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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
      þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 29, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File
    No. 000-50052
  Cosi, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

06-1393745(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   1751 Lake Cook Road,
    Suite 600, Deerfield, Illinois 60015
 Telephone Number
    (847) 597-8800
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of ClassCommon Stock
    ($.01 par value)   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
   o þ
   þ o
   Regulation S-K Form 10-K Form 10-K o þ
  Rule 12b-2
  Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o

Smaller reporting company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
       DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




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##### 





TABLE OF
    CONTENTS
   
 Item

Description

PagePART I1.


Business


31A.


Risk Factors


81B.


Unresolved Staff Comments


172.


Properties


183.


Legal Proceedings


204.


Submission of Matters to a Vote of Security Holders


20PART II5.


Market for Registrants Common Equity, Related Stockholder
    Matters, and Issuer Purchases of Equity Securities


216.


Selected Financial Data


247.


Managements Discussion and Analysis of Financial Condition
    and Results of Operations


257A.


Quantitative and Qualitative Disclosures about Market Risk


418.


Financial Statements and Supplementary Data


429.


Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure


429A.


Controls and Procedures


429B.


Other Information


43PART III10.


Directors, Executive Officers and Corporate Governance


4411.


Executive Compensation


4412.


Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters


4413.


Certain Relationships and Related Transactions and Director
    Independence


4414.


Principal Accounting Fees and Services


44PART IV15.


Exhibits and Financial Statement Schedules


45EX-23.1EX-31.1EX-31.2EX-32.1   2




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PART I  Item 1.
    BUSINESS  General
    ®
  Form 10-K, Form 10-Q, Form 8-K c/o Investor
  Recent
    Developments
    Business
    Strategy
      Offering an innovative menu appealing to our target
    customer.
  Providing customers with an exceptional service and dining
    experience.
 3




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Expanding marketing initiatives to build brand
    awareness.
  Increasing comparable restaurant sales and average unit
    volumes.
  Operating our restaurants efficiently.
  Growth
    Strategy
    Build a system of franchised restaurants and develop
    Company-owned restaurants. multi-unit
  Pursue foodservice strategic alliances. grab-and-go grab-and-go
  Cosi
    Product Offerings
     4




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People
    Restaurant
    Operations
  Management Structure.
      Sales Forecasting.
  Product Quality.
  Food and Labor Cost Controls. item-by-item
  multi-unit
   5




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Management
    Information Systems
      back-ups,
  Purchasing
      Coca-Cola
      Competition
   6




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Intellectual
    Property
        Governmental
    Regulation
    and/or
       7




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Item 1A.  RISK
    FACTORS  Risks
    Related to Our Growth Strategy
  We may
    not be able to achieve our planned expansion. If we or our
    franchisees are unable to successfully open new restaurants, our
    revenue growth rate and profits may be reduced.
    
    locating suitable restaurant sites in new and existing markets;
    negotiating acceptable lease terms;
    generating positive cash flow from existing and new restaurants;
    successful operation and execution in new and existing markets;
    recruiting, training and retaining qualified corporate and
    restaurant personnel and management;
    attracting and retaining qualified franchisees;
    cost effective and timely planning, design and build-out of
    restaurants;
    the reliability of our customer and market studies;
    the reliability of our site identification studies;
    consumer trends;
    obtaining and maintaining required local, state, federal and
    where applicable, foreign governmental approvals and permits
    related to the construction of the sites and the sale of food
    and alcoholic beverages;
    creating customer awareness of our restaurants in new markets;
    competition in our markets, both in our business and in locating
    suitable restaurant sites;
    the cost of our principal food products and supply and delivery
    shortages or interruptions;
    weather conditions; and
    general economic conditions.  We
    must identify and obtain a sufficient number of suitable new
    restaurant sites for us to sustain our revenue growth
    rate.
   8




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Our
    expansion in existing markets can cause sales in some of our
    existing restaurants to decline, which could result in
    restaurant closures.
    Our
    expansion into new markets, both foreign and domestic, may
    present increased risks due to our unfamiliarity with the area.
    The restaurants we open in new geographic regions may not
    achieve market acceptance.
  ®
    We may
    not be able to successfully incorporate a franchising and area
    developer model into our strategy.
   9




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If our
    franchisees cannot develop or finance new restaurants, build
    them on suitable sites or open them on schedule, our growth and
    success may be impeded.
    Additional
    foodservice strategic alliances may not be successful and may
    materially adversely affect our business and results of
    operations.
    Any
    inability to manage our growth effectively could materially
    adversely affect our operating results.
    If we
    are unable to successfully integrate future acquisitions, our
    business could be negatively impacted. Any acquisitions may also
    be costly.
    Risks
    Related to Our Business
  If we
    are unable to execute our business strategy, we could be
    materially adversely affected.
    
    our ability to generate positive cash flow from operations;
    identification and availability of suitable restaurant sites;
    competition for restaurant sites and customers;
    negotiation of favorable leases; 10




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
    management of construction and development costs of new and
    renovated restaurants;
    securing required governmental approvals and permits;
    recruitment and retention of qualified operating personnel;
    successful operation and execution in new and existing markets;
    recruiting, training and retaining qualified corporate and
    restaurant personnel and management;
    identification of under-performing restaurants and our ability
    to improve or efficiently close under-performing restaurants,
    including securing favorable lease termination terms;
    the rate of our internal growth, and our ability to generate
    increased revenue from existing restaurants;
    our ability to incorporate a franchising and area developer
    model into our strategy;
    competition in new and existing markets;
    the reliability of our customer and market studies;
    consumer trends;
    the cost of our principal food products and supply and delivery
    shortages or interruptions;
    availability of additional capital and financing;
    weather conditions; and
    general regional, national and, where applicable, foreign
    economic conditions.    During
    our operating history, we have been unable to achieve
    profitability.
  Form 10-K
  If
    internally generated cash flow from our restaurants does not
    meet our expectations, our business, results of operations and
    financial condition could be materially adversely
    affected.
    We may
    need additional capital in the future and it may not be
    available on acceptable terms.
   11




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There
    is no assurance that any particular course of action or specific
    transaction will occur as a result of our ongoing strategic
    review.
    The
    current economic crisis could adversely affect our business and
    financial results and have a material adverse effect on our
    liquidity and capital resources.
  ®
  Our
    franchisees could take actions that could harm our
    business.
    We
    could face liability from our franchisees.
    Our
    financial results are affected by the financial results of our
    franchisees.
   12




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Our
    restaurants are currently concentrated in the Northeastern and
    Mid-Atlantic regions of the United States, particularly in
    the New York City and Washington, D.C. areas. Accordingly,
    we are highly vulnerable to negative occurrences in these
    regions.
    You
    should not rely on past increases in our average unit volumes as
    an indication of our future results of operations because they
    may fluctuate significantly.
    
    our ability to execute our business and growth strategy
    effectively;
    introduction of new menu items;
    sales performance by our new and existing restaurants;
    management turnover in the restaurants;
    competition;
    general regional, national and where applicable, foreign
    economic conditions;
    weather conditions; and
    consumer trends.    If we
    cannot meet the continued listing requirements of The NASDAQ
    Stock Market (NASDAQ), NASDAQ may delist our common
    stock, which could have an adverse impact on the liquidity and
    market price of our common stock.
  trading-day
  Seasonality,
    inclement weather and other variable factors may adversely
    affect our sales and results of operations and could cause our
    quarterly results to fluctuate and fall below expectations of
    securities analysts and investors, resulting in a decline in our
    stock price.
   13




