independent
business   valuation   appraisal  was  used  to  assist  Company  management  in
determining the purchase price.

The purchase price has been allocated as follows:


Assets and liabilities acquired:
  Inventory                         $       55,674
  Property and equipment                   317,601
  Deposits                                   1,200
  Other                                      5,677
  Note payable                           (161,394)
                                     -------------
                                           218,758
Investment in TW-Springhurst             (126,415)
Goodwill                                   174,657
                                     -------------
                                    $      267,000
                                     =============

8.  ACQUISITION OF INTERNATIONAL

On January 1, 2002, the Company  purchased the ownership  interest in Tumbleweed
International,  LLC  ("International")  for $1.5 million  from  TW-International
Investors,  Inc. and Chi-Chi's  International  Operations,  Inc. ("CCIO").  CCIO
owned 40% of  International.  The President and Chief  Executive  Officer of the
Company is the sole shareholder of CCIO. Members of TW-International  Investors,
Inc. include three current  directors of the Company.  The acquisition gives the
Company  direct  control  and  benefit  of the  international  licensing  of the
Tumbleweed concept.  In connection with the acquisition,  the Company assumed an
existing $1.4 million bank loan of TW- International Investors,  Inc. and issued
76,923  shares of its  common  stock to CCIO.  The  Company  has  enterd  into a
commission  agreement  with CCIO in  connection  with the sale of  international
regional licenses by International.







                                       11

<PAGE>



8.  ACQUISITION OF INTERNATIONAL (continued)

The  transaction  was  accounted  for as a purchase and the  purchase  price was
allocated  to the  intangible  assets  acquired - the  Tumbleweed  international
licensing  rights  and  existing  franchise  contracts.  The  allocation  of the
purchase price is summarized as follows.


Note payable                        $    1,425,968
Common stock                                   769
Paid-in capital                             99,229
                                     -------------
                                    $    1,525,966
                                     =============
Intangible assets:
   Tumbleweed licensing rights      $    1,455,966
   Contracts in place                       70,000
                                     -------------
                                    $    1,525,966
                                     =============

9.  INCOME TAXES

Income taxes on the Company's  income before income taxes and cumulative  effect
of a change in  accounting  principle  for the twelve weeks ended March 23, 2003
and March 24, 2002 have been provided for at an estimated  effective tax rate of
44%. The effective  tax rate differs from the statutory  federal tax rate of 34%
due  substantially  to the impact of  employment  tax credits  and state  income
taxes.

10.  INVOLUNTARY CONVERSION OF NON-MONETARY ASSETS

As a result of a fire July 11, 2002 at a  Company-owned  restaurant  in Ohio, an
involuntary  conversion of a non-  monetary  asset  occurred.  During the twelve
weeks ended March 23, 2003, the Company recorded as other revenues approximately
$30,000  of  business  interruption  income  which  will  be  reimbursed  by the
Company's insurance.

11.  CONTINGENCIES

The Company  guaranteed  certain  equipment leases with a bank for TW-Tennessee,
LLC, a former franchisee (TW- Tennessee) of the Company in which the Company and
David M. Roth, a Director of the Company, were formerly members. The Company has
agreed to assume  and pay one of the  equipment  leases  totaling  approximately
$125,000  and remains  contingently  liable on two other  equipment  leases that
currently have a remaining  balance of  approximately  $35,000 which the Company
believes will be assumed and paid by other guarantors.  In the fourth quarter of
2001, the Company reserved  $125,000 to cover its portion of the equipment lease
it assumed.  As of March 23, 2003, the reserve balance is approximately  $64,000
which  management   believes  is  sufficient  to  satisfy  the  remaining  lease
obligation.  The  Company's  management  believes it will not incur  significant
additional losses in connection with this matter.

