UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

For the Quarterly Period Ended:     April 4, 1998

                                       or

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

For the Transition Period from       to

Commission File Number:    333-45179


                       MRS. FIELDS' ORIGINAL COOKIES, INC.
               (Exact name of registrant specified in its charter)

         DELAWARE                                           87-0552899
-------------------------------                ---------------------------------
(State or other jurisdiction of                (IRS employer identification no.)
incorporation or organization)


2855 East Cottonwood Parkway, Suite 400
        Salt Lake City, Utah                               84121-7050
---------------------------------------          -------------------------------
(Address of principal executive offices)                   (Zip Code)


                                 (801) 736-5600
              (Registrant's telephone number, including area code)

                             462 West Bearcat Drive
                           Salt Lake City, Utah 84115

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceeding 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.

 X  yes        no

The Company had 400 shares of common stock outstanding at May 15, 1998.



<PAGE>




              MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES


                                TABLE OF CONTENTS


PART I.   FINANCIAL INFORMATION


Item 1.   Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as
 of April 4, 1998 and January 3, 1998.........................................3

Condensed Consolidated Statements of Operations for the thirteen-week periods
 ended April 4, 1998 and March 29, 1997.......................................5

Condensed Consolidated Statements of Cash Flows for the thirteen-week periods
 ended April 4, 1998 and March 29, 1997.......................................6

Notes to Condensed Consolidated Financial Statements..........................7


Item 2.   Management's Discussion and Analysis
           of Financial Condition and Results of Operations..................12


PART II.   OTHER INFORMATION

Item 1.   Legal Proceedings..................................................18

Item 6.   Exhibits and Reports on Form 8-K...................................18



<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.    Financial Statements
                                                                     Page 1 of 2

              MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                          April 4,            January 3,
                                                                                           1998                  1998
                                                                                                   (Unaudited)
<S>                                                                                  <C>                   <C>

CURRENT ASSETS:
    Cash and cash equivalents                                                         $    15,015          $    16,287
    Accounts receivable, net of allowance for doubtful accounts of $41 and $32,
       respectively                                                                         1,240                1,535
    Amounts due from franchisees and licensees, net of allowance for doubtful
       accounts of $620 and $582, respectively                                              1,746                2,176
    Inventories                                                                             2,972                3,100
    Prepaid rent and other                                                                  2,669                2,960
    Deferred income tax assets, current portion                                             2,765                2,765
                                                                                      -----------          -----------

                Total current assets                                                       26,407               28,823
                                                                                       ----------           ----------

PROPERTY AND EQUIPMENT, at cost:
    Leasehold improvements                                                                 21,313               21,099
    Equipment and fixtures                                                                 14,924               14,100
    Land                                                                                      128                  128
                                                                                    -------------         ------------
                                                                                           36,365               35,327
    Less accumulated depreciation and amortization                                         (7,464)              (6,125)
                                                                                      -----------          -----------

                Net property and equipment                                                 28,901               29,202
                                                                                       ----------           ----------

DEFERRED INCOME TAX ASSETS, net of current portion                                            734                  734
                                                                                     ------------         ------------

GOODWILL, net of accumulated amortization of $6,098 and $4,980, respectively
                                                                                           67,466               68,501
                                                                                        ---------           ----------

TRADEMARKS AND OTHER INTANGIBLES, net of accumulated amortization of $1,704 and
    $1,409, respectively                                                                   14,898               15,193
                                                                                        ---------           ----------

DEFERRED LOAN COSTS, net of accumulated amortization of $281 and
    $70, respectively                                                                       5,695                5,906
                                                                                      -----------          -----------

OTHER ASSETS                                                                                1,258                1,325
                                                                                      -----------          -----------

                                                                                         $145,359             $149,684
                                                                                         ========             ========
</TABLE>



The accompanying  notes to condensed  consolidated  financial  statements are an
integral part of these balance sheets.
<PAGE>


                                                                     Page 2 of 2
              MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (dollars in thousands, except per share data)

                      LIABILITIES AND STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                                    April 4,            January 3,
                                                                                     1998                  1998
                                                                                            (Unaudited)
<S>                                                                                <C>                  <C>
CURRENT LIABILITIES:
    Current portion of long-term debt                                               $     472            $     472
    Current portion of capital lease obligations                                          151                  142
    Accounts payable                                                                    2,918                3,805
    Accrued liabilities                                                                 1,617                2,826
    Store closure reserve, current portion                                              2,960                3,664
    Accrued salaries, wages and benefits                                                2,074                1,891
    Accrued interest payable                                                            3,613                1,082
    Sales taxes payable                                                                   389                  937
    Deferred income                                                                       630                  871
                                                                                   ----------           ----------

              Total current liabilities                                                14,824               15,690

LONG-TERM DEBT, net of current portion                                                100,089              100,284

STORE CLOSURE RESERVE, net of current portion                                           1,802                1,802

CAPITAL LEASE OBLIGATIONS, net of current portion                                         221                  183
                                                                                  -----------          -----------

              Total liabilities                                                       116,936              117,959
                                                                                     --------             --------

MANDATORILY  REDEEMABLE  CUMULATIVE  PREFERRED  STOCK of PTI (a  majority  owned
    subsidiary), aggregate liquidation preference of $1,437 and $1,451,
    respectively                                                                          992                  902
                                                                                  -----------          -----------

MINORITY INTEREST                                                                          75                   58
                                                                                 ------------         ------------

STOCKHOLDER'S EQUITY:
    Common stock, $.01 par value; 1,000 shares authorized and 400 shares
       outstanding                                                                        -                    -
    Additional paid-in capital                                                         30,843               30,843
    Accumulated deficit                                                                (3,487)                 (78)
                                                                                  -----------        -------------

              Total stockholder's equity                                               27,356               30,765
                                                                                   ----------           ----------

                                                                                     $145,359             $149,684
                                                                                     ========             ========
</TABLE>

The accompanying  notes to condensed  consolidated  financial  statements are an
integral part of these balance sheets.


<PAGE>

              MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                  Thirteen Weeks Ended       Thirteen Weeks Ended
                                                                                    April 4, 1998               March 29, 1997
                                                                                    ----------------            --------------
                                                                                                    (Unaudited)
<S>                                                                                 <C>                          <C>
REVENUES:
    Net store sales                                                                      $28,545                      $27,642
    Franchising, net                                                                       1,121                          745
    Licensing, net                                                                           251                          439
    Other, net                                                                               168                           85
                                                                                      ----------                  -----------

       Total revenues                                                                     30,085                       28,911
                                                                                        --------                     --------

OPERATING COSTS AND EXPENSES:
    Selling and store occupancy costs                                                     17,054                       16,091
    Food cost of sales                                                                     6,741                        6,697
    General and administrative                                                             4,082                        3,698
    Depreciation and amortization                                                          2,881                        2,072
                                                                                       ---------                    ---------

       Total operating costs and expenses                                                 30,758                       28,558
                                                                                        --------                     --------

          (Loss) income from operations                                                     (673)                         353
                                                                                       ----------                  ----------

OTHER INCOME (EXPENSE), net
    Interest expense                                                                      (2,756)                      (1,545)
    Interest income                                                                          176                          108
    Other expense                                                                            (13)                         -
                                                                                      -----------                  -----------

       Total other income (expense), net                                                  (2,593)                      (1,437)
                                                                                         --------                     --------

