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 June 15, 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 July 15, 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 twenty-four
     weeks and twelve weeks ended  June 15, 2003 and June 16, 2002           3
  b) Consolidated Balance Sheets as of June 15, 2003 and
     December 29, 2002                                                       4
  c) Consolidated Statements of Cash Flows for the twenty-four
     weeks ended June 15, 2003 and June 16, 2002                             5
  d) Notes to Consolidated Financial Statements                              6

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations                                           14

Item 3. Quantitative and Qualitative Disclosures About Market Risk          20

Item 4. Controls and Procedures                                             20

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                  21
Item 6.  Exhibits and Reports on Form 8-K                                   22

Signature                                                                   23







                                        2

<PAGE>



                                Tumbleweed, Inc.
                      Consolidated Statements of Operations
                                   (Unaudited)


<TABLE>
<CAPTION>



                                                         Twenty-Four                    Twelve Weeks
                                                         Weeks Ended                        Ended
                                                -----------------------------   -----------------------------
                                                   June 15,       June 16,        June 15,        June 16,
                                                     2003           2002            2003            2002
                                                --------------  -------------   -------------   -------------
Revenues:
<S>                                            <C>             <C>             <C>             <C>
   Restaurant sales                            $    25,949,248 $   26,559,567  $   13,303,918  $   13,095,974
   Commissary sales                                  1,051,495        796,479         542,706         414,593
   Franchise fees and royalties                        635,509        541,557         350,662         291,709
   Other revenues                                      210,256        294,890          96,053         205,462
                                                --------------  -------------   -------------   -------------

Total revenues                                      27,846,508     28,192,493      14,293,339      14,007,738

Operating expenses:
   Restaurant cost of sales                          7,557,912      8,055,402       3,877,175       3,982,795
   Commissary cost of sales                            903,375        711,597         461,586         364,662
   Operating expenses                               14,057,820     14,660,313       7,190,269       7,269,656
   Selling, general and administrative
    expenses                                         3,002,759      2,847,591       1,489,590       1,410,514
   Preopening expenses                                  28,865              -          28,865               -
   Depreciation and amortization                       945,897        909,861         482,031         452,542
                                                --------------  -------------   -------------   -------------

Total operating expenses                            26,496,628     27,184,764      13,529,516      13,480,169
                                                --------------  -------------   -------------   -------------

Income from operations                               1,349,880      1,007,729         763,823         527,569

Interest expense, net                                 (630,890)      (464,472)       (309,750)       (230,394)
                                                --------------  -------------   -------------   -------------

Income before income taxes and cumulative
effect of a change in accounting principle             718,990        543,257         454,073         297,175
Provision for income taxes - current and
 deferred                                              316,356        239,036         199,792         130,757
                                                --------------  -------------   -------------   -------------

Income before cumulative effect of a change
  in accounting principle                              402,634        304,221         254,281         166,418
Cumulative effect of a change in accounting
  principle, net of tax ($845,873)                           -     (1,503,773)              -               -
                                                --------------  -------------   -------------   -------------
Net income (loss)                                      402,634     (1,199,552)        254,281         166,418
                                                ==============  =============   =============   =============

Basic and diluted earnings (loss) per share:
    Income before cumulative effect of a
       change in accounting principle          $          0.07 $         0.05  $         0.04  $         0.03
    Cumulative effect of a change in accounting
       principle, net of tax                                 -          (0.25)              -               -
                                                --------------  -------------   -------------   -------------
    Net income (loss)                          $          0.07 $        (0.20) $         0.04  $         0.03
                                                ==============  =============   =============   =============
</TABLE>

See accompanying notes.


                                        3

<PAGE>



                                Tumbleweed, Inc.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                            As of
                                                                           June 15,             As of
                                                                             2003           December 29,
                                                                         (Unaudited)            2002
                                                                        --------------     ---------------
Assets
Current assets:
<S>                                                                    <C>                <C>
   Cash and cash equivalents                                           $     5,550,579    $      1,334,631
   Accounts receivable                                                         772,335             942,241
   Inventories                                                               1,880,258           1,786,207
   Prepaid expenses and other assets                                           650,847             601,751
                                                                        --------------     ---------------
Total current assets                                                         8,854,019           4,664,830
Property and equipment, net                                                 26,777,543          26,699,920
Goodwill                                                                       174,657             174,657
Intangible assets, net                                                       1,523,812           1,524,530
Deferred income taxes                                                          231,688             281,840
Other assets                                                                   878,433             631,365
                                                                        --------------     ---------------
Total assets                                                           $    38,440,152    $     33,977,142
                                                                        ==============     ===============

Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                                    $     2,458,577    $      1,292,871
   Accrued liabilities                                                       2,716,187           2,951,024
   Deferred income taxes                                                       282,375             153,249
   Current maturities on long-term
     debt and capital leases                                                   893,626           1,191,874
                                                                        --------------     ---------------
Total current liabilities                                                    6,350,765           5,589,018

Long-term liabilities:
   Long-term debt, less current maturities                                  16,806,627          13,251,083
   Capital lease obligations, less current maturities                        1,190,768           1,437,683
   Other liabilities                                                            55,000              65,000
                                                                        --------------     ---------------
Total long-term liabilities                                                 18,052,395          14,753,766
                                                                        --------------     ---------------
Total liabilities                                                           24,403,160          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 June 15, 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                                                         (2,161,135)         (2,563,769)
                                                                        --------------     ---------------
     Total stockholders' equity                                             14,036,992          13,634,358
                                                                        --------------     ---------------
Total liabilities and stockholders' equity                             $    38,440,152    $     33,977,142
                                                                        ==============     ===============
</TABLE>

See accompanying notes.






                                        4

<PAGE>


                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                          Twenty-Four         Twenty-Four
                                                                          Weeks Ended         Weeks Ended
                                                                           June 15,             June 16,
                                                                             2003                 2002
                                                                       -----------------    ----------------

Operating activities:
<S>                                                                   <C>                  <C>
   Net income (loss)                                                  $          402,634   $      (1,199,552)
   Adjustments to reconcile net income (loss) to net
       cash provided by operating activities:
        Depreciation and amortization                                            945,897             909,861
        Deferred income taxes                                                    179,278            (442,158)
        Loss on disposition of property and equipment                             58,817              42,107
        Cumulative effect of a change in accounting
            principle                                                                  -           2,349,646
        Changes in operating assets and liabilities:
          Accounts receivable                                                    169,906            (329,673)
          Income tax receivable                                                  104,055            (102,285)
          Inventories                                                            (94,051)              9,729
          Prepaid expenses                                                      (169,809)             49,350
          Other assets                                                          (255,569)           (143,624)
          Accounts payable                                                     1,165,706             317,739
          Accrued liabilities                                                   (234,837)           (590,672)
          Other liabilities                                                      (10,000)            (55,000)
                                                                       -----------------    ----------------
Net cash provided by operating activities                                      2,262,027             815,468

Investing activities:
    Purchases of property and equipment                                       (1,056,461)           (350,537)
   Business acquisition                                                                -            (150,000)
                                                                       -----------------    ----------------
Net cash used in investing activities                                         (1,056,461)           (500,537)

Financing activities:
   Proceeds from issuance of long-term debt                                   18,000,000             920,000
   Payments on long-term debt and capital lease obligations                  (14,989,618)         (1,660,345)
                                                                       -----------------    ----------------
Net cash provided by (used in) financing activities                            3,010,382            (740,345)
                                                                       -----------------    ----------------

Net increase (decrease) in cash and cash equivalents                           4,215,948            (425,414)

Cash and cash equivalents at beginning of period                               1,334,631             757,266
                                                                       -----------------    ----------------
Cash and cash equivalents at end of period                            $        5,550,579   $         331,852
                                                                       =================    ================

</TABLE>

See accompanying notes.








                                        5

<PAGE>




                                TUMBLEWEED, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                  June 15, 2003


1.  BASIS OF PRESENTATION

Restaurant Facilities

As of June 15, 2003,  the Company  owned,  franchised  or licensed 57 Tumbleweed
restaurants.  The Company owned and operated 31 restaurants in Kentucky, Indiana
and Ohio.  There were 21 franchised  restaurants  located in Indiana,  Illinois,
Kentucky and Wisconsin and five 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 twenty-four weeks ended June 15, 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                                2
     Restaurants closed                               (1)
                                                --------
     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 twenty-four
weeks and twelve weeks ended June 15, 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.


                                        6

<PAGE>



1.  BASIS OF PRESENTATION (continued)

145 rescinds SFAS No. 44 and 64 because the statements are no longer applicable.
Tumbleweed  will 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.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable Interest Entities,  an interpretation of ARB No. 51" ("FIN 46"). FIN 46
addresses the consolidation of entities whose equity holders have either (a) not
provided  sufficient  equity at risk to allow  the  entity  to  finance  its own
activities  or (b) do  not  possess  certain  characteristics  of a  controlling
financial interest.  FIN 46 requires the consolidation of these entities,  known
as  variable  interest  entities  ("VIEs"),  by the primary  beneficiary  of the
entity.  The primary  beneficiary  is the entity,  if any,  that is subject to a
majority  of the risk of loss from the VIE's  activities,  entitled to receive a
majority of the VIE's residual returns,  or both. FIN 46 applies  immediately to
variable  interests in VIEs  created or obtained  after  January 31,  2003.  For
variable  interests in a VIE created before  February 1, 2003, FIN 46 is applied
to the VIE no later than the beginning of the first interim or annual  reporting
period  beginning  after June 15, 2003 (the quarter  beginning June 16, 2003 for
the Company).  The  Interpretation  requires  certain  disclosures  in financial
statements issued after January 31, 2003, if it is reasonably  possible that the
Company  will  consolidate  or  disclose  information  about  variable  interest
entities when the Interpretation becomes effective.  The Company's management is
currently  evaluating the  requirements  of FIN 46 with respect to the Company's
specific  facts in order to  determine  the  impact,  if any,  on its  financial
statements.