On December  16,  2002,  the  Company  filed a Complaint  in  Jefferson  County,
Kentucky  Circuit  Court  against  American  Federal,  Inc.  ("AFI")  seeking  a
declaratory  judgment  that the Company has no  contractual  obligation to pay a
commission to AFI, in  connection  with a  Conditional  Commitment  entered into
between   AFI  and  the   Company   and  is  seeking   damages   for  fraud  and
misrepresentation  when AFI provided a commitment for a $20.1 million  financing
which the Company  believes AFI never intended to fund as they had  represented,
but instead acted as a broker. In response,  AFI filed suit in the United States
District  Court for the  Eastern  District  of  Missouri  seeking  payment  of a
commitment fee plus additional charges, fees and costs aggregating approximately
$500,000 relating to the Conditional  Commitment,  as well as damages for breach
of contract,  unjust enrichment and  misrepresentation/fraud.  This matter is in
the early  discovery  stage.  Management  believes that AFI's claims are without
merit,  but it is too early to  predict  an  outcome.  The  Company  intends  to
vigorously  defend itself in connection with this matter.  As of March 23, 2003,
the Company has not made an accrual in the accompanying  consolidated  financial
statements for a potential liability in connection with this matter.

We are also subject to claims and legal  actions in the  ordinary  course of our
business.  Certain of these claims and actions may involve related  parties.  We
believe  that all such  claims  and  actions  are either  adequately  covered by
insurance  or would not have a  material  adverse  effect on us if  decided in a
manner unfavorable to us.



                                       12

<PAGE>



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

GENERAL

We make various  forward-looking  statements about our business in the following
discussion.  When making these forward-looking  statements, we use words such as
expects,  believes,  estimates,  anticipates,  plans and similar  expressions to
identify them. We also identify  important  cautionary  factors that could cause
our  actual  results  to  differ   materially   from  those   projected  in  the
forward-looking  statements  we make.  Factors  that  realistically  could cause
results  to  differ  materially  from  those  projected  in the  forward-looking
statements  include the availability and cost of financing and other events that
affect  our  restaurant  expansion  program,  changes  in food and other  costs,
changes in national, regional or local economic conditions,  changes in consumer
tastes,  competitive  factors  such as changes in the  number  and  location  of
competing  restaurants,  the  availability of experienced  management and hourly
employees, and other factors set forth below.

As  of  March  23,  2003,  we  owned,   franchised  or  licensed  57  Tumbleweed
restaurants.  The Company owned and operated 31 restaurants in Kentucky, Indiana
and Ohio. There were 20 franchised  restaurants in Indiana,  Illinois,  Kentucky
and Wisconsin and six licensed  restaurants located outside the United States in
Germany, Jordan, Egypt, England and Turkey.

During  the  first  quarter  of 2002,  the  Company  closed  four  Company-owned
restaurant  locations.  The  restaurants  were located in Cincinnati,  Ohio (2),
Columbus,  Ohio (1), and Evansville,  Indiana (1). The restaurant  closings were
part  of a  strategic  management  decision  to  eliminate  lower  sales  volume
restaurants  that were  unprofitable  in 2001 and to focus its  energies  on the
continued  improvement of per-store  average sales volumes.  On January 1, 2002,
the Company  purchased from its joint venture partner the remaining 50% interest
in a restaurant  location.  See Note 7 to the consolidated  financial statements
for a further discussion of this transaction.

During  the second  quarter  of 2002,  the  Company  sold one of its  restaurant
locations to a  franchisee.  This was in accordance  with the Company's  plan it
established  in the fourth  quarter of 2001.  In connection  with the plan,  the
Company  had  taken a charge  to  earnings  in  accordance  with  SFAS No.  121,
"Impairment  of  Long-Lived  Assets." The personal  property had no value on the
books of the Company as a result of this special charge.  The franchisee assumed
the building lease and purchased the inventory for $11,000.

The  following  section  should  be  read  in  conjunction  with  our  financial
statements and the related notes included elsewhere in this filing.
























                                       13

<PAGE>



RESULTS OF OPERATIONS

The table  below sets forth the  percentage  relationship  to total  revenues of
certain income statement data, except where noted, for the periods indicated.


