##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to
 Commission File No. 000-50052
 COSÌ, INC.
  Delaware
    
    06-1393745(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 1751 Lake Cook Road
 Deerfield, Illinois 60015
  (847) 597-8800
  þ o
  Large accelerated filer o
    
    Accelerated filer
þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



COSI, INC.
 
 Page NumberPART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets  as of March 31, 2008 and December 31, 2007 (Note 1)
    
    
    3Consolidated Statements of Operations  Three periods ended
March 31, 2008 and April 2, 2007
    
    
    4Consolidated Statement of Stockholders Equity  Three month period ended
March 31, 2008
    
    
    5Consolidated Statements of Cash Flows  Three month periods ended
March 31, 2008 and April 2, 2007
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7-11Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    12-24Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    25Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    26EXHIBIT INDEX
    
    
    27CERTIFICATIONS
    
    
    28-30302 Certification of Chief Executive Officer302 Certification of Chief Financial OfficerSection 906 Certification
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 Cosi, Inc.
Consolidated Balance Sheets
As of March 31, 2008 and December 31, 2007
(dollars in thousands, except share and per share data)
 March 31, 2008
    
    
    December 31, 2007(Unaudited)
    
    
    (Note 1)AssetsCurrent assets:Cash and cash equivalents
    
    $
    6,954
    
    
    $
    6,309Accounts receivable, net
    
    
    612
    
    
    
    658Inventories
    
    
    938
    
    
    
    1,045Prepaid expenses and other current assets
    
    
    3,827
    
    
    
    3,796Assets held for sale
    
    
    33
    
    
    
    122Assets of discontinued operations
    
    
    8
    
    
    
    35Total current assets
    
    
    12,372
    
    
    
    11,965Furniture and fixtures, equipment and leasehold improvements, net
    
    
    40,870
    
    
    
    42,477Intangibles, security deposits and other assets, net
    
    
    1,931
    
    
    
    1,970Total assets
    
    $
    55,173
    
    
    $
    56,412Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    2,769
    
    
    $
    2,106Accrued expenses
    
    
    10,004
    
    
    
    9,014Deferred franchise revenue
    
    
    653
    
    
    
    783Current liabilities of discontinued operations
    
    
    54
    
    
    
    285Current portion of other long-term liabilities
    
    
    402
    
    
    
    465Total current liabilities
    
    
    13,882
    
    
    
    12,653Deferred franchise revenue
    
    
    2,690
    
    
    
    2,730Other long-term liabilities, net of current portion
    
    
    7,255
    
    
    
    7,183Total liabilities
    
    
    23,827
    
    
    
    22,566Commitments and contingenciesStockholders equity:Common stock  $.01 par value; 100,000,000 shares authorized,
41,063,681 and 41,052,170 shares issued, respectively
    
    
    411
    
    
    
    411Additional paid-in capital
    
    
    275,715
    
    
    
    275,187Treasury stock, 239,543 shares at cost
    
    
    (1,198
    )
    
    
    (1,198
    )Accumulated deficit
    
    
    (243,582
    )
    
    
    (240,554
    )Total stockholders equity
    
    
    31,346
    
    
    
    33,846Total liabilities and stockholders equity
    
    $
    55,173
    
    
    $
    56,412
 The accompanying notes are an integral part of these consolidated financial statements.
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Cosi, Inc.
Consolidated Statements of Operations
For the Three Month Periods Ended March 31, 2008 and April 2, 2007
(dollars in thousands, except share and per share data)
 Three Months EndedMarch 31,
    
    
    April 2,2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)Revenues:Restaurant net sales
    
    $
    32,459
    
    
    $
    30,689Franchise fees and royalties
    
    
    732
    
    
    
    432Total revenues
    
    
    33,191
    
    
    
    31,121Costs and expenses:Cost of food and beverage
    
    
    7,536
    
    
    
    7,099Restaurant labor and related benefits
    
    
    11,238
    
    
    
    10,745Occupancy and other restaurant operating expenses
    
    
    9,753
    
    
    
    9,04328,527
    
    
    
    26,887General and administrative expenses
    
    
    5,038
    
    
    
    5,981Depreciation and amortization
    
    
    2,111
    
    
    
    2,060Restaurant pre-opening expenses
    
    
    28
    
    
    
    270Closed store costs
    
    
    32
    
    
    
    Lease termination expense
    
    
    243
    
    
    
    Total costs and expenses
    
    
    35,979
    
    
    
    35,198Operating loss
    
    
    (2,788
    )
    
    
    (4,077
    )Interest income
    
    
    45
    
    
    
    205Interest expense
    
    
    (1
    )
    