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If we
    fail to comply with governmental regulations or if these
    regulations change, our business could suffer.
    Form 10-K
  Our
    operations depend upon governmental licenses and we may face
    liability under dram shop statutes.
  and/or
  Our
    failure or inability to enforce our trademarks or other
    proprietary rights could adversely affect our competitive
    position or the value of our brand.
     14




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We
    hold significant amounts of illiquid assets and may have to
    dispose of them on unfavorable terms.
    We may
    face litigation that could have a material adverse effect on our
    business, financial condition and results of
    operations.
  ® ®
    If we
    are unable to protect our customers credit card data, we
    could be exposed to data loss, litigation and liability, and our
    reputation could be significantly harmed.
    We
    rely on computer systems and information technology to run our
    business. Any material failure, interruption or security breach
    of our computer systems or information technology may adversely
    affect the operation of the business and our results of
    operations.
   15




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Risks
    Relating to the Food Service Industry
  Our
    business is affected by changes in consumer
    preferences.
    Natural
    disasters, war, acts of terrorism or other armed conflict, or
    the threat of such actions, on the United States or
    international economies may cause a decline in discretionary
    consumer spending, which would negatively affect our
    business.
    Our
    success depends on our ability to compete with many food service
    businesses.
      Changes
    in food and supply costs and availability could adversely affect
    our results of operations.
   16




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Health
    concerns relating to the consumption of beef, poultry, produce
    or other food products could adversely affect the price and
    availability of beef, poultry, produce, and other food products,
    consumer preferences and our results of operations and stock
    price.
      The
    food service industry is affected by litigation and publicity
    concerning food quality, health and other issues, which can
    cause customers to avoid our products and result in
    liabilities.
    Our
    business could be adversely affected by increased labor costs or
    labor shortages.
    Item 1B.
    UNRESOLVED
    STAFF COMMENTS   17




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Item 2.
    PROPERTIES    10-year
    Street Address

City

Date Opened

FormatMIDATLANTIC234 South 15th Street

Philadelphia, PA

September-96

Cosi325 Chestnut Street

Philadelphia, PA

April-97

Cosi1350 Connecticut Avenue

Washington, DC

September-97

Cosi1128 Walnut Street

Philadelphia, PA

December-97

Cosi1647 20th Street NW

Washington, DC

August-98

Cosi140 South 36th Street

Philadelphia, PA

August-98

Cosi761 Lancaster Avenue

Bryn Mawr, PA

September-98

Cosi301 Pennsylvania Avenue SE

Washington, DC

March-99

Cosi2050 Wilson Boulevard

Arlington, VA

April-99

Cosi215 Lombard Street

Philadelphia, PA

May-99

Cosi1700 Pennsylvania Avenue

Washington, DC

August-99

Cosi Downtown1700 Market Street

Philadelphia, PA

September-99

Cosi Downtown700 King Street

Alexandria, VA

May-00

Cosi700 11th Street

Washington, DC

May-00

Cosi4250 Fairfax Drive

Arlington, VA

June-00

Cosi1919 M Street

Washington, DC

September-00

Cosi201 South 18th Street

Philadelphia, PA

October-00

Cosi1001 Pennsylvania Avenue NW

Washington, DC

October-00

Cosi Downtown7251 Woodmont Avenue

Bethesda, MD

December-00

Cosi11909 Democracy Drive

Reston, VA

May-01

Cosi4074 The Strand West

Columbus, OH

October-01

Cosi1501 K Street NW

Washington, DC

December-01

Cosi Downtown1875 K Street

Washington, DC

July-02

Cosi Downtown6390 Sawmill Road

Columbus, OH

September-02

Cosi601 Pennsylvania Ave. NW

Washington, DC

September-02

Cosi1275 K Street

Washington, DC

September-02

Cosi2212 East Main Street

Bexley, OH

September-02

Cosi1478 Bethel Road

Columbus, OH

November-02

Cosi295 Main Street

Exton, PA

November-02

Cosi7166 N. High Street

Worthington, OH

December-02

Cosi5252 Wisconsin Ave, NW

Washington, DC

December-02

Cosi177 Kentlands Blvd

Gaithersburg, MD

January-03

Cosi1333 H Street, NW

Washington DC

January-03

Cosi Downtown1310 Polaris Parkway

Columbus, OH

February-03

Cosi1801 N. Lynn Street

Arlington, VA

November-05

Cosi4025 Welsh Road

Willow Grove, PA

December-05

Cosi50 Yorktown Plaza

Elkins Park, PA

April-06

Cosi 18




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Street Address

City

Date Opened

Format833 Chestnut

Philadelphia, PA

June-06

Cosi9177 Reisterstown Road

Owing Mills, MD

June-06

Cosi424 West Swedesford Road

Berwyn, PA

June-06

Cosi100 South Charles

Baltimore, MD

July-06

Cosi513 West Broad Street

Falls Church, VA

October-06

Cosi3503 Fairfax Drive, Suite 200

Arlington, VA

November-06

Cosi201 N. Washington #290

Rockville, MD

March-07

Cosi2955 Market St.

Philadelphia, PA

July-07

Cosi2011 Crystal Drive
    Suite 100-B

Arlington, VA

May-08

CosiMIDWEST116 S. Michigan Avenue

Chicago, IL

September-00

Cosi55 E. Grand Street

Chicago, IL

October-00

Cosi230 W. Washington Street

Chicago, IL

November-00

Cosi Downtown203 North LaSalle Street

Chicago, IL

May-01

Cosi Downtown301 South State Street

Ann Arbor, MI

May-01

Cosi1101 Lake Street

Oak Park, IL

June-01

Cosi101 North Old Woodward Avenue

Birmingham, MI

August-01

Cosi25 E. Hinsdale

Hinsdale, IL

December-01

Cosi8775 N. Port Washington Road

Fox Point, WI

December-01

Cosi230 West Monroe Street

Chicago, IL

May-02

Cosi Downtown301 East Grand River Avenue

East Lansing, MI

May-02

Cosi84 W. Adams Road

Rochester Hills, MI

September-02

Cosi28674 Telegraph Road

Southfield, MI

November-02

Cosi37652 Twelve Mile Road

Farmington Hills, MI

December-02

Cosi15131 LaGrange Road

Orland Park, IL

December-02

Cosi233 North Michigan Avenue

Chicago, IL

December-02

Cosi Downtown33 N Dearborn

Chicago, IL

June-05

Cosi Downtown1740 Sherman Avenue

Evanston, IL

September-05

Cosi1825 2nd Street

Highland Park, IL

December-05

Cosi18 West 066 22nd Street

Oak Brook Terrace, IL

August-06

Cosi2200 North Clark

Chicago, IL

August-06

Cosi8310 Greenway Boulevard, #106

Middleton, WI

September-06

Cosi250 State Street

Madison, WI

September-06

Cosi910 North Milwaukee Avenue, Suite A

Lincolnshire, IL

November-06

Cosi220 South Washington Street

Naperville, IL

December-06

Cosi21720 W. Long Grove Rd.