                                                  Twelve Weeks    Twelve Weeks
                                                    Ended            Ended
                                                  March 23,        March 24,
                                                     2003            2002
                                                --------------   -------------
Revenues:
   Restaurant sales                                       93.3%           94.9%
   Commissary sales                                        3.8             2.7
   Franchise fees and royalties                            2.1             1.8
   Other revenues                                          0.8             0.6
                                                --------------   -------------
     Total revenues                                      100.0           100.0
Operating expenses:
   Restaurant cost of sales (1)                           29.1            30.2
   Commissary cost of sales (2)                           86.8            90.8
   Operating expenses (1)                                 54.3            54.9
   Selling, general and administrative expenses           11.2            10.1
   Depreciation and amortization                           3.4             3.2
                                                --------------   -------------
     Total operating expenses                             95.7            96.6
                                                --------------   -------------
     Income from operations                                4.3             3.4
Interest expense, net                                     (2.4)           (1.7)
                                                --------------   -------------
Income before income taxes and cumulative
    effect of a change in accounting principle             1.9             1.7
Provision for income taxes - current
   and deferred                                            0.8             0.7
                                                --------------   -------------
Income before cumulative effect of a
   change in accounting principle                          1.1             1.0
Cumulative effect of a change in accounting
   principle, net of tax                                     -           (10.6)
                                                --------------   -------------
Net income (loss)                                          1.1 %          (9.6)%
                                                ==============   =============
  (1)   As percentage of restaurant sales.
  (2)   As percentage of commissary sales.

COMPARISON OF THE FIRST QUARTER OF 2003 AND 2002

Total  revenues  decreased  by  $631,585  or 4.5% for the first  quarter of 2003
compared to the same period in 2002 primarily as a result of the following:

   Restaurant  sales decreased by $818,263 or 6.1% for the first quarter of 2003
   compared to the same period in 2002.  The  decrease  in  restaurant  sales is
   primarily a result of the closing of four  Company-owned  restaurants  during
   the  first  quarter  of 2002,  the  temporary  closing  of one  Company-owned
   restaurant  in  July  2002  as  a  result  of  a  fire  (restaurant  reopened
   mid-February  2003),  and  the  sale  of one  Company-owned  restaurant  to a
   franchisee  during the second  quarter of 2002.  The  decrease in  restaurant
   sales can also be  attributed  to a 1.7% decrease in same store sales for the
   first quarter.

   Commissary  sales to franchised and licensed  restaurants and  non-affiliated
   restaurant  concepts  increased by $126,903 or 33.3% for the first quarter of
   2003 compared to the same period in 2002. The increase in commissary sales is
   primarily  a result  of an  increase  in sales to  non-affiliated  restaurant
   concepts.

   Franchise  fees and  royalties  increased  by  $34,999 or 14.0% for the first
   quarter  of 2003  compared  to the  same  period  in 2002.  Franchise  income
   increased  $35,000  primarily as a result of having one franchise  restaurant
   opening in the first  quarter of 2003  compared  to no  franchise  restaurant
   openings during the first quarter of 2002.  Royalty income remained fairly in
   constant in the first quarter of 2003 compared to the same period in 2002.

                                       14

<PAGE>



   Other  revenues  increased by $24,776 or 27.7% for the first  quarter of 2003
   compared to the same period in 2002 primarily due to approximately $30,000 of
   insurance  proceeds (business  interruption  income) as a result of a fire in
   July 2002 at a Company-owned  restaurant.  There was no similar income in the
   first quarter of 2002.

Restaurant  cost of sales decreased by $391,870 or 9.6% for the first quarter of
2003  compared to the same period in 2002.  The decrease in  restaurant  cost of
sales is  primarily  a result of the closing of four  Company-owned  restaurants
during the first  quarter of 2002,  the temporary  closing of one  Company-owned
restaurant in July 2002 as a result of a fire (restaurant reopened  mid-February
2003), and the sale of one  Company-owned  restaurant to a franchisee during the
second quarter of 2002.  Restaurant  cost of sales  decreased as a percentage of
sales by 1.1% to 29.1% for the first  quarter of 2003  compared to 30.2%  during
the same period in 2002.  The 1.1%  decrease in cost of sales as a percentage of
restaurant sales is primarily the result of improved operating  efficiencies and
lower product costs at the restaurant  level combined with a 2.0% price increase
in mid-February 2003.