    
    (2
    )Loss from continuing operations
    
    
    (2,744
    )
    
    
    (3,874
    )Discontinued operations:Loss from discontinued operations
    
    
    (284
    )
    
    
    (331
    )Net loss
    
    $
    (3,028
    )
    
    
    (4,205
    )Per Share Data:Loss per share, basic and dilutedContinuing operations
    
    $
    (0.07
    )
    
    $
    (0.10
    )Discontinued operations
    
    $
    (0.01
    )
    
    $
    (0.01
    )Net loss
    
    $
    (0.08
    )
    
    $
    (0.11
    )Weighted average shares outstanding:
    
    
    39,930,253
    
    
    
    38,571,150
 The accompanying notes are an integral part of these consolidated financial statements.
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Cosi, Inc.
Consolidated Statement of Stockholders Equity
For the Three Months Ended March 31, 2008
(unaudited)
(dollars in thousands, except share data)
 Common Stock
    
    
    Treasury StockAdditionalNumber of
    
    
    
    
    
    
    Paid In
    
    
    Number of
    
    
    
    
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Shares
    
    
    Amount
    
    
    Deficit
    
    
    TotalBalance, December 31, 2007
    
    
    41,047,985
    
    
    $
    411
    
    
    $
    275,187
    
    
    
    239,543
    
    
    $
    (1,198
    )
    
    $
    (240,554
    )
    
    $
    33,846Exercise of options
    
    
    23,696
    
    
    
    
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53Net forfeiture of
restricted stock
    
    
    (8,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    475
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    475Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,028
    )
    
    
    (3,028
    )Balance, March 31, 2008
    
    
    41,063,681
    
    
    $
    411
    
    
    $
    275,715
    
    
    
    239,543
    
    
    $
    (1,198
    )
    
    $
    (243,582
    )
    
    $
    31,346
 The accompanying notes are an integral part of these consolidated financial statements.
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Cosi, Inc.
Consolidated Statements of Cash Flows
For the Three Month Periods Ended March 31, 2008 and April 2, 2007
(dollars in thousands)
 March 31, 2008
    
    
    April 2, 2007(Unaudited)
    
    
    (Unaudited)Cash flows from operating activities:Net loss
    
    $
    (3,028
    )
    
    $
    (4,205
    )Adjustments to reconcile net loss to net cash (used in)
provided by operating activitiesDepreciation and amortization
    
    
    2,116
    
    
    
    2,248Non-cash portion of asset impairments and disposals
    
    
    88
    
    
    
    Non-cash portion of store closing costs
    
    
    24
    
    
    
    Provision for bad debts
    
    
    (2
    )
    
    
    Stock-based compensation expense
    
    
    475
    
    
    
    56Changes in operating assets and liabilities:Accounts receivable
    
    
    47
    
    
    
    706Inventories
    
    
    136
    
    
    
    5Prepaid expenses and other current assets
    
    
    (31
    )
    
    
    84Other assets
    
    
    22
    
    
    
    31Accounts payable and accrued expenses
    
    
    1,286
    
    
    
    (891
    )Deferred franchise revenue
    
    
    (170
    )
    
    
    345Other long-term liabilities
    
    
    191
    
    
    
    (286
    )Net cash provided by (used in) operating activities
    
    
    1,154
    
    
    
    (1,907
    )Cash flows from investing activities:Capital expenditures
    
    
    (579
    )
    
    
    (4,340
    )Purchases of investments
    
    
    
    
    
    
    (20,777
    )Redemptions of investments
    
    
    
    
    
    
    28,855Net refunds of security deposits
    
    
    17
    
    
    
    3Net cash (used in) provided by investing activities
    
    
    (562
    )
    
    
    3,741Cash flows from financing activities:Net proceeds from exercise of stock options
    
    
    53
    
    
    
    415Net cash provided by financing activities
    
    
    53
    
    
    
    415Net increase in cash and cash equivalents
    
    
    645
    
    
    
    2,249Cash and cash equivalents, beginning of period
    
    
    6,309
    
    
    
    938Cash and cash equivalents, end of period
    
    $
    6,954
    
    
    $
    3,187Supplemental disclosure of cash flow information:Cash paid for:Corporate franchise and income taxes
    
    $
    54
    
    
    $
    70
 The accompanying notes are an integral part of these consolidated financial
statements.
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COSI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1  Basis of Presentation
       Note 2  Stock-Based Compensation Expense
  For the Three Months Ended(in thousands)March 31, 2008
    
    
    April 2, 2007Stock option compensation expense
    
    $
    51
    
    
    $
    118Restricted stock compensation expense (benefit), net of forfeitures
    
    
    424
    
    
    
