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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|ý                                                             | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934       
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|FOR THE QUARTERLY PERIOD ENDED June 28, 2003                 
|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 number: 333-45179

MRS. FIELDS' ORIGINAL COOKIES, INC.(Exact Name of Registrant Specified in Its Charter)

|Delaware                                                                                             |  | 87-0552899                       
|---------------------------------------------------------------------------------------------------- |  | ---------------------------------
|(State or Other Jurisdiction of
Incorporation or Organization)                                       |  | (IRS Employer Identification No.)
|2855 East Cottonwood Parkway, Suite 400
Salt Lake City, Utah(Address of Principal Executive Offices) |  | 84121-7050(Zip Code)             
|Registrant's telephone number, including area code:(801) 736-5600                                   

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

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

The
registrant had 400 shares of common stock, $0.01 par value, outstanding at August 1, 2003.

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

TABLE OF CONTENTS



|PART 1FINANCIAL INFORMATION
|----------------------------
|Item 1.                     
|                            
|                            
|                            
|                            
|                            
|Item 2.                     
|Item 3.                     
|Item 4.                     
|PART IIOTHER INFORMATION   
|Item 1.                     
|Item 5.                     
|Item 6.                     
|Signatures                  

2

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PART 1FINANCIAL INFORMATION

ITEM 1. Financial Statements

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

|                                                                                                     |                                                                                                                   | June 28, 2003               |         | December 28, 2002 |        
|---------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------- | ------- | ----------------- | -------
|ASSETS                                                                                               |                                                                                                                  
|CURRENT ASSETS:                                                                                      |                                                                                                                   |                             |         |                   |        
|                                                                                                     | Cash and cash equivalents                                                                                         |                             | $       | 1,282             |        
|                                                                                                     | Accounts receivable, net of allowance for doubtful accounts of $118 and $124, respectively                        |                             |         | 2,212             |        
|                                                                                                     | Amounts due from franchisees and licensees, net of allowance for doubtful accounts of $962 and $953, respectively |                             |         | 2,582             |        
|                                                                                                     | Inventories                                                                                                       |                             |         | 3,184             |        
|                                                                                                     | Prepaid rent and other                                                                                            |                             |         | 925               |        
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|                                                                                                     |                                                                                                                   | Total current assets        |         |                   | 10,185 
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|PROPERTY AND EQUIPMENT, at cost:                                                                     |                                                                                                                   |                             |         |                   |        
|                                                                                                     | Leasehold improvements                                                                                            |                             |         | 29,406            |        
|                                                                                                     | Equipment and fixtures                                                                                            |                             |         | 25,443            |        
|                                                                                                     | Land                                                                                                              |                             |         | 240               |        
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|                                                                                                     |                                                                                                                   |                             | 55,089  |                   |        
|                                                                                                     | Less accumulated depreciation and amortization                                                                    |                             |         | (42,221           | )      
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|                                                                                                     |                                                                                                                   | Net property and equipment  |         |                   | 12,868 
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|GOODWILL, net                                                                                        |                                                                                                                   |                             | 64,115  |                   |        
|TRADEMARKS AND OTHER INTANGIBLES, net of accumulated amortization of $8,554 and $7,936, respectively |                                                                                                                   |                             | 9,939   |                   |        
|DEFERRED LOAN COSTS, net of accumulated amortization of $12,933 and $11,516, respectively            |                                                                                                                   |                             | 4,011   |                   |        
|AMOUNTS DUE FROM AFFILIATES                                                                          |                                                                                                                   |                             | 1,500   |                   |        
|OTHER ASSETS                                                                                         |                                                                                                                   |                             | 351     |                   |        
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|                                                                                                     |                                                                                                                   | $                           | 102,969 |                   | $      
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|LIABILITIES AND SHAREHOLDER'S DEFICIT                                                                |                                                                                                                  
|CURRENT LIABILITIES:                                                                                 |                                                                                                                   |                             |         |                   |        
|                                                                                                     | Bank borrowings under line of credit                                                                              |                             | $       | 7,991             |        
|                                                                                                     | Current portion of long-term debt                                                                                 |                             |         | 1,155             |        
|                                                                                                     | Current portion of capital lease obligations                                                                      |                             |         | 257               |        
|                                                                                                     | Accounts payable                                                                                                  |                             |         | 7,130             |        
|                                                                                                     | Accrued liabilities                                                                                               |                             |         | 4,044             |        
|                                                                                                     | Current portion of store closure reserve                                                                          |                             |         | 616               |        
|                                                                                                     | Accrued salaries, wages and benefits                                                                              |                             |         | 5,281             |        
|                                                                                                     | Accrued interest payable                                                                                          |                             |         | 1,085             |        
|                                                                                                     | Sales taxes payable                                                                                               |                             |         | 611               |        
|                                                                                                     | Amounts due to affiliates                                                                                         |                             |         | 3,974             |        
|                                                                                                     | Current portion of deferred revenue                                                                               |                             |         | 943               |        
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|                                                                                                     |                                                                                                                   | Total current liabilities   |         |                   | 33,087 
|LONG-TERM DEBT, net of current portion and discount                                                  |                                                                                                                   |                             | 139,951 |                   |        
|CAPITAL LEASE OBLIGATIONS, net of current portion                                                    |                                                                                                                   |                             | 108     |                   |        
|STORE CLOSURE RESERVE, net of current portion                                                        |                                                                                                                   |                             | 1,026   |                   |        
|DEFERRED REVENUE, net of current portion                                                             |                                                                                                                   |                             | 4,458   |                   |        
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|                                                                                                     |                                                                                                                   | Total liabilities           |         |                   | 178,630
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|STOCKHOLDER'S DEFICIT:                                                                               |                                                                                                                   |                             |         |                   |        
|                                                                                                     | Common stock, $.01 par value; 1,000 shares authorized, 400 shares outstanding                                     |                             |         |                  |        
|                                                                                                     | Additional paid-in capital                                                                                        |                             |         | 64,575            |        
|                                                                                                     | Deferred stock compensation                                                                                       |                             |         | (401              | )      
|                                                                                                     | Accumulated deficit                                                                                               |                             |         | (139,701          | )      
|                                                                                                     | Accumulated other comprehensive loss                                                                              |                             |         | (134              | )      
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|                                                                                                     |                                                                                                                   | Total stockholder's deficit |         |                   | (75,661
|                                                                                                     |                                                                                                                   |                             |         |                   |        
|COMMITMENTS AND CONTINGENCIES                                                                        |                                                                                                                   |                             |         |                   |        
|                                                                                                     |                                                                                                                   | $                           | 102,969 |                   | $      
|                                                                                                     |                                                                                                                   |                             |         |                   |        

See accompanying notes to condensed consolidated financial statements.

3

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS  (Unaudited)  (Dollars in thousands)

|                                                                       |                                         | 13 Weeks Ended                |       
|---------------------------------------------------------------------- | --------------------------------------- | ----------------------------- | ------
|
|REVENUES:                                                              |                                         |                               |       
|                                                                       | Net store and food sales                |                               | $     
|                                                                       | Franchising and licensing               |                               |       
|                                                                       | Mail order                              |                               |       
|                                                                       | Management fee revenue                  |                               |       
|                                                                       | Other operating revenue                 |                               |       
|                                                                       |                                         |                               |       
|                                                                       |                                         | Total revenues                |       
|                                                                       |                                         |                               |       
|OPERATING COSTS AND EXPENSES:                                          |                                         |                               |       
|                                                                       | Selling and store occupancy costs       |                               |       
|                                                                       | Cost of salesstore and food            |                               |       
|                                                                       | Franchising and licensing               |                               |       
|                                                                       | Mail order                              |                               |       
|                                                                       | General and administrative              |                               |       
|                                                                       | Stock compensation expense              |                               |       
|                                                                       | Store closure provision                 |                               |       
|                                                                       | Wal-Mart restructuring costs            |                               |       
|                                                                       | Impairment of long-lived assets         |                               |       
|                                                                       | Depreciation                            |                               |       
|                                                                       | Amortizationintangibles                |                               |       
|                                                                       | Other operating income, net             |                               |       
|                                                                       |                                         |                               |       
|                                                                       | Total operating costs and expenses      |                               |       
|                                                                       |                                         |                               |       
|                                                                       |                                         | Income (loss) from operations |       
|Interest expense, net                                                  |                                         |                               | (4,510
|                                                                       |                                         |                               |       
|Loss before benefit (provision) for income taxes and minority interest |                                         |                               | (3,931
|Benefit (provision) for income taxes                                   |                                         |                               | 88    
|                                                                       |                                         |                               |       
|Loss before minority interest                                          |                                         |                               | (3,843
|Minority interest                                                      |                                         |                               |      
|                                                                       |                                         |                               |       
|                                                                       | Net loss                                |                               | $     
|                                                                       |                                         |                               |       
|COMPREHENSIVE LOSS:                                                    |                                         |                               |       
|                                                                       | Net loss                                |                               | $     
|                                                                       | Foreign currency translation adjustment |                               |       
|                                                                       |                                         |                               |       
|                                                                       |                                         | Comprehensive loss            |       
|                                                                       |                                         |                               |       

See
accompanying notes to condensed consolidated financial statements.

4

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS  (Unaudited)  (Dollars in thousands)

|                                                                                                     |                                         | 26 Weeks Ended                |       
|---------------------------------------------------------------------------------------------------- | --------------------------------------- | ----------------------------- | ------
|
|
|REVENUES:                                                                                            |                                         |                               |       
|                                                                                                     | Net store and food sales                |                               | $     
|                                                                                                     | Franchising and licensing               |                               |       
|                                                                                                     | Mail order                              |                               |       
|                                                                                                     | Management fee revenue                  |                               |       
|                                                                                                     | Other operating revenue                 |                               |       
|                                                                                                     |                                         |                               |       
|                                                                                                     |                                         | Total revenues                |       
|                                                                                                     |                                         |                               |       
|OPERATING COSTS AND EXPENSES:                                                                        |                                         |                               |       
|                                                                                                     | Selling and store occupancy costs       |                               |       
|                                                                                                     | Cost of salesstore and food            |                               |       
|                                                                                                     | Franchising and licensing               |                               |       
|                                                                                                     | Mail order                              |                               |       
|                                                                                                     | General and administrative              |                               |       
|                                                                                                     | Stock compensation expense              |                               |       
|                                                                                                     | Store closure provision                 |                               |       
|                                                                                                     | Wal-Mart restructuring costs            |                               |       
|                                                                                                     | Impairment of long-lived assets         |                               |       
|                                                                                                     | Depreciation                            |                               |       
|                                                                                                     | Amortizationintangibles                |                               |       
|                                                                                                     | Other operating (income) expense, net   |                               |       
|                                                                                                     |                                         |                               |       
|                                                                                                     | Total operating costs and expenses      |                               |       
|                                                                                                     |                                         |                               |       
|                                                                                                     |                                         | Income (loss) from operations |       
|Interest expense, net                                                                                |                                         |                               | (8,967
|                                                                                                     |                                         |                               |       
|Loss before provision for income taxes, minority interest and cumulative effect of accounting change |                                         |                               | (6,288
|Provision for income taxes                                                                           |                                         |                               | (35   
|                                                                                                     |                                         |                               |       
|Loss before minority interest and cumulative effect of accounting change                             |                                         |                               | (6,323
|Minority interest                                                                                    |                                         |                               |      
|                                                                                                     |                                         |                               |       
|Loss before cumulative effect of accounting change                                                   |                                         |                               | (6,323
|Loss from cumulative effect of accounting change                                                     |                                         |                               |      
|                                                                                                     |                                         |                               |       
|                                                                                                     | Net loss                                |                               | $     
|                                                                                                     |                                         |                               |       
|COMPREHENSIVE LOSS:                                                                                  |                                         |                               |       
|                                                                                                     | Net loss                                |                               | $     
|                                                                                                     | Foreign currency translation adjustment |                               |       
|                                                                                                     |                                         |                               |       
|                                                                                                     |                                         | Comprehensive loss            |       
|                                                                                                     |                                         |                               |       

See
accompanying notes to condensed consolidated financial statements.

5

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)  (Dollars in thousands)

|                                                  |                                                                             | 26 Weeks Ended                                                     |                                           
|------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                                                             |                                                                    |                                           
|                                                  | Net loss                                                                    |                                                                    | $                                         
|                                                  | Adjustments to reconcile net loss to net cash used in operating activities: |                                                                    |                                           
|                                                  |                                                                             | Loss from cumulative effect of accounting change                   |                                           
|                                                  |                                                                             | Impairment of long-lived assets                                    |                                           
|                                                  |                                                                             | Depreciation and amortization                                      |                                           
|                                                  |                                                                             | Asset write offWal-Mart locations                                 |                                           
|                                                  |                                                                             | Amortization of deferred loan costs and accretion of loan discount |                                           
|                                                  |                                                                             | Stock compensation expense                                         |                                           
|                                                  |                                                                             | (Gain) loss on disposition of assets                               |                                           
|                                                  |                                                                             | Minority interest                                                  |                                           
|                                                  |                                                                             | Changes in assets and liabilities:                                 |                                           
|                                                  |                                                                             |                                                                    | Accounts receivable                       
|                                                  |                                                                             |                                                                    | Amounts due from franchisees and licensees
|                                                  |                                                                             |                                                                    | Amounts due to/from affiliates            
|                                                  |                                                                             |                                                                    | Inventories                               
|                                                  |                                                                             |                                                                    | Prepaid rent and other                    
|                                                  |                                                                             |                                                                    | Other assets                              
|                                                  |                                                                             |                                                                    | Accounts payable                          
|                                                  |                                                                             |                                                                    | Accrued liabilities                       
|                                                  |                                                                             |                                                                    | Store closure reserve                     
|                                                  |                                                                             |                                                                    | Accrued salaries, wages and benefits      
|                                                  |                                                                             |                                                                    | Accrued interest payable                  
|                                                  |                                                                             |                                                                    | Sales taxes payable                       
|                                                  |                                                                             |                                                                    | Deferred revenue                          
|                                                  |                                                                             |                                                                    |                                           
|                                                  |                                                                             |                                                                    | Net cash used in operating activities     
|                                                  |                                                                             |                                                                    |                                           
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                                                             |                                                                    |                                           
|                                                  | Purchases of property and equipment                                         |                                                                    |                                           
|                                                  | Proceeds from sale of property and equipment                                |                                                                    |                                           
|                                                  |                                                                             |                                                                    |                                           
|                                                  |                                                                             |                                                                    | Net cash provided by investing activities 
|                                                  |                                                                             |                                                                    |                                           
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                                                             |                                                                    |                                           
|                                                  | Borrowings (payments) under line of credit                                  |                                                                    |                                           
|                                                  | Payment of debt financing costs                                             |                                                                    |                                           
|                                                  | Principal payments on long-term debt                                        |                                                                    |                                           
|                                                  | Principal payments on capital lease obligations                             |                                                                    |                                           
|                                                  | Distribution to parent under tax sharing agreement                          |                                                                    |                                           
|                                                  |                                                                             |                                                                    |                                           
|                                                  |                                                                             |                                                                    | Net cash used in financing activities     
|                                                  |                                                                             |                                                                    |                                           
|EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH   |                                                                             |                                                                    | 1                                         
|                                                  |                                                                             |                                                                    |                                           
|NET DECREASE IN CASH AND CASH EQUIVALENTS         |                                                                             |                                                                    | (1,385                                    
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD  |                                                                             |                                                                    | 2,667                                     
|                                                  |                                                                             |                                                                    |                                           
|CASH AND CASH EQUIVALENTS AT END OF PERIOD        |                                                                             | $                                                                  | 1,282                                     
|                                                  |                                                                             |                                                                    |                                           
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                                             |                                                                    |                                           
|                                                  |                                                                             | Cash paid for interest                                             |                                           
|                                                  |                                                                             |                                                                    |                                           
|                                                  |                                                                             | Cash paid for income taxes                                         |                                           
|                                                  |                                                                             |                                                                    |                                           

See accompanying notes to condensed consolidated financial statements.