Commissary  cost of sales  increased  $94,854 or 27.3% for the first  quarter of
2003  compared to the same period in 2002.  The increase in  commissary  cost of
sales is due  primarily to the increase in sales.  As a percentage to commissary
sales,  commissary  cost of sales  decreased  4.0% for the first quarter of 2003
compared  to the same  period  in 2002 as a result  of an  increase  in sales to
non-affiliated restaurant concepts.

Restaurant  operating  expenses  decreased  by  $523,106  or 7.1% for the  first
quarter of 2003  compared to the same period in 2002.  The decrease in operating
expenses is primarily a result of the closing of four Company-owned  restaurants
during the first  quarter of 2002,  the temporary  closing of one  Company-owned
restaurant in July 2002 as a result of a fire (restaurant reopened  mid-February
2003), and the sale of one  Company-owned  restaurant to a franchisee during the
second  quarter  of  2002.  Operating  expenses  decreased  as a  percentage  of
restaurant  sales by 0.6% to 54.3% for the first  quarter of 2003 from 54.9% for
the same period in 2002  primarily as a result of  decreased  hourly labor costs
and  administrative  costs  and  as  a  result  of  a  2.0%  price  increase  in
mid-February 2003.

Selling,  general and  administrative  expenses increased by $76,092 or 5.3% for
the first quarter of 2003  compared to the same period in 2002.  The increase in
selling,  general and administrative  expenses is primarily a result of training
costs  incurred  as a result  of a  franchise  restaurant  opening  in the first
quarter of 2003 (no similar  expense  incurred in the first quarter of 2002) and
increased  management  development  costs for  Company-owned  restaurants.  As a
percentage to total revenues,  selling, general and administrative expenses were
11.2% and 10.1% for the first quarter of 2003 and 2002, respectively.

Depreciation  and  amortization  expense  increased $6,547 or 1.4% for the first
quarter of 2003  compared  to the same period in 2002  primarily  as a result of
capital improvements made to existing Company-owned restaurants during 2002.

Net interest  expense  increased  $87,061 or 37.2% for the first quarter of 2003
compared to the same period in 2002.  The increase in net  interest  expense for
the first  quarter is  primarily a result of the  approximately  $3.2 million of
additional  debt the Company  incurred in connection  with the debt  refinancing
which was  completed  December 31, 2002.  See below for a further  discussion of
this transaction.

Income taxes on the Company's  income before income taxes and cumulative  effect
of a change in accounting  principle for the first quarter of 2003 and 2002 have
been  provided for at an estimated  effective tax rate of 44%. The effective tax
rate  differs  from the  statutory  federal  tax rate of 34% as a result  of the
impact of employment tax credits and state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

On December 31, 2002, the Company  completed an $18.0 million  financing package
with GE Capital  Franchise  Finance  Corporation (GE). The loan was divided into
two real  estate  loans  totaling  $14.5  million  secured by fifteen fee simple
properties,  one loan ($7,122,000) bearing interest at a fixed rate of 8.52% for
15 years and the other  ($7,378,000) at a variable rate of LIBOR plus 4.20% over
15 years.  The Company also entered into two equipment loan agreements  totaling
$3.5 million  secured by  substantially  all the  equipment of the Company.  One
equipment  loan  ($1,750,000)  bears  interest  at a fixed rate of 8.32% over 10
years while the other equipment loan  ($1,750,000)  has a variable rate of LIBOR
plus  4.20%  over  10  years.  The  financing  package  consolidates  all of the
Company's  outstanding  debt and  provides  approximately  $1.7  million for the
remodel,  modernization  and / or upgrade  to the  properties  described  in the
renovation  agreements  signed  with GE. The  Company has until June 30, 2004 to
complete