Deer Park, IL

March-07

CosiNORTHEAST257 Park Avenue South

New York, NY

February-97

Cosi38 East 45th Street

New York, NY

February-97

Cosi Downtown11 West 42nd Street

New York, NY

June-97

Cosi Downtown60 East 56th Street

New York, NY

September-97

Cosi Downtown3 World Financial Center

New York, NY

January-98

Cosi Downtown55 Broad Street

New York, NY

March-98

Cosi Downtown1633 Broadway

New York, NY

July-98

Cosi Downtown61 West 48th Street

New York, NY

August-98

Cosi Downtown685 Third Avenue

New York, NY

June-99

Cosi Downtown970 Farmington Avenue

W. Hartford, CT

August-99

Cosi 19




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Street Address

City

Date Opened

Format461 Park Avenue South

New York, NY

January-00

Cosi50 Purchase Street

Rye, NY

March-00

Cosi841 Broadway

New York, NY

September-00

Cosi15 S. Moger Avenue

Mt. Kisco, NY

December-00

Cosi77 Quaker Ridge Road

New Rochelle, NY

November-01

Cosi1298 Boston Post Road

Larchmont, NY

December-01

Cosi471 Mount Pleasant Road

Livingston, NJ

September-02

Cosi29 Washington Street

Morristown, NJ

December-02

Cosi385 West Main Street

Avon, CT

December-02

Cosi498 7th Avenue

New York, NY

December-02

Cosi700 6th Avenue

New York, NY

February-03

Cosi980 Boston Post Road

Darien, CT

October-05

Cosi129 West Putnam Avenue

Greenwich, CT

February-06

Cosi441 South Oyster Bay Road

Plainview, NY

June-06

Cosi1209 High Ridge Road

Stamford, CT

July-06

Cosi44 Great Neck Road

Great Neck, NY

July-06

Cosi53 E. 8th St.

New York, NY

April-07

Cosi2186 Broadway

New York, NY

June-07

Cosi230 Tresser Blvd. Ste 005

Stamford, CT

November-07

Cosi   Item 3.
    LEGAL
    PROCEEDINGS      Item 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   20




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PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, STOCK AND RELATED
    STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY
    SECURITIES    Stock
    Price Information
    Fiscal 2008


Fiscal 2007Fiscal Quarter:

High


Low


High


LowFirst Quarter

$
3.14


$
1.81


$
6.67


$
5.10Second Quarter

$
3.15


$
2.23


$
5.74


$
4.47Third Quarter

$
2.85


$
1.57


$
5.02


$
3.24Fourth Quarter

$
1.97


$
0.18


$
3.89


$
2.10   Stockholders
    Dividend
    Policy
   21




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Securities
    Authorized for Issuance Under Equity Compensation
    Plans
      Cummulative
    Total Return
  
  22-Nov-02


31-Dec-02


31-Dec-03


31-Dec-04


30-Dec-05


29-Dec-06


31-Dec-07


29-Dec-08COSI



100




73




37




80




109




67




29




3NASDAQ



100




91




136




148




150




164




181




103S&P



100




100




100




111




118




135




133




85   Recent
    Sales of Unregistered Securities
    (a)
    Exercises
    of Warrants       22




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23




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Item 6.
    SELECTED
    FINANCIAL DATA    Fiscal Year2008


2007


2006


2005


2004(In thousands, except per share data)Consolidated Statement of Operations Data:Revenues:Restaurant net sales

$
132,501


$
132,414


$
122,849


$
114,036


$
110,040Franchise fees and royalties


3,078



2,142



849



101



Total revenues


135,579



134,556



123,698



114,137



110,040Costs and expenses:Cost of food and beverage


30,235



30,972



28,170



27,104



27,820Restaurant labor and related benefits


45,375



45,995



40,782



37,264



38,428Occupancy and other restaurant operating expenses


39,821



38,369



32,045



27,726



27,720115,431



115,336



100,997



92,094



93,968General and administrative expenses


19,966



22,973



26,887



24,265



24,573
(1)Depreciation and amortization


8,409



8,823



7,196



6,516



6,874Restaurant pre-opening expenses


100



710



1,451



824



64Provision for losses on asset impairments and disposals


7,099



3,845



249



675



1,406Closed store costs


69



262











Lease termination expenses (benefit), net


551



347



(232
)


(179
)


(589
)Gain on sale of assets






(23
)


(482
)


(1,432
)


Total costs and expenses


151,625



152,273



136,066



122,763



126,296Operating loss


(16,046
)


(17,717
)


(12,368
)


(8,626
)


(16,256
)Other income (expense):Interest income


102



524



1,411



802



159Interest expense


(7
)


(42
)


(9
)


(34
)


(62
)Allowance for notes receivable from stockholders














(261
)


(1,266
)Other income (expense)


41



705



77



104



(103
)Total other income (expense)


136



1,187



1,479



611



(1,272
)Loss from continuing operations


(15,910
)


(16,530
)


(10,889
)


(8,015
)


(17,528
)Discontinued operations:Operating loss from discontinued operations


(224
)


(903
)


(1,183
)


(1,906
)


(504
)Asset impairments of discontinued operations


(88
)


(3,350
)


(256
)


(3,205
)


(341
)Loss from discontinued operations


(312
)


(4,253
)


(1,439
)


(5,111
)


(845
)Net loss

$
(16,222
)

$
(20,783
)

$
(12,328
)

$
(13,126
)

$
(18,373
)Per share data:Loss per share  basic and dilutedContinuing operations

$
(0.40
)

$
(0.42
)

$
(0.28
)

$
(0.23
)

$
(0.59
)Discontinued operatons

$



$
(0.11
)

$
(0.04
)

$
(0.15
)

$
(0.03
)Net loss

$
(0.40
)

$
(0.53
)

$
(0.32
)

$
(0.38
)

$
(0.62
)Weighted average shares used in computing net loss per
    share  basic and diluted


40,079



39,332



38,207



34,929



29,432     (1)
    
    Includes $1.0 million in expense related to the relocation
    of our corporate office from New York to Deerfield, IL.  24




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Fiscal Year2008


2007


2006


2005


2004(In thousands)Selected Consolidated Balance Sheet Data:Cash and cash equivalents

$
5,589


$
6,309


$
938


$
1,952


$
1,090Investments

$



$



$
18,962


$
32,918


$
9,962Total assets

$
42,781


$
56,412


$
75,757


$
76,544


$
51,138Total stockholders equity

$
19,026


$
33,846


$
50,631


$
56,208


$
29,152Selected Consolidated Statement of Cash Flow Data:Cash flow provided by (used in) operating activities

$
2,044


$
(2,369
)

$
3,949


$
4,249


$
(9,631
)Cash flow (used in) provided by investing activities

$
(2,817
)

$
5,727


$
(6,674
)

$
(31,536
)

$
(17,268
)Cash flow provided by financing activities

$
53


$
2,013


$
1,711


$
36,648


$
20,032Selected Operating Data:Company-owned restaurants open at the end of the fiscal year


101



107



110



96



92   Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  The following discussion and analysis of our financial
    condition and results of operations for the fiscal years ended
    December 29, 2008, December 31, 2007 and
    January 1, 2007 should be read in conjunction with
    Selected Consolidated Financial Data and our audited
    consolidated financial statements and the notes to those
    statements that are included elsewhere in this Annual Report.
    Our discussion contains forward-looking statements based upon
    current expectations that involve risks and uncertainties, such
    as our plans, objectives, expectations and intentions. Actual
    results and the timing of events could differ materially from
    those anticipated in these forward-looking statements as a
    result of a number of factors, including those set forth under
    Cautionary Note Regarding Forward-Looking Statements
    below and elsewhere in this Annual Report.
  Business
    Overview
  System-wide
    Restaurants:
  Fiscal Year2008