6

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)

(1)   BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by Mrs. Fields' Original Cookies, Inc. and subsidiaries
("Mrs. Fields" or 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 accounting principles generally accepted in the United States of America. In the opinion of management, these condensed consolidated financial statements
reflect all adjustments, which consist only of normal recurring adjustments, necessary to present fairly the financial position of Mrs. Fields as of June 28, 2003 and December 28,
2002, and the results of its operations and its cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial
statements and notes thereto for the fiscal year ended December 28, 2002 contained in Mrs. Fields' Annual Report on Form 10-K.

The
results of operations for the 13 and 26 weeks ended June 28, 2003 are not necessarily indicative of the results that may be expected for the remainder of the fiscal year
ending January 3, 2004. Loss per share information is not presented as Mrs. Fields is wholly owned by Mrs. Fields' Holding Company, Inc. ("Mrs. Fields' Holding")
and, therefore, its shares are not publicly traded. Mrs. Fields' Holding is a wholly owned subsidiary of Mrs. Fields Famous Brands, Inc. ("MFFB").

The
results of operations and cash flows for the 26 weeks ended June 29, 2002 have been restated to reflect the transitional provisions of the cumulative effect of a change in
accounting principle. The Company completed its analysis of the impact of Statement of Financial Accounting Standards No. 142, ("SFAS 142") in the third quarter of 2002 and, in
accordance with the requirements of SFAS 142, recorded the resultant cumulative effect of a change in accounting principle of $39.1 million effective as of the beginning of fiscal 2002.

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

(2)   LIQUIDITY

Management believes the Company's operations have been negatively impacted over the past two years by reduced mall traffic due to the recession during 2001 and
the continued economic instability, the events of September 11, 2001 and the war in Iraq that commenced during the first quarter of 2003. The Company has incurred net losses from the date of
its formation resulting in a stockholder's deficit of $75.7 million at June 28, 2003. The Company used $2.8 million of cash for operating activities during the 26 weeks ended
June 28, 2003. The Company generated $1.6 million of cash from investing activities during the 26 weeks ended June 28, 2003, primarily from proceeds from the sale of 27 company
owned stores to franchisees offset by purchases of property and equipment. The Company used $200,000 of cash for financing activities during the 26 weeks ended June 28, 2003, principally for a
distribution to parent under the tax sharing agreement and payments of debt financing costs, long-term debt and capital leases offset by borrowings under the revolving line of credit.

During
2003, the Company expects that its principal uses of cash will be for working capital, capital expenditures, store closure obligations, debt service requirements, payments to MFFB
in accordance with the Tax Allocation Agreement (see Note 7) and other general corporate purposes. In March 2003, Mrs. Fields paid MFFB $5.0 million relating to its
obligations under the Tax Allocation Agreement for fiscal 2002. In July 2003, Mrs. Fields paid MFFB $1.1 million relating to its obligations

7

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under
the Tax Allocation Agreement for fiscal 2003. During the second half of fiscal 2003, Mrs. Fields expects to pay MFFB an additional $2.4 million relating to its fiscal 2003
obligations under the Tax Allocation Agreement. The Company expects that its principal sources of cash will be provided by operating activities, proceeds from the sale of assets including the sale of
company owned stores to new or existing franchisees and borrowings from the revolving line of credit. At June 28, 2003, the Company had $1.9 million available under its revolving line of
credit. In March 2003, the Company received $2.0 million from a supplier as an advance to develop a beverage concept at company owned and franchised stores.

The
Company is highly leveraged. In addition to its credit facility with Foothill Capital Corporation (see Note 5), the Company has $140 million of senior unsecured notes
due on December 1, 2004 (the "Senior Notes"). The Senior Notes require semi-annual interest payments of approximately $7.1 million on June 1 and December 1. Due
to borrowing restrictions under its senior note indenture and required maintenance of financial covenants under the Foothill Credit Facility, the Company's ability to obtain additional debt financing
is significantly limited. Therefore, the Company may sell additional company owned stores, defer capital expenditures and extend vendor payments to meet its debt service obligations. The Company
believes that its sources of cash will be adequate to meet its cash requirements anticipated for the next 12 months. The Company is in compliance with its covenants underlying its Foothill
Credit Facility and its Senior Notes at June 28, 2003.

Mrs. Fields,
Mrs. Fields' Holding, MFFB and TCBY have engaged an investment banking firm to act as financial advisors to assist in the evaluation of various financing
alternatives, which may include, among other alternatives, the refinancing of the Senior Notes. There can be no assurances that the Company will be successful in refinancing the Senior Notes or
consummating any other recommended financing alternatives.

(3)   RELATED PARTY TRANSACTIONS

The Company is party to various related party transactions with its parent company, Mrs. Fields' Holding, and with TCBY Holding Company, Inc., a
wholly owned subsidiary of MFFB ("TCBY Holding"), and its subsidiaries (collectively, "TCBY"). The intercompany balance due to Mrs. Fields' Holding is principally the amount due under an
Assignment and Assumption Agreement entered into on December 29, 2001 for the assignment of 20 Pretzel Time stores formerly owned and operated by Mrs. Fields' Holding.

Amounts
receivable from TCBY represent amounts receivable under a management agreement, with the retention amount receivable classified as long-term. The amounts due to TCBY
at December 28, 2002 primarily represent amounts due for excess royalties paid by TCBY under a license agreement to sell Mrs. Fields branded ice cream that were repaid in
February 2003. The amounts due to TCBY at June 28, 2003 represent royalties for the sale of TCBY products at company owned stores.

Amounts
due to Riverport Equipment and Distribution Company, a subsidiary of TCBY ("Riverport"), are from purchases of equipment and smallware supplies for company owned stores.

Amounts
due to MFFB represent amounts due under the Amended and Restated Tax Allocation Agreement among the Company, MFFB, Mrs. Fields' Holding, TCBY Holding and all of their
respective subsidiaries.

8

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Amounts
due to/from affiliates as of June 28, 2003 and December 28, 2002 are as follows (in thousands):

June 28, 2003

December 28, 2002Amounts due from affiliates:TCBYretention amount, long-term


1,500


1,500$
1,500

$
1,500Amounts due to affiliates:Mrs. Fields' Holding

$
868

$
827Riverport





183TCBY


23


321MFFBtax sharing


3,083


5,244$
3,974

$
6,575


(4)   STORE CLOSURE RESERVE

The Company's management reviews the historical and projected operating performance of its stores on a periodic basis to identify under-performing stores for
impairment of net property investment or for targeted closing. The Company's policy is to recognize an impairment loss for that portion of the net property investment determined to be impaired.
Additionally, when a store is identified for targeted closing, the costs of closing the store are reserved. These costs consist primarily of estimated lease termination costs. Lease termination costs
include both one-time settlement payments and continued contractual payments over time under the original lease agreements where no settlement can be reached with the landlord. As a
result, although all stores targeted for closure may have been closed, the store closure reserve will continue to have a balance until all cash payments have been made. The Company does not accrue for
future expected operating losses.

Management
periodically reassesses the remaining store closure reserves based on all available relevant data. Reserves for closed stores that are settled on terms more favorable than
were originally estimated and expensed through the store closure provision are reversed through the store closure provision in the statement of operations. As of June 28, 2003, the remaining
store closure reserve was $1.6 million.

The
following presents a summary of the activity in the store closure reserve for the 13 weeks and 26 weeks ended June 28, 2003 and June 29, 2002 (in thousands):

|                                                                                            |  | 13 Weeks Ended |       | 26 Weeks Ended |  
|------------------------------------------------------------------------------------------- |  | -------------- | ----- | -------------- | -
|
|Beginning balance                                                                           |  | $              | 1,703 |                | $
|Additional reserves for continuing company owned and franchises stores targeted for closure |  |                | 331   |                |  
|Reversal of reserves                                                                        |  |                | (105  | )              |  
|Utilization of reserves                                                                     |  |                | (287  | )              |  
|                                                                                            |  |                |       |                |  
|Ending balance                                                                              |  | $              | 1,642 |                | $
|                                                                                            |  |                |       |                |  

9

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(5)   CREDIT FACILITY

On January 16, 2003 the Company entered into a Second Amended and Restated Loan and Security Agreement with Foothill Capital Corporation (the "Foothill
Credit Facility"), pursuant to which the Company's former credit facility with LaSalle National Bank was replaced and all amounts outstanding under it were refinanced. The Foothill Credit Facility
bears interest at the prime rate plus 1.75 percent and requires a monthly servicing fee of $5,000 and an anniversary fee of $200,000. The Foothill Credit Facility provides for
$11.9 million of credit (assuming the Company satisfies certain borrowing base restrictions) comprised of a $9.9 million revolving line of credit for financing working capital and
$2.0 million for letters of credit. The Foothill Credit Facility matures November 1, 2004 and is secured by substantially all of the assets of the Company.

On
June 26, 2003, the Company entered into an amendment of the Foothill Credit Facility (the "Amendment"). Among other things, the Amendment allows the Company to add back to
earnings used to calculate adjusted EBITDA, to the extent and only to the extent deducted from earnings used in calculating EBITDA, as defined in the Foothill Credit Facility, the severance related
costs in connection with the resignation of Larry Hodges (as further discussed in Note 8) expensed and payable by the Company during the fiscal years 2003 and 2004 in an aggregate amount not to
exceed $1.2 million. In addition, the Amendment provides for more favorable terms for certain financial covenants through the expiration date of the Foothill Credit Facility.

(6)   REPORTABLE SEGMENTS

Operating segments are components of the Company for which separate financial information is available that is evaluated regularly by management in deciding how
to allocate resources and in assessing performance. This information is reported on the basis that it is used internally for evaluating segment performance. Mrs. Fields has four reportable
operating segments; namely, company owned stores and related activity, franchising activity, licensing activity, and mail order activity. The segments are determined by revenue source: direct sales,
royalties and license fees. The company owned stores segment consists of both cookie and pretzel stores owned and operated by Mrs. Fields along with sales of branded cookie dough to retailers.
The franchising and licensing segments consist of cookie and pretzel stores, which are owned and operated by third parties who pay Mrs. Fields an initial franchise or license fee and monthly
royalties based on a percentage of gross sales and other licensing activity not related to cookie or pretzel stores. The mail order segment includes sales generated from the Company's mail order gift
catalog and web site. Sales and transfers between segments are eliminated in consolidation.

Mrs. Fields
evaluates performance of each segment based on contribution margin. Contribution margin is computed as the difference between the revenues generated by a reportable
segment and the selling and occupancy costs, cost of sales and direct general administrative costs related to that reportable segment. Contribution margin is used as a measure of the operating
performance of an operating segment. Mrs. Fields does not allocate any revenue generated from the TCBY management fee, general and administrative expense, other income (expense), interest
expense, depreciation and amortization or assets to its reportable operating segments. Mrs. Fields does not separate the costs incurred while performing activities for the TCBY Management
Agreement from costs of operating Mrs. Fields, as most of Mrs. Fields' employees support both companies, therefore the activity of

10

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managing
TCBY is not reported as a separate segment. Segment revenue and contribution margin are presented in the following table (in thousands):

|                             |  | Company Owned
Stores |        | Franchising |   | Licensing |  | Mail Order |       | Total
|---------------------------- |  | -------------------- | ------ | ----------- | - | --------- |  | ---------- | ----- | -----
|13 weeks ended June 28, 2003 |  |                      |        |             |   |           |  |            |       |      
|Revenue                      |  | $                    | 19,953 |             | $ | 6,767     |  | $          | 1,123 |      
|Contribution Margin          |  |                      | 2,364  |             |   | 4,524     |  |            | 833   |      
|13 weeks ended June 29, 2002 |  |                      |        |             |   |           |  |            |       |      
|Revenue                      |  | $                    | 27,954 |             | $ | 6,000     |  | $          | 528   |      
|Contribution Margin          |  |                      | 2,937  |             |   | 3,852     |  |            | 254   |      
|26 weeks ended June 28, 2003 |  |                      |        |             |   |           |  |            |       |      
|Revenue                      |  | $                    | 41,534 |             | $ | 12,937    |  | $          | 2,446 |      
|Contribution Margin          |  |                      | 4,606  |             |   | 8,637     |  |            | 1,998 |      
|26 weeks ended June 29, 2002 |  |                      |        |             |   |           |  |            |       |      
|Revenue                      |  | $                    | 58,696 |             | $ | 12,038    |  | $          | 3,350 |      
|Contribution Margin          |  |                      | 7,025  |             |   | 7,686     |  |            | 2,757 |      

The
reconciliation of contribution margin to net loss is as follows (in thousands):

|                                                   |          | 13 Weeks Ended |        | 26 Weeks Ended |  
|-------------------------------------------------- | -------- | -------------- | ------ | -------------- | -
|
|Contribution margin                                |          | $              | 8,141  |                | $
|Management fee revenue                             |          |                | 2,600  |                |  
|Other operating income                             |          |                | 17     |                |  
|General and administrative expense                 |          |                | (7,741 | )              |  
|Stock compensation expense                         |          |                | (46    | )              |  
|Store closure provision                            |          |                | (239   | )              |  
|Wal-Mart restructuring costs                       |          |                |       |                |  
|Impairment of long-lived assets                    |          |                | (1,295 | )              |  
|Depreciation and amortization                      |          |                | (1,918 | )              |  
|Other income (expense), net                        |          |                | 1,060  |                |  
|Minority interest                                  |          |                |       |                |  
|Interest expense, net                              |          |                | (4,510 | )              |  
|Benefit (provision) for income taxes               |          |                | 88     |                |  
|                                                   |          |                |        |                |  
|Loss before cumulative effect of accounting change |          |                | (3,843 | )              |  
|Loss from cumulative effect of accounting change   |          |                |       |                |  
|                                                   |          |                |        |                |  
|                                                   | Net loss |                | $      | (3,843         | )
|                                                   |          |                |        |                |  

The
assets of the Company primarily relate to company owned stores and related activity. Assets relating to franchising and licensing activity are primarily amounts due from franchisees
and licensees and goodwill relating to franchising concepts.