                                       15

<PAGE>



the  renovations,  unless  the  Company  obtains  GE's  written  consent  for an
extension of such date.  Additionally,  the financing  package provides for $1.2
million  to be used for  expansion  of  Company  restaurants.  The loan  imposes
restrictions on the Company with respect to the maintenance of certain financial
covenants,  the  incurrence  of  indebtedness,  the sale of assets  and  capital
expenditures.  The Company is required to maintain  two  separate  Fixed  Charge
Coverage Ratios.  One is a Corporate Fixed Charge Coverage Ratio of 1.25:1 based
on results of the entire  company  and the second,  an  aggregate  Fixed  Charge
Coverage Ratio of at least 1.25:1 on the properties  used as collateral on these
loans.  Both ratios are  determined  as of the last day of each fiscal year with
respect to the twelve-  month period of time  immediately  preceding the date of
determination.  The Company must also maintain a Funded Debt to EBITDA ratio not
to exceed 5.5 to 1.0,  determined as of the last day of each fiscal  quarter for
the  twelve-   month  period  of  time   immediately   preceding   the  date  of
determination.  With the exception of new store  development,  the Company shall
not incur debt in excess of $500,000 per year without prior  written  consent of
GE. The Company is in compliance with various financial  covenants at the end of
the first quarter of 2003 and,  management  expects to be in compliance with the
financial covenants throughout 2003.

Our capital needs during the first quarter of 2003 arose from the reconstruction
of a  restaurant  facility  which  was  damaged  by fire in  July  2001  and the
maintenance and improvement of existing restaurant facilities. Our capital needs
during the first quarter of 2002 arose from the  maintenance  and improvement of
existing restaurant facilities. The source of capital to fund the reconstruction
was primarily  insurance proceeds received in 2002 and 2003. The maintenance and
improvement expenditures were funded by internally generated cash flow. The 2003
maintenance and improvement  expenditures were also partially funded by the $1.7
million generated from the debt refinancing, as discussed above.

The table below provides certain  information  regarding our sources and uses of
cash for the periods presented.


                                            Twelve Weeks        Twelve Weeks
                                               Ended                Ended
                                             March 23,            March 24,
                                                2003                2002
                                          ----------------    -----------------
Net cash provided by operations          $         672,941   $          512,122
Purchases of property and equipment               (701,923)             (72,202)
Business acquisition                                     -             (267,000)
Net borrowings (payments) on long-term
   debt and capital lease obligations            3,219,887             (212,360)

The Company's  largest use of funds during the first quarter of 2003 was for the
reconstruction  of a restaurant  facility which was damaged by fire in July 2002
(restaurant  reopened in mid-February  2003), for payments of long-term debt and
for the  maintenance  and  improvement of existing  restaurant  facilities.  The
Company's  largest source of funds during the first quarter of 2003 was proceeds
from  the debt  refinancing,  cash  reserves,  cash  flow  from  operations  and
insurance  proceeds for the property and  equipment  which was destroyed in July
2002.  The  Company's  largest use of funds during the first quarter of 2002 was
for the payment of  long-term  debt and capital  lease  obligations  and for the
acquisition  of the  remaining  50% interest in  TW-Springhurst.  The  Company's
largest  source of funds during the first  quarter of 2002 was proceeds from the
Company's two mortgage  revolving lines of credit and cash flow from operations.
Sales  are  predominantly  for  cash  and the  business  does  not  require  the
maintenance of significant receivables or inventories. In addition, it is common
within the restaurant  industry to receive trade credit on the purchase of food,
beverage and supplies, thereby reducing the need for incremental working capital
to support sales increases.

We both own and lease our restaurant  facilities.  Management determines whether
to  acquire  or  lease a  restaurant  facility  based on its  evaluation  of the
financing alternatives available for a particular site.

In the next 12 months,  the Company  expects to construct one to two  additional
restaurant  facilities.  Our  ability to expand our number of  restaurants  will
depend on a number of factors,  including  the  selection  and  availability  of
quality restaurant sites, the negotiation of acceptable lease or purchase terms,
the  securing  of required  governmental  permits and  approvals,  the  adequate
supervision  of  construction,  the hiring,  training  and  retaining of skilled
management and other personnel, the availability of adequate financing and other
factors,  many of which are beyond our  control.  The  hiring and  retention  of
management and other personnel may be difficult given the low unemployment rates
in the

                                       16

<PAGE>



areas in which we intend to operate.  There can be no assurance  that we will be
successful in opening the number of restaurants  anticipated in a timely manner.
Furthermore,  there can be no assurance that our new  restaurants  will generate
sales  revenue  or  profit  margins   consistent  with  those  of  our  existing
restaurants, or that these new restaurants will be operated profitably.