          Loss before provision for income taxes                                          (3,266)                      (1,084)

PROVISION FOR INCOME TAXES                                                                   (10)                         (50)
                                                                                       ---------                   ----------

          Loss before preferred stock accretion and dividends of subsidiaries
              and minority interest                                                       (3,276)                      (1,134)

PREFERRED STOCK ACCRETION AND DIVIDENDS OF SUBSIDIARIES
                                                                                            (111)                         (89)

MINORITY INTEREST                                                                            (22)                           -
                                                                                      ----------               --------------

          Net loss                                                                       $(3,409)                    $ (1,223)
                                                                                         =======                     =========


</TABLE>


The accompanying  notes to condensed  consolidated  financial  statements are an
integral part of these statements.
<PAGE>

 
              MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                               Thirteen Weeks Ended      Thirteen Weeks Ended
                                                                                   April 4, 1998           March 29, 1997
                                                                                   -------------           --------------
                                                                                                (Unaudited)
<S>                                                                               <C>                      <C>
Increase (Decrease) in Cash and Cash Equivalents

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                          $  (3,409)                 $ (1,223)
   Adjustments to reconcile net loss to net cash provided by (used in)
     operating activities, net of effects from acquisitions:
         Depreciation and amortization                                                   2,881                     2,072
         Amortization of deferred loan costs                                               211                         -
         Loss on sale of assets                                                             13                         -
         In-kind interest expense on note payable to stockholder                             -                        89
         Preferred stock accretion and dividends of subsidiaries                           111                        89
         Minority interest                                                                  22                         -
         Changes in assets and liabilities, net of effects from acquisitions:
               Accounts receivable                                                         295                       163
               Amounts due from franchisees and licensees                                  430                       286
               Inventories                                                                 128                      (496)
               Prepaid rent and other                                                      291                     1,131
               Other assets                                                                 67                        (6)
               Accounts payable and accrued liabilities                                 (1,948)                   (1,301)
               Store closure reserve                                                      (704)                     (442)
               Accrued salaries, wages and benefits                                        183                      (196)
               Accrued interest payable                                                  2,531                      (249)
               Sales taxes payable                                                        (548)                     (282)
               Deferred income                                                            (241)                      202
                                                                                      ---------               ----------
                  Net cash provided by (used in) operating activities                      313                      (163)
                                                                                     ---------                -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Net cash paid for acquisitions expenses                                                (53)                        -
    Purchase of property and equipment, net of effects from acquisitions                (1,226)                   (1,206)
                                                                                      ---------                ----------
                  Net cash used in investing activities                                 (1,279)                   (1,206)
                                                                                      ---------                ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Reduction of long-term debt                                                           (195)                      (29)
    Principal payments on capital lease obligations                                        (90)                        -
    Reduction in preferred stock                                                           (21)                        -
                                                                                    -----------            -------------
                  Net cash used in by financing activities                                (306)                      (29)
                                                                                     ----------              ------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                               (1,272)                   (1,398)

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                                    16,287                     6,709
                                                                                      --------                 ---------

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                         $15,015                 $   5,311
                                                                                       =======                 =========

</TABLE>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for interest was  approximately  $14 and $1,704 for the 13 weeks ended
April 4, 1998 and March 29, 1997, respectively.


The accompanying  notes to condensed  consolidated  financial  statements are an
integral part of these statements.


<PAGE>


              MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


(1)      DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

Mrs. Fields' Original Cookies, Inc. (the "Company"), a Delaware corporation,  is
a wholly owned subsidiary of Mrs.  Fields' Holding  Company,  Inc. ("MFH" or the
"Parent").  MFH is a majority owned  subsidiary of Capricorn  Investors II, L.P.
("Capricorn"). The Company has five wholly owned subsidiaries;  namely, The Mrs.
Fields' Brand,  Inc.  ("MFB"),  Mrs.  Fields' Cookies  Australia,  Mrs.  Fields'
Cookies  (Canada)  Ltd.,  H & M  Canada,  and  Fairfield  Foods,  Inc.  and four
partially owned subsidiaries, the largest of which is Pretzel Time, Inc. ("PTI")
of which the Company owns 60 percent of the common stock.

The Company  primarily  operates retail stores which sell freshly baked cookies,
brownies, pretzels and other food products through four specialty retail chains.
As of April 4, 1998,  the Company owned and operated 146 "Mrs.  Fields  Cookies"
stores,  145 "Original Cookie Company" stores, 100 "Hot Sam Pretzels" stores and
81  "Pretzel  Time"  stores,  all of which are  located  in the  United  States.
Additionally,  the Company has  franchised  or licensed 469 stores in the United
States and 78 stores in 10 other  countries.  As of April 4, 1998,  the  Company
operated  377 core  stores and  operated  95 stores  which are in the process of
being sold or  franchised.  All of the stores in the process of being  closed or
franchised  are  expected to be closed or  franchised  by the end of fiscal year
1999.

The Company's  business  follows seasonal trends and is also affected by climate
and weather  conditions.  The Company  experiences  its highest  revenues in the
fourth  quarter.  Because  the  Company's  stores are  heavily  concentrated  in
shopping malls, the Company's sales  performance is  significantly  dependent on
the performance of those malls.


Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared  by the Company in  accordance  with the rules and  regulations  of the
Securities  and  Exchange  Commission  for Form 10-Q,  and  accordingly,  do not
include all of the  information  and  footnotes  required by generally  accepted
accounting  principles.  In  the  opinion  of  management,   these  consolidated
financial  statements  reflect all  adjustments,  which  consist  only of normal
recurring  adjustments,  which are  necessary  to present  fairly the  Company's
financial position, results of operations and cash flows as of April 4, 1998 and
for  the  periods  presented  herein.  These  unaudited  condensed  consolidated
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial  statements and notes thereto  included in the Company's  Registration
Statement on Form S-4, as amended, for the fiscal year ended January 3, 1998.

The results of  operations  for the thirteen week period ended April 4, 1998 are
not necessarily indicative of the results that may be expected for the remainder
of the fiscal year ending January 2, 1999.  Earnings per share is not presented,
as the Company is wholly-owned by MFH.


(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncement

During the 13 weeks  ended  April 4, 1998,  the  Company  adopted  Statement  of
Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting  Comprehensive
Income.". SFAS No. 130 requires an "all-inclusive" approach which specifies that
all  revenues,  expenses,  gains and  losses  recognized  during  the  period be
reported in income,  regardless of whether they are  considered to be results of
operations  of the  period.  The  adoption  of SFAS No. 130 had no impact on the
Company's financial statement presentation.

<PAGE>




(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Reclassifications

Certain  reclassifications  have been made in the  prior  period's  consolidated
financial statements to conform with the current year presentation.