The
Company has one licensee, Nonni's Food Company, Inc. ("Nonni's") that accounted for $841,000 and $1.8 million, or 74.9 percent and 73.6 percent of the
revenue of the licensing segment for the 13 and 26 weeks ended June 28, 2003, respectively, and $241,000 and $2.7 million, or 45.6 percent and 79.6 percent of the revenue
of the licensing segment for the 13 and 26 weeks ended June 29, 2002,

11

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respectively.
The Company has one customer, Quill Corporation, that accounted for $363,000 and $938,000, or 11.3 percent and 15.6 percent of the revenue of the mail order business
segment for the 13 and 26 weeks ended June 28, 2003, respectively, and $452,000 and $897,000, or 19.2 percent and 19.5 percent of the revenue of the mail order business segment
for the 13 and 26 weeks ended June 29, 2002, respectively. There were no other customers or licensees that accounted for more than 10.0 percent of the Company's total revenue or any
individual segment's revenue. At June 28, 2003, the Company had a receivable of $616,000 from Nonni's, which represented 12.9 percent of the Company's total combined receivables.
Additionally, the Company had a receivable of $719,000 from International Multifoods Corporation at June 28, 2003, which represented 15.0 percent of the Company's total combined
receivables. At June 28, 2003 the Company had deferred revenue of $1.8 million under the Nonni's licensing agreement. This amount will be recognized into income during fiscal years 2003
and 2004.

(7)   TAX ALLOCATION DISTRIBUTION

In September 2001, the Company entered into an Amended and Restated Tax Allocation Agreement (the "Tax Allocation Agreement") among MFFB, Mrs Fields'
Holding, TCBY Holding and all of their respective subsidiaries (collectively, the "Group"). The Tax Allocation Agreement provides for compensation to the Company for any utilization of the Company's
net operating loss and capital loss carryforwards that existed as of September 29, 2001. Pursuant to this agreement, on a quarterly basis, a hypothetical federal income tax liability is
calculated for each subsidiary or subgroup of subsidiaries as if each subsidiary or subgroup of subsidiaries filed its own U.S. federal income tax return. The exact amount of any compensation MFFB
receives from a subsidiary or subgroup of subsidiaries is contingent upon the length of time between the utilization date and September 29, 2001 and is subject to additional calculations as
defined in the Supplement to Tax Allocation Agreement. During the 26 weeks ended June 28, 2003, TCBY paid $150,000 to the Company for utilization of the Company's net operating loss carry
forwards. During the 26 weeks ended June 28, 2003, the Company and its subsidiaries recorded distributions of $2.8 million due to MFFB under the Tax Allocation Agreement. In
March 2003, Mrs. Fields paid $5.0 million to MFFB relating to its obligations under the Tax Allocation Agreement, which was accrued at December 28, 2002. In
July 2003, Mrs. Fields paid $1.1 million to MFFB relating to its obligations under the Tax Allocation Agreement for fiscal 2003.

(8)   ACCRUED SEVERANCE BENEFITS

On May 7, 2003, the Board of Directors of the Company accepted the resignation of Larry A. Hodges as President, Chief Executive Officer and Director of the
Company. Mr. Hodges' resignation was effective on May 14, 2003. Under terms of his employment agreement, Mr. Hodges will receive 28 months
of salary as severance, the first year of which will be paid semi-monthly, and the balance in a lump sum at the end of the first year. These payments are not expected to be material to the
Company's liquidity. The Company recorded an expense of $1.2 million during the 13 weeks ended June 28, 2003 related to severance and other termination related expenses.

Under
terms of a stockholders' agreement, there are put and call rights with respect to Mr. Hodges' MFFB common stock, and, if exercised, his options on MFFB common stock.
Negotiations to resolve the outcome of arrangements with respect to such stock are not complete.

The
Company's Board of Directors named Stephen Russo as the new President, Chief Executive Officer and Director of the Company effective on May 15, 2003.

(9)   SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Company's obligation related to its $140.0 million total principal amount of Senior Notes due 2004 is fully and unconditionally guaranteed on a joint
and several basis and on a senior basis by five

12

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of
the Company's wholly owned subsidiaries (the "Guarantors"). These guarantees are general unsecured obligations of the Guarantors, rank senior in right of payment to all subordinated indebtedness of
the Guarantors and rank pari passu in right of payment with all existing and future senior indebtedness of the Guarantors. There are no restrictions on the Company's ability to obtain cash dividends
or other distributions of funds from the Guarantors, 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"), Great American Cookie Company, Inc.,
Pretzelmaker, Inc., Pretzel Time, Inc., Mrs. Fields Gifts, Inc. and Mrs. Fields Cookies Australia, which are Guarantors (collectively, the "Guarantor Subsidiaries")
and Mrs. Fields' Cookies (Canada) Ltd., Pretzelmaker Canada, Sunshine Pretzel Time, Inc., Peachtree Pretzel Time, Inc., CMBC, Inc. and two partially owned
subsidiaries (collectively, the "Non-guarantor Subsidiaries"). The Company has not presented separate financial statements and other disclosures concerning the Guarantor Subsidiaries
because management has determined that such information is not material to investors.

13

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET  AS OF JUNE 28, 2003  (Unaudited)  (Dollars in thousands)

|                                                                     |                                                                 | Parent
Company            |         | Guarantor
Subsidiaries |        | Non-Guarantor
Subsidiaries |        | Eliminations |     | Consolidated |    
|-------------------------------------------------------------------- | --------------------------------------------------------------- | ------------------------- | ------- | ---------------------- | ------ | -------------------------- | ------ | ------------ | --- | ------------ | ---
|ASSETS                                                               |                                                                 |                           |         |                        |        |                            |        |              |     |              |    
|CURRENT ASSETS:                                                      |                                                                 |                           |         |                        |        |                            |        |              |     |              |    
|                                                                     | Cash and cash equivalents                                       |                           | $       | 1,005                  |        | $                          | 226    |              | $   | 51           |    
|                                                                     | Accounts receivable, net                                        |                           |         | 1,438                  |        |                            | 774    |              |     |             |    
|                                                                     | Amounts due from franchisees and licensees, net                 |                           |         | 902                    |        |                            | 1,651  |              |     | 29           |    
|                                                                     | Amounts due from affiliates                                     |                           |         | 42,951                 |        |                            |       |              |     |             |    
|                                                                     | Inventories                                                     |                           |         | 1,420                  |        |                            | 1,764  |              |     |             |    
|                                                                     | Other current assets                                            |                           |         | 757                    |        |                            | 162    |              |     | 6            |    
|                                                                     |                                                                 |                           |         |                        |        |                            |        |              |     |              |    
|                                                                     |                                                                 | Total current assets      |         |                        | 48,473 |                            |        | 4,577        |     |              | 86 
|PROPERTY AND EQUIPMENT, net                                          |                                                                 |                           | 10,042  |                        |        | 2,826                      |        |              |    |              |    
|INTANGIBLES, net                                                     |                                                                 |                           | 19,139  |                        |        | 54,915                     |        |              |    |              |    
|INVESTMENT IN SUBSIDIARIES                                           |                                                                 |                           | 16,800  |                        |        | 1                          |        |              |    |              |    
|AMOUNTS DUE FROM AFFILIATES                                          |                                                                 |                           | 1,500   |                        |        |                           |        |              |    |              |    
|OTHER ASSETS                                                         |                                                                 |                           | 4,071   |                        |        | 291                        |        |              |    |              |    
|                                                                     |                                                                 |                           |         |                        |        |                            |        |              |     |              |    
|                                                                     |                                                                 | $                         | 100,025 |                        | $      | 62,610                     |        | $            | 86  |              | $  
|                                                                     |                                                                 |                           |         |                        |        |                            |        |              |     |              |    
|LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)                       |                                                                 |                           |         |                        |        |                            |        |              |     |              |    
|CURRENT LIABILITIES:                                                 |                                                                 |                           |         |                        |        |                            |        |              |     |              |    
|                                                                     | Current portion of long-term debt and capital lease obligations |                           | $       | 1,409                  |        | $                          | 3      |              | $   |             |    
|                                                                     | Accounts payable and bank borrowings                            |                           |         | 13,422                 |        |                            | 1,693  |              |     | 6            |    
|                                                                     | Amounts due to affiliates                                       |                           |         | 1,508                  |        |                            | 45,302 |              |     | 115          |    
|                                                                     | Accrued liabilities                                             |                           |         | 11,645                 |        |                            | 887    |              |     | 48           |    
|                                                                     |                                                                 |                           |         |                        |        |                            |        |              |     |              |    
|                                                                     |                                                                 | Total current liabilities |         |                        | 27,984 |                            |        | 47,885       |     |              | 169
|LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, net of current portion |                                                                 |                           | 140,045 |                        |        | 14                         |        |              |    |              |    
|STORE CLOSURE RESERVE, net of current portion                        |                                                                 |                           | 1,026   |                        |        |                           |        |              |    |              |    
|DEFERRED REVENUE, net of current portion                             |                                                                 |                           | 4,458   |                        |        |                           |        |              |    |              |    
|STOCKHOLDER'S EQUITY (DEFICIT)                                       |                                                                 |                           | (73,488 | )                      |        | 14,711                     |        |              | (83 | )            |    
|                                                                     |                                                                 |                           |         |                        |        |                            |        |              |     |              |    
|                                                                     |                                                                 | $                         | 100,025 |                        | $      | 62,610                     |        | $            | 86  |              | $  
|                                                                     |                                                                 |                           |         |                        |        |                            |        |              |     |              |    

14

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS  FOR THE 13 WEEKS ENDED JUNE 28, 2003  (Unaudited)  (Dollars in thousands)

|                                                |                                   | Parent
Company                     |                               | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiaries |       | Eliminations |       | Consolidated |    
|----------------------------------------------- | --------------------------------- | ---------------------------------- | ----------------------------- | ---------------------- | ------ | --------------------------- | ----- | ------------ | ----- | ------------ | ---
|REVENUES:                                       |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                | Net store and food sales          |                                    | $                             | 19,895                 |        | $                           |      |              | $     | 58           |    
|                                                | Franchising and licensing         |                                    |                               | 3,646                  |        |                             | 6,105 |              |       | 60           |    
|                                                | Mail order                        |                                    |                               |                       |        |                             | 3,200 |              |       |             |    
|                                                | Management fee revenue            |                                    |                               | 2,600                  |        |                             |      |              |       |             |    
|                                                | Other operating revenue           |                                    |                               | 20                     |        |                             | (3    | )            |       |             |    
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                |                                   | Total revenues                     |                               |                        | 26,161 |                             |       | 9,302        |       |              | 118
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|OPERATING COSTS AND EXPENSES:                   |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                | Selling and store occupancy costs |                                    |                               | 14,130                 |        |                             |      |              |       | 49           |    
|                                                | Cost of salesstore and food      |                                    |                               | 5,523                  |        |                             | (4    | )            |       | 12           |    
|                                                | Franchising and licensing         |                                    |                               | 198                    |        |                             | 2,293 |              |       | 42           |    
|                                                | Mail order                        |                                    |                               |                       |        |                             | 2,780 |              |       |             |    
|                                                | General and administrative        |                                    |                               | 7,253                  |        |                             | 219   |              |       | 69           |    
|                                                | Stock compensation expense        |                                    |                               | 46                     |        |                             |      |              |       |             |    
|                                                | Store closure provision           |                                    |                               | 239                    |        |                             |      |              |       |             |    
|                                                | Impairment of long-lived assets   |                                    |                               | 1,295                  |        |                             |      |              |       |             |    
|                                                | Depreciation and amortization     |                                    |                               | 1,696                  |        |                             | 222   |              |       |             |    
|                                                | Other operating income, net       |                                    |                               | (1,060                 | )      |                             |      |              |       |             |    
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                |                                   | Total operating costs and expenses |                               |                        | 29,320 |                             |       | 5,510        |       |              | 172
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                |                                   |                                    | Income (loss) from operations |                        |        | (3,159                      | )     |              | 3,792 |              |    
|Interest expense, net                           |                                   |                                    | (2,667                        | )                      |        | (1,843                      | )     |              |      |              |    
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|Income (loss) before provision for income taxes |                                   |                                    | (5,826                        | )                      |        | 1,949                       |       |              | (54   | )            |    
|Benefit (provision) for income taxes            |                                   |                                    | 142                           |                        |        | (55                         | )     |              | 1     |              |    
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|Net income (loss)                               |                                   | $                                  | (5,684                        | )                      | $      | 1,894                       |       | $            | (53   | )            | $  
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    