In the next 12 months,  the Company expects the demand on future liquidity to be
principally from the ongoing  maintenance and improvement of existing restaurant
facilities  and  from  the  construction  of one to  two  additional  restaurant
facilities.  As of March 23, 2003, the Company had no material  commitments  for
the  construction  of new  restaurants,  maintenance  or improvement of existing
restaurant facilities.  In addition to the $1.2 million reserve established as a
result of the GE financing  package,  we will utilize  mortgage,  sale/leaseback
and/or landlord  financing,  as well as equipment  leasing and financing,  for a
portion of the  development  costs of restaurants we plan to open in the next 12
months.  The remaining  costs will be funded by available cash reserves and cash
provided from operations. Management believes such sources will be sufficient to
fund our  expansion  plans the next 12  months.  Should  our  actual  results of
operations fall short of, or our rate of expansion  significantly  exceed plans,
or should our costs of capital expenditures exceed expectations,  we may need to
seek additional  financing in the future.  In negotiating such financing,  there
can be no assurance  that we will be able to raise  additional  capital on terms
satisfactory to us.

The Company  guaranteed  certain  equipment leases with a bank for TW-Tennessee,
LLC, a former franchisee (TW- Tennessee) of the Company in which the Company and
David M. Roth, a Director of the Company, were formerly members. The Company has
agreed to assume  and pay one of the  equipment  leases  totaling  approximately
$125,000  and remains  contingently  liable on two other  equipment  leases that
currently have a remaining  balance of  approximately  $35,000 which the Company
believes will be assumed and paid by other guarantors.  In the fourth quarter of
2001, the Company reserved  $125,000 to cover its portion of the equipment lease
it assumed.  As of March 23, 2003, the reserve balance is approximately  $64,000
which  management   believes  is  sufficient  to  satisfy  the  remaining  lease
obligation.  The  Company's  management  believes it will not incur  significant
additional losses in connection with this matter.

On December  16,  2002,  the  Company  filed a Complaint  in  Jefferson  County,
Kentucky  Circuit  Court  against  American  Federal,  Inc.  ("AFI")  seeking  a
declaratory  judgment  that the Company has no  contractual  obligation to pay a
commission to AFI, in  connection  with a  Conditional  Commitment  entered into
between   AFI  and  the   Company   and  is  seeking   damages   for  fraud  and
misrepresentation  when AFI provided a commitment for a $20.1 million  financing
which the Company  believes AFI never intended to fund as they had  represented,
but instead acted as a broker. In response,  AFI filed suit in the United States
District  Court for the  Eastern  District  of  Missouri  seeking  payment  of a
commitment fee plus additional charges, fees and costs aggregating approximately
$500,000 relating to the Conditional  Commitment,  as well as damages for breach
of contract,  unjust enrichment and  misrepresentation/fraud.  This matter is in
the early  discovery  stage.  Management  believes that AFI's claims are without
merit,  but it is too early to  predict  an  outcome.  The  Company  intends  to
vigorously  defend itself in connection with this matter.  As of March 23, 2003,
the Company has not made an accrual in the accompanying  consolidated  financial
statements for a potential liability in connection with this matter.

We are also subject to claims and legal  actions in the  ordinary  course of our
business.  Certain of these claims and actions may involve related  parties.  We
believe  that all such  claims  and  actions  are either  adequately  covered by
insurance  or would not have a  material  adverse  effect on us if  decided in a
manner unfavorable to us.

IMPACT OF INFLATION

The  impact  of  inflation  on the  cost of  food,  labor,  equipment,  land and
construction costs could harm our operations. The Company pays a majority of its
employees  hourly rates  related to federal and state  minimum  wage laws.  As a
result of increased competition and the low unemployment rates in the markets in
which the  Company's  restaurants  are  located,  the Company has  continued  to
increase wages and benefits in order to attract and retain management  personnel
and hourly  workers.  In  addition,  most of the  Company's  leases  require the
Company to pay taxes,  insurance,  maintenance,  repairs and utility costs,  and
these costs are subject to  inflationary  pressures.  Most of the leases provide
for  increases in rent based on  increases in the consumer  price index when the
leases are  renewed.  The Company may attempt to offset the effect of  inflation
through periodic menu price increases, economies of scale in purchasing and cost
controls and efficiencies at existing restaurants.