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 twenty-four  weeks and
twelve weeks ended June 15, 2003 and June 16, 2002:
<TABLE>
<CAPTION>


                                                     Twenty-Four                          Twelve
                                                     Weeks Ended                        Weeks Ended
                                            ------------------------------    -------------------------------
                                               June 15,        June 16,          June 15,         June 16,
                                                 2003            2002              2003             2003
                                            --------------   -------------    ---------------   -------------
<S>                                        <C>              <C>              <C>               <C>
Net income (loss) as reported              $       402,634  $   (1,199,552)  $        254,281  $      166,418
Stock-based compensation cost using fair
   value method, net of related tax effects        292,631         381,935            142,690         159,427
                                            --------------   -------------    ---------------   -------------
Pro forma net income (loss)                $       110,003   $  (1,581,487)  $        111,591  $        6,991
                                            ==============   =============    ===============   =============

Earnings (loss) per share:
   Basic and diluted, as reported          $          0.07  $        (0.20)  $           0.04  $         0.03
   Pro forma basic and diluted                        0.02           (0.27)              0.02            0.00

</TABLE>

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 two quarters of
2003, the Company recorded  amortization  expense totaling $718 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>


                                                                 June 15,          December 29,
                                                                   2003                2002
                                                              ---------------     --------------

<S>                                                          <C>                 <C>
Accrued payroll and related taxes                            $      1,126,343    $       979,082
Accrued taxes, other than payroll                                     724,269            609,900
Gift card and certificate liability                                   269,138            524,870
Reserve for loss on guarantees of indebtedness                         54,214             74,573
Reserve for store closing costs                                       233,407            290,990
Other                                                                 308,816            471,609
                                                              ---------------     --------------
                                                             $      2,716,187    $     2,951,024
                                                              ===============     ==============
</TABLE>

4.   LONG-TERM DEBT

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


                                                                 June 15,          December 29,
                                                                   2003                2002
                                                              ---------------     ---------------
<S>                                                          <C>                 <C>
Secured mortgage payable, bearing interest at LIBOR plus
4.20% (5.52% at June 15, 2003), payable in monthly
installments through January 1, 2018                         $      7,242,234    $              -

Secured mortgage payable, bearing interest at 8.52%,
payable in monthly installments through January 1, 2018             7,021,420                   -

Secured mortgage payable, bearing interest at 8.32%,
payable in monthly installments through January 1, 2013             1,702,200                   -


Secured mortgage payable, bearing interest at LIBOR plus
4.20% (5.52% at June 15, 2003), payable in monthly
installments through January 1, 2013                                1,694,185                   -

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

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

</TABLE>
                                      (Continued next page)



                                        8

<PAGE>



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


                                                                 June 15,          December 29,
                                                                   2003                2002
                                                              ---------------     ---------------


<S>                                                          <C>                 <C>
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                                             -             288,703
                                                              ---------------     ---------------

                                                                   17,660,039          13,995,623
Less current maturities                                               853,412             744,540
                                                              ---------------     ---------------
Long-term debt                                               $     16,806,627    $     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  $22,700,000  at  June  15,  2003.  The  Company  is in
compliance with various financial  covenants at the end of the second 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 twenty-four  weeks and twelve weeks ended June 15,
2003 and June 16, 2002 in accordance with FAS 128, "Earnings per Share."
<TABLE>
<CAPTION>


                                                     Twenty-Four      Twenty-Four     Twelve Weeks      Twelve Weeks
                                                     Weeks Ended      Weeks Ended         Ended             Ended
                                                      June 15,          June 16,        June 15,          June 16,
                                                        2003              2002            2003              2002
                                                   ---------------   --------------  ---------------   ---------------
Numerator:
<S>                                               <C>               <C>             <C>               <C>
    Income before cumulative effect of a
       change in accounting principle             $        402,634  $       304,221 $        254,281  $        166,418
    Cumulative effect of a change in accounting
       principle, net of tax                                     -       (1,503,773)               -                 -
                                                   ---------------   --------------  ---------------   ---------------
    Net income (loss)                             $        402,634  $    (1,199,552)$        254,281  $        166,418
                                                   ===============   ==============  ===============   ===============