    (62
    )Total non-cash, stock-based compensation expense, net of forfeitures
    
    $
    475
    
    
    $
    56
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COSI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  continued
   NOTE 3  Warrants
   NOTE 4  Earnings Per Share
  NOTE 5  Lease Termination Costs
  8




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COSI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  continued
   NOTE 6  Discontinued Operations
   Accounting
for the Impairment or Disposal of Long-Lived Assets
  As ofMarch 31, 2008
    
    
    December 31, 2007(dollars in thousands)Current assets:Inventories
    
    $
    
    
    
    $
    27Other current assets
    
    
    8
    
    
    
    8Total assets of discontinued operations
    
    $
    8
    
    
    $
    35Current liabilities:Accrued expenses
    
    $
    54
    
    
    $
    161Other current liabilities
    
    
    
    
    
    
    124Total current liabilities of discontinued operations
    
    $
    54
    
    
    $
    285
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COSI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  continued
  Three Months EndedMarch 31,
    
    
    April 2,2008
    
    
    2007(dollars in thousands)RevenuesRestaurant net sales
    
    $
    373
    
    
    $
    970Costs and expenses
Cost of food and beverage
    
    
    107
    
    
    
    291Restaurant labor and related benefits
    
    
    188
    
    
    
    498Occupancy and other restaurant operating expenses
    
    
    182
    
    
    
    325477
    
    
    
    1,114Depreciation and amortization
    
    
    5
    
    
    
    187Closed store costs
    
    
    87
    
    
    
    Asset impairments
    
    
    88
    
    
    
    Total costs and expenses
    
    
    657
    
    
    
    1,301Loss from discontinued operations
    
    $
    (284
    )
    
    $
    (331
    )
  NOTE 7  Contingencies
  NOTE 8  Income Taxes
  Accounting for Uncertainty in Income Taxes, an interpretation of FASB
Statement No. 109
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COSI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  continued
   NOTE 9  New Accounting Pronouncements
 Fair Value Measures Effective Date of FASB Statement No. 157
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115.
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB 51
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Item 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of our financial condition and results of operations
for the fiscal quarters ended March 31, 2008 and April 2, 2007 should be read in
conjunction with Selected Consolidated Financial Data and our audited consolidated
financial statements and the notes to those statements that are in our 2007 Annual Report on
Form 10-K. Our discussion contains forward-looking statements based upon current
expectations that involve risks and uncertainties, such as our plans, objectives,
expectations and intentions. Actual results and the timing of events could differ materially
from those anticipated in these forward-looking statements as a result of a number of
factors, including those set forth under Cautionary Note Regarding Forward-Looking
Statements below and elsewhere in this Quarterly Report.
 OVERVIEW
  For the Three Months EndedMarch 31, 2008
    
    
    April 2, 2007Company-Owned
    
    
    Franchised
    
    
    Total
    
    
    Company-Owned
    
    
    Franchised
    
    
    TotalRestaurants at beginning of period
    
    
    107
    (b)
    
    
    34
    
    
    
    141
    
    
    
    110
    (a)
    
    
    13
    
    
    
    123New restaurants opened
    
    
    
    
    
    
    8
    
    
    
    8
    
    
    
    3
    
    
    
    6
    
    
    
    9Restaurants permanently closed
    
    
    5
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Restaurants at end of period
    
    
    102
    
    
    
    42
    
    
    
    144
    
    
    
    113
    (a)
    
    
    19
    
    
    
    132
 
 (a)
    
    Includes nine locations that are classified as discontinued operations(b)
    
    Includes three locations that are classified as discontinued operations     12




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CRITICAL ACCOUNTING POLICIES
   Long Lived Assets Accounting for the Impairment or Disposal of Long-Lived
Assets
  Lease Termination Charges Accounting for Costs Associated with Exit or
Disposal Activities
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Stock-based Compensation Expense Share-Based Payment Accounting for Stock-Based
Compensation
  Expected dividend yield
    
    
    0
    %Expected stock price volatility
    
    
    68
    %Average risk-free interest rate
    
    
    3.79
    %Average expected life of options
    
    5.0 years
   Accounting for Lease Obligations: Accounting for Operating Leases with Scheduled Rent Increases
 Landlord Allowances Issues Relating to
Accounting for Leases
 Income Taxes
 14




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Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statement No. 109
    Restaurant Net Sales.
 Franchise Fees and Royalties.
 Gift Card Sales
    Cost of Food and Beverage.
 Restaurant Labor and Related Benefits.
 Occupancy and Other Restaurant Operating Expenses.
 15




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General and Administrative Expenses.
 Depreciation and Amortization.
 Restaurant Pre-opening Expenses.
 16