15

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS  FOR THE 26 WEEKS ENDED JUNE 28, 2003  (Unaudited)  (Dollars in thousands)

|                                                |                                   | Parent
Company                     |                               | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiaries |        | Eliminations |       | Consolidated |    
|----------------------------------------------- | --------------------------------- | ---------------------------------- | ----------------------------- | ---------------------- | ------ | --------------------------- | ------ | ------------ | ----- | ------------ | ---
|REVENUES:                                       |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                | Net store and food sales          |                                    | $                             | 41,422                 |        | $                           |       |              | $     | 112          |    
|                                                | Franchising and licensing         |                                    |                               | 7,309                  |        |                             | 11,977 |              |       | 110          |    
|                                                | Mail order                        |                                    |                               |                       |        |                             | 6,010  |              |       |             |    
|                                                | Management fee revenue            |                                    |                               | 5,200                  |        |                             |       |              |       |             |    
|                                                | Other operating revenue           |                                    |                               | 38                     |        |                             | (2     | )            |       |             |    
|                                                |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                |                                   | Total revenues                     |                               |                        | 53,969 |                             |        | 17,985       |       |              | 222
|                                                |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|OPERATING COSTS AND EXPENSES:                   |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                | Selling and store occupancy costs |                                    |                               | 29,885                 |        |                             |       |              |       | 94           |    
|                                                | Cost of salesstore and food      |                                    |                               | 11,426                 |        |                             | (13    | )            |       | 22           |    
|                                                | Franchising and licensing         |                                    |                               | 362                    |        |                             | 4,367  |              |       | 19           |    
|                                                | Mail order                        |                                    |                               |                       |        |                             | 4,856  |              |       |             |    
|                                                | General and administrative        |                                    |                               | 12,882                 |        |                             | 1,253  |              |       | 137          |    
|                                                | Stock compensation expense        |                                    |                               | 92                     |        |                             |       |              |       |             |    
|                                                | Store closure provision           |                                    |                               | 310                    |        |                             |       |              |       |             |    
|                                                | Impairment of long-lived assets   |                                    |                               | 1,295                  |        |                             |       |              |       |             |    
|                                                | Depreciation and amortization     |                                    |                               | 3,280                  |        |                             | 447    |              |       |             |    
|                                                | Other operating income, net       |                                    |                               | (1,217                 | )      |                             |       |              |       |             |    
|                                                |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                |                                   | Total operating costs and expenses |                               |                        | 58,315 |                             |        | 10,910       |       |              | 272
|                                                |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                |                                   |                                    | Income (loss) from operations |                        |        | (4,346                      | )      |              | 7,075 |              |    
|Interest expense, net                           |                                   |                                    | (7,072                        | )                      |        | (1,895                      | )      |              |      |              |    
|                                                |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|Income (loss) before provision for income taxes |                                   |                                    | (11,418                       | )                      |        | 5,180                       |        |              | (50   | )            |    
|Benefit (provision) for income taxes            |                                   |                                    | 77                            |                        |        | (112                        | )      |              |      |              |    
|                                                |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|Net income (loss)                               |                                   | $                                  | (11,341                       | )                      | $      | 5,068                       |        | $            | (50   | )            | $  
|                                                |                                   |                                    |                               |                        |        |                             |        |              |       |              |    

16

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS  FOR THE 26 WEEKS ENDED JUNE 28, 2003  (Unaudited)  (Dollars in thousands)

|                                                     |                                                                    | Parent
Company                                      |        | Guarantor
Subsidiaries |       | Non-
Guarantor
Subsidiaries |        | Eliminations |      | Consolidated |  
|---------------------------------------------------- | ------------------------------------------------------------------ | --------------------------------------------------- | ------ | ---------------------- | ----- | --------------------------- | ------ | ------------ | ---- | ------------ | -
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES  |                                                                    | $                                                   | (7,956 | )                      | $     | 5,303                       |        | $            | (141 | )            | $
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|                                                     | Purchase of property and equipment                                 |                                                     |        | (954                   | )     |                             |       |              |      |             |  
|                                                     | Proceeds from sales of property and equipment                      |                                                     |        | 2,594                  |       |                             |       |              |      |             |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|                                                     |                                                                    | Net cash provided by (used in) investing activities |        |                        | 1,640 |                             |        |             |      |              | 
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|                                                     | Principal payments on long-term debt and capital lease obligations |                                                     |        | (1,115                 | )     |                             |       |              |      |             |  
|                                                     | Payment of debt financing costs                                    |                                                     |        | (1,136                 | )     |                             |       |              |      |             |  
|                                                     | Borrowings under line of credit                                    |                                                     |        | 7,019                  |       |                             |       |              |      |             |  
|                                                     | Distribution to parent under tax sharing agreement                 |                                                     |        |                       |       |                             | (5,000 | )            |      |             |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|                                                     |                                                                    | Net cash provided by (used in) financing activities |        |                        | 4,768 |                             |        | (5,000       | )    |              | 
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH      |                                                                    |                                                     |       |                        |       | (78                         | )      |              | 79   |              |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                    |                                                     | (1,548 | )                      |       | 225                         |        |              | (62  | )            |  
|CASH AND CASH EQUIVALENTS, beginning of period       |                                                                    |                                                     | 2,553  |                        |       | 1                           |        |              | 113  |              |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|CASH AND CASH EQUIVALENTS, end of period             |                                                                    | $                                                   | 1,005  |                        | $     | 226                         |        | $            | 51   |              | $
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|                                                     | Interest paid                                                      |                                                     | $      | 7,463                  |       | $                           | 1      |              | $    |             |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  
|                                                     | Income taxes paid                                                  |                                                     | $      | 196                    |       | $                           | 55     |              | $    |             |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |        |              |      |              |  

17

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET  AS OF DECEMBER 28, 2002  (Unaudited)  (Dollars in thousands)

|                                                                     |                                                                 | Parent
Company            |         | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiaries |        | Eliminations |      | Consolidated |      
|-------------------------------------------------------------------- | --------------------------------------------------------------- | ------------------------- | ------- | ---------------------- | ------ | --------------------------- | ------ | ------------ | ---- | ------------ | -----
|ASSETS                                                               |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|CURRENT ASSETS:                                                      |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     | Cash and cash equivalents                                       |                           | $       | 2,553                  |        | $                           | 1      |              | $    | 113          |      
|                                                                     | Accounts receivable, net                                        |                           |         | 2,299                  |        |                             | 135    |              |      |             |      
|                                                                     | Amounts due from franchisees and licensees, net                 |                           |         | 2,206                  |        |                             | 2,266  |              |      | 21           |      
|                                                                     | Amounts due from affiliates, net                                |                           |         | 40,893                 |        |                             |       |              |      |             |      
|                                                                     | Inventories                                                     |                           |         | 2,412                  |        |                             | 583    |              |      | 3            |      
|                                                                     | Other current assets                                            |                           |         | 671                    |        |                             |       |              |      |             |      
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     | Total current assets                                            |                           |         | 51,034                 |        |                             | 2,985  |              |      | 137          |      
|PROPERTY AND EQUIPMENT, net                                          |                                                                 |                           | 15,941  |                        |        | 1,510                       |        |              |     |              |      
|INTANGIBLES, net                                                     |                                                                 |                           | 19,807  |                        |        | 54,760                      |        |              | 167  |              |      
|INVESTMENT IN SUBSIDIARIES                                           |                                                                 |                           | 16,425  |                        |        |                            |        |              |     |              |      
|AMOUNTS DUE FROM AFFILIATES                                          |                                                                 |                           | 1,500   |                        |        |                            |        |              |     |              |      
|OTHER ASSETS                                                         |                                                                 |                           | 4,251   |                        |        | 390                         |        |              |     |              |      
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     |                                                                 | $                         | 108,958 |                        | $      | 59,645                      |        | $            | 304  |              | $    
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|LIABILITIES AND STOCKHOLDER'S DEFICIT                                |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|CURRENT LIABILITIES:                                                 |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     | Current portion of long-term debt and capital lease obligations |                           | $       | 2,089                  |        | $                           | 2      |              | $    |             |      
|                                                                     | Accounts payable and borrowings under line of credit            |                           |         | 12,399                 |        |                             | 814    |              |      | 2            |      
|                                                                     | Amounts due to affiliates                                       |                           |         | 1,655                  |        |                             | 44,754 |              |      | 1,059        |      
|                                                                     | Accrued liabilities                                             |                           |         | 10,616                 |        |                             | 809    |              |      | 52           |      
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     |                                                                 | Total current liabilities |         |                        | 26,759 |                             |        | 46,379       |      |              | 1,113
|LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, net of current portion |                                                                 |                           | 140,423 |                        |        | 16                          |        |              |     |              |      
|STORE CLOSURE RESERVE, net of current portion                        |                                                                 |                           | 1,232   |                        |        |                            |        |              |     |              |      
|DEFERRED REVENUE, net of current portion                             |                                                                 |                           | 3,162   |                        |        |                            |        |              |     |              |      
|STOCKHOLDER'S EQUITY (DEFICIT)                                       |                                                                 |                           | (62,618 | )                      |        | 13,250                      |        |              | (809 | )            |      
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     |                                                                 | $                         | 108,958 |                        | $      | 59,645                      |        | $            | 304  |              | $    
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      

18

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS  FOR THE 13 WEEKS ENDED JUNE 29, 2002  (Unaudited)  (Dollars in thousands)

|                                                                      |                                        | Parent
Company                     |                               | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiaries |        | Eliminations |       | Consolidated |    
|--------------------------------------------------------------------- | -------------------------------------- | ---------------------------------- | ----------------------------- | ---------------------- | ------ | --------------------------- | ------ | ------------ | ----- | ------------ | ---
|REVENUES:                                                             |                                        |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                      | Net store and food sales               |                                    | $                             | 27,905                 |        | $                           |       |              | $     | 49           |    
|                                                                      | Franchising and licensing              |                                    |                               | 2,420                  |        |                             | 6,675  |              |       | 55           |    
|                                                                      | Mail order                             |                                    |                               | 2,357                  |        |                             |       |              |       |             |    
|                                                                      | Management fee revenue                 |                                    |                               | 2,600                  |        |                             |       |              |       |             |    
|                                                                      | Other operating revenue                |                                    |                               | 1,578                  |        |                             |       |              |       |             |    
|                                                                      |                                        |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                      |                                        | Total revenues                     |                               |                        | 36,860 |                             |        | 6,675        |       |              | 104
|                                                                      |                                        |                                    |                               |                        |        |                             |        |              |       |              |    
|OPERATING COSTS AND EXPENSES:                                         |                                        |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                      | Selling and store occupancy costs      |                                    |                               | 20,203                 |        |                             |       |              |       | 58           |    
|                                                                      | Cost of salesstore and food           |                                    |                               | 7,763                  |        |                             |       |              |       | 13           |    
|                                                                      | Franchising and licensing              |                                    |                               | 10                     |        |                             | 2,412  |              |       |             |    
|                                                                      | Mail order                             |                                    |                               | 2,312                  |        |                             |       |              |       |             |    
|                                                                      | General and administrative             |                                    |                               | 9,291                  |        |                             | (1,064 | )            |       | 8            |    
|                                                                      | Stock compensation expense             |                                    |                               |                       |        |                             |       |              |       |             |    
|                                                                      | Store closure provision                |                                    |                               | 38                     |        |                             |       |              |       |             |    
|                                                                      | Wal-Mart restructuring costs           |                                    |                               | 5,288                  |        |                             |       |              |       |             |    
|                                                                      | Impairment of long-lived assets        |                                    |                               | 635                    |        |                             |       |              |       |             |    
|                                                                      | Depreciation and amortization          |                                    |                               | 2,816                  |        |                             | 349    |              |       | (29          | )  
|                                                                      | Other operating (income) expenses, net |                                    |                               | (256                   | )      |                             |       |              |       | 31           |    
|                                                                      |                                        |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                      |                                        | Total operating costs and expenses |                               |                        | 48,100 |                             |        | 1,697        |       |              | 81 
|                                                                      |                                        |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                      |                                        |                                    | Income (loss) from operations |                        |        | (11,240                     | )      |              | 4,978 |              |    
|Interest expense, net                                                 |                                        |                                    | (4,243                        | )                      |        | (57                         | )      |              |      |              |    
|                                                                      |                                        |                                    |                               |                        |        |                             |        |              |       |              |    
|Income (loss) before provision for income taxes and minority interest |                                        |                                    | (15,483                       | )                      |        | 4,921                       |        |              | 23    |              |    
|Provision for income taxes                                            |                                        |                                    | (33                           | )                      |        |                            |        |              |      |              |    
|                                                                      |                                        |                                    |                               |                        |        |                             |        |              |       |              |    
|Income (loss) before minority interest                                |                                        |                                    | (15,516                       | )                      |        | 4,921                       |        |              | 23    |              |    
|Minority interest                                                     |                                        |                                    | 17                            |                        |        |                            |        |              |      |              |    
|                                                                      |                                        |                                    |                               |                        |        |                             |        |              |       |              |    
|Net income (loss)                                                     |                                        | $                                  | (15,499                       | )                      | $      | 4,921                       |        | $            | 23    |              | $  
|                                                                      |                                        |                                    |                               |                        |        |                             |        |              |       |              |    