Denominator:
    Weighted average shares outstanding - basic          5,916,153        5,916,153        5,916,153         5,916,153
    Effect of dilutive securities:
        Director and employee stock options                  9,090            3,577            9,180             3,064
                                                   ---------------   --------------  ---------------   ---------------
    Denominator for diluted earnings per share
    - adjusted weighted average and assumed
    conversions                                          5,925,243        5,919,730        5,925,333         5,919,217
                                                   ===============   ==============  ===============   ===============

</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 twenty-four weeks ended June 15, 2003 is as follows:

<TABLE>
<CAPTION>

                                                       Restaurant       Commissary        Corporate         Totals
                                                      -------------    ------------     -------------    ------------
Revenues from external
<S>                                                 <C>              <C>               <C>              <C>
   customers                                        $    25,949,248  $    1,051,495    $      845,765   $  27,846,508
Intersegment revenues                                             -       1,171,083                 -       1,171,083
General and
   administrative expenses                                        -               -         2,121,899       2,121,899
Advertising expenses                                              -               -           880,860         880,860
Depreciation and amortization                               767,920          46,001           131,976         945,897
Net interest expense                                              -          68,358           562,532         630,890
Income (loss) before income taxes                         3,296,979         102,376        (2,680,365)        718,990


</TABLE>






                                       10

<PAGE>



6.   SEGMENT INFORMATION (continued)

Segment information for the twenty-four weeks ended June 16, 2002 is as follows:
<TABLE>
<CAPTION>


                                                       Restaurant       Commissary        Corporate         Totals
                                                      -------------    ------------     -------------    -------------
Revenues from external
<S>                                                 <C>              <C>               <C>              <C>
   customers                                        $    26,559,567  $      796,479    $      836,447   $  28,192,493
Intersegment revenues                                             -       1,194,719                 -       1,194,719
General and
   administrative expenses                                        -               -         1,956,234       1,956,234
Advertising expenses                                              -               -           891,357         891,357
Depreciation and
   amortization                                             745,986          37,662           126,213         909,861
Net interest expense                                              -          70,584           393,888         464,472
Income (loss) before income taxes and
cumulative effect of a change in accounting
principle                                                 2,816,112          41,584        (2,314,439)        543,257
</TABLE>

Segment information for the twelve weeks ended June 15, 2003 is as follows:
<TABLE>
<CAPTION>


                                                       Restaurant       Commissary        Corporate         Totals
                                                      -------------    ------------     -------------    -------------
Revenues from external
<S>                                                 <C>              <C>               <C>              <C>
   customers                                        $    13,303,918  $      542,706    $      446,715   $  14,293,339
Intersegment revenues                                             -         609,141                 -         609,141
General and
   administrative expenses                                        -               -         1,039,911       1,039,911
Advertising expenses                                              -               -           449,679         449,679
Depreciation and amortization                               392,811          23,160            66,060         482,031
Net interest expense                                              -          34,179           275,571         309,750
Income (loss) before income taxes                         1,694,446          58,184        (1,298,557)        454,073
</TABLE>

Segment information for the twelve weeks ended June 16, 2002 is as follows:
<TABLE>
<CAPTION>


                                                       Restaurant       Commissary        Corporate         Totals
                                                      -------------    ------------     -------------    -------------
Revenues from external
<S>                                                 <C>              <C>               <C>              <C>
   customers                                        $    13,095,974  $      414,593    $      497,171   $  14,007,738
Intersegment revenues                                             -         621,890                 -         621,890
General and
   administrative expenses                                        -               -           973,072         973,072
Advertising expenses                                              -               -           437,442         437,442
Depreciation and
   amortization                                             371,373          18,831            62,338         452,542
Net interest expense                                              -          35,292           195,102         230,394
Income (loss) before income taxes and
cumulative effect of a change in accounting
principle                                                 1,316,413          28,284        (1,047,522)        297,175
</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.


                                       11

<PAGE>



7.  INVESTMENT IN TW-SPRINGHURST (continued)

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  entered  into a
commission  agreement  with CCIO in  connection  with the sale of  international
regional licenses by International.

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 twenty-four  weeks and twelve weeks
ended June 15, 2003 and June 16,  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  permanent  timing
differences.

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 twenty-four
weeks ended June 15, 2003, the Company recorded as other revenues  approximately
$30,000 of business  interruption  income which was  reimbursed by the Company's
insurance.