2007


2006Company-








Company-








Company-Owned


Franchise


Total


Owned


Franchise


Total


Owned


Franchise


TotalRestaurants at beginning of period


107
c


34



141



110
b


13



123



96
a


5



101New restaurants opened


1



19



20



6



22



28



21



8



29Restaurants permanently closed


7



3



10



9



1



10



7







7Restaurants at end of period


101



50



151



107
c


34



141



110
b


13



123            25




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##### Table of Contents



® ® and/or ® ® ® ®
    ®
  ®
    Recent
    Developments
    Critical
    Accounting Policies
     26




---



##### Table of Contents



Long Lived Assets: Accounting for the Impairment or Disposal of Long Lived
    Assets
  Lease Termination
    Charges: Accounting
    for Costs Associated with Exit or Disposal Activities
  Stock-Based Compensation Expense: Share-Based
    Payment
    Expected dividend yield


0
%Expected stock price volatility


68
%Average risk-free interest rate


3.79
%Average expected life of options


5 yearsWeighted average grant date fair value

$
3.89     Accounting for Lease Obligations: Bulletin No. 85-3, Accounting for Operating Leases with Scheduled Rent
    Increases
  Landlord Allowances: Bulletin No. 88-1, Issues Relating to Accounting for Leases
 27




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##### Table of Contents



Income Taxes:
  Accounting for Uncertainty in Income Taxes, an
    interpretation of FASB Statement No. 109
      Revenue
  Restaurant Net Sales.
  Franchise Fees and Royalties.
  Gift Card Sales.
  Comparable
    Restaurant Sales
    Costs and
    Expenses
  Cost of Food and Beverage.
  Restaurant Labor and Related Benefits.
 28




---



##### Table of Contents



Occupancy and Other Restaurant Operating
    Expenses.
  General and Administrative Expenses.
  Depreciation and Amortization.
  Restaurant Pre-opening Expenses.
 29




---



##### Table of Contents



Results
    of Operations
    Fiscal Year2008


2007


2006Revenues:Restaurant net sales


97.7
%


98.4
%


99.3
%Franchise fees and royalties


2.3



1.6



0.7Total revenues


100.0



100.0



100.0Cost and expenses:Cost of food and beverage(1)


22.8



23.4



22.9Restaurant labor and related benefits(1)


34.2



34.7



33.2Occupancy and other restaurant operating expenses(1)


30.1



29.0



26.187.1



87.1



82.2General and administrative expenses:


14.7



17.1



21.7Depreciation and amortization


6.2



6.6



5.8Restaurant pre-opening expenses


0.1



0.5



1.2Provision for losses on asset impairments and disposals


5.2



2.9



0.2Closed store costs


0.1



0.2



Lease termination expense (benefit), net


0.4



0.3



(0.2
)Gain on sale of assets










(0.4
)Total costs and expenses


111.8



113.2



110.0Operating loss


(11.8
)


(13.2
)


(10.0
)Other income (expense):Interest income






0.4



1.1Other income






0.5



0.1Loss from continuing operations


(11.8
)


(12.3
)


(8.8
)Discontinued operations:Operating loss from discontinued operations


(0.2
)


(0.7
)


(1.0
)Asset imparments of discontinued operations






(2.4
)


(0.20
)Loss from discontinued operations


(0.2
)


(3.1
)


(1.2
)Net loss


(12.0
)


(15.4
)


(10.0
)     (1)
    
    These are expressed as a pecentage of restaurant net sales
    versus all other items expressed as a percentage of total
    revenues.  Fiscal
    Year 2008 (52 weeks) compared to Fiscal Year 2007
    (52 weeks)
  Restaurant
    Net Sales
  Restaurant Net SalesAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
132,501



97.7
%Fiscal 2007

$
132,414



98.4
%  30




---



##### Table of Contents



Franchise
    Fees and Royalties
  Franchise Fees and RoyaltiesAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
3,078



2.3
%Fiscal 2007

$
2,142



1.6
%     Costs and
    Expenses
  Cost of Food and BeverageAs a % of(In Thousands)


Restaurant Net SalesFiscal 2008

$
30,235



22.8
%Fiscal 2007

$
30,972



23.4
%   Cost of Food and Beverage.
  Restaurant Labor and Related Benefitsas a % of(In thousands)


restaurant net salesFiscal 2008

$
45,375



34.2
%Fiscal 2007

$
45,995



34.7
%   Restaurant Labor and Related Benefits.
  Occupancy and Other Restaurant Operating ExpensesAs a % of(In Thousands)


Restaurant Net SalesFiscal 2008

$
39,821



30.1
%Fiscal 2007

$
38,369



29.0
%  31




---



##### Table of Contents



Occupancy and Other Restaurant Operating
    Expenses.
  General and Administrative CostsAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
19,966



14.7
%Fiscal 2007

$
22,973



17.1
%   General and administrative costs.
  Depreciation and AmortizationAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
8,409



6.2
%Fiscal 2007

$
8,823



6.6
%   Depreciation and Amortization.
  Restaurant Pre-Opening ExpensesAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
100



0.1
%Fiscal 2007

$
710



0.5
%   Restaurant Pre-Opening Expenses.
  Provision for Losses on Asset Impairments and DisposalsAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
7,099



5.2
%Fiscal 2007

$
3,845



2.9
%   Provision for Losses on Asset Impairments and
    Disposals.
 32




---



##### Table of Contents



Closed Store CostsAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
69



0.1
%Fiscal 2007

$
262



0.2
%   Closed Store Costs.
  Lease Termination ExpenseAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
551



0.4
%Fiscal 2007

$
347



0.3
%   Lease Termination Expense.
  Gain on Sale of AssetsAs a % of(In Thousands)


Total RevenuesFiscal 2008






Fiscal 2007

$
23



   Gain on Sale of Assets.
  Interest Income


Interest ExpenseAs a % of





As a % of(In Thousands)


Total Revenues


(In Thousands)


Total RevenuesFiscal 2008

$
102






$
7



Fiscal 2007

$
524



0.4
%

$
42



   Interest Income and Expense.
  Other IncomeAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
41



Fiscal 2007

$
705



0.5
%  33




---



##### Table of Contents



Other income.
  Loss from Continuing OperationsAs a % of(In Thousands)


Total RevenuesFiscal 2008

$
(15,910
)


(11.8
)%Fiscal 2007

$
(16,530
)


(12.3
%)   Loss from Continuing Operations.
  Discontinued Operations. ®
    Accounting for the
    Impairment or Disposal of Long-Lived Assets
    Fiscal
    Year 2007 (52 weeks) compared to Fiscal Year 2006
    (52 weeks)
  Restaurant
    Net Sales
  Restaurant Net SalesAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
132,414



98.4
%Fiscal 2006

$
122,849



99.3
%    34




---



##### Table of Contents



Franchise
    Fees and Royalties
  Franchise Fees and RoyaltiesAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
2,142



1.6
%Fiscal 2006

$
849



0.7
%     Costs and
    Expenses
  Cost of Food and BeverageAs a % of(In Thousands)