(3)   PRO FORMA RESULTS OF OPERATIONS

The following unaudited pro forma information presents a summary of consolidated
results of operations of the Company  assuming the PTI and H&M  acquisitions had
occurred at the  beginning of the fiscal year ended  Janaury 3, 1998.  Pro forma
adjustments have been made to give effect to amortization of goodwill,  interest
expense on acquisition debt and certain other adjustments. The pro forma results
have been  prepared  for  comparative  purposes  only and do not  purport  to be
indicative of the results of operations  which  actually would have resulted had
the  acquisitions  been  consummated  at the  beginning of the fiscal year ended
January 3, 1998.
<TABLE>
<CAPTION>


                                         13 Weeks Ended        13 Weeks Ended
                                          April 4, 1998        March 29, 1997
                                        ----------------       --------------
                                                        (Unaudited)
<S>                                         <C>                    <C>    
   Total Revenues.............              $30,085                $33,914

  (Loss) income from
     operations...............                 (673)                   632

   Net loss...................              $(3,409)               $(1,970)
</TABLE>


(4)   SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Company's obligation related to its $100,000,000  aggregate principal amount
of 10 1/8 percent  Series A Senior  Notes due 2004 is fully and  unconditionally
guaranteed  ("the  Guarantee") on a senior basis by one of the Company's  wholly
owned subsidiaries. The Guarantee is a general unsecured obligations of The Mrs.
Fields' Brand,  Inc. ("the  Guarantor"),  rank senior in right of payment to all
subordinated  indebtedness  of the Guarantor  Subsidiary  and rank pari passu in
right of  payment  with all  existing  and  future  senior  indebtedness  of the
Guarantor  Subsidiary.  There are no  restrictions  on the Company's  ability to
obtain  cash  dividends  or  other  distributions  of funds  from the  Guarantor
Subsidiary,  except those imposed by applicable law. The following  supplemental
financial  information sets forth, on a condensed  consolidating  basis, balance
sheets,  statements of operations and statements of cash flows for Mrs.  Fields'
Original Cookies, Inc. (the "Parent Company"), The Mrs. Fields' Brand, Inc. (the
"Guarantor Subsidiary") and Mrs. Fields' Cookies Australia, Mrs. Fields' Cookies
(Canada) Ltd., H & M Canada,  and Fairfield Foods, Inc. and four partially owned
subsidiaries,  the largest of which is Pretzel Time,  Inc., of which the Company
owns  60  percent  of  the  common  stock   (collectively,   the  "Non-guarantor
Subsidiaries").  The Company has not presented separate financial statements and
other disclosures  concerning the Guarantor  Subsidiary  because  management has
determined that such information is not material.

Investments  in  subsidiaries  are  accounted  for by the Parent  Company on the
equity  method for  purposes  of the  supplemental  consolidating  presentation.
Earnings of the subsidiaries are,  therefore,  reflected in the Parent Company's
investment  accounts and earnings.  The principal  elimination entries eliminate
the Parent Company's  investments in subsidiaries and intercompany  balances and
transactions.

<PAGE>



               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                               AS OF APRIL 4, 1998

                             (dollars in thousands)


<TABLE>
<CAPTION>
                                          Parent          Guarantor      Non-Guarantor
                                          Company        Subsidiary      Subsidiaries      Eliminations         Consolidated
                                        -----------     ------------   ----------------   ---------------      --------------     

<S>                                     <C>              <C>            <C>               <C>                    <C>
ASSETS
======
    CURRENT ASSETS:
       Cash and cash equivalents        $   13,948      $       411       $       656       $           -      $     15,015
       Accounts receivable, net                857                -               383                  -              1,240
       Amounts due from franchisees
          and licensees, net                 1,036              577               133                  -              1,746
       Inventories                           2,972                -                 -                  -              2,972
       Other current assets and
          amounts due from (to)       ---------------  ---------------  ----------------  -----------------    ------------
          affiliates, net                    5,623             (275)               86                  -              5,434

            Total current assets            24,436              713             1,258                  -             26,407

    PROPERTY AND EQUIPMENT, net             28,751                1               149                  -             28,901
    INTANGIBLES, net                        59,306           17,405             5,653                  -             82,364
    INVESTMENT IN SUBSIDIARIES              25,098                -                 -            (25,098)                 -
    OTHER ASSETS                             7,587                -               100                  -              7,687

                                        $  145,151      $    18,119       $     7,187       $     (25,098)     $    145,359
                                       ============    ==============   ================  ==================   =============

LIABILITIES AND STOCKHOLDER'S EQUITY
====================================

CURRENT LIABILITIES:
    Current portion of long-term
       debt and capital lease           $      151      $         -       $       472       $           -      $         623
       obligations
       Accounts payable                      2,761                -               157                  -              2,918
       Accrued liabilities                  10,416               21               846                  -             11,283

            Total current                   13,328               21             1,475                  -             14,824
       liabilities

LONG-TERM DEBT AND CAPITAL LEASE
    OBLIGATIONS, net of current       
    portion                                100,221                -                89                  -            100,310
OTHER ACCRUED LIABILITIES                    1,802                -                 -                  -              1,802
MANDATORILY REDEEMABLE CUMULATIVE
 PREFERRED STOCK                                 -                -               992                  -                992
MINORITY INTEREST                              123                -                22                (70)                75
STOCKHOLDER'S EQUITY                        29,677           18,098             4,609            (25,028)            27,356
                                      ===============  ===============  ================  =================  =================
                                        $  145,151      $    18,119       $     7,187       $     (25,098)     $     145,359
                                      ===============  ===============  ================  =================  =================

</TABLE>

<PAGE>





          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE 13 WEEKS ENDED APRIL 4, 1998

                             (dollars in thousands)

<TABLE>
<CAPTION>
                                          Parent          Guarantor      Non-Guarantor
                                          Company         Subsidiary    Subsidiaries       Eliminations        Consolidated
                                      --------------    ------------    --------------    --------------      --------------    

<S>                                     <C>              <C>              <C>               <C>                <C>          
NET REVENUES                            $   29,088       $      251       $       746       $           -      $      30,085
                                      --------------    ------------    --------------    ---------------      -------------
OPERATING COSTS AND EXPENSES:
       Selling and store occupancy          17,054                -                 -                  -             17,054
        costs
       Food cost of sales                    6,741                -                 -                  -              6,741
       General and administrative            3,338              276               468                  -              4,082
       Depreciation and amortization         2,449              319               113                  -              2,881
                                       -------------     -----------     -------------    ----------------     -------------
            Total operating costs
               and expenses                 29,582              595               581                  -             30,758
                                                                                          

    (Loss) income from operations             (494)            (344)              165                  -               (673)

    INTEREST EXPENSE AND
      OTHER, net                            (2,601)               8                 -                  -             (2,593)
                                        ------------      -----------     -------------    ---------------      -------------
       (Loss) income before
         provision for income taxes
         and equity in net loss of          
         consolidated subsidiaries          (3,095)            (336)              165                  -             (3,266)

    PROVISION FOR INCOME TAXES                 (10)               -                 -                  -                (10)
                                        ------------      ------------     -------------   ---------------       -------------
       (Loss) income before
         preferred stock accretion   
         and dividends of
         subsidiaries and equity in                            
         net loss of consolidated           
         subsidiaries                       (3,105)            (336)              165                  -             (3,276)

    PREFERRED STOCK ACCRETION AND
       DIVIDENDS OF SUBSIDIARIES                 -                -              (111)                 -               (111)
                                              

    EQUITY IN NET LOSS OF
       CONSOLIDATED SUBSIDIARIES               (22)               -                 -                  -                (22)
                                        ------------      ------------    --------------   ---------------       ------------
    NET (LOSS) INCOME                   $   (3,105)       $    (336)      $        32       $           -        $    (3,409)
                                        ============      ============    ==============   ===============       ============

</TABLE>
<PAGE>





          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE 13 WEEKS ENDED APRIL 4, 1998