19

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS  FOR THE 26 WEEKS ENDED JUNE 29, 2002  (Unaudited)  (Dollars in thousands)

|                                                                                                              |                                   | Parent
Company                     |                               | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiaries |        | Eliminations |       | Consolidated |    
|------------------------------------------------------------------------------------------------------------- | --------------------------------- | ---------------------------------- | ----------------------------- | ---------------------- | ------ | --------------------------- | ------ | ------------ | ----- | ------------ | ---
|REVENUES:                                                                                                     |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                                                              | Net store and food sales          |                                    | $                             | 58,590                 |        | $                           |       |              | $     | 106          |    
|                                                                                                              | Franchising and licensing         |                                    |                               | 4,881                  |        |                             | 16,154 |              |       | 128          |    
|                                                                                                              | Mail order                        |                                    |                               | 4,611                  |        |                             |       |              |       |             |    
|                                                                                                              | Management fee revenue            |                                    |                               | 5,890                  |        |                             |       |              |       |             |    
|                                                                                                              | Other operating revenue           |                                    |                               | 1,711                  |        |                             |       |              |       |             |    
|                                                                                                              |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                                                              |                                   | Total revenues                     |                               |                        | 75,683 |                             |        | 16,154       |       |              | 234
|                                                                                                              |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|OPERATING COSTS AND EXPENSES:                                                                                 |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                                                              | Selling and store occupancy costs |                                    |                               | 41,505                 |        |                             |       |              |       | 102          |    
|                                                                                                              | Cost of salesstore and food      |                                    |                               | 16,210                 |        |                             |       |              |       | 27           |    
|                                                                                                              | Franchising and licensing         |                                    |                               | 25                     |        |                             | 4,920  |              |       |             |    
|                                                                                                              | Mail order                        |                                    |                               | 3,931                  |        |                             |       |              |       |             |    
|                                                                                                              | General and administrative        |                                    |                               | 12,549                 |        |                             | 3,375  |              |       | 201          |    
|                                                                                                              | Stock compensation expense        |                                    |                               |                       |        |                             |       |              |       |             |    
|                                                                                                              | Store closure provision           |                                    |                               | 38                     |        |                             |       |              |       |             |    
|                                                                                                              | Wal-Mart restructuring costs      |                                    |                               | 5,288                  |        |                             |       |              |       |             |    
|                                                                                                              | Impairment of long-lived assets   |                                    |                               | 635                    |        |                             |       |              |       |             |    
|                                                                                                              | Depreciation and amortization     |                                    |                               | 5,099                  |        |                             | 727    |              |       | 10           |    
|                                                                                                              | Other operating expenses, net     |                                    |                               | 89                     |        |                             |       |              |       | 31           |    
|                                                                                                              |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                                                              |                                   | Total operating costs and expenses |                               |                        | 85,369 |                             |        | 9,022        |       |              | 371
|                                                                                                              |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|                                                                                                              |                                   |                                    | Income (loss) from operations |                        |        | (9,686                      | )      |              | 7,132 |              |    
|Interest expense, net                                                                                         |                                   |                                    | (8,600                        | )                      |        | (117                        | )      |              |      |              |    
|                                                                                                              |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|Income (loss) before provision for income taxes, minority interest and cumulative effect of accounting change |                                   |                                    | (18,286                       | )                      |        | 7,015                       |        |              | (137  | )            |    
|Provision for income taxes                                                                                    |                                   |                                    | (111                          | )                      |        |                            |        |              |      |              |    
|                                                                                                              |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|Income (loss) before minority interest and cumulative effect of accounting change                             |                                   |                                    | (18,397                       | )                      |        | 7,015                       |        |              | (137  | )            |    
|Minority interest                                                                                             |                                   |                                    | 23                            |                        |        |                            |        |              |      |              |    
|                                                                                                              |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|Income (loss) before cumulative effect of accounting change                                                   |                                   |                                    | (18,374                       | )                      |        | 7,015                       |        |              | (137  | )            |    
|Loss from cumulative effect of accounting change                                                              |                                   |                                    | (39,111                       | )                      |        |                            |        |              |      |              |    
|                                                                                                              |                                   |                                    |                               |                        |        |                             |        |              |       |              |    
|Net income (loss)                                                                                             |                                   | $                                  | (57,485                       | )                      | $      | 7,015                       |        | $            | (137  | )            | $  
|                                                                                                              |                                   |                                    |                               |                        |        |                             |        |              |       |              |    

20

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES  SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS  FOR THE 26 WEEKS ENDED JUNE 29, 2002  (Unaudited)  (Dollars in thousands)

|                                                    |                                                                     | Parent
Company                             |        | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiaries |     | Eliminations |     | Consolidated |  
|--------------------------------------------------- | ------------------------------------------------------------------- | ------------------------------------------ | ------ | ---------------------- | ------ | --------------------------- | --- | ------------ | --- | ------------ | -
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |                                                                     | $                                          | (772   | )                      | $      | (640                        | )   | $            | 25  |              | $
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|CASH FLOWS FROM INVESTING ACTIVITIES:               |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|                                                    | Purchase of property and equipment.                                 |                                            |        | (4,043                 | )      |                             |    |              |     |             |  
|                                                    | Proceeds from sales of property and equipment.                      |                                            |        | 4,962                  |        |                             | 457 |              |     |             |  
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|                                                    |                                                                     | Net cash provided by investing activities. |        |                        | 919    |                             |     | 457          |     |              | 
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|CASH FLOWS FROM FINANCING ACTIVITIES:               |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|                                                    | Principal payments on long-term debt and capital lease obligations. |                                            |        | (1,260                 | )      |                             | (36 | )            |     |             |  
|                                                    | Payments under line of credit.                                      |                                            |        | (240                   | )      |                             |    |              |     |             |  
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|                                                    |                                                                     | Net cash used in financing activities.     |        |                        | (1,500 | )                           |     | (36          | )   |              | 
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH.    |                                                                     |                                            |       |                        |        |                            |     |              | (37 | )            |  
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS.          |                                                                     |                                            | (1,353 | )                      |        | (219                        | )   |              | (12 | )            |  
|CASH AND CASH EQUIVALENTS, beginning of period.     |                                                                     |                                            | 3,441  |                        |        | (21                         | )   |              | 83  |              |  
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|CASH AND CASH EQUIVALENTS, end of period            |                                                                     | $                                          | 2,088  |                        | $      | (240                        | )   | $            | 71  |              | $
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:   |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|                                                    | Interest paid.                                                      |                                            | $      | 7,527                  |        | $                           | 10  |              | $   |             |  
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  
|                                                    | Income taxes paid.                                                  |                                            | $      | 71                     |        | $                           |    |              | $   |             |  
|                                                    |                                                                     |                                            |        |                        |        |                             |     |              |     |              |  

21

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

Forward-looking Information

This report contains forward-looking statements. Forward-looking statements include the words "may," "will," "estimate," "continue," "believe," "expect" or
"anticipate" and other similar words. These forward-looking statements generally relate to our plans and objectives for future operations and are based upon management's reasonable estimates of future
results or trends. Although the Company believes that the plans and objectives reflected in or suggested by such forward-looking statements are based upon assumptions that are reasonable, the Company
may not achieve such plans or objectives. Actual results may differ materially from projected results due, but not limited, to unforeseen developments, including developments relating to the
following:



The
Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these
risks, uncertainties and assumptions, the forward-looking events discussed in this report may not occur.

Overview

Mrs. Fields' Original Cookies, Inc. ("Mrs. Fields" or the "Company") is a wholly owned subsidiary of Mrs. Fields' Holding
Company, Inc. ("Mrs. Fields' Holding"). Mrs. Fields' Holding is a wholly

22

---

owned
subsidiary of Mrs. Fields Famous Brands, Inc. ("MFFB"), which was established to combine Mrs. Fields' Holding and TCBY Holding Company, Inc. ("TCBY") under a common
parent.

Mrs. Fields
has ten wholly owned operating subsidiaries: Great American Cookie Company, Inc., Pretzel Time, Inc., Pretzelmaker, Inc., Mrs. Fields
Gifts, Inc., Mrs. Fields Cookies Australia, Mrs. Fields Cookies (Canada) Ltd., Pretzelmaker Canada, Inc., Sunshine Pretzel Time, Inc., Peachtree Pretzel
Time, Inc., CMBC, Inc. and two partially owned subsidiaries.

The
Company operates, develops and franchises retail bakery stores and cafes, which sell freshly baked cookies, brownies, pretzels and other food products through four specialty branded
concepts: Mrs. Fields Cookies, Great American Cookies, Pretzel Time and Pretzelmaker. In addition, the Company operates retail bakery stores that operate under two other branded concepts:
Original Cookie Company and Hot Sam Pretzels.

During
mid-to-late 2001 and early 2002, the Company opened 57 company-owned stores in Wal-Mart locations. Sales and operating performance at the
Wal-Mart locations did not meet expectations. Based upon the operating trends of the Wal-Mart locations, and to eliminate future operational losses from these locations,
management determined to close the Company's stores located within Wal-Mart. The
Company negotiated a release from these locations from Wal-Mart effective September 28, 2002.

The
Company's business follows seasonal trends and economic conditions and is also affected by climate and weather conditions, which in turn affect mall traffic. 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. The Company typically experiences its highest revenues
in the fourth quarter of the calendar year due to the holiday season.

23

---



The following table sets forth, for the periods indicated, certain information relating to the operations of Mrs. Fields and percentage changes from period
to period (in thousands, except other data).

|                                                  |                                                                                                                | 13 Weeks Ended                     |        | 26 Weeks Ended |       
|------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ------ | -------------- | ------
|
|
|Statement of Operations Data:                     |                                                                                                                |                                    |        |                |       
|REVENUES:                                         |                                                                                                                |                                    |        |                |       
|                                                  | Net store and food sales                                                                                       |                                    | $      | 19,953         |       
|                                                  | Franchising and licensing                                                                                      |                                    |        | 7,890          |       
|                                                  | Mail order                                                                                                     |                                    |        | 3,200          |       
|                                                  | Management fee revenue                                                                                         |                                    |        | 2,600          |       
|                                                  | Other operating revenue                                                                                        |                                    |        | 17             |       
|                                                  |                                                                                                                |                                    |        |                |       
|                                                  |                                                                                                                | Total revenues                     |        |                | 33,660
|                                                  |                                                                                                                |                                    |        |                |       
|OPERATING COSTS AND EXPENSES:                     |                                                                                                                |                                    |        |                |       
|                                                  | Selling and store occupancy costs                                                                              |                                    |        | 12,805         |       
|                                                  | Cost of salesstore and food                                                                                   |                                    |        | 4,784          |       
|                                                  | Franchising and licensing                                                                                      |                                    |        | 2,533          |       
|                                                  | Mail order                                                                                                     |                                    |        | 2,780          |       
|                                                  | General and administrative                                                                                     |                                    |        | 7,741          |       
|                                                  | Stock compensation expense                                                                                     |                                    |        | 46             |       
|                                                  | Store closure provision                                                                                        |                                    |        | 239            |       
|                                                  | Wal-Mart restructuring costs                                                                                   |                                    |        |               |       
|                                                  | Impairment of long-lived assets                                                                                |                                    |        | 1,295          |       
|                                                  | Depreciation                                                                                                   |                                    |        | 1,498          |       
|                                                  | Amortizationintangibles                                                                                       |                                    |        | 420            |       
|                                                  | Other operating (income) expense, net                                                                          |                                    |        | (1,060         | )     
|                                                  |                                                                                                                |                                    |        |                |       
|                                                  |                                                                                                                | Total operating costs and expenses |        |                | 33,081
|                                                  |                                                                                                                |                                    |        |                |       
|                                                  |                                                                                                                | Income (loss) from operations      |        |                | 579   
|                                                  | Interest expense, net                                                                                          |                                    |        | (4,510         | )     
|                                                  |                                                                                                                |                                    |        |                |       
|                                                  | Loss before benefit (provision) for income taxes, minority interest and cumulative effect of accounting change |                                    |        | (3,931         | )     
|                                                  | Benefit (provision) for income taxes and minority interest                                                     |                                    |        | 88             |       
|                                                  |                                                                                                                |                                    |        |                |       
|                                                  | Loss before cumulative effect of accounting change                                                             |                                    |        | (3,843         | )     
|                                                  | Loss from cumulative effect of accounting change                                                               |                                    |        |               |       
|                                                  |                                                                                                                |                                    |        |                |       
|                                                  | Net loss                                                                                                       |                                    | $      | (3,843         | )     
|                                                  |                                                                                                                |                                    |        |                |       
|Cash flows from operating activities              |                                                                                                                | $                                  | 916    |                | $     
|                                                  |                                                                                                                |                                    |        |                |       
|Cash flows from investing activities              |                                                                                                                | $                                  | 1,717  |                | $     
|                                                  |                                                                                                                |                                    |        |                |       
|Cash flows from financing activities              |                                                                                                                | $                                  | (3,405 | )              | $     
|                                                  |                                                                                                                |                                    |        |                |       
|OTHER DATA:                                       |                                                                                                                |                                    |        |                |       
|Number of company owned store unit weeks (1)      |                                                                                                                |                                    | 3,947  |                |       
|Unit week average ("UWA") sales (1)               |                                                                                                                | $                                  | 5,028  |                | $     
|Year-over-year comparable store sales percent (1) |                                                                                                                |                                    | (4.5   | )%             |       
|Unit weeksstore open more than 13 months         |                                                                                                                |                                    | 3,779  |                |       
|UWA salesstores open more than 13 months         |                                                                                                                | $                                  | 5,045  |                | $     

---

24

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13 Weeks Ended June 28, 2003  Compared to the 13 Weeks Ended June 29, 2003

Income From OperationsOverview.Income from operations was $600,000 for the 13 weeks
ended June 28, 2003 compared to loss from operations of $6.2 million for the 13 weeks ended June 29, 2002, an increase in income from operations of $6.8 million. This
increase in income from operations was primarily attributable to increases in contribution from franchising and licensing of $1.3 million, contribution from mail order of $400,000, other
operating income of $800,000 and reductions in operating costs including reduction in Wal-Mart restructuring charges of $5.3 million, general and administrative costs of $900,000,
depreciation and amortization of $1.2 million, offset by a reduction in other revenues of $1.6 million, lower store contribution of $500,000, and increased costs associated with the
impairment of long-lived assets of $700,000 and the provision for store closure of $200,000.

Store
contribution was $2.4 million for the 13 weeks ended June 28, 2003, a decrease of $500,000 or 17.2 percent, from store contribution of $2.9 million for
the 13 weeks ended June 29, 2002. The decrease was a result of a 4.5 percent decrease in same store comparable sales for the 2003 period from the 2002 period resulting in a decrease in
contribution of approximately $600,000. Management believes the decrease in same store comparable sales was the result of reduced mall traffic due to the general economic instability and lower
consumer confidence. Additionally, the decrease in store sales resulted from approximately 1,135 fewer store weeks (excluding Wal-Mart locations) in the second quarter of 2003 compared to
the second quarter of 2002 resulting in a decrease in contribution of approximately $700,000. Contribution as a percent of sales for the 13 weeks ended June 28, 2002 was 11.8 percent
compared to 10.5 percent for the 13 weeks ended June 29, 2002. This increase in contribution percentage was primarily attributable to elimination of operating losses of $400,000 from the
Company's Wal-Mart locations which were closed in 2002 and a decrease in store labor costs of $400,000 due to tightening of store staffing.