Restaurant Net SalesFiscal 2007

$
30,972



23.4
%Fiscal 2006

$
28,170



22.9
%   Cost of Food and Beverage.
  Restaurant Labor and Related BenefitsAs a % of(In Thousands)


Restaurant Net SalesFiscal 2007

$
45,995



34.7
%Fiscal 2006

$
40,782



33.2
%   Restaurant Labor and Related Benefits.
  Occupancy and Other Restaurant Operating ExpensesAs a % of(In Thousands)


Restaurant Net SalesFiscal 2007

$
38,369



29.0
%Fiscal 2006

$
32,045



26.1
%  35




---



##### Table of Contents



Occupancy and Other Restaurant Operating
    Expenses.
  General and Administrative CostsAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
22,973



17.1
%Fiscal 2006

$
26,887



21.7
%   General and Administrative Costs.
  Depreciation and AmortizationAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
8,823



6.6
%Fiscal 2006

$
7,196



5.8
%   Depreciation and Amortization.
  Restaurant Pre-Opening ExpensesAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
710



0.5
%Fiscal 2006

$
1,451



1.2
%   Restaurant Pre-opening Expenses.
  Provision for Losses on Asset Impairments and DisposalsAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
3,845



2.9
%Fiscal 2006

$
249



0.2
%  36




---



##### Table of Contents



Provision for Losses on Asset Impairments and
    Disposals.
  Closed Store CostsAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
262



0.2
%Fiscal 2006






   Closed Store Costs.
  Lease Termination Expense (Benefit)As a % of(In Thousands)


Total RevenuesFiscal 2007

$
347



0.3
%Fiscal 2006

$
(232
)


(0.2
)%   Lease Termination Expense (Benefits), net.
  Gain on Sale of AssetsAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
23



Fiscal 2006

$
482



(0.4
)%   Gain on Sale of Assets.
  Interest Income


Interest ExpenseAs a % of





As a % of(In Thousands)


Total Revenues


(In Thousands)


Total RevenuesFiscal 2007

$
524



0.4
%

$
42



Fiscal 2006

$
1,411



1.1
%

$
9



   Interest Income and Expense.
  Other IncomeAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
705



0.5
%Fiscal 2006

$
77



0.1
%  37




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##### Table of Contents



Other Income.
  Loss from Continuing OperationsAs a % of(In Thousands)


Total RevenuesFiscal 2007

$
(16,530
)


(12.3
)%Fiscal 2006

$
(10,889
)


(8.8
)%   Loss from Continuing Operations.
  Discontinued Operations. ®
    Accounting for the
    Impairment or Disposal of Long-Lived Assets
    Liquidity
    and Capital Resources
       38




---



##### Table of Contents



Contractual
    Obligations :
    Payments Due by PeriodDue


Due


DueTotal


Due


Fiscal 2010


Fiscal 2012


AfterDescription

Obligations


Fiscal 2009


to Fiscal 2011


to Fiscal 2013


Fiscal 2013(In thousands)Long-term debt(1)(2)

$
1,400


$
600


$
717


$
83


$
Operating leases(3)


76,591



15,337



27,092



18,046



16,116Total contractual cash obligations

$
77,991


$
15,937


$
27,809


$
18,129


$
16,116  39




---



##### Table of Contents



(1)
    
    Amounts shown include a $0.1 million obligation including
    aggregate scheduled interest payments of $0.2 million
    related to a settlement for a trademark dispute. The principal
    amount of the debt, net of interest obligations, is included in
    the other long-term liabilities in the attached consolidated
    balance sheets.(2)
    
    Amounts shown include $1.3 million for a legal settlement
    related to a claim from a former employee. The installment
    payments for this settlement are non-interest bearing. The
    amount of this settlement is included in other long-term
    liabilities in the attached consolidated balance sheets.(3)
    
    Amounts shown are net of an aggregate $0.2 million of
    sublease rental income due under non-cancelable subleases and
    include accrued contractual lease increases of an aggregate
    $4.6 million, which are included in other long-term
    liabilities in the attached consolidated balance sheets.  Off-Balance
    Sheet Arrangements
    Selected
    Quarterly Financial Data
    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(Dollars in thousands, except share data)Fiscal 2008Total revenues

$
33,191


$
36,723


$
34,930


$
30,735Total costs and expenses

$
35,979


$
38,447


$
38,078


$
39,121Net loss

$
(3,028
)

$
(1,729
)

$
(3,095
)

$
(8,370
)Basic and diluted loss per share:

$
(0.08
)

$
(0.04
)

$
(0.08
)

$
(0.21
)Fiscal 2007Total revenues

$
31,121


$
35,448


$
34,837


$
33,150Total costs and expenses

$
35,198


$
39,624


$
38,511


$
38,940Net loss

$
(4,205
)

$
(7,401
)

$
(3,002
)

$
(6,175
)Basic and diluted loss per share:

$
(0.11
)

$
(0.19
)

$
(0.08
)

$
(0.16
)   Recent
    Accounting Pronouncements
    CAUTIONARY
    NOTE REGARDING FORWARD LOOKING STATEMENTS
  Form 10-K
 40




---



##### Table of Contents




    the cost of our principal food products and supply and delivery
    shortages or interruptions;
    labor shortages or increased labor costs;
    changes in demographic trends and consumer tastes and
    preferences, including changes resulting from concerns over
    nutritional or safety aspects of beef, poultry, produce or other
    foods or the effects of food-borne illnesses, such as E.coli,
    mad cow disease and avian influenza or bird
    flu;
    competition in our markets, both in our business and locating
    suitable restaurant sites;
    our operation and execution in new and existing markets;
    expansion into new markets, including foreign countries;
    our ability to attract and retain qualified franchisees;
    our ability to locate suitable restaurant sites in new and
    existing markets and negotiate acceptable lease terms;
    the rate of our internal growth, and our ability to generate
    increased revenue from our new and existing restaurants;
    our ability to generate positive cash flow from existing and new
    restaurants;
    fluctuations in our quarterly results due to seasonality;
    increased government regulation and our ability to secure
    required governmental approvals and permits;
    our ability to create customer awareness of our restaurants in
    new markets;
    the reliability of our customer and market studies;
    cost effective and timely planning, design and build-out of new
    restaurants;
    our ability to recruit, train and retain qualified corporate and
    restaurant personnel and management;
    market saturation due to new restaurant openings;
    inadequate protection of our intellectual property;
    our ability to obtain additional capital and financing;
    adverse weather conditions, which impact customer traffic at our
    restaurants; and
    adverse economic conditions.    Item 7A:
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rate Risk
   41




---



##### Table of Contents



Foreign
    Currency Risk
    Inflation
    Item 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    Item 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    Item 9A.
    CONTROLS
    AND PROCEDURES  Rule 13a-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Form 10-K.
  Rule 13a-15(f)
 42




---



##### Table of Contents



Internal
    Control-Integrated Framework
    Changes
    in Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  Item 9B.
    OTHER
    INFORMATION   43




---



##### Table of Contents



PART III  Item 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    Item 11.
    EXECUTIVE
    COMPENSATION    Item 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    Item 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    Item 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   44




---



##### Table of Contents



PART IV  Item 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES        ExhibitNumber