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RESULTS OF OPERATIONS
  Three Months EndedMarch 31,
    
    April 2,2008
    
    2007Revenues:Restaurant net sales
    
    
    97.8
    %
    
    
    98.6
    %Franchise fees and royalties
    
    
    2.2
    
    
    
    1.4Total revenue
    
    
    100.0
    
    
    
    100.0Cost and expenses:Cost of food and beverage (1)
    
    
    23.2
    
    
    
    23.1Restaurant labor and related benefits (1)
    
    
    34.6
    
    
    
    35.0Occupancy and other restaurant operating expenses (1)
    
    
    30.0
    
    
    
    29.587.8
    
    
    
    87.6General and administrative expenses
    
    
    15.2
    
    
    
    19.3Depreciation and amortization
    
    
    6.4
    
    
    
    6.6Restaurant pre-opening expenses
    
    
    0.1
    
    
    
    0.9Closed store costs
    
    
    0.1
    
    
    
    Lease termination expense
    
    
    0.7
    
    
    
    Total costs and expenses
    
    
    108.4
    
    
    
    113.1Operating loss
    
    
    (8.4
    )
    
    
    (13.1
    )Other income (expense):Interest income
    
    
    0.1
    
    
    
    0.7Loss from continuing operations
    
    
    (8.3
    )
    
    
    (12.4
    )Discontinued operations:Loss from discontinued operations
    
    
    (0.8
    )
    
    
    (1.1
    )Net loss
    
    
    (9.1
    )
    
    
    (13.5
    )
 
 (1)
    
    These are expressed as a percentage of restaurant net sales versus all other
items expressed as a percentage of total revenues. Restaurant Net Sales
 Restaurant Net Salesas a % of total(in thousands)
    
    revenuesQ1 - 2008
    
    $
    32,459
    
    
    
    97.8
    %Q1 - 2007
    
    $
    30,689
    
    
    
    98.6
    %
  17




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Franchise Fees and Royalties
 Franchise Fees and Royaltiesas a % of total(in thousands)
    
    revenuesQ1 - 2008
    
    $
    732
    
    
    
    2.2
    %Q1 - 2007
    
    $
    432
    
    
    
    1.4
    %
  Costs and Expenses
 Cost of Food and Beverageas a % ofrestaurant net(in thousands)
    
    salesQ1 - 2008
    
    $
    7,536
    
    
    
    23.2
    %Q1 - 2007
    
    $
    7,099
    
    
    
    23.1
    %
 Cost of Food and Beverage
 Restaurant Labor and RelatedBenefitsas a % ofrestaurant net(in thousands)
    
    salesQ1 - 2008
    
    $
    11,238
    
    
    
    34.6
    %Q1 - 2007
    
    $
    10,745
    
    
    
    35.0
    %
 Restaurant Labor and Related Benefits.
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Occupancy and Other RestaurantOperating Expensesas a % of restaurant(in thousands)
    
    net salesQ1 - 2008
    
    $
    9,753
    
    
    
    30.0
    %Q1 - 2007
    
    $
    9,043
    
    
    
    29.5
    %
 Occupancy and Other Restaurant Operating Expenses
 General and Administrative Costsas a % of total(in thousands)
    
    revenuesQ1 - 2008
    
    $
    5,038
    
    
    
    15.2
    %Q1 - 2007
    
    $
    5,981
    
    
    
    19.3
    %
 General and Administrative Costs
 Depreciation and Amortizationas a % of total(in thousands)
    
    revenuesQ1 - 2008
    
    $
    2,111
    
    
    
    6.4
    %Q1 - 2007
    
    $
    2,060
    
    
    
    6.6
    %
 Depreciation and Amortization
 Restaurant Pre-opening Expensesas a % of total(in thousands)
    
    revenuesQ1 - 2008
    
    $
    28
    
    
    
    0.1
    %Q1 - 2007
    
    $
    270
    
    
    
    0.9
    %
 Restaurant Pre-opening Expenses
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Closed Store Costsas a % of total(in thousands)
    
    revenuesQ1 - 2008
    
    $
    32
    
    
    
    0.1
    %Q1 - 2007
    
    $
    
    
    
    
    0.0
    %
 Closed Store Costs
 Lease Termination Expenseas a % of total(in thousands)
    
    revenuesQ1 - 2008
    
    $
    243
    
    
    
    0.7
    %Q1 - 2007
    
    $
    
    
    
    
    0.0
    %
 Lease Termination Expense
 Interest Income
    
    Interest Expenseas a % of
    
    
    
    
    
    as a % oftotal
    
    
    