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ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company  does not enter into  derivative  transactions  or  speculate on the
future direction of interest rates.  The Company's  primary market risk exposure
with  regards  to  financial  instruments  is  changes in  interest  rates.  The
Company's  debt bears  interest at both fixed and variable  rates.  On March 23,
2002, a hypothetical  100 basis point increase in interest rates would result in
an  approximately  $480,000  decrease  in fair value of debt and would  increase
interest expense on the variable rate mortgages by approximately $90,000.

ITEM 4.  CONTROLS AND PROCEDURES

Within 90 days prior to the date of the  filing of this  report,  the  Company's
Chief Executive  Officer and Chief Financial  Officer conducted an evaluation of
the effectiveness, design and operation of the Company's disclosure controls and
procedures as defined in Exchange Act Rule 13a-14.  Based upon that  evaluation,
such officers  concluded that the Company's  disclosure  controls and procedures
are effective to ensure that  information  required to be disclosed is recorded,
processed,  summarized,  and  reported  in a timely  manner.  There have been no
significant  changes in the Company's internal controls or in other factors that
could  significantly  effect  these  controls  subsequent  to  the  date  of the
evaluation referred to above.

PART II.    OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

The Company  guaranteed  certain  equipment leases with a bank for TW-Tennessee,
LLC, a former franchisee (TW- Tennessee) of the Company in which the Company and
David M. Roth, a Director of the Company, were formerly members. The Company has
agreed to assume  and pay one of the  equipment  leases  totaling  approximately
$125,000  and remains  contingently  liable on two other  equipment  leases that
currently have a remaining  balance of  approximately  $35,000 which the Company
believes will be assumed and paid by other guarantors.  In the fourth quarter of
2001, the Company reserved  $125,000 to cover its portion of the equipment lease
it assumed.  As of March 23, 2003, the reserve balance is approximately  $64,000
which  management   believes  is  sufficient  to  satisfy  the  remaining  lease
obligation.  The  Company's  management  believes it will not incur  significant
additional losses in connection with this matter.

On December  16,  2002,  the  Company  filed a Complaint  in  Jefferson  County,
Kentucky  Circuit  Court  against  American  Federal,  Inc.  ("AFI")  seeking  a
declaratory  judgment  that the Company has no  contractual  obligation to pay a
commission to AFI, in  connection  with a  Conditional  Commitment  entered into
between   AFI  and  the   Company   and  is  seeking   damages   for  fraud  and
misrepresentation  when AFI provided a commitment for a $20.1 million  financing
which the Company  believes AFI never intended to fund as they had  represented,
but instead acted as a broker. In response,  AFI filed suit in the United States
District  Court for the  Eastern  District  of  Missouri  seeking  payment  of a
$405,000  commitment  fee plus  additional  charges,  fees and  costs all in the
excess of $500,000  relating to the Conditional  Commitment,  as well as damages
for breach of contract,  unjust  enrichment  and  misrepresentation/fraud.  This
matter is in the early discovery  stage.  Management  believes that AFI's claims
are  without  merit,  but it is too early to predict  an  outcome.  The  Company
intends to vigorously  defend itself in connection with this matter. As of March
23, 2003, the Company has not made an accrual in the  accompanying  consolidated
financial statements for a potential liability in connection with this matter.

We are also subject to claims and legal  actions in the  ordinary  course of our
business.  Certain of these claims and actions may involve related  parties.  We
believe  that all such  claims  and  actions  are either  adequately  covered by
insurance  or would not have a  material  adverse  effect on us if  decided in a
manner unfavorable to us.