Description of Exhibit2
.1

Merger Agreement by and among Xando, Incorporated, Xando Merger
    Corp. and Cosi Sandwich Bar, Inc. dated as of October 4,
    1999 (Filed as Exhibit 2.1 to the Companys
    Registration Statement on
    Form S-1,
    file #333-86390).3
.1

Amended and Restated Certificate of Incorporation of Cosi, Inc.
    (Filed as Exhibit 3.1 to the Companys Annual Report
    on
    Form 10-K
    for the period ended December 30, 2002).3
.2

Amended and Restated By-Laws of Cosi, Inc. (Filed as
    Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended October 1, 2007).4
.1

Form of Certificate of Common Stock (Filed as Exhibit 4.1
    to the Companys Registration Statement on
    Form S-1,
    file #333-86390).4
.2

Rights Agreement between Cosi, Inc. and American Stock Transfer
    and Trust Company as Rights Agent dated November 21,
    2002 (Filed as Exhibit 4.2 to the Companys Annual
    Report on
    Form 10-K
    for the period ended December 30, 2002).4
.3

Amended and Restated Registration Agreement, dated as of
    March 30, 1999 (Filed as Exhibit 4.3 to the
    Companys Registration Statement on
    Form S-1,
    file #333-86390).4
.4

Supplemental Registration Rights Agreement, dated as of
    August 5, 2003 by and among the Company and the parties
    thereto (Filed as Exhibit 4.4.2 to the Companys
    Registration Statement on
    Form S-1,
    file #333-107689).4
.5

Amendment No. 1 to Rights Agreement dated as of
    November 21, 2002, between Cosi, Inc. and American Stock
    Transfer and Trust Company, as rights agent (Filed as
    Exhibit 4.3 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2003).4
.6

Investment Agreement, dated as of August 5, 2003, among the
    Company, Eric J. Gleacher, Charles G. Phillips, LJCB Nominees
    Pty Ltd, and ZAM Holdings, L.P. (Filed as Exhibit 4.9 to
    the Companys Registration Statement on
    Form S-1/A,
    file #333-107689).4
.7

Letter Agreement, dated as of August 5, 2003, among the
    Company, Eric J. Gleacher, Charles G. Phillips, LJCB Nominees
    Pty Ltd, and ZAM Holdings, L.P. (Filed as Exhibit 4.10 to
    the Companys Registration Statement on
    Form S-1/A,
    file #333-107689).10
.1

Cosi, Inc. 2005 Omnibus Long-Term Incentive Plan (Filed as
    Exhibit C to the Companys Proxy Statement on
    Schedule 14A filed on March 31, 2005, file #000-50052).10
.2

Cosi Employee Stock Purchase Plan (Filed as Exhibit 10.2 to
    the Companys Registration Statement on
    Form S-1,
    file #333-86390).10
.3

Cosi Non-Employee Director Stock Incentive Plan (Filed as
    Exhibit 10.3 to the Companys Registration Statement
    on
    Form S-1,
    file #333-86390).10
.4

Cosi Sandwich Bar, Inc. Incentive Stock Option Plan (Filed as
    Exhibit 10.4 to the Companys Registration Statement
    on
    Form S-1,
    file #333-86390).10
.5.3

Employment agreement between Cosi, Inc. and Kevin Armstrong,
    dated May 9, 2005 (Filed as Exhibit 10.5.11 to the
    Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended April 4, 2005).10
.5.4

Separation and Release Agreement between Cosi, Inc. and Cynthia
    Jamison, dated August 17, 2005 (Filed as Exhibit 10.1
    to the Companys Current report on
    Form 8-K,
    dated August 23, 2005).10
.5.5

Employment Agreement between Cosi, Inc. and William D. Forrest,
    dated December 12, 2005 (Filed as Exhibit 10.1 to the
    Companys Current report on
    Form 8-K,
    dated December 16, 2005). 45




---



##### Table of Contents



ExhibitNumber

Description of Exhibit10
.5.6

Terms of Employment between Cosi, Inc. and William E. Koziel,
    effective as of August 17, 2005 as described in the
    Companys Current Report on
    Form 8-K
    (Filed on August 23, 2005).10
.5.7

Terms of Employment between Cosi, Inc. and Christopher Carroll,
    effective as of May 22, 2006 as described in the
    Companys Current Report of
    Form 8-K
    (Filed on May 25, 2006).10
.5.8

Terms of Employment between Cosi, Inc. and Christopher Ames,
    effective as of November 13, 2006 as described in the
    Companys Current Report on
    Form 8-K
    (Filed on November 17, 2006).10
.5.9

Terms of Employment between Cosi, Inc. and Robert Merritt,
    effective as of March 12, 2007 as described in the
    Companys Current Report on
    Form 8-K
    (Filed on March 12, 2007).10
.5.10

General separation and release agreement by and between the
    Company and Patrick Donnellan, dated August 8, 2007 (Filed
    as Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended October 1, 2007).10
.5.11

Employment agreement, dated as of September 15, 2007 by and
    between the Company and James F. Hyatt (Filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K,
    dated September 18, 2007).10
.5.12

General separation and release agreement by and between the
    Company and Gilbert Melott, dated October 17, 2007 (Filed
    as Exhibit 10.2 to the companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended October 1, 2007).10
.5.13

General Separation and Release Agreement by and between the
    Company and Christopher Ames, dated August 26, 2008 (Filed
    as Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 29, 2008).10
.5.14

General Separation and Release Agreement by and between the
    Company and Christopher Carroll, dated August 26, 2008
    (Filed as Exhibit 10.2 to the Companys Quarterly
    Report on
    Form 10-Q
    for the fiscal quarter ended September 29, 2008).10
.5.15

Form of Indemnification Agreement, dated as of December 19,
    2008 by and between the Directors and Officers of the Company
    (filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K,
    dated December 18, 2008).10
.5.16

Change in Control Severance Agreement, dated as of
    December 18, 2008 by and between William Koziel and the
    Company (filed as Exhibit 10.2 to the Companys
    Current Report on
    Form 8-K,
    dated December 18, 2008).10
.5.17

Change in Control Severance Agreement, dated as of
    December 18, 2008 by and between Vicki Baue and the Company
    (filed as Exhibit 10.2 to the Companys Current Report
    on
    Form 8-K,
    dated December 18, 2008).10
.5.18

Change in Control Severance Agreement, dated as of
    December 18, 2008 by and between Paul Bower and the Company
    (filed as Exhibit 10.2 to the Companys Current Report
    on
    Form 8-K,
    dated December 18, 2008).10
.5.19

Change in Control Severance Agreement, dated as of
    December 18, 2008 by and between Becky Iliff and the
    Company (filed as Exhibit 10.2 to the Companys
    Current Report on
    Form 8-K,
    dated December 18, 2008).10
.5.20

First Amendment to Employment Agreement, dated as of
    December 18, 2008 by and between the Company and James
    Hyatt (filed as Exhibit 10.5 to the Companys Current
    Report on
    Form 8-K,
    dated December 18, 2008).10
.6.1

Foodservice Distribution Agreement between Cosi, Inc. and
    Distribution Market Advantage, Inc. dated as of November 1,
    2005.(1)10
.7.1

Cosi, Inc. Form of Franchise Agreement (Filed as
    Exhibit 10.5 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended July 4, 2005).10
.7.2

Cosi, Inc. Form of Area Developer Franchise Agreement (Filed as
    Exhibit 10.6 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended July 4, 2005).10
.8