Franchising
and licensing contribution was $5.4 million for the 13 weeks ended June 28, 2003, an increase of $1.3 million or approximately 30.5 percent, from
franchising and licensing contribution of $4.1 million for the 13 weeks ended June 29, 2002. This increase was principally due to an increase in initial franchise fees of $200,000 from
the sale of corporate stores to franchisees, an increase in franchising revenues of $500,000 as a result of 61 additional franchised stores, and an increase in royalties and license fees earned for
Mrs. Fields branded soft-baked cookies and candies sold in retail stores, ice cream and premium hot cocoa of $600,000.

Mail
order contribution was $400,000 for the 13 weeks ended June 28, 2003, an increase of $350,000 from $50,000 for the 13 weeks ended June 29, 2002. This increase was
attributable to an increase in mail order sales of $800,000 offset by an increase in mail order product and operating expenses of $400,000.

Company Owned and Franchised or Licensed Store Activity.As of June 28, 2003, there were 280
company owned stores and 1,061 franchised or licensed stores in operation. The store activity for the 13 week periods ended June 28, 2003 and June 29, 2002 is summarized as follows:

|                                                       |  | June 28, 2003 |   | June 29, 2002 |  
|------------------------------------------------------ |  | ------------- | - | ------------- | -
|
|Stores open as of the beginning of the fiscal period   |  | 311           |   | 1,022         |  
|Stores opened (including relocations and acquisitions) |  | 2             |   | 34            |  
|Stores closed (including relocations)                  |  | (12           | ) | (16           | )
|Stores sold to franchisees                             |  | (22           | ) | 22            |  
|Stores acquired from franchisees                       |  | 1             |   | (1            | )
|                                                       |  |               |   |               |  
|Stores open as of the end of the fiscal period         |  | 280           |   | 1,061         |  
|                                                       |  |               |   |               |  

25

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Net Store and Food Sales.Total net store and food sales, which includes sales from stores and sales
of frozen cookie dough product to retail markets, were $20.0 million for the 13 weeks ended June 28, 2003, a decrease of $8.0 million or 28.6 percent, from
$28.0 million for the 13 weeks ended June 29, 2002. Frozen cookie dough product sales were $100,000 and $200,000 for the 13 weeks ended June 28, 2003 and June 29, 2002,
respectively.

Store
sales were $19.9 million for the 13 weeks ended June 28, 2003, a decrease of $7.9 million or 28.8 percent, from $27.8 million for the 13 weeks
ended June 29, 2002. The decrease in store sales was principally due to i) approximately 1,135 fewer store weeks (excluding Wal-Mart locations) for the 13 weeks ended
June 28, 2003 compared to the same period in 2002 resulting in a sales shortfall from unit week average ("UWA") of $5.9 million, ii) a 4.5 percent reduction or $900,000 in
same store sales, which management believes was a result of reduced mall traffic due to the continued economic instability and lower consumer confidence and iii) a decrease in sales from the
Company's Wal-Mart locations of $1.1 million for the 13 weeks ended June 28, 2003 compared to the same period in 2002 due to the closure of Wal-Mart locations in
September 2002.

Cost of SalesStore and Food.Cost of sales was $4.8 million for the 13 weeks
ended June 28, 2003, a decrease of $1.8 million or 27.9 percent, from $6.6 million for the 13 weeks ended June 29, 2003.

Cost
of sales, stores only, was $4.7 million for the 13 weeks ended June 28, 2003, a decrease of $1.8 million or 27.7 percent, from $6.5 million for
the 13 weeks ended June 29, 2002. This decrease was due to fewer operating stores as a result of the closure of the Wal-Mart locations, approximately 1,135 fewer unit weeks
(excluding Wal-Mart locations) and cost containment strategies implemented, including the closing of non-performing stores. Cost of sales, stores only, as a percent of sales
was 23.6 percent and 23.4 percent for the 13 weeks ended June 28, 2003 and June 29, 2002, respectively. This increase was the result of increased food costs for the period
compared to the prior year period.

Selling and Store Occupancy Costs.Total selling and store occupancy costs were $12.8 million
for the 13 weeks ended June 28, 2003, a decrease of $5.6 million or 30.3 percent, from $18.4 million for the 13 weeks ended June 29, 2002. This decrease was due to
fewer stores opened during the 2003 13 week period compared to the 2002 13 week period. Selling and store occupancy costs decreased from 66.2 percent of sales for the 2002 13 week period to
64.5 percent of sales for the 2003 13 week period. This decrease
was principally due to the closure of the Wal-Mart locations in 2002 and tightening of labor costs in 2003.

Labor
costs were 29.0 percent of sales and 31.3 percent sales for the 13 weeks ended June 28, 2003 and June 29, 2002, respectively. This decrease was
primarily the result of tightening of staffing levels in conjunction with the lower sales volumes and the closure of the Wal-Mart locations.

Store
occupancy costs were 25.4 percent of sales and 25.2 percent of sales for the 13 weeks ended June 28, 2003 and June 29, 2002, respectively. This increase
in store occupancy costs was due to increases in base rents and the inability to obtain leverage on the rents as a result of lower store sales volumes.

Other
store expense was 10.0 percent of sales and 9.6 percent of sales for the 13 weeks ended June 28, 2003 and June 29, 2002, respectively. This increase was
due to increased costs for property and liability insurance and other costs for which the stores were unable to obtain leverage as a result of lower store sales volumes.

Franchising and Licensing Revenues.Franchising and licensing revenues were $7.9 million for
the 13 weeks ended June 28, 2003, an increase of $1.4 million or 20.9 percent, from $6.5 million for the 13 weeks ended June 29, 2002. Franchising revenues were
$6.8 million for the 2003 13 week period, an increase of $800,000 or 13.3 percent, from $6.0 million for the 2002 13 week period. This increase was

26

---

primarily
due to a $200,000 increase in initial franchise fees, a $200,000 increase in franchise royalties, and a $400,000 increase in batter sales to Great American Cookie franchisees. These
increases were principally the result of 61 additional franchised stores.

Licensing
revenues were $1.1 million for the 13 weeks ended June 28, 2003, an increase of $600,000 or 112.7 percent, from $500,000 for the 13 weeks ended
June 29, 2002. This increase was principally due to a $600,000 increase in licensing royalties for Mrs. Fields branded soft baked cookies.

Franchising and Licensing Expenses.Franchising and licensing expenses were $2.5 million for
the 13 weeks ended June 28, 2003, an increase of $100,000 or 4.6 percent, from $2.4 million for the 13 weeks ended June 29, 2002. This increase was principally due to
increased costs associated with increased sales activity of the batter facility that sells cookie batter to the Company's Great American Cookie franchisees and an increase in administrative costs
associated with the Company's international and domestic licensing group.

Mail Order Revenues.Mail order revenues were $3.2 million for the 13 week period ended
June 28, 2003, an increase $800,000 or 35.8 percent, from $2.4 million for the 13 week period ended June 29, 2002. Mail order revenues consist of sales through the
Company's catalog and web-site. This increase in revenues was due to increased sales to affiliations with other gift catalogs, Internet customers and to the airline industry.

Mail Order Expense.Mail order expenses were $2.8 million for the 13 weeks ended
June 28, 2003, an increase of $500,000 or 20.2 percent, from $2.3 million for the 13 weeks ended June 29, 2002. This increase in expense was due to an increase in cost of
sales and operating costs associated with the increased sales volume.

Other Operating Revenue.Other operating revenue was $17,000 for the 13 weeks ended June 28,
2003, a decrease of $1.6 million, from $1.6 million for the 13 weeks ended June 29, 2002. This decrease was principally due to insurance proceeds received in 2002 under the
Company's business interruption insurance policy for the loss of its World Trade Center location as a result of the events of September 11, 2001.

General and Administrative Expense.General and administrative expenses were $7.7 million for
the 13 weeks ended June 28, 2003, a decrease of $900,000 or 10.3 percent, from $8.6 million for the 13 weeks ended June 29, 2002. General and administrative expenses
include supervision costs associated with store and franchise operations and general and administrative costs of the Company.

Operations
and supervision expenses were $1.6 million for the 13 weeks ended June 28, 2003, a decrease of $300,000 or 15.7 percent, from $1.9 million for the
13 weeks ended June 29, 2002. This decrease was principally due to decreases in payroll and related costs of $200,000 and travel and related costs of $100,000 resulting from the Company's staff
reductions in late 2002.

General
and administrative expenses, excluding operations and supervision expenses, were $6.1 million for the 13 weeks ended June 28, 2003, a decrease of $600,000 or
9.0 percent, from $6.7 million for 13 weeks ended June 29, 2002. This decrease in expenses was principally due to reductions in advertising and marketing expenses of $700,000,
payroll and related costs of $300,000 resulting from the Company's staff reductions in late 2002, office, printing and supplies of $300,000, bad debt expense of $200,000, professional expenses of
$100,000 and other cost saving measures of $200,000 offset with severance costs of $1.2 million relating to the resignation of the Company's Chief Executive Officer.

Store Closure Provision.Store closure provision was $239,000 for the 13 weeks ended June 28,
2003, an increase of $201,000, from $38,000 for the 13 weeks ended June 29, 2002. This was principally

27

---

due
to additional reserves established for lease abatements made during the period on stores sold to franchisees.

Impairment of Long-Lived Assets.Impairment of long-lived assets was
$1.3 million for the 13 weeks ended June 28, 2003, an increase of $700,000 from $600,000 for the 13 weeks ended June 29, 2002. This increase was principally due to continued
decrease of net contribution of certain store locations.

Depreciation and Amortization Expense.Total depreciation and amortization expense was
$1.9 million for the 13 weeks ended June 28, 2003, a decrease of $1.2 million or 38.7 percent, from $3.1 million for the 13 weeks ended June 29, 2002.
Depreciation expense was $1.5 million for 13 weeks ended June 28, 2003, a decrease of $1.3 million or 46.3 percent, from $2.8 million for 13 weeks ended
June 29, 2002. This decrease was principally due to fewer store assets as a result of store closures, the sale of corporate stores to franchisees and impairment of store assets recorded in
fiscal 2002. Amortization expense was $420,000 for the 13 weeks ended June 28, 2003, an increase of $71,000 or 20.3 percent, from $349,000 for the 13 weeks ended June 29,
2002.

Other Operating Income, Net.Other operating income, net was $1.1 million for the 13 weeks
ended June 28, 2003, an increase of $800,000 from other operating income, net of $225,000 for the 13 weeks ended June 29, 2002. The increase in other operating income was the result of a
$1.3 million net gain on stores sold to franchisees during the 13 weeks ended June 28, 2003 compared to $300,000 net gain on stores sold to franchisees during the 13 weeks ended
June 29, 2002.

Interest Expense, Net.Interest expense, net was $4.5 million for the 13 weeks ended
June 28, 2003, an increase of $200,000 or 4.9 percent, from $4.3 million for the 13 weeks ended June 29, 2002. This increase was primarily due to increased amortization of
loan fees incurred for the replacement of the Company's credit facility.

Provision for Income Taxes.Provision for income taxes was $88,000 benefit for the 13 week period
ended June 28, 2003 compared to $33,000 provision for the 13 week period ended June 29, 2002. The benefit for the 13 week 2003 period was principally due to compensation of $150,000 paid
by TCBY to the Company for utilization of the Company's net operating loss carryforwards under the Amended and Restated Tax Allocation Agreement with MFFB and Mrs. Fields' Holdings offset by
provision for state and foreign income taxes of $62,000. Provision for income taxes for the 13 week 2002 period primarily consists of state and foreign income taxes.

26 Weeks Ended June 28, 2003  Compared to the 26 Weeks Ended June 29, 2002

Income From OperationsOverview.Income from operations was $2.7 million for the
26 weeks ended June 28, 2003 compared to loss from operations of $2.7 million for the 26 weeks ended June 29, 2002, an increase in income from operations of $5.4 million.
This increase in income from operations was primarily attributable to increases in contribution from franchising and licensing of $200,000, contribution from mail order of $500,000, other operating
income of $1.3 million and reductions in operating costs including reduction in Wal-Mart restructuring charges of $5.3 million, general and administrative costs of
$1.8 million, depreciation and amortization of $2.1 million, offset by decreases in other revenues of $1.7 million, store contribution of $2.4 million, management fee of
$700,000 and increased costs associated with the impairment of long-lived assets of $700,000 and the provision for store closure of $300,000.

Store
contribution was $4.6 million for the 26 weeks ended June 28, 2003, a decrease of $2.4 million or 34.4 percent, from store contribution of
$7.0 million for the 26 weeks ended June 29, 2002. The decrease was a result of a 5.9 percent decrease in same store comparable sales for the 2003 period from the 2002 period
resulting in a decrease in contribution of approximately $1.7 million. Management believes the decrease in same store comparable sales was the result of reduced mall

28

---

traffic
due to the general economic instability, the war in Iraq, and continued lower consumer confidence. Additionally, the decrease in store sales resulted from approximately 2,300 fewer store weeks
(excluding Wal-Mart locations) in the 26 weeks ended June 28, 2003 compared to the 26 weeks ended June 29, 2002 resulting in a decrease in contribution of approximately
$1.4 million. Contribution as a percent of sales for the 26 weeks ended June 28, 2003 was 11.0 percent compared to 12.0 percent for the 26 weeks ended June 29, 2002.
This decrease in contribution percentage was primarily attributable to higher other store expenses of $200,000. These decreases were partially offset by the elimination of operating losses of $900,000
from the Company's Wal-Mart locations which were closed in 2002.

Franchising
and licensing contribution was $10.6 million for the 26 weeks ended June 28, 2003, an increase of $200,000 or 1.8 percent, from franchising and licensing
contribution of $10.4 million for the 26 weeks ended June 29, 2002. This increase was principally due to an increase in franchising revenues of $900,000 as a result of 61 additional
franchised stores and an increase in royalties and license fees earned for Mrs. Fields branded soft-baked cookies and candies sold in retail stores and premium hot cocoa of $900,000
offset by revenue recognized under a recipe sale and license of $1.6 million in January 2002.