                             (dollars in thousands)
<TABLE>
<CAPTION>
                                          Parent          Guarantor      Non-Guarantor
                                          Company        Subsidiary       Subsidiaries      Eliminations         Consolidated
                                      ---------------  ---------------  ----------------  ----------------     ---------------

<S>                                  <C>                <C>             <C>               <C>                  <C>
    NET CASH PROVIDED BY (USED IN)
       OPERATING ACTIVITIES             $      627       $     (314)      $         -       $          -         $      313
                                     ----------------  ---------------  ----------------  -----------------    ---------------

    CASH FLOWS FROM INVESTING
       ACTIVITIES:
          Net cash paid for                    
            acquisitions                       (53)               -                 -                  -                (53)
          Purchase of property and
            equipment, net                  (1,221)               -                (5)                 -             (1,226)
                                      ---------------  ---------------  ----------------  -----------------     --------------
               Net cash used in
                 investing                    
                 activities                 (1,274)               -                (5)                 -             (1,279)
                                      ---------------  ---------------  ----------------  -----------------     --------------
    CASH FLOWS FROM FINANCING
       ACTIVITIES:
          Reduction of long-term
            debt and capital lease             
            obligations                        (90)               -              (195)                 -               (285)
          Reduction in preferred                
            stock                                -                -               (21)                 -                (21)
                                      ---------------  ---------------  ----------------  -----------------     --------------
                Net cash used in
                financing activities           (90)               -              (216)                 -               (306)

    NET DECREASE IN CASH AND CASH
       EQUIVALENTS                            (737)            (314)             (221)                 -             (1,272)
    CASH AND CASH EQUIVALENTS,
       beginning of period                  14,685              725               877                  -             16,287
                                      ---------------  ---------------  ----------------  -----------------     --------------
    CASH AND CASH EQUIVALENTS, end
       of period                        $   13,948       $      411       $       656       $          -         $   15,015
                                      ===============  ===============  ================  =================     ==============

</TABLE>

<PAGE>



               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                              AS OF JANUARY 3, 1998

                             (dollars in thousands)
<TABLE>
<CAPTION>
                                          Parent          Guarantor      Non-Guarantor
                                          Company         Subsidiary     Subsidiaries      Eliminations        Consolidated
                                      --------------   --------------   ----------------  ---------------    ---------------
                ASSETS              

<S>                                   <C>              <C>               <C>               <C>                <C>
    CURRENT ASSETS:
       Cash and cash equivalents        $   14,270      $       725       $     1,292       $          -       $     16,287
       Accounts receivable, net              1,388                -               147                  -              1,535
       Amounts due from franchisees
          and licensees, net                 1,517              659                 -                  -              2,176
       Inventories                           3,094                -                 6                  -              3,100
       Other current assets and
          amounts due from (to)                 
          affiliates, net                    6,593             (615)             (253)                 -              5,725
                                     ---------------  ---------------  ----------------  -----------------    --------------
            Total current assets            26,862              769             1,192                  -             28,823

    PROPERTY AND EQUIPMENT, net             28,907                1               294                  -             29,202
    INTANGIBLES, net                        59,928           17,725             6,041                  -             83,694
    INVESTMENT IN SUBSIDIARIES              23,089                -                 -            (23,089)                 -
    OTHER ASSETS                             7,902                -                63                  -              7,965
                                      --------------  ---------------  ----------------   ----------------    --------------
                                        $  146,688      $    18,495       $     7,590       $    (23,089)      $    149,684
                                      ==============  ===============  ================   ================    ==============

LIABILITIES AND STOCKHOLDER'S EQUITY
====================================

CURRENT LIABILITIES:
    Current portion of long-term
       debt and capital lease          
       obligations                      $        -      $         -       $       614      $           -      $         614
       Accounts payable                      3,621               36               148                  -              3,805
       Accrued liabilities                  10,499               25               747                  -             11,271
                                      --------------  ---------------  ----------------    ---------------    --------------
       Total current liabilities            14,120               61             1,509                  -             15,690


LONG-TERM DEBT AND CAPITAL LEASE
    OBLIGATIONS, net of current      
    portion                                100,000                -               467                  -            100,467
OTHER ACCRUED LIABILITIES                    1,802                -                 -                  -              1,802
MANDATORILY REDEEMABLE CUMULATIVE
 PREFERRED STOCK                                 -                -               902                  -                902
MINORITY INTEREST                                -                -                 -                 58                 58
STOCKHOLDER'S EQUITY                        30,766           18,434             4,712            (23,147)            30,765
                                      ===============  ===============  ================  =================  =================
                                        $  146,688      $    18,495       $     7,590       $     (23,089)     $     149,684
                                      ===============  ===============  ================  =================  =================

</TABLE>

<PAGE>





          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE 13 WEEKS ENDED MARCH 29, 1997

                             (dollars in thousands)
<TABLE>
<CAPTION>
                                          Parent          Guarantor      Non-Guarantor
                                          Company        Subsidiary      Subsidiaries       Eliminations       Consolidated
                                      --------------    ------------    ---------------    --------------      -------------

<S>                                     <C>              <C>              <C>               <C>                <C>         
NET REVENUES                            $   28,472       $      439       $         -       $          -       $     28,911
                                      --------------    ------------    ----------------   --------------      -------------
OPERATING COSTS AND EXPENSES:
       Selling and store occupancy          16,091                -                 -                  -             16,091
        costs
       Food cost of sales                    6,697                -                 -                  -              6,697
       General and administrative            3,520              178                 -                  -              3,698
       Depreciation and amortization         1,795              277                 -                  -              2,072
                                      --------------    ------------    ----------------   ---------------     -------------
            Total operating costs
               and expenses                 28,103              455                 -                  -             28,558
                                      --------------    ------------    ----------------   ---------------     -------------
            Income (loss) from        
              operations                       369              (16)                -                  -                353

    INTEREST EXPENSE AND
      OTHER, net                            (1,102)            (335)                -                  -             (1,437)
                                       -------------     -----------    -----------------  ----------------     -------------
       Loss before provision for
         income taxes and equity in
         net loss of consolidated            
         subsidiaries                         (733)            (351)                -                  -             (1,084)

    PROVISION FOR INCOME TAXES                 (50)               -                 -                  -                (50)
                                       -------------     ------------    ----------------   ----------------     ------------
       Loss before preferred stock
         accretion and dividends of  
         subsidiaries and equity in
         net loss of consolidated                           
         subsidiaries                         (783)            (351)                -                  -             (1,134)

    PREFERRED STOCK ACCRETION AND
       DIVIDENDS OF SUBSIDIARIES                 -              (89)                -                  -                (89)
                                       --------------    ------------     ---------------   -----------------     ------------
    NET LOSS                            $     (783)      $     (440)      $         -       $          -         $   (1,223)
                                       ==============    ============     ===============   =================     ============

</TABLE>

<PAGE>





          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE 13 WEEKS ENDED MARCH 29, 1997

                             (dollars in thousands)
<TABLE>
<CAPTION>
                                          Parent          Guarantor      Non-Guarantor
                                          Company        Subsidiary      Subsidiaries      Eliminations           Consolidated
                                      ---------------  ---------------  ---------------   ----------------        ------------
<S>                                  <C>               <C>               <C>              <C>                     <C>
    NET CASH USED IN OPERATING
       ACTIVITIES                       $      (42)      $     (121)      $         -       $          -          $     (163)
                                       