Form of Senior Secured Note and Warrant Purchase Agreement
    (Filed as Exhibit 10.7 to the Companys Registration
    on
    Form S-1,
    file #333-86390).10
.9

Securities Purchase Agreement dated as of April 27, 2004
    (Filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K,
    dated April 28, 2004). 46




---



##### Table of Contents



ExhibitNumber

Description of Exhibit10
.10

Form of Restricted Stock Award Agreement (Filed as
    Exhibit 10.1 to the Companys Current Report of
    Form 8-K,
    dated June 6, 2005).16


Letter from Ernst & Young LLP to the Securities and
    Exchange Commission, dated as of August 13, 2004,
    acknowledging its agreement with the statements made in Current
    Report on
    Form 8-K
    (Filed as Exhibit 16 to the Companys Current Report
    on
    Form 8-K,
    dated August 13, 2004).21


Subsidiaries of Cosi, Inc. (Filed as Exhibit 21.1 to the
    Companys Registration Statement on
    Form S-1,
    file #333-86390).23
.1

Filed herewith Consent of BDO Seidman, LLP, Registered Public
    Accounting Firm.31
.1

Filed herewith Certification of the Chief Executive Officer
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Filed herewith Certification of the Chief Financial Officer
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Filed herewith Certification of the Chief Executive Officer and
    Chief Financial Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.     (1)
    
    Portions of Exhibit 10.6.1 have been omitted and filed
    separately with the Securities and Exchange Commission pursuant
    to a request for confidential treatment. 47




---



##### 



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReport of BDO Seidman, LLP, Independent
    Registered Public Accounting Firm


49Report of BDO Seidman, LLP, Independent
    Registered Public Accounting Firm on Internal Control Over
    Financial Reporting


50Consolidated Balance Sheets as of
    December 29, 2008 and December 31, 2007


51Consolidated Statements of Operations for the
    Fiscal Years Ended December 29, 2008, December 31,
    2007 and January 1, 2007


52Consolidated Statements of Stockholders
    Equity for the Fiscal Years Ended December 29, 2008,
    December 31, 2007 and January 1, 2007


53Consolidated Statements of Cash Flows for the
    Fiscal Years Ended December 29, 2008, December 31,
    2007 and January 1, 2007


54Notes to Consolidated Financial Statements for
    the Fiscal Years Ended December 29, 2008, December 31,
    2007 and January 1, 2007


55   48




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm          ,
  Internal Control  Integrated Framework
  
    49




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm on
    Internal Control Over Financial Reporting      Internal Control 
    Integrated Framework
            
   50




---



##### Table of Contents



Cosi,
    Inc.
  Consolidated
    Balance Sheets
 As of
    December 29, 2008 and December 31, 2007
  December 29, 2008


December 31, 2007(Dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
5,589


$
6,309Accounts receivable, net


916



658Inventories


998



1,045Prepaid expenses and other current assets


3,650



3,796Assets held for sale






122Assets of discontinued operations






35Total current assets


11,153



11,965Furniture and fixtures, equipment and leasehold improvements, net


29,779



42,477Intangibles, security deposits and other assets


1,849



1,970Total assets

$
42,781


$
56,412LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
3,378


$
2,106Accrued expenses


9,835



9,014Deferred franchise revenue


149



783Current liabilities of discontinued operations


4



285Current portion of other long-term liabilities


668



465Total current liabilities


14,034



12,653Deferred franchise revenue


2,545



2,730Other long-term liabilities, net of current portion


7,176



7,183Total liabilities


23,755



22,566Commitments and contingenciesStockholders equity:Common stock  $.01 par value;
    100,000,000 shares authorized, 40,663,189 and
    41,047,985 shares issued, respectively


407



411Additional paid-in capital


276,593



275,187Treasury stock, 239,543 shares at cost


(1,198
)


(1,198
)Accumulated deficit


(256,776
)


(240,554
)Total stockholders equity


19,026



33,846Total liabilities and stockholders equity

$
42,781


$
56,412    51




---



##### Table of Contents



Cosi,
    Inc
  Consolidated
    Statements of Operations
 For
    the Fiscal Years Ended December 29, 2008, December 31,
    2007 and January 1, 2007
  December 29,


December 31,


January 1,2008


2007


2007(Dollars in thousands, except per share data)Revenues:Restaurant net sales

$
132,501


$
132,414


$
122,849Franchise fees and royalties


3,078



2,142



849Total revenues


135,579



134,556



123,698Costs and expenses:Cost of food and beverage


30,235



30,972



28,170Restaurant labor and related benefits


45,375



45,995



40,782Occupancy and other restaurant operating expenses


39,821



38,369



32,045115,431



115,336



100,997General and administrative expenses


19,966



22,973



26,887Depreciation and amortization


8,409



8,823



7,196Restaurant pre-opening expenses


100



710



1,451Provision for losses on asset impairments and disposals


7,099



3,845



249Closed store costs


69



262



Lease termination expense (benefit), net


551



347



(232
)Gain on sale of assets






(23
)


(482
)Total costs and expenses


151,625



152,273



136,066Operating loss


(16,046
)


(17,717
)


(12,368
)Interest income


102



524



1,411Interest expense


(7
)


(42
)


(9
)Other income


41



705



77Total other income (expense)


136



1,187



1,479Loss from continuing operations


(15,910
)


(16,530
)


(10,889
)Discontinued operations:Operating loss from discontinued operations


(224
)


(903
)


(1,183
)Asset impairments of discontinued operations


(88
)


(3,350
)


(256
)Loss from discontinued operations


(312
)


(4,253
)


(1,439
)Net loss

$
(16,222
)

$
(20,783
)

$
(12,328
)Per Share Data:Loss per share, basic and dilutedContinuing operations

$
(0.40
)

$
(0.42
)

$
(0.28
)Discontinued operations

$



$
(0.11
)

$
(0.04
)Net loss

$
(0.40
)

$
(0.53
)

$
(0.32
)Weighted average common shares outstanding


40,078,511



39,332,226



38,207,173    52




---



##### Table of Contents



Cosi,
    Inc.
  Consolidated
    Statements of Stockholders Equity
 For
    the Fiscal Years Ended December 29, 2008, December 31,
    2007 and January 1, 2007
  Common Stock





Treasury StockAdditional


Unearned


Shares of


AmountNumber of





Paid In


Stock


Treasury


Treasury


AccumulatedShares


Amount


Capital


Compensation


Stock


Stock


Deficit


Total(Dollars in thousands, except share data)Balance, January 2, 2006


38,478,796


$
385


$
268,330


$
(3,867
)


239,543


$
(1,198
)

$
(207,443
)

$
56,208Adoption of FAS 123R










(3,867
)


3,867















Issuance of restricted stock, net of forfeitures


815,000



8



(8
)


















Stock-based compensation


11,376







5,021



















5,021Exercise of warrants


263,302



3



441



















444Exercise of stock options


341,640



3



1,283



















1,286Net loss


























(12,328
)


(12,328
)Balance, January 1, 2007


39,910,114



399



271,200







239,543



(1,198
)


(219,771
)


50,631Issuance of restricted stock, net of forfeitures


147,932



1



(1
)


















Stock-based compensation










1,969



















1,969Exercise of warrants


699



1



(1
)


















Exercise of stock options


989,240



10



2,020



















2,030Net loss


























(20,783
)