                                       12

<PAGE>



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  $25,000 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 June 15, 2003, the reserve balance is  approximately  $54,000
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
approximately  $500,000 which includes a $405,000 commitment fee plus additional
charges,  fees and  costs  related  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 June
15, 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.  SUBSEQUENT EVENTS

On June 16,  2003,  the  Company's  Board of Directors  approved a  one-for-5000
reverse stock split to be immediately  followed by a 5000-for-one  forward stock
split,  subject to stockholder  approval.  Persons otherwise entitled to receive
less than one share in the reverse  stock split would receive cash in the amount
of $1.10 per share. The Board had preliminarily  approved the transaction on May
19, 2003, subject to receipt of a fairness opinion from FTN Financial Securities
Corp.  ("FTN"),  financial  advisor to the special  committee of the Board,  and
stockholder  approval.  On June 16, 2003,  the Board  approved  the  transaction
following the Committee's  receipt of a fairness  opinion with regard to the per
share  cash  amount  to  be  paid  in  the  reverse   split  from  FTN  and  the
recommendation  of the  special  committee.  The  transaction  is subject to the
approval  of the  stockholders.  Stockholders  will  be  asked  to  approve  the
transaction at the annual meeting of stockholders  currently expected to be held
in September. The transaction, if approved by the stockholders, would reduce the
number of stockholders below the level at which the Company would be required to
continue to file reports with the SEC, and the  Company's  stock would no longer
be traded on the Nasdaq Small Cap Market.  Any trading of the  Company's  common
stock  after  the  transaction  would  only  occur in the  "pink  sheets"  or in
privately  negotiated sales.  Company's  management currently estimates that the
total  funds  required  to pay the  consideration  to  stockholders  entitled to
receive  cash for their  shares  and to pay fees and  expenses  relating  to the
transaction  will be approximately  $1.0 million.  Cash reserves will be used to
fund the  transaction.  If the above  described  transaction  is completed,  the
remaining stockholders will be asked to approve a conversion of the Company from
a Delaware  corporation to a Delaware limited liability company.  The conversion
would  be  accomplished  through  the  transfer  of  the  Company's  assets  and
liabilities to a newly-formed Delaware limited liability company and liquidation
of the existing Delaware corporation.  No additional equity contributions to the
Company or the limited liability company would be required.

Subsequent to June 15, 2003, the Company  purchased 2.2 acres of land in Dublin,
Ohio for  approximately  $630,000 and entered  into a $975,000  contract for the
construction  of a 5,100 square foot  Tumbleweed  restaurant.  The total project
cost,  including  preopening  costs, is currently  estimated at $2,600,000.  The
Company  is  currently  negotiating  construction  financing  in the  amount  of
$1,300,000 with a term of eighteen months. Upon its maturity,  the Company plans
to replace the construction loan with permanent  financing.  In negotiating such
financing,  there can be no  assurance  that the Company  will be able to obtain
financing on terms  satisfactory  to the  Company's  management.  The  remaining
project cost will be funded by cash reserves and an equipment operating lease.


                                       13

<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 June 15, 2003, we owned, franchised or licensed 57 Tumbleweed restaurants.
The Company  owned and operated 31  restaurants  in Kentucky,  Indiana and Ohio.
There  were  21  franchised  restaurants  in  Indiana,  Illinois,  Kentucky  and
Wisconsin and five  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.























                                       14

<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.
<TABLE>
<CAPTION>


                                                              Twenty-Four                      Twelve Weeks
                                                              Weeks Ended                         Ended
                                                    -------------------------------   ------------------------------
                                                       June 15,         June 16,        June 15,         June 16,
                                                         2003             2002            2003             2002
                                                    --------------    -------------   -------------    -------------
Revenues:
<S>                                                           <C>              <C>             <C>              <C>
   Restaurant sales                                           93.2%            94.2%           93.1%            93.5%
   Commissary sales                                            3.8              2.8             3.8              2.9
   Franchise fees and royalties                                2.3              1.9             2.4              2.1
   Other revenues                                              0.7              1.1             0.7              1.5
                                                    --------------    -------------   -------------    -------------
     Total revenues                                          100.0            100.0           100.0            100.0
Operating expenses:
   Restaurant cost of sales (1)                               29.1             30.3            29.1             30.4
   Commissary cost of sales (2)                               85.9             89.3            85.1             88.0
   Operating expenses (1)                                     54.2             55.2            54.0             55.5
   Selling, general and administrative expenses               10.8             10.1            10.4             10.1
   Preopening expenses                                         0.1                -             0.1                -
   Depreciation and amortization                               3.4              3.2             3.4              3.2
                                                    --------------    -------------   -------------    -------------
     Total operating expenses                                 95.2             96.4            94.7             96.2
                                                    --------------    -------------   -------------    -------------
     Income from operations                                    4.8              3.6             5.3              3.8
Interest expense, net                                         (2.3)            (1.7)           (2.1)            (1.7)
                                                    --------------    -------------   -------------    -------------
Income before income taxes and cumulative
    effect of a change in accounting principle                 2.5              1.9             3.2              2.1
Provision for income taxes - current
   and deferred                                                1.1              0.8             1.4              0.9
                                                    --------------    -------------   -------------    -------------
Income before cumulative effect of a
   change in accounting principle                              1.4              1.1             1.8              1.2
Cumulative effect of a change in accounting
   principle, net of tax                                         -             (5.3)              -                -
                                                    --------------    -------------   -------------    -------------
Net income (loss)                                              1.4%            (4.2)%           1.8 %            1.2%
                                                    ==============    =============   =============    =============