    
    
    total(in thousands)
    
    revenues
    
    (in thousands)
    
    revenuesQ1 - 2008
    
    $
    45
    
    
    
    0.1
    %
    
    $
    1
    
    
    
    0.0
    %Q1 - 2007
    
    $
    205
    
    
    
    0.7
    %
    
    $
    2
    
    
    
    0.0
    %
 Interest Income and Expense
 Loss from Continuing Operationsas a % of total(in thousands)
    
    revenuesQ1 - 2008
    
    $
    2,744
    
    
    
    8.3
    %Q1 - 2007
    
    $
    3,874
    
    
    
    12.4
    %
 Operating Loss
 Discontinued Operations
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Accounting for the Impairment or Disposal of Long-Lived Assets
 LIQUIDITY AND CAPITAL RESOURCES
       21




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Contractual Obligations
 Payments Due by Period (in thousands)Due 2ndthrough 4th
    
    
    Due Fiscal
    
    
    Due FiscalTotal
    
    
    Quarter of
    
    
    2009 through
    
    
    2011 through
    
    
    Due AfterDescription
    
    Obligations
    
    
    Fiscal 2008
    
    
    Fiscal 2010
    
    
    Fiscal 2012
    
    
    Fiscal 2012Long-term debt (1)
    
    $
    100
    
    
    $
    25
    
    
    $
    50
    
    
    $
    25
    
    
    $
    Operating leases (2) (3)
    
    
    82,186
    
    
    
    11,601
    
    
    
    28,461
    
    
    
    21,655
    
    
    
    20,469Purchase obligations (4)
    
    
    458
    
    
    
    458
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    82,744
    
    
    $
    12,084
    
    
    $
    28,511
    
    
    $
    21,680
    
    
    $
    20,469
 
 (1)
    
    Amounts shown include aggregate scheduled interest payments of $0.02 million. The principal amount of the debt,
net of interest obligations, is included in the Other long-term liabilities, in the attached consolidated balance sheets.(2)
    
    Amounts shown are net of an aggregate $0.4 million of sub-lease rental income
due under non-cancelable subleases.(3)
    
    Amounts include approximately an aggregate $0.2 million of obligations on leases
for restaurants that have been closed as of March 31, 2008.(4)
    
    Constitute primarily contractual obligations related to new restaurant construction.  PURCHASE COMMITMENTS
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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
  
    
    the cost of our principal food products and supply and delivery shortages or
interruptions;
    
    labor shortages or increased labor costs;
    
    changes in demographic trends and consumer tastes and preferences, including
changes resulting from concerns over nutritional or safety aspects of beef, poultry,
produce or other foods or the effects of food-borne illnesses such as mad cow
disease and avian influenza or bird flu;
    
    competition in our markets, both in our business and locating suitable restaurant
sites;
    
    our operation and execution in new and existing markets;
    
    expansion into new markets, including foreign countries;
    
    our ability to attract and retain qualified franchisees;
    
    our ability to locate suitable restaurant sites in new and existing markets and
negotiate acceptable lease terms;
    
    the rate of our internal growth, and our ability to generate increased revenue
from our existing restaurants;
    
    our ability to generate positive cash flow from existing and new restaurants;
    
    fluctuations in our quarterly results due to seasonality;
    
    increased government regulation and our ability to secure required governmental
approvals and permits;
    
    our ability to create customer awareness of our restaurants in new markets;
    
    the reliability of our customer and market studies;
    
    cost effective and timely planning, design and build-out of new restaurants;
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##### Table of Contents




    
    our ability to recruit, train and retain qualified corporate and restaurant
personnel and management;
    
    market saturation due to new restaurant openings;
    
    inadequate protection of our intellectual property;
    
    adverse weather conditions which impact customer traffic at our restaurants; and
    
    adverse economic conditions.
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
   
 Part II. OTHER INFORMATION
 
 Item 1: LEGAL PROCEEDINGS
  24




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##### Table of Contents



Item 1A: RISK FACTORS
  
 Item 6: EXHIBITS
 Exhibits
 Exhibit Number
    
    DescriptionExhibit 31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.Exhibit 31.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.Exhibit 32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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##### Table of Contents



SIGNATURES
  COSI, INC.Date: May 8, 2008
    By:
    /s/ JAMES HYATTJames HyattPresident,
Chief Executive Officer, and
DirectorDate: May 8, 2008
    By:
    /s/ WILLIAM KOZIELWilliam KozielChief Financial Officer (chief accounting officer)
Treasurer and Secretary 26




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##### Table of Contents



EXHIBIT INDEX
 Exhibit 31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.Exhibit 31.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.Exhibit 32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 27