                                      ---------------  ---------------  ----------------  -----------------       ------------
    CASH FLOWS FROM INVESTING
       ACTIVITIES:
          Purchase of property and
            equipment, net                    
                                            (1,206)               -                 -                  -              (1,206)
                                      ---------------  ---------------  ----------------  -----------------       ------------
               Net cash used in
                 investing                     
                 activities                 (1,206)               -                 -                  -              (1,206)
                                      ---------------  ---------------  ----------------  -----------------       ------------
    CASH FLOWS FROM FINANCING
       ACTIVITIES:
          Reduction of long-term
            debt and capital lease             
            obligations                        (29)               -                 -                  -                (29)
                                      ---------------  ---------------  ----------------  -----------------       ------------
                Net cash used in
                   financing                     
                   activities                  (29)               -                 -                  -                (29)
                                      ---------------  ---------------  ----------------  -----------------       ------------
    NET DECREASE IN CASH AND CASH
       EQUIVALENTS                          (1,277)            (121)                -                  -             (1,398)
    CASH AND CASH EQUIVALENTS,
       beginning of period                   6,121              588                 -                  -              6,709
                                      ---------------  ---------------  ----------------  -----------------       ------------
  CASH AND CASH EQUIVALENTS, end
       of period                        $    4,844       $      467       $         -       $          -          $   5,311
                                      ===============  ===============  ================  =================       ============
</TABLE>
<PAGE>


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

Overview

     In  1996,   an  investor   group  led  by  Capricorn   Investors  II,  L.P.
("Capricorn")  formed Mrs. Fields' Original  Cookies,  Inc. and The Mrs. Fields'
Brand, Inc.  (collectively,  "Mrs.  Fields" or the "Company") as subsidiaries of
Mrs. Fields' Holding Company, Inc. ("MFH").

     On September 17, 1996, the Company  initiated  operations when it purchased
substantially  all of the assets and assumed certain  liabilities of Mrs. Fields
Inc. and  subsidiaries,  The Original  Cookie Company,  Incorporated  ("Original
Cookie"), and the pretzel business of Hot Sam Company, Inc. ("Hot Sam").

     The Company set out to increase sales and  profitability  of its cookie and
pretzel  operations  by  implementing  key elements of its business plan coupled
with  strategic  acquisitions.  A key element of the business plan is closing or
franchising certain Company-owned stores that do not meet specific financial and
geographical criteria established by management.  Implementation of this element
of the  business  plan is expected to result in  enhanced  operating  margins as
these  stores are  franchised  or closed.  Stores not planned for  franchise  or
closure are  referred  to as "core"  stores.  Core  stores  will  continue to be
operated by the Company into the foreseeable  future.  As a result of converting
certain  stores to  franchises,  royalty  revenues  are expected to increase and
general and administrative  expenses  associated with operating those stores are
expected to be reduced.

     The  Company is pursuing  growth in both its cookie and pretzel  businesses
through strategic  acquisitions.  Management expects that significant  operating
synergies,  expense  leveraging  and  geographic  market  share can be  achieved
through  targeted  acquisitions.  On July 25, 1997, a  subsidiary  of MFH,  Mrs.
Fields' Pretzel Concepts, Inc. ("MFPC") acquired substantially all of the assets
and assumed certain  liabilities of H&M Concepts Ltd. Co.  ("H&M"),  the largest
franchisee  of Pretzel Time,  Inc.("Pretzel  Time").  On September 2, 1997,  MFH
acquired 56% of the common stock of Pretzel Time,  the franchisor of the Pretzel
Time concept.

     On November 26, 1997, the Company received as a contribution  from MFH, the
business  of MFPC and 56% of the  shares of common  stock of  Pretzel  Time (the
"Pretzel  Contributions").   On  that  same  date  the  Company  received  as  a
contribution  from MFH, all of the common stock of The Mrs. Fields' Brand,  Inc.
On January 2, 1998, the Company acquired an additional 4% of Pretzel Time common
stock, bringing the Company's total ownership percentage to 60%.

     The  Company has  recently  been in  discussions  concerning  the  possible
acquisition by the Company of Great American Cookie Company,  Inc.  ("GACC") for
some of its owned or franchised  stores.  GACC is a publicly  reporting  company
(under the Exchange  Act). As of May 15, 1998, no agreement with respect to such
a transaction  has been  concluded,  and there can be no assurance  that such an
agreement will be concluded.


<PAGE>



Results of Operations

     The  following  table  sets  forth,  for  the  periods  indicated,  certain
information  relating to the operations of the Company expressed in thousands of
dollars and percentage changes from period to period. Data in the table reflects
the consolidated results of the Company for the 13 weeks ended April 4, 1998 and
the 13 weeks ended March 29, 1997. As  supplemental  information  the table also
segregates the statement of operations data into a core stores and stores in the
process of being closed or franchised format.

<TABLE>
<CAPTION>

                                                     For the 13 Weeks Ended
                                                  ------------------------------
                                                                           % OF
                                                                            CHG
                                                                           FROM
                                                   APRIL        MARCH      1997
                                                  4, 1998     29, 1997   TO 1998
                                                  ------------------------------
                                                      (Dollars in thousands)
                  Statement of Operations Data:
                  <S>                             <C>         <C>         <C>
                  Revenues:
                         Net store sales........  $28,545     $27,642      3.3%
                                                                            
                         Franchising, net.......    1,121         745     50.5
                                                                           
                         Licensing, net.........      251         439    (42.8)
                                                                            
                         Other revenue, net.....      168          85     97.6
                                                  -------     -------    
                         Total revenues.           30,085      28,911      4.1   
                                                  -------     -------    
                                                                            
                  Operating Costs and Expenses:
                         Selling and store
                           occupancy costs......   17,054      16,091      6.0
                         Food cost of sales.....    6,741       6,697      0.7
                         General and administrative 4,082       3,698     10.4
                         Depreciation and          
                            amortization........    2,881       2,072     39.0
                                 Total operating
                            costs and expenses     30,758      28,558      7.7

                  Other Income (Expense), net:
                          Interest expense......   (2,756)     (1,545)    78.4
                                                  --------     -------   
                          Interest income.......      176         108     63.0
                                                  --------     -------   
                          Other expenses........     (156)       (139)    12.2
                                                  --------     -------   
                          Net loss..............  $(3,409)    $(1,223)   178.7%
                                                  ========    ========
                 ---------------------------------------------------------------

                                        Supplemental Information
                  Core stores:
                      Net store sales...........  $24,589     $22,429      9.6%
                                                 --------    --------
                      Operating costs and
                      expenses:
                         Selling and store
                         occupancy costs........   13,583     11,632      16.8
                         Food cost of sales.....    5,654      5,153       9.7
                         Depreciation and          
                         amortization...........    1,034        809      27.8
                                                 --------    -------    
                            Total operating
                             costs and expenses.   20,271     17,594      15.2
                                                 --------    -------
                            Core store            
                              contribution......    4,318      4,835     (10.7)
                                                 ========    =======