<FN>

(1)   As percentage of restaurant sales.
(2)   As percentage of commissary sales.
</FN>
</TABLE>



COMPARISON OF THE FIRST TWO QUARTERS OF 2003 AND 2002

Total revenues  decreased by $345,985 or 1.2% for the first two quarters of 2003
compared to the same period in 2002 primarily as a result of the following:

   Restaurant  sales decreased by $610,319 or 2.3% for the first two quarters 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 is  partially  offset by a 0.4%  increase  in same store  sales for the
   first two  quarters of 2003 and a 2.0% menu price  increase  in  mid-February
   2003.

   Commissary  sales to franchised and licensed  restaurants and  non-affiliated
   restaurant concepts increased by $255,016 or 32.0% for the first two quarters
   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 and the addition of two franchised restaurants during 2003.


                                     15
<PAGE>


   Franchise fees and royalties  increased by $93,952 or 17.3% for the first two
   quarters  of 2003  compared  to the same  period  in 2002.  Franchise  income
   increased $70,000 as a result of having two franchise  restaurant openings in
   the first two quarters of 2003 compared to no franchise  restaurant  openings
   during the first two  quarters  of 2002.  Royalty  income  increased  $18,952
   primarily as a result of the two  franchise  restaurant  openings  during the
   first two quarters of 2003.

   Other  revenues  decreased  by $84,634 or 28.7% for the first two quarters of
   2003 compared to the same period in 2002 partially as a result of a temporary
   decrease in purchasing  rebates.  The decrease in other  revenues can also be
   attributed to recognizing  as income,  in 2002,  $55,000 of development  fees
   which were  forfeited by a franchisee.  There was no similar  income in 2003.
   The decrease in other  revenues is  partially  offset by $30,000 of insurance
   proceeds  (business  interruption  income  recorded as other revenue in 2003)
   which  were a result  of a fire in July 2002 at a  Company-owned  restaurant.
   There was no similar income in the first two quarters of 2002.

Restaurant  cost of  sales  decreased  by  $497,490  or 6.2% for the  first  two
quarters 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  restaurant  sales by 1.2% to 29.1% for the first two quarters of
2003 compared to 30.3% during the same period in 2002. The 1.2% 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% menu price increase in mid-February 2003.

Commissary cost of sales increased  $191,778 or 27.0% for the first two quarters
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 of commissary
sales,  commissary  cost of sales  decreased  3.4% for the first two quarters 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 $602,493 or 4.1% for the first two
quarters 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 1.0% to 54.2% for the first two quarters of 2003 from 55.2%
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% menu price increase in
mid-February 2003.

Selling,  general and administrative  expenses increased by $155,168 or 5.4% for
the first two quarters 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 two franchise  restaurant openings in the
first two  quarters  of 2003 (no similar  expense was  incurred in the first two
quarters of 2002) and increased  management  development costs for Company-owned
restaurants.   As  a  percentage  to  total  revenues,   selling,   general  and
administrative  expenses were 10.8% and 10.1% for the first two quarters of 2003
and 2002, respectively.

Preopening  expenses  were  $28,865 for the first two  quarters  of 2003.  These
expenses  represent  the  portion of  preopening  costs  which were  incurred in
connection with the 2003 reopening of the restaurant which had been destroyed by
fire in July 2002 that were not recoverable from insurance.

Depreciation and amortization  expense  increased  $36,036 or 4.0% for the first
two quarters of 2003  compared to the same period in 2002  primarily as a result
of capital improvements made to existing Company-owned restaurants.

Net interest expense  increased  $166,418 or 35.8% for the first two quarters of
2003 compared to the same period in 2002.  The increase in net interest  expense
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 on
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 two quarters 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% due substantially to
the impact of permanent timing differences.




                                       16

<PAGE>



COMPARISON OF THE SECOND QUARTER OF 2003 AND 2002

Total  revenues  increased  by $285,601  or 2.0% for the second  quarter of 2003
compared to the same period in 2002 primarily as a result of the following:

   Restaurant sales increased by $207,944 or 1.6% for the second quarter of 2003
   compared to the same period in 2002.  The  increase  in  restaurant  sales is
   primarily  a result of a 2.4%  increase  in same store  sales and a 2.0% menu
   price  increase in  mid-February  2003.  The increase in restaurant  sales is
   partially offset by the sale of one Company-owned  restaurant to a franchisee
   during the second quarter of 2002.