Mail
order contribution was $1.2 million for the 26 weeks ended June 28, 2003, an increase of $500,000 or 69.7 percent, from $700,000 for the 26 weeks ended
June 29, 2002. This increase was attributable to an increase in mail order sales of $1.4 million offset by an increase in mail order product and operating expenses of $900,000.

Company Owned and Franchised or Licensed Store Activity.As of June 28, 2003, there were 280
company owned stores and 1,061 franchised or licensed stores in operation. The store activity for the 26 week periods ended June 28, 2003 and June 29, 2002 is summarized as follows:

|                                                       |  | June 28, 2003 |   | June 29, 2002 |  
|------------------------------------------------------ |  | ------------- | - | ------------- | -
|
|Stores open as of the beginning of the fiscal year     |  | 330           |   | 1,038         |  
|Stores opened (including relocations and acquisitions) |  | 4             |   | 54            |  
|Stores closed (including relocations)                  |  | (28           | ) | (57           | )
|Wal-Mart stores (closed) opened                        |  |              |   |              |  
|Stores sold to franchisees                             |  | (27           | ) | 27            |  
|Stores acquired from franchisees                       |  | 1             |   | (1            | )
|                                                       |  |               |   |               |  
|Stores open as of the end of the fiscal period         |  | 280           |   | 1,061         |  
|                                                       |  |               |   |               |  

Net Store and Food Sales.Total net store and food sales, which includes sales from stores and sales
of frozen cookie dough product to retail markets, were $41.5 million for the 26 weeks ended June 28, 2003, a decrease of $17.2 million or 29.2 percent, from
$58.7 million for the 26 weeks ended June 29, 2002. Frozen cookie dough product sales were $200,000 and $300,000 for the 26 weeks ended June 28, 2003 and June 29, 2002,
respectively.

Store
sales were $41.3 million for the 26 weeks ended June 28, 2003, a decrease of $17.1 million or 29.3 percent, from $58.4 million for the 26 weeks
ended June 29, 2002. The decrease in store sales was principally due to i) approximately 2,300 fewer store weeks (excluding Wal-Mart locations) for the 26 weeks ended
June 28, 2003 compared to the same period in 2002 resulting in a sales shortfall from unit week average ("UWA") of $12.4 million, ii) a 5.9 percent reduction or
$2.6 million in same store sales, which management believes was a result of reduced mall traffic due to the continued economic instability, the war in Iraq and lower consumer confidence and
iii) a decrease in sales from the

29

---

Company's
Wal-Mart locations of $2.1 million for the 26 weeks ended June 28, 2003 compared to the same period in 2002 due to the closure of Wal-Mart locations in
September 2002.

Cost of SalesStore and Food.Cost of sales was $9.9 million for the 26 weeks
ended June 28, 2003, a decrease of $4.1 million or 29.7 percent, from $14.0 million for the 26 weeks ended June 29, 2003.

Cost
of sales, stores only, was $9.7 million for the 26 weeks ended June 28, 2003, a decrease of $4.1 million or 29.7 percent, from $13.8 million for
the 26 weeks ended June 29, 2002. This decrease was due to fewer operating stores as a result of the closure of the Wal-Mart locations, approximately 2,300 fewer unit weeks
(excluding Wal-Mart locations) and cost containment strategies implemented, including the closing of non-performing stores. Cost of sales, stores only, as a percent of sales
was 23.5 percent and 23.6 percent for the 26 weeks ended June 28, 2003 and June 29, 2002, respectively.

Selling and Store Occupancy Costs.Total selling and store occupancy costs were $27.1 million
for the 26 weeks ended June 28, 2003, a decrease of $10.5 million or 28.1 percent, from $37.6 million for the 26 weeks ended June 29, 2002. This decrease was due to
fewer stores opened during the 2003 26 week period compared to the 2002 26 week period. Selling and store occupancy costs increased from 64.5 percent of sales for the 2002 26 week period to
65.5 percent of sales for the 2003 26 week period. This increase was principally due to increases in store occupancy costs, primarily base rents, and other store expenses.

Labor
costs were 29.5 percent of sales and 30.9 percent sales for the 26 weeks ended June 28, 2003 and June 29, 2002, respectively. This decrease was
primarily the result of tightening of staffing levels in conjunction with the lower sales volumes and the closure of the Wal-Mart locations.

Store
occupancy costs were 25.7 percent of sales and 24.3 percent of sales for the 26 weeks ended June 28, 2003 and June 29, 2002, respectively. This increase
in store occupancy costs was due to increases in base rents and the inability to obtain leverage on the rents as a result of lower store sales volumes.

Other
store expense was 10.3 percent of sales and 9.2 percent of sales for the 26 weeks ended June 28, 2003 and June 29, 2002, respectively. This increase was
due to increased costs for property and liability insurance and other costs for which the stores were unable to obtain leverage as a result of lower store sales volumes.

30

---



Franchising and Licensing Revenues.Franchising and licensing revenues were $15.4 million for
the 26 weeks ended June 28, 2003 and for the 26 weeks ended June 29, 2002. Franchising revenues were $12.9 million for the 2003 26 week period, an increase of
$900,000 or 7.5 percent, from $12.0 million for the 2002 26 week period. This increase was primarily due to increases in franchise royalties of $600,000 and batter sales to Great
American Cookie franchisees of $300,000. These increases were principally the result of 61 additional franchised stores.

Licensing
revenues were $2.4 million for the 26 weeks ended June 28, 2003, a decrease of $900,000 or 27.0 percent, from $3.3 million for the
26 weeks ended June 29, 2002. This decrease was principally due to decreases in licensing revenues from the sale of certain recipes under a licensing agreement with a national
manufacturer of soft-baked cookies of $1.6 million and international and domestic license income of $100,000 offset by increases in licensing royalties for Mrs. Fields
branded soft baked cookies of $800,000.

Franchising and Licensing Expenses.Franchising and licensing expenses were $4.7 million for
the 26 weeks ended June 28, 2003, a decrease of $200,000 or 4.0 percent, from $4.9 million for the 26 weeks ended June 29, 2002. This decrease was principally
due to decreases in administrative costs associated with the Company's international and domestic licensing group of $100,000 and other operating expenses of $100,000.

Mail Order Revenues.Mail order revenues were $6.0 million for the 26 weeks ended
June 28, 2003, an increase $1.4 million or 30.3 percent, from $4.6 million for the 26 weeks ended June 29, 2002. Mail order revenues consist of sales through
the Company's catalog and web-site. This increase in revenues was due to increased sales to affiliations with other gift catalogs, Internet customers and the airline industry.

Mail Order Expense.Mail order expenses were $4.8 million for the 26 weeks ended
June 28, 2003, an increase of $900,000 or 23.5 percent, from $3.9 million for the 26 weeks ended June 29, 2002. This increase in expense was due to an increase in
cost of sales of $500,000 and marketing and operating costs of $400,000 associated with the increased sales volume.

Management Fee Revenues.Management fee revenue was $5.2 million for the 26 weeks ended
June 28, 2003, a $700,000 decrease or 11.7 percent from $5.9 million for the 26 weeks ended June 29, 2002. The decrease was due to a decrease in the management fee
effective October 1, 2002 as a result of an amendment to the TCBY Management Agreement.

Other Operating Revenue.Other operating revenue was $36,000 for the 26 weeks ended
June 28, 2003, a decrease of $1.6 million, from $1.7 million for the 26 weeks ended June 29, 2002. This decrease was principally due to insurance proceeds received
in 2002 under the Company's business interruption insurance policy for the loss of its World Trade Center location as a result of the events of September 11, 2001.

General and Administrative Expense.General and administrative expenses were $14.7 million for
the 26 weeks ended June 28, 2003, a decrease of $1.8 million or 10.8 percent, from $16.5 million for the 26 weeks ended June 29, 2002. General and
administrative expenses include supervision costs associated with store and franchise operations and general and administrative costs of the Company.

Operations
and supervision expenses were $3.2 million for the 26 weeks ended June 28, 2003, a decrease of $500,000 or 13.5 percent, from $3.7 million
for the 26 weeks ended June 29, 2002. This decrease was principally due to decreases in payroll and related costs of $300,000 and travel and related costs of $200,000 resulting from the
Company's staff reductions in late 2002.

General
and administrative expenses, excluding operations and supervision expenses, were $11.5 million for the 26 weeks ended June 28, 2003, a decrease of
$1.3 million or 10.2 percent, from

31

---

$12.8 million
for 26 weeks ended June 29, 2002. This decrease in expenses was principally due to reductions in advertising and marketing expenses of $1.0 million, payroll
and related costs of $600,000 resulting from the Company's staff reductions in late 2002, office, printing and supplies of $600,000, professional expenses of $100,000, occupancy costs of $100,000 and
other cost saving measures of $100,000 offset with severance costs of $1.2 million relating to the resignation of the Company's Chief Executive Officer.

Store Closure Provision.Store closure provision was $310,000 for the 26 weeks ended
June 28, 2003, an increase of $272,000, from $38,000 for the 26 weeks ended June 29, 2002. This was principally due to additional reserves established for lease abatements made
during the period on stores sold to franchisees.

Impairment of Long-Lived Assets.Impairment of long-lived assets was
$1.3 million for the 26 weeks ended June 28, 2003, an increase of $700,000 from $600,000 for the 26 weeks ended June 29, 2002. This increase was principally due to
continued decrease of net contribution of certain store locations.

Depreciation and Amortization Expense.Total depreciation and amortization expense was
$3.7 million for the 26 weeks ended June 28, 2003, a decrease of $2.1 million or 48.3 percent, from $5.8 million for the 26 weeks ended June 29,
2002. Depreciation expense was $3.1 million for 26 weeks ended June 28, 2003, a decrease of $2.1 million or 41.3 percent, from $5.2 million for
26 weeks ended June 29, 2002. This decrease was principally due to fewer store assets as a result of store closures, the sale of corporate stores to franchisees and impairment of store
assets recorded in fiscal 2002. Amortization expense was $667,000 for the 26 weeks ended June 28, 2003, an increase of $43,000 or 6.9 percent, from $624,000 for the 26 weeks ended
June 29, 2002

Other Operating Income, Net.Other operating income, net was $1.2 million for the
26 weeks ended June 28, 2003, an increase of $1.3 million from other operating expense, net of $100,000 for the 26 weeks ended June 29, 2002. The increase in other
operating income was the result of a $1.2 million net gain on stores sold to franchisees during the 26 weeks ended June 28, 2003 compared to $200,000 net loss on stores sold to
franchisees during the 26 weeks ended June 29, 2002.

Interest Expense, Net.Interest expense, net was $8.9 million for the 26 weeks ended
June 28, 2003, an increase of $200,000 or 2.9 percent, from $8.7 million for the 26 weeks ended June 29, 2002. This increase was primarily due to increased
amortization of loan fees incurred for the replacement of the Company's credit facility.

Provision for Income Taxes.Provision for income taxes was $35,000 for the 13 week period
ended June 28, 2003 compared to $100,000 for the 13 week period ended June 29, 2002. Provision for income taxes primarily consists of state and foreign income taxes. Included in
the provision for income taxes for the 26 weeks ended June 28, 2003 is compensation of $150,000 paid by TCBY to the Company for utilization of the Company's net operating loss
carryforwards under the Amended and Restated Tax Allocation Agreement with MFFB and Mrs. Fields' Holdings.

Cumulative Effect of Accounting Change.The Company recorded a non-cash charge of
approximately $39.1 million to reduce the carrying value of the goodwill associated with its company owned stores reporting unit in the 26 weeks ended June 29, 2002. Such charge
is non-operational in nature and was recorded as a cumulative effect of an accounting change upon the mandatory adoption of Statement of Financial Accounting Standards ("SFAS")
No. 142 effective the beginning of fiscal 2002.

Liquidity and Capital Resources

General.The Company's principal sources of liquidity are cash flows from operating activities, cash
on hand, available borrowings under its revolving credit facility and proceeds from the sale of

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company
owned stores to franchisees. At June 28, 2003, the Company had $1.2 million of unrestricted cash and $1.9 million available under its $9.9 million revolving line of
credit. The terms of the Company's indenture governing its outstanding senior notes limit the Company's ability to borrow under the credit facility to a total of $9.9 million, excluding letters
of credit. At June 28, 2003, the Company had outstanding borrowings of $8.0 million and outstanding letters of credit totaling $1.3 million.

On
January 16, 2003, the Company entered into a Second Amended and Restated Loan and Security Agreement with Foothill Capital Corporation (the "Foothill Credit Facility"),
pursuant to which the Company's former credit facility with LaSalle National Bank was replaced and all amounts outstanding under it were refinanced. The Foothill Credit Facility bears interest at the
prime rate plus 1.75 percent and requires a monthly servicing fee of $5,000 and an anniversary fee of $200,000. The Foothill Credit Facility provides for $11.9 million of credit
(assuming the Company satisfies certain borrowing base restrictions) comprised of a $9.9 million revolving line of credit for financing working capital and $2.0 million for letters of
credit. The Foothill Credit Facility matures November 1, 2004 and is secured by substantially all of the assets of the Company.

On
June 26, 2003, the Company entered into an amendment of the Foothill Credit Facility (the "Amendment"). Among other things, the Amendment allows the Company to add back to
earnings used to calculate adjusted EBITDA, to the extent and only to the extent deducted from earnings used in calculating EBITDA, as defined in the Foothill Credit Facility, the severance related
costs in connection with the resignation of Larry Hodges expensed and payable by the Company during the fiscal years 2003 and 2004 in an aggregate amount not to exceed $1.2 million. In
addition, the Amendment provides for more favorable terms for certain financial covenants through the expiration date of the Foothill Credit Facility.

Management
believes the Company's operations have been negatively impacted over the past two years by reduced mall traffic due to the recession during 2001 and the continued economic
instability, the events of September 11, 2001 and the war in Iraq that commenced during the first quarter of 2003. The Company has incurred net losses from the date of its formation resulting
in a stockholder's deficit of $75.7 million at June 28, 2003. The Company used $2.8 million of cash for operating activities during the 26 weeks ended June 28, 2003.
The Company generated $1.6 million of cash from investing activities during the 26 weeks ended June 28, 2003, primarily from proceeds from the sale of 27 company owned stores to
franchisees offset by purchases of property and equipment. The Company used $200,000 of cash for financing activities during the 26 weeks ended June 28, 2003, principally for a
distribution to parent under the tax sharing agreement and payments of debt financing costs, long-term debt and capital leases offset by borrowings under the revolving line of credit.