                  Stores in the process of being
                  closed or franchised:
                      Net store sales...........    3,956      5,213     (24.1)
                                                 --------    -------
                      Operating costs and
                      expenses:
                         Selling and store
                          occupancy costs.......    3,471     4,459      (22.2)
                         Food cost of sales.....    1,087     1,544      (29.6)
                         Depreciation and                            
                          amortization..........      109         -        N/A
                            Total operating
                            costs and expenses..    4,667     6,003      (22.3)
                                                 --------    ------
                            Stores in the
                            process of
                            being  closed        
                            or franchised.......    (711)      (790)     (10.0)                     
                                                 ========    =======                
                         EBITDA.................   2,208      2,425       (9.8)%
                                                 ========    =======
                                                                            
</TABLE>
<PAGE>


13 Weeks Ended April 4, 1998 Compared to the 13 Weeks Ended March 29, 1997

Company-owned and Franchised or Licensed Store Activity

         As of April  4,  1998,  there  were 472  Company-owned  stores  and 547
franchised or licensed stores in operation.  The store activity for the 13 weeks
ended  April 4, 1998 and the 13 weeks  ended  March 29,  1997 is  summarized  as
follows:
<TABLE>
<CAPTION>

                                                                         1998                    1997
                                                                 ---------------------  ---------------------
                                                                 Company-   Franchised  Company-   Franchised
                                                                  Owned    or Licensed   Owned    or Licensed
                                                                 --------  -----------  --------  -----------
<S>                                                                 <C>        <C>         <C>        <C>
Stores open as of the beginning of the fiscal year                  481        553         482        418
                                                                                      
     Stores opened (including relocations)                            3         22           1         26
                                                                                  
     Stores closed (including relocations)                           (5)       (29)         (1)        (4)
                                                                                    
     Non-core (exit plan) stores closed (September 18, 1996          (6)         -         (23)         -
      forward)                                                                            

     Stores sold to franchisees                                       -          -           -          -
 
     Non-core (exit plan) stores franchised (September 18,
      1996 forward)                                                  (2)         2           -          -

     Stores acquired from franchisees                                 1         (1)          4         (4)
                                                                   ------     ------       ----       -----
Stores open as of the end of the period                               472        547       463        436
                                                                   ======     ======       ====       =====
</TABLE>
                                                                              

         The activity reflected above resulted in 6,195 and 6,143  Company-owned
equivalent store weeks and 7,150 and 5,551 franchisee/licensee  equivalent store
weeks  during the 13 weeks  ended April 4, 1998 and the 13 weeks ended March 29,
1997, respectively.

Revenues

         Net Stores Sales.  Total net store sales increased  $903,000,  or 3.3%,
from $27,642,000 to $28,545,000 for the 13 weeks ended April 4, 1998 compared to
the 13 weeks ended March 29, 1997.

          Net store sales from core stores increased  $2,160,000,  or 9.6%, from
$22,429,000 to $24,589,000  for the 13 weeks ended April 4, 1998 compared to the
13 weeks ended March 29, 1997.  The increase in net store sales from core stores
was  primarily  attributable  to the  operation  of 69 Pretzel  Time core stores
obtained in connection  with the Pretzel  Contributions in July 1997,  offset in
part by the negative effect of two calendar  shifts;  (i) the Company's year end
was  December  28 in 1996 and  January  3, 1998 for 1997.  As a result,  the New
Year's  holiday  week fell in the first  quarter of 1997 and again in the fourth
quarter  1997.  The first  quarter of 1998 did not  benefit  from the New Year's
holiday sales, and (ii) in addition, Easter was March 30 in 1997 but April 12 in
1998.  As a result,  Easter  holiday sales were in the first quarter of 1997 but
will be in the second  quarter of 1998.  Had these two holiday weeks been in the
first  quarter  of 1998,  net store  sales  from  core  stores  would  have been
approximately $1,000,000 greater or $25,589,000.

         On a  comparable  store  basis  (adjusted  for  the  calendar  shifts),
system-wide  core store  sales were down 0.5% during the 13 weeks ended April 4,
1998 compared to the same period in 1997.  However,  the Mrs. Fields core stores
continue to demonstrate  the strength of the Mrs. Fields brand by posting a 4.0%
increase  in  comparable  store  sales.  This  increase is in addition to a 3.1%
increase for the first quarter of 1997.

         Net  store  sales  from  stores  in the  process  of  being  closed  or
franchised decreased $1,257,000, or 24.1%, from $5,213,000 to $3,956,000 for the
13 weeks ended April 4, 1998 compared to the 13 weeks ended March 29, 1997. This
decrease  results from closing 6 stores and  franchising  2 stores during the 13
weeks  ended  April 4, 1998 and the effect of  closing  23 stores  during the 13
weeks ended March 29, 1997. In addition,  47 stores were closed and 9 franchised
over the  remainder  of fiscal year 1997 which were in  operation  during the 13
weeks ended March 29, 1997.


         Franchising  Revenues.  Franchising  revenues  increased  $376,000,  or
50.5%, from $745,000 to $1,121,000 for the 13 weeks ended April 4, 1998 compared
to the 13 weeks ended March 29, 1997. The increase in  franchising  revenues was
primarily  attributable  to royalties  earned from 141 Pretzel  Time  franchised
stores obtained in connection with the Pretzel Acquisitions.

         Licensing Revenues.  Licensing revenues decreased  $188,000,  or 42.8%,
from  $439,000 to $251,000 for the 13 weeks ended April 4, 1998  compared to the
13 weeks ended March 29, 1997. The decrease in licensing  revenues was primarily
attributable  to a Mrs.  Fields branded dry cookie mix license fee earned during
the 13 weeks ended March 29, 1997 that did not recur in the 13 weeks ended April
4, 1998.

         Other Revenue,  net. Other revenue,  net, increased $83,000,  or 97.6%,
from $85,000 to $168,000 for the 13 weeks ended April 4, 1998 compared to the 13
weeks ended March 29, 1997.  The increase in other  revenue,  net, was primarily
attributable  to a 13%  increase in  contribution  from the sale of Mrs.  Fields
branded products  through the Company's mail order division,  once again showing
the strong demand for the brand's quality.

<PAGE>

     Total  Revenues.   Depsite  the  holiday  calendar  shifts,  total  revenue
increased by $1,174,000,  or 4.1%,  from  $28,911,000 to $30,085,000  for the 13
weeks ended  April 4, 1998  compared to the 13 weeks ended March 29, 1997 due to
the  addition  of the  Pretzel  Contributions  offset by the  effects  of closed
stores.


Operating Costs and Expenses

         Selling and Store  Occupancy  Costs.  Total selling and store occupancy
costs increased  $963,000,  or 6.0%, from  $16,091,000 to $17,054,000 for the 13
weeks ended April 4, 1998 compared to the 13 weeks ended March 29, 1997.

     Selling and store occupancy costs for core stores  increased by $1,951,000,
or 16.8%,  from  $11,632,000 to $13,583,000 for the 13 weeks ended April 4, 1998
compared to the 13 weeks ended March 29,  1997.  Within this  overall  increase,
selling  expenses  increased  by  $1,214,000,   or  18.1%,  from  $6,706,000  to
$7,920,000  for the 13 weeks ended April 4, 1998  compared to the 13 weeks ended
March 29, 1997. The increase in selling  expenses was primarily  attributable to
the 69  Pretzel  Time  core  stores  obtained  in  connection  with the  Pretzel
Contributions in July 1997. Store occupancy costs increased $737,000,  or 15.0%,
from  $4,926,000 to $5,663,000  for the 13 weeks ended April 4, 1998 compared to
the 13 weeks ended March 29,  1997.  The increase in store  occupancy  costs was
primarily attributable to the 69 Pretzel Time core stores obtained in connection
with the Pretzel  Contributions in July 1997,  coupled with the opening of three
new core  stores  during  the 13 weeks  ended  April 4, 1998 and  lease  renewal
increases.