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ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

(a)       Exhibits  -

         Exhibit 10.1      $7,122,000  Loan  Agreement  dated December 31, 2002
                           and related  amendment between TW Real Estate I, LLC
                           and GE Capital Franchise Finance Corporation
         Exhibit 10.2      $7,378,000  Loan  Agreement  dated December 31, 2002
                           and related amendment between TW Real Estate II, LLC
                           and GE Capital Franchise Finance Corporation
         Exhibit 10.3      $1,750,000 Equipment Loan and Security Agreement
                           dated December 31, 2002 between TW Real Estate I, LLC
                           and GE Capital Franchise Finance Corporation
         Exhibit 10.4      $1,750,000 Equipment Loan and Security Agreement
                           dated December 31, 2002 between TW Real Estate II,
                           LLC and GE Capital Franchise Finance Corporation
         Exhibit 99.1      Certifications pursuant to Section 1350, Chapter
                           63 of  Title  18,  United  States  Code,  as  adopted
                           pursuant to Section 906 of the  Sarbanes-Oxley Act of
                           2002


(b)       Reports on Form 8-K

         Tumbleweed,  Inc. (the  Company)  filed Form 8-K on January 9, 2003 to
         report  under Item 5 that the Company had  completed  an $18.0  million
         financing package with GE Capital Franchise Finance Corporation.

         Items 2, 3, 4 and 5 are not applicable and have been omitted.






































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<PAGE>
                                    Signature

 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 there unto duly authorized.

 Dated:       May 7, 2003                        Tumbleweed, Inc.


                                      By:  /s/   Glennon F. Mattingly
                                                 --------------------
                                               Glennon F. Mattingly
                                               Senior Vice President
                                               Chief Financial Officer


 I, Glennon F. Mattingly, certify that:

 (1)     I have reviewed this quarterly report on Form 10-Q of Tumbleweed, Inc.;
(2)      Based on my  knowledge,  this  quarterly  report  does not  contain any
         untrue  statement of a material  fact or omit to state a material  fact
         necessary to make the  statements  made, in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this quarterly report;
 (3)     Based on my knowledge,  the financial  statements,  and other financial
         information  included in this quarterly  report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this quarterly report;
 (4)     The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:  (a) designed such  disclosure  controls and procedures to ensure
         that material information relating to the
                  registrant,  including its consolidated subsidiaries,  is made
                  known to us by  others  within  those  entities,  particularly
                  during  the  period in which  this  quarterly  report is being
                  prepared;
         (b)      evaluated the  effectiveness  of the  registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing  date of this  quarterly  report  (the  "Evaluation
                  Date"); and
         (c)      presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;
 (5)     The registrant's other certifying  officer and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit committee of registrant's board of directors: (a) all significant
         deficiencies  in the design or  operation  of internal  controls  which
         could adversely affect
                  the  registrant's  ability to record,  process,  summarize and
                  report financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and
         (b)      any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and
 (6)     The registrant's  other certifying officer and I have indicated in this
         quarterly  report  whether there were  significant  changes in internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

 Date:   May 7, 2003                  /s/ Glennon F. Mattingly
                                      ------------------------
                                      Glennon F. Mattingly
                                      Vice President and
                                      Chief Financial Officer

 I, Terrance A. Smith, certify that:

 (1)     I have reviewed this quarterly report on Form 10-Q of Tumbleweed, Inc.;
 (2)     Based on my  knowledge,  this  quarterly  report  does not  contain any
         untrue  statement of a material  fact or omit to state a material  fact
         necessary to make the  statements  made, in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this quarterly report;
 (3)     Based on my knowledge,  the financial  statements,  and other financial
         information  included in this quarterly  report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this quarterly report;
 (4)     The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

                                       20

<PAGE>



         (a)      designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this quarterly report is being prepared:
         (b)      evaluated the  effectiveness  of the  registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing  date of this  quarterly  report  (the  "Evaluation
                  Date"); and
         (c)      presented in this quarterly  report our conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on  our  evaluation  as  of  the  Evaluation   Date;  (5)  The
                  registrant's  other  certifying  officer and I have disclosed,
                  based on our most recent evaluation, to the registrant's
                  auditors and the audit committee of registrant's board of
                  directors:
         (a)      all significant deficiencies in the design or operation of
                  internal controls which could adversely affect
                  the  registrant's  ability to record,  process,  summarize and
                  report financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and
         (b)      any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and
 (6)     The registrant's  other certifying officer and I have indicated in this
         quarterly  report  whether there were  significant  changes in internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

 Date:   May 7, 2003             /s/ Terrance A. Smith
                               ---------------------
                                 Terrance A. Smith
                                 President and Chief
                                 Executive Officer





































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