   Commissary  sales to franchised and licensed  restaurants and  non-affiliated
   restaurant  concepts increased by $128,113 or 30.9% for the second 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 and the addition of two franchised restaurants during 2003.

   Franchise  fees and  royalties  increased  $58,953  or 20.2%  for the  second
   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 second  quarter of 2003  compared to no  franchise  restaurant
   openings during the second quarter of 2002.  Royalty income increased $23,953
   primarily as a result of two franchise  restaurant  openings during the first
   two quarters of 2003.

   Other revenues  decreased by $109,409 or 53.2% for the second quarter of 2003
   compared  to the same  period in 2002  partially  as a result of a  temporary
   decrease in purchasing  rebates.  The decrease in other  revenues can also be
   attributed to recognizing as income,  in the second quarter of 2002,  $55,000
   of  development  fees  which were  forfeited  by a  franchisee.  There was no
   similar income in 2003.

Restaurant cost of sales decreased by $105,620 or 2.7% for the second quarter of
2003  compared to the same period in 2002.  The decrease in  restaurant  cost of
sales is  primarily a result of 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 1.3% to  29.1%  for the  second  quarter  of 2003
compared to 30.4% during the same period in 2002.  The 1.3%  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% menu price increase in mid-February 2003.

Commissary  cost of sales  increased  $96,924 or 26.6% for the second 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 of commissary
sales,  commissary  cost of sales  decreased 2.9% for the second 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  $79,387  or 1.1% for the  second
quarter  of 2003  compared  to the  same  period  in  2002.  Operating  expenses
decreased as a percentage  of  restaurant  sales by 1.5% to 54.0% for the second
quarter of 2003 from 55.5% 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%
menu price increase in mid-February 2003.

Selling,  general and  administrative  expenses increased by $79,076 or 5.6% for
the second  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 second
quarter of 2003 (no similar  expense was incurred in the second quarter of 2002)
and increased management development costs for Company-owned  restaurants.  As a
percentage to total revenues,  selling, general and administrative expenses were
10.4% and 10.1% for the second quarter of 2003 and 2002, respectively.

Preopening  expenses were $28,865 for the second quarter of 2003. These expenses
represent the portion of preopening costs which were incurred in connection with
the 2003  reopening of the  restaurant  which had been destroyed by fire in July
2002 that were not recoverable from insurance.

Depreciation and amortization  expense  increased $29,489 or 6.5% for the second
quarter of 2003  compared  to the same period in 2002  primarily  as a result of
capital improvements made to existing Company-owned restaurants.

Net interest expense  increased  $79,356 or 34.4% for the second quarter of 2003
compared to the same period in 2002.

                                       17

<PAGE>
The  increase  in net  interest  expense for the second  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 second 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% due substantially to the
impact of permanent timing differences.

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  consolidated  all of the
Company's  outstanding  debt and  provides  approximately  $1.7  million for the
remodel,  modernization  and / or upgrade  of the  properties  described  in the
renovation  agreements  signed  with GE. The  Company has until June 30, 2004 to
complete 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 second quarter
of 2003, and management expects to be in compliance with the financial covenants
throughout 2003.

Our  capital  needs  during  the  first  two  quarters  of 2003  arose  from the
reconstruction  of a restaurant  facility which was damaged by fire in July 2002
and the  maintenance  and  improvement of existing  restaurant  facilities.  Our
capital  needs during the first two quarters 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.


                                           Twenty-Four          Twenty-Four
                                           Weeks Ended          Weeks Ended
                                             June 15,            June 16,
                                               2003                2002
                                         ----------------    -----------------
Net cash provided by operations         $       2,262,027   $          815,468
Purchases of property and equipment            (1,056,461)            (350,537)
Business acquisition                                    -             (267,000)
Net borrowings (payments) on long-term
   debt and capital lease obligations           3,010,382             (623,345)

The Company's largest use of funds during the first two quarters 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 two  quarters  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

                                       18

<PAGE>
funds  during the first two  quarters 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  two  quarters  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 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 June 15, 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,  the  Company  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  the Company
plans 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 the Company's  expansion  plans the next
12 months.  Should the Company's  actual results of operations fall short of, or
the  Company's  rate of  expansion  significantly  exceed  plans,  or should the
Company's costs of capital  expenditures  exceed  expectations,  the Company may
need to seek additional  financing in the future. In negotiating such financing,
there can be no  assurance  that the  Company  will be able to raise  additional
capital on terms satisfactory to the Company's management.