         Selling  and store  occupancy  costs for stores in the process of being
closed or franchised decreased $988,000, or 22.2%, from $4,459,000 to $3,471,000
for the 13 weeks  ended  April 4, 1998  compared to the 13 weeks ended March 29,
1997. This decrease was primarily the result of closing 6 stores and franchising
2 stores  during the 13 weeks  ended  April 4, 1998 and the effect of closing 23
stores  during the 13 weeks ended March 29, 1997.  In  addition,  47 stores were
closed and 9  franchised  over the  remainder  of fiscal year 1997 which were in
operation during the 13 weeks ended March 29, 1997.


         Food Cost of Sales.  Total  food cost of sales  increased  $44,000,  or
0.7%,  from  $6,697,000  to  $6,741,000  for the 13 weeks  ended  April 4,  1998
compared to the 13 weeks ended March 29, 1997.

         Food cost of sales for core stores  increased  $501,000,  or 9.7%, from
$5,153,000 to $5,654,000 for the 13 weeks ended April 4, 1998. This increase was
primarily  the result of the  addition  of 69 Pretzel  Time core  stores in July
1997.

         Food  cost of sales  for  stores  in the  process  of being  closed  or
franchised  decreased $457,000,  or 29.6%, from $1,544,000 to $1,087,000 for the
13 weeks ended April 4, 1998 compared to the 13 weeks ended March 29, 1997. This
decrease was primarily  the result of closing 6 stores and  franchising 2 stores
during  the 13 weeks  ended  April 4, 1998 and the  effect of  closing 23 stores
during the 13 weeks ended March 29, 1997. In addition, 47 stores were closed and
9  franchised  over the  remainder  of fiscal year 1997 which were in  operation
during the 13 weeks ended March 29, 1997.


         General  and  Administrative   Expenses.   General  and  administrative
expenses increased $384,000,  or 10.4%, from $3,698,000 to $4,082,000 for the 13
weeks ended April 4, 1998  compared  to the 13 weeks ended March 29,  1997.  The
increase in general and  administrative  expenses was primarily  attributable to
the addition of the Pretzel Contributions.

         Depreciation  and  Amortization.  Total  depreciation  and amortization
expense  increased by $809,000,  or 39.0%, from $2,072,000 to $2,881,000 for the
13 weeks ended April 4, 1998 compared to the 13 weeks ended March 29, 1997. This
increase  was  primarily  attributable  to increased  goodwill  from the Pretzel
Contributions.

         Depreciation  and  amortization   expense  for  core  stores  increased
$225,000,  or 27.8%, from $809,000 to $1,034,000 for the 13 weeks ended April 4,
1998  compared  to  the  13  weeks  ended  March  29,  1997.  This  increase  in
depreciation and amortization expense was primarily attributable to the addition
of 69 Pretzel  Time core stores in July 1997 and three newly  opened core stores
during the 13 weeks ended April 4, 1998.


         Total Operating Costs and Expenses.  Total operating costs and expenses
increased by $2,200,000,  or 7.7%,  from  $28,558,000 to $30,758,000  for the 13
weeks ended April 4, 1998 compared to the 13 weeks ended March 29, 1997, for the
reasons discussed above.

         Interest  Expense.  Interest expense,  net,  increased  $1,211,000,  or
78.4%,  from  $1,545,000  to  $2,756,000  for the 13 weeks  ended  April 4, 1998
compared to the 13 weeks ended  March 29,  1997.  This  increase  was  primarily
attributable to interest on the  $100,000,000 in high yield notes which were put
in place in November 1997.

<PAGE>

         Interest Income.  Interest income,  increased  $68,000,  or 63.0%, from
$108,000  to $176,000  for the 13 weeks  ended April 4, 1998  compared to the 13
weeks ended March 29, 1997.  This  increase was  primarily  the result  interest
income on excess  cash  provided by the  $100,000,000  in high yield notes which
were put in place in November 1997.

         Other  Expenses.  Other expenses,  increased  $17,000,  or 12.2%,  from
$139,000  to $156,000  for the 13 weeks  ended April 4, 1998  compared to the 13
weeks ended March 29, 1997.  This  increase was  primarily  attributable  to the
Company  recognizing the minority interest from the net loss at the Pretzel Time
subsidiary for the 13 weeks ended April 4, 1998.

         Net  Loss.  The net loss  increased  by  $2,186,000,  or  178.7%,  from
$1,223,000 to $3,409,000 for the 13 weeks ended April 4, 1998 compared to the 13
weeks ended March 29, 1997 due to the combination of factors described above.

         Contribution from Core Stores.  Contribution from core stores decreased
by $517,000,  or 10.7%,  from  $4,835,000 to  $4,318,000  for the 13 weeks ended
April 4, 1998 compared to the 13 weeks ended March 29, 1997.  Contribution  from
core  stores  during the first  quarter of 1998 was  negatively  impacted by two
calendar shifts;  (i) the Company's year end was December 28 in 1996 and January
3, 1998 for 1997.  As a result,  the New Year's  holiday  week fell in the first
quarter of 1997 and again in the fourth  quarter of 1997.  The first  quarter of
1998 did not benefit from the New Year's  holiday  sales,  and (ii) in addition,
Easter was March 30 in 1997 but April 12 in 1998.  As a result,  Easter  holiday
sales were in the first  quarter  of 1997 but will be in the  second  quarter of
1998.  Had  these  two  holiday  weeks  been  in  the  first  quarter  of  1998,
contribution from core stores would have been approximately  $800,000 greater or
$5,118,000.

         Negative  Contribution  from Stores in the  Process of Being  Closed or
Franchised. The negative contribution from stores in the process of being closed
or franchised  decreased by $79,000, or 10.0%, from $790,000 to $711,000 for the
13 weeks ended April 4, 1998 compared to the 13 weeks ended March 29, 1997.  The
decrease in negative contribution was primarily attributable to closing 6 stores
and  franchising 2 stores during the 13 weeks ended April 4, 1998 and the effect
of closing 23 stores during the 13 weeks ended March 29, 1997.  In addition,  47
stores were closed and 9 franchised over the remainder of fiscal year 1997 which
were in operation during the 13 weeks ended March 29, 1997.

         EBITDA. Earnings before interest, taxes, depreciation and amortization,
preferred stock accretion and dividends of subsidiaries,  minority  interest and
other income  (expense)  ("EBITDA")  is presented as  management  believes  that
certain  investors  find it to be a useful  tool for  measuring  the  ability to
service debt. EBITDA does not represent net income or cash flows from operations
as these terms are defined by generally accepted accounting  principles and does
not necessarily  indicate  whether cash flows have been or will be sufficient to
fund cash needs.  EBITDA  decreased by $217,000,  or 9.8%,  from  $2,425,000  to
$2,208,000  for the 13 weeks ended April 4, 1998  compared to the 13 weeks ended
March 29,  1997.  Had the two holiday  weeks been in the first  quarter of 1998,
EBITDA would have been approximately $800,000 greater or $3,008,000.