As
of June 28, 2003, the Company had liquid assets (unrestricted cash and cash equivalents and accounts receivable) of $6.1 million, a decrease of $3.4 million from
December 28, 2002 when liquid assets were $9.5 million. Current assets were $10.2 million at June 28, 2003, a decrease of $3.1 million from $13.3 million at
December 28, 2002. This decrease was primarily the result of a decrease in cash and cash equivalents, accounts receivable and amounts due from franchisees and licensees offset by an increase in
inventories and prepaid rent. Long-term assets were $92.8 million at June 28, 2003, a decrease of $5.5 million from $98.3 million at December 28, 2002.
This decrease was due to recurring depreciation of property and equipment, impairment of long-lived assets, sale of company owned stores and amortization of intangibles.

Current
liabilities were $33.1 million at June 28, 2003, a decrease of $300,000 from $33.4 million at December 28, 2002. This decrease was primarily due to a
decrease in accounts payable, amounts due to affiliates and sales tax payable offset by an increase in bank borrowings, accrued salaries and wages and deferred revenue

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The
Company's working capital deficit of $22.9 million at June 28, 2003 increased by $2.8 million from a deficit of $20.1 million at December 28, 2002
for the reasons described above.

During
2003, the Company expects that its principal uses of cash will be for working capital, capital expenditures, store closure obligations, debt service requirements, payments to MFFB
in accordance with the Tax Allocation Agreement and other general corporate purposes. In March 2003, Mrs. Fields paid MFFB $5.0 million relating to its obligations under the Tax
Allocation Agreement for fiscal 2002. In July 2003, Mrs. Fields paid MFFB $1.1 million relating to its obligations under the Tax Allocation Agreement for fiscal 2003. During the
second half of fiscal 2003, Mrs. Fields expects to pay MFFB an additional $2.4 million relating to its fiscal 2003 obligations under the Tax Allocation Agreement. The Company expects
that its principal sources of cash will be provided by operating activities, proceeds from the sale of assets including the sale of company owned stores to new or existing franchisees and borrowings
from the revolving line of credit. In March 2003, the Company received $2.0 million from a supplier as an advance to develop a beverage concept at company owned and franchised stores.

The
Company is highly leveraged. In addition to its credit facility with Foothill, the Company has $140 million of senior unsecured notes due on December 1, 2004 (the
"Senior Notes"). The Senior Notes require semi-annual interest payments of approximately $7.1 million on June 1 and December 1. Due to borrowing restrictions under its
senior note indenture and required maintenance of financial covenants under the Foothill Credit Facility, the Company's ability to obtain additional debt financing is significantly limited. Therefore,
the Company may sell additional company owned stores, defer capital expenditures and extend vendor payments to meet its debt service obligations. The Company believes that its sources of cash will be
adequate to meet its cash requirements anticipated for the next 12 months. The Company is in compliance with its covenants underlying its Foothill Credit Facility and its Senior Notes at
June 28, 2003.

Mrs. Fields,
Mrs. Fields' Holding, MFFB and TCBY have engaged an investment banking firm to act as financial advisors to assist in the evaluation of various financing
alternatives, which may include, among other alternatives, the refinancing of the Senior Notes. There can be no assurances that the Company will be successful in refinancing the Senior Notes or
consummating any other recommended financing alternatives.

Inflation

The impact of inflation on the operations of the business has not been significant in recent years. Most of the Company's leases contain escalation clauses.
However, such leases are accounted for on a straight-line basis as required by accounting principles generally accepted in the United States of America, which minimizes fluctuations in
operating income. In addition, some of our employees are paid hourly wages at the Federal minimum wage level. Minimum wage increases will negatively impact our payroll costs in the short term, but
management believes such impact can be offset in the long term through lower staffing of store operations and, if necessary, through product price increases.

Critical Accounting Policies

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses in the Company's consolidated financial statements. Management has reviewed the accounting policies
that it uses to prepare the Company's consolidated financial statements and believes that the following policies are the most important to the portrayal of the Company's financial condition and the
results of its operations while requiring the use of judgments and estimates about the effects of matters that are inherently uncertain.

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Related Party Transactions.Mrs. Fields has contractual relationships with various affiliates,
primarily TCBY and Mrs. Fields' Holding, which are intended to be fair to the parties involved in the transactions and on terms similar to what could be negotiated with independent third
parties. Sometimes the Company is required to negotiate the agreements for both sides of the transactions. Also, inherent in any contractual relationship is the interpretation of the intent of the
agreement at a later time when unanticipated events occur. When situations like these occur, the Company attempts to objectively determine the terms of the transaction or interpret the intent of the
agreement on a fair and independent basis. However, there is no guarantee that we will be successful in doing so. Individual affiliate transactions or a series of related transactions in excess of
$1.0 million require a resolution by the Company's board of directors. Individual affiliate transactions or a series of related transactions in
excess of $5.0 million require an "opinion of fairness" by an accounting, appraisal or investment banking firm.

Tax Allocation Agreement.The Company is subject to an Amended and Restated Tax Allocation Agreement
with MFFB and Mrs. Fields' Holding (the "Tax Allocation Agreement"). The Tax Allocation Agreement is among MFFB, Mrs. Fields' Holding, TCBY Holding, and all of their respective
subsidiaries (collectively, the "Group").

The
Tax Allocation Agreement provides for compensation to the Company for any utilization of the Company's net operating loss and capital loss carryforwards that existed as of
September 29, 2001. Pursuant to this agreement, on a quarterly basis, a hypothetical federal income tax liability is calculated for each subsidiary or subgroup of subsidiaries as if each
subsidiary or subgroup of subsidiaries filed its own U.S. Federal Income Tax Return. The exact amount of any compensation to the Company or MFFB is contingent upon the length of time between the
utilization date and September 29, 2001 and is subject to additional calculations as defined in the Supplement to Tax Allocation Agreement.

Impairment of Goodwill and Intangible Assets.On an annual basis, the Company completes a valuation
of the intangible assets associated with its various operating segments. To the extent that the fair value associated with the intangible asset is less than the recorded value, the Company writes down
the value of the related intangible asset. The valuation of the intangible assets is affected by, among other things, the Company's business plan for the future, estimated results of future operations
and the comparable companies that are used to value the Company's intangible assets. Changes in the business plan or operating results that are different than the projections used to develop the
valuation of the intangible assets have an impact on the valuation of the intangible assets. Also, the decision to use one company versus another company as a benchmark may have an impact on the
valuation of the intangible assets.

Impairment of Long-lived Assets.The Company reviews its long-lived assets
for impairment when circumstances indicate that the book value of an asset may not be fully recovered by the undiscounted net cash flow generated over the remaining life of the related asset or group
of assets. If the cash flows generated by the asset are not sufficient to recover the remaining book value of the asset, the Company is required to write down the value of the asset. In evaluating
whether the asset will generate sufficient cash flow to recover its book value, the Company estimates the amount of cash flow that will be generated by the asset and the remaining life of the asset.
In making our estimate, the Company considers the performance trends related to the asset, the likelihood that the trends will continue or change, both at the asset level as well as at the national
economic level, and the length of time that we expect to retain the asset.

Allowance for Doubtful Accounts.The Company sells product to and receives royalties from its
franchisees and sells product to other customers. Sometimes these franchisees and customers are unable or unwilling to pay for the products that they receive or royalties that they owe. Factors that
affect the Company's ability to collect amounts that are due to Mrs. Fields include the financial strength of a franchisee or customer and its operations, the economic strength of the mall
where the

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franchisee
is located and the overall strength of the retail economy. Mrs. Fields is required to establish an estimated allowance for the amounts included in accounts receivable that it will
not be able to collect in the future. To establish this allowance, it evaluates the customer's or franchisee's financial strength, payment history, reported sales and the availability of collateral to
offset potential losses. If the assumptions that are used to determine the allowance for doubtful accounts change, Mrs. Fields may have to provide for a greater level of expense in future
periods or to reverse amounts provided in prior periods.

Store Closure Reserve.The Company periodically closes under-performing stores, either individually
or as part of an overall store closure plan. When a store is targeted for closure, the Company records a provision for costs that will be incurred in closing the store, which are predominately
estimated lease termination costs. The costs include both settlement payments and continued contractual payments over time under original lease agreements. The amount of the provision is allocated
between current amounts that are estimated to be paid within one year and long-term amounts that are estimated to be paid thereafter. The amount of the estimated reserve and the timing of
the payments are affected by Mrs. Fields' ability to settle with the landlord for amounts less than the amount reserved and the timing of the payments agreed to in the settlement.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46 ("FIN 46"), "Consolidation of Variable
Interest Entities," an interpretation of Accounting Research Bulletin No. 51, "Consolidated Financial Statements." FIN 46 addresses the consolidation of entities whose equity holders
have either (a) not provided sufficient equity at risk to allow the entity to finance its own activities or (b) do not possess certain characteristics of a controlling financial
interest. FIN 46 requires the consolidation of these entities, known as variable interest entities ("VIEs"), by the primary beneficiary of the entity. The primary beneficiary is the entity, if
any, that is subject to a majority of the risk of loss from the VIE's activities, entitled to receive a majority of the VIE's residual returns, or both. FIN 46 applies immediately to variable
interests in VIEs created or obtained after January 31, 2003. For variable interests in a VIE created before February 1, 2003, FIN 46 is applied to the VIE no later than the end
of the first interim or annual reporting period beginning after June 15, 2003 (the quarter ending September 27, 2003 for the Company). FIN 46 requires certain disclosures in
financial statements issued after January 31, 2003, if it is reasonably possible that the Company will consolidate or disclose information about VIEs when the interpretation becomes effective.
We are currently evaluating what impact, if any, FIN 46 may have on the Company's consolidated financial statements.

In
April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 is intended to amend
and clarify financial accounting for reporting for derivative instruments, including certain derivative instruments embedded in other contracts and hedging activities. The changes in SFAS
No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. In particular, this Statement (a) clarifies under what
circumstances a contract with an initial net investment meets the characteristic of a derivative, (b) clarifies when a derivative contains a financing component, (c) amends the
definition of an underlying to conform it to language used in FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others", and (d) amends certain other existing pronouncements. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003. The Company
does not expect the adoption of SFAS No. 149 to have a material impact on the Company's consolidated financial statements.

In
May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." This statement establishes
standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It

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requires
that an issuer classify a financial instrument that is within its scope as a liability. Many of those instruments were previously classified as equity. SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Company does
not expect the adoption of SFAS No. 150 to have a material impact on the Company's consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

There have been no significant changes in market risks since the end of the Company's fiscal year ended December 28, 2002. For more information, please
read the consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 28, 2002.

ITEM 4. CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer reviewed and evaluated the Company's disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-Q. Based on that evaluation, these officers have concluded that
as of June 28, 2003, the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Company's reports filed or submitted under the Securities Exchange Act of 1934.

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PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

Mrs. Fields'
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 5. OTHER INFORMATION

As disclosed elsewhere in this Quarterly Report on Form 10-Q and on a Current Report on Form 8-K filed on May 7,
2003, effective May 14, 2003, Larry A. Hodges, President, Chief Executive Officer and Director of the Company, resigned from the Company and Stephen Russo succeeded him, effective
May 15, 2003, as President, Chief Executive Officer and Director of the Company. A copy of Mr. Russo's employment agreement with the Company was filed as an exhibit to the Current
Report.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

|10.1 |  | Second Amendment to Second Amended and Restated Loan and Security Agreement, dated as of April 23, 2003 between Foothill Capital Corporation, a California corporation, and Mrs. Fields' Original Cookies,
 Inc., a Delaware corporation, filed herein.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2 |  | Third Amendment to Second Amended and Restated Loan and Security Agreement, dated as of June 26, 2003 between Foothill Capital Corporation, a California corporation, and Mrs. Fields' Original Cookies, Inc., a Delaware corporation,
filed herein.   
|31.1 |  | Certification of Chief Executive Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                            
|31.2 |  | Certification of Chief Financial Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                            
|32   |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                          

(b)   Reports Filed On Form 8-K

A Form 8-K was filed on April 8, 2003, in which it was reported that Mrs. Fields Famous Brands, Inc. acquired an aggregate
of $27,950,000 principal amount of the 14% Senior Secured Discount Notes due 2005 of Mrs. Fields' Holding Company, Inc.

A
Form 8-K was filed on May 7, 2003, in which it was reported that, effective May 14, 2003, Larry A. Hodges, President, Chief Executive Officer
and Director of the Company, resigned from the Company and Stephen Russo succeeded him, effective May 15, 2003, as President, Chief Executive Officer and Director of the Company.

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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/STEPHEN RUSSOStephen Russo, President and Chief Executive Officer                                                                    |  | August 8, 2003Date
|/s/SANDRA M. BUFFASandra M. Buffa, Senior Vice President and Chief Financial Officer
(Chief Financial and Principal Accounting Officer) |  | August 8, 2003Date

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EXHIBIT INDEX

|Exhibit
Number |  | Description of Document                                                                                                                                                                                                                               
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1           |  | Second Amendment to Second Amended and Restated Loan and Security Agreement, dated as of April 23, 2003 between Foothill Capital Corporation, a California corporation, and Mrs. Fields' Original Cookies, Inc., a
Delaware corporation, filed herein.
|10.2           |  | Third Amendment to Second Amended and Restated Loan and Security Agreement, dated as of June 26, 2003 between Foothill Capital Corporation, a California corporation, and Mrs. Fields' Original Cookies, Inc., a Delaware corporation, filed
herein.  
|31.1           |  | Certification of Chief Executive Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the Exchange Act, As Adopted Pursuant to Section 203 of the Sarbanes-Oxley Act of 2002.                                                                           
|31.2           |  | Certification of Chief Financial Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the Exchange Act, As Adopted Pursuant to Section 203 of the Sarbanes-Oxley Act of 2002.                                                                           
|32             |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                        

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