On June 16,  2003,  the  Company's  Board of Directors  approved a  one-for-5000
reverse stock split to be immediately  followed by a 5000-for-one  forward stock
split,  subject to stockholder  approval.  Persons otherwise entitled to receive
less than one share in the reverse  stock split would receive cash in the amount
of $1.10 per share. The Board had preliminarily  approved the transaction on May
19, 2003, subject to receipt of a fairness opinion from FTN Financial Securities
Corp.  ("FTN"),  financial  advisor to the special  committee of the Board,  and
stockholder  approval.  On June 16, 2003,  the Board  approved  the  transaction
following the Committee's  receipt of a fairness  opinion with regard to the per
share  cash  amount  to  be  paid  in  the  reverse   split  from  FTN  and  the
recommendation  of the  special  committee.  The  transaction  is subject to the
approval  of the  stockholders.  Stockholders  will  be  asked  to  approve  the
transaction at the annual meeting of stockholders  currently expected to be held
in September. The transaction, if approved by the stockholders, would reduce the
number of stockholders below the level at which the Company would be required to
continue to file reports with the SEC, and the  Company's  stock would no longer
be traded on the Nasdaq Small Cap Market.  Any trading of the  Company's  common
stock  after  the  transaction  would  only  occur in the  "pink  sheets"  or in
privately  negotiated sales.  Company's  management currently estimates that the
total  funds  required  to pay the  consideration  to  stockholders  entitled to
receive  cash for their  shares  and to pay fees and  expenses  relating  to the
transaction  will be approximately  $1.0 million.  Cash reserves will be used to
fund the  transaction.  If the above  described  transaction  is completed,  the
remaining stockholders will be asked to approve a conversion of the Company from
a Delaware  corporation to a Delaware limited liability company.  The conversion
would  be  accomplished  through  the  transfer  of  the  Company's  assets  and
liabilities to a newly-formed Delaware limited liability company and liquidation
of the existing Delaware corporation.  No additional equity contributions to the
Company or the limited liability company would be required.

Subsequent to June 15, 2003, the Company  purchased 2.2 acres of land in Dublin,
Ohio for  approximately  $630,000 and entered  into a $975,000  contract for the
construction  of a 5,100 square foot  Tumbleweed  restaurant.  The total project
cost,  including  preopening  costs, is currently  estimated at $2,600,000.  The
Company  is  currently  negotiating  construction  financing  in the  amount  of
$1,300,000 with a term of eighteen months. Upon its maturity,  the Company plans
to replace

                                       19

<PAGE>
the construction loan with permanent  financing.  In negotiating such financing,
there can be no assurance  that the Company will be able to obtain  financing on
terms satisfactory to the Company's management.  The remaining project cost will
be funded by cash reserves and an equipment operating lease.

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  $25,000 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 June 15, 2003, the reserve balance is  approximately  $54,000
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
approximately  $500,000 which includes a $405,000 commitment fee plus additional
charges,  fees and  costs  related  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 June
15, 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.

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 June 15,
2003, a hypothetical  100 basis point increase in interest rates would result in
an  approximately  $460,000  decrease  in fair value of debt and would  increase
annual 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.

                                       20

<PAGE>



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  $25,000 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 June 15, 2003, the reserve balance is  approximately  $54,000
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
approximately  $500,000 which includes a $405,000 commitment fee plus additional
charges,  fees and  costs  related  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 June
15, 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.

























                                       21

<PAGE>



ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

 (a) Exhibits  -

  Exhibit 31       Certifications pursuant to Section 302, of the Sarbanes-Oxley
                   Act of 2002

  Exhibit 32        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

         On May 19, 2003,  Tumbleweed,  Inc.  (the  Company)  filed  Form 8-K to
         report  under  Item 5 that its  Board of  Directors  had  preliminarily
         approved a proposed  one-for-5000 reverse stock split to be immediately
         followed by a 5000-for-one forward stock split.

         On June 16,  2003,  the Company  filed Form 8-K to  report under Item 5
         that its Board of Directors had approved a  one-for-5000  reverse stock
         split to be immediately followed by a 5000-for-one forward stock split.
         The Board approved the  transaction  following the Special  Committee's
         receipt of a fairness  opinion with regard to the per share cash amount
         to be paid in the reverse split from FTN Financial Securities Corp. and
         the recommendation of the Special Committee. The transaction is subject
         to the approval of stockholders.  Stockholders will be asked to approve
         the  transaction  at  the  annual  meeting  of  stockholders  currently
         expected  to be held in  September.  The  transaction,  if  approved by
         stockholders,  would reduce the number of stockholders  below the level
         at which the Company would be required to continue to file reports with
         the SEC.

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

































                                       23

<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:       July 29, 2003                             Tumbleweed, Inc.

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














































                                       24