Liquidity and Capital Resources

         General

         The  Company's  principal  sources  of  liquidity  are cash  flows from
operations,  cash on hand and available  borrowings under the Company's existing
revolving credit facilities.  At April 4, 1998, the Company had $15.0 million of
cash and $15.0 million of unused  borrowings  under its credit  facility.  It is
expected that the Company's  principal  uses of cash will be to provide  working
capital,  finance capital expenditures (including acquisitions and store closure
costs), meet debt service requirements and for other general corporate purposes.
The Company is highly  leveraged.  Based on current  operations and  anticipated
cost  savings,  the  Company  believes  that its  sources of  liquidity  will be
adequate  to meet its  anticipated  requirements  for working  capital,  capital
expenditures  (including  acquisitions and store closure costs),  scheduled debt
service  requirements  and other  general  corporate  purposes.  There can be no
assurance,  however,  that the Company's business will continue to generate cash
flows at or above current levels or that cost savings can be achieved.

         April 4, 1998 Compared to January 3, 1998

         As of April 4,  1998,  the  Company  had liquid  assets  (cash and cash
equivalents  and accounts  receivable) of  $17,987,000,  a decrease of 10.1%, or
$2,011,000,  from  January 3, 1998 when  liquid  assets were  $19,998,000.  Cash
decreased $1,272,000,  or 7.8%, to $15,015,000 at April 4, 1998 from $16,287,000
at  January  3,  1998.  This  decrease  was  primarily  the  result  of  capital
expenditures  of  $1,226,000  during the period  relating to store  remodels and
renovations.  Accounts receivable decreased $774,000, or 20.7%, to $2,972,000 at
April 4, 1998 from  $3,711,000 at January 3, 1998 due to the  seasonality of the
business and improved collections.
<PAGE>

         Current assets decreased by $2,416,000, or 8.4% to $26,407,000 at April
4, 1998 from  $28,823,000  at January 3, 1998.  This  decrease was primarily the
result of a decrease in cash of $1,272,000, accounts receivable of $774,000, and
prepaids of $242,000.

         Long-term  assets  decreased  $1,909,000,  or 1.6%, to  $118,952,000 at
April 4, 1998 from  $120,861,000 at January 3, 1998. This decrease was primarily
the result of normal recurring amortization of goodwill and deferred loan costs.

         Current  liabilities  decreased by $866,000,  or 5.5% to $14,824,000 at
April 4, 1998 from  $15,690,000 at January 3, 1998.  This decrease is due to the
Company liquidating  liabilities relating to accounts payable,  sales tax, lease
settlements and store closures offset by an increase in accrued interest.

     The Company's  working  capital  decreased by $1,530,000 to  $11,583,000 at
April 4, 1998 from  $13,113,000  at January 3, 1998,  for the reasons  described
above.

         The Company's cash flow from  operating  activities of $313,000 for the
13  weeks  ended  April  4,  1998,  resulted  primarily  from  store  sales  and
franchising and licensing  revenues less costs and expenses incurred to generate
the store sales and franchising and licensing revenues.

         The  Company  utilized  $1,279,000  of cash from  investing  activities
during the 13 weeks ended  April 4, 1998,  primarily  for  capital  expenditures
relating to store remodels and renovations.

         The Company utilized $306,000 of cash from financing  activities during
the 13 weeks  ended  April 4, 1998,  primarily  from the  payment  of  principal
related to various notes and capital lease obligations at Pretzel Time.

         The  specialty  cookie  and  pretzel  businesses  do  not  require  the
maintenance of  significant  receivables or  inventories;  however,  the Company
continually  invests in its  business by  upgrading  and  remodeling  stores and
adding new stores,  carts,  and kiosks as  opportunities  arise.  Investments in
these long-term assets,  which are key to generating  current sales,  reduce the
Company's working capital. During the 13 weeks ended April 4, 1998 and March 29,
1997, the Company expended  $1,226,000 and $1,206,000,  respectively for capital
assets  and  expects  to expend  approximately  $7,800,000  in 1998.  Management
anticipates  that these  expenditures  will be funded with cash  generated  from
operations and short-term borrowings under its credit facility as needed.


Inflation

         The impact of  inflation  on the  earnings of the business has not been
significant in recent years.  Most of Mrs.  Fields'  leases  contain  escalation
clauses  (however,  such leases are  accounted for on a  straight-line  basis as
required  by  generally   accepted   accounting   principles   which   minimizes
fluctuations in operating  income) and many of Mrs.  Fields'  employees are paid
hourly wages at the Federal  minimum wage level.  Minimum  wage  increases  will
negatively  impact Mrs.  Fields' payroll costs in the short term, but management
believes  such  impact  can be  offset  in the  long  term  through  operational
efficiency gains and, if necessary, through product price increases.


Seasonality

         The Company's  sales and store  contribution  are highly seasonal given
the significant impact of its mall-based locations.  The Company's sales tend to
mirror customer traffic flow trends in malls which increase significantly during
the fourth quarter (primarily  between  Thanksgiving and the end of the calendar
year).  Holiday gift purchases are also a significant  factor in increased sales
in the fourth quarter.

         The seasonality  effect on store  contribution is even more significant
than on sales.  The impact on store  contribution is more significant due to the
fixed  nature of certain  store  level costs  (occupancy  costs,  store  manager
salaries,  etc.).  Once these fixed costs are covered by store  sales,  the flow
through of sales to store contribution becomes greater.  Accordingly, the fourth
quarter is a key determinant to overall profitability for the year.


<PAGE>



                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

         In  connection  with the GACC  discussions,  on or about  September 12,
1997,  nine  franchisees  of GACC filed an action in the  Superior  Court of New
Jersey,  Mercer  County,  against the Company,  Capricorn and other  defendants,
challenging a possible acquisition of GACC by the Company.  Goldberg,  et al. v.
Great American  Cookie  Company,  et al.,  Docket No.  MER-L-3502-97  (Super Ct.
Mercer County).  The complaint asserts that the proposed sale violates Illinois,
Indiana,  Maryland,  New Jersey  and  Virginia  franchise  law,  violates  North
Carolina,  South Carolina and Texas unfair trade  practices  acts,  breaches the
plaintiffs'  franchise contracts and tortiously  interferes with the plaintiffs'
actual and prospective  contractual  relationships.  Management believes that it
has good and  meritorious  defenses to the action and intends to defend the case
vigoursly.  Currently  there are ongoing  negotiations  between the parties.  An
extension date of June 12, 1998 was granted to the defendant to file an answer.

         In the ordinary course of business,  the Company is involved in routine
litigation,  including  franchise  disputes.  The  Company is not a party to any
legal  proceedings  which,  in the opinion of management  of the Company,  after
consultation  with  legal  counsel,  is  material  to  the  Company's  business,
financial  condition or results of operations beyond amounts provided for in the
accompanying financial statements.

         The Company's stores and products are subject to regulation by numerous
governmental  authorities,  including,  without limitation,  federal,  state and
local  laws  and  regulations   governing  health,   sanitation,   environmental
protection, safety and hiring and employment practices.


Item 6.  Exhibits and Reports on Form 8-K

(a)    Exhibits

Exhibit No.       Description
    27            Financial data schedule (for SEC use only)


(b)    Forms 8-K

None



<PAGE>




                                                    SIGNATURES

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





MRS. FIELDS' ORIGINAL COOKIES, INC.




/s/Larry A. Hodges                   May 15, 1998
--------------------------------     ------------
Larry A. Hodges, President & CEO         Date