(20,783
)Balance, December 31, 2007


41,047,985



411



275,187







239,543



(1,198
)


(240,554
)


33,846Net forfeiture of restricted stock


(420,330
)


(4
)


4



















Stock-based compensation










1,349



















1,349Exercise of warrants


11,563



























Exercise of stock options


23,971







53



















53Net loss


























(16,222
)


(16,222
)Balance, December 29, 2008


40,663,189


$
407


$
276,593


$




239,543


$
(1,198
)

$
(256,776
)

$
19,026    53




---



##### Table of Contents



Cosi,
    Inc.
  Consolidated
    Statements of Cash Flows
 For
    the Fiscal Years Ended December 29, 2008, December 31,
    2007 and January 1, 2007
  December 29,


December 31,


January 1,2008


2007


2007(In thousands)Cash flows from operating activities:Net loss

$
(16,222
)

$
(20,783
)

$
(12,328
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activitiesDepreciation and amortization


8,414



9,233



7,767Gain on sale of assets






(23
)


(482
)Non-cash portion of asset impairments and disposals


7,187



7,195



505Non-cash portion of store closing costs


24



370



Provision for bad debts


23



1



4Stock-based compensation expense


1,349



1,968



5,020Changes in operating assets and liabilities:Accounts receivable


(281
)


1,292



(1,459
)Inventories


76



(87
)


(72
)Prepaid expenses and other current assets


144



237



(360
)Other assets


95



171



307Accounts payable and accrued expenses


1,967



(1,074
)


1,160Deferred franchise revenue


(819
)


(5
)


3,008Lease termination reserve


608



(171
)


(195
)Other liabilities


(521
)


(693
)


1,074Net cash provided by (used in) operating activities


2,044



(2,369
)


3,949Cash flows from investing activities:Capital expenditures


(2,881
)


(14,363
)


(21,307
)Proceeds from sale of assets


30



650



775Purchases of investments






(20,777
)


(171,683
)Redemptions of investments






39,738



185,639Return (payment) of security deposits, net


34



479



(98
)Net cash (used in) provided by investing activities


(2,817
)


5,727



(6,674
)Cash flows from financing activities:Proceeds from issuance of common stock


53



2,030



1,287Exercises of warrants










443Principal payments on long-term debt






(17
)


(19
)Net cash provided by financing activities


53



2,013



1,711Net (decrease) increase in cash and cash equivalents


(720
)


5,371



(1,014
)Cash and cash equivalents, beginning of year


6,309



938



1,952Cash and cash equivalents, end of year

$
5,589


$
6,309


$
938Supplemental disclosures of cash flow information:Cash paid for:Interest

$
7


$
42


$
9Corporate franchise and income taxes

$
213


$
300


$
268    54




---



##### Table of Contents



COSI,
    INC.
  Notes
    to Consolidated Financial Statements
  For the
    Fiscal Years Ended December 29, 2008, December 31,
    2007, and January 1, 2007
  1.
    Organization
    and Summary of Significant Accounting Policies  Organization
    Fiscal
    Year
    Basis
    of Presentation
    Cash
    and Cash Equivalents
    Concentration
    of Credit Risks
      Accounts
    Receivable
    Inventories
  first-in,
  Assets
    Held for Sale
   55




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Furniture
    and Fixtures, Equipment and Leasehold Improvements
      Long-Lived
    Assets
  restaurant-by-restaurant
  ®
      Accounting
    for Lease Obligations
    Intangibles,
    Security Deposits and Other Assets
    Goodwill and Other
    Intangible Assets
 56




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Lease
    Termination Charges
        (In thousands)Balance as of January 2, 2006

$
742Benefit from reversal of prior charges


(231
)Deductions and adjustments


(80
)(a)Balance as of January 1, 2007


431Charged to costs and expenses


347Deductions and adjustments


(518
)(a)Balance as of December 31, 2007


260Charged to costs and expenses


551Deductions and adjustments


57
(a)Balance as of December 29, 2008

$
868     (a)
    
    Deductions and adjustments include payments to landlords for
    lease obligations.  Other
    Liabilities
    Income
    Taxes
   57




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Accounting for Uncertainty in Income Taxes, an
    interpretation of FASB Statement No. 109
      Revenue
    Recognition
  Restaurant Net Sales.
  Franchise Fees and Royalties.
  Gift Card Sales.
  Gain
    on Sale of Assets
    Restaurant
    Pre-opening Expenses
   58




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Advertising
    Costs
  ®
  Net
    Loss Per Share
    Stock-Based
    Compensation
  Share-Based
    Payment
  Segment
    Information
    Accounting
    Estimates
   59




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Reclassifications
    Recent
    Accounting Pronouncements
  Fair Value
    Measures No. SFAS 157-2, Effective Date of FASB Statement No. 157 No. SFAS 157-3,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115.
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements, an amendment of ARB 51
 60




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB No. 133.
  2.
    Accounts
    Receivable    December 29,


December 31,2008


2007(In thousands)Receivables due from franchisees

$
548


$
158Reimbursements due from landlords






200Accounts receivable, trade


262



187Other


132



116Total receivables


942



661Less allowance for doubtful accounts


(26
)


(3
)Accounts receivable, net

$
916


$
658     (In thousands)Balance as of January 2, 2006


8.0Benefit from accrual reversals


13.0Deductions


(17.0
)(a)Balance as of January 1, 2007


4.0Charged to costs and expenses


12.0Deductions


(13.0
)(a)Balance as of December 31, 2007


3Charged to costs and expenses


18.0Deductions


5.0
(a)Balance as of December 29, 2008

$
26.0     (a)
    
    Recovery (write-off) of uncollectible accounts. 61




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   3.
    Prepaid
    Expenses and Other Current Assets  :
  December 29,


December 31,2008


2007(In thousands)Prepaid insurance

$
1,640


$
1,705Prepaid rent


1,631



1,709Other


379



382Prepaid expenses and other current assets

$
3,650


$
3,796   4.
    Discontinued
    Operations      December 31,2007(In thousands)Leasehold improvements

$
139Restaurant equipment


141Furniture and fixtures


48Computer and telephone equipment


111Total furniture and fixtures, equipment and leasehold
    improvements


439Less accumulated depreciation and amortization


(317
)Total assets held for sale, net

$
122   ®
 62




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Accounting for the
    Impairment or Disposal of Long-Lived Assets
  December 29,


December 31,2008


2007(In thousands)Current assets:Inventories

$



$
28Other current assets






7Total assets of discontinued operations

$



$
35Current liabilities:Accrued expenses

$



$
161Other current liabilities


4



124Total current liabilities of discontinued operations

$
4


$
285     Fiscal Year2008


2007


2006(In thousands)RevenuesRestaurant net sales

$
373


$
3,203


$
3,189Costs and expensesCost of food and beverage


107



949



986Restaurant labor and related expenses


188



1,580



1,692Occupancy and other restaurant operating expenses


181



1,168



963476



3,697



3,641Depreciation and amortization


5



409



571Closed store costs


116







Restaurant pre-opening expenses










160Total costs and expenses


597



4,106



4,372Operating loss from discontinued operations

$
(224
)

$
(903
)

$
(1,183
)  63




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  5.
    Furniture
    and Fixtures, Equipment and Leasehold Improvements    Fiscal Year2008


2007(In thousands)Leasehold improvements

$
42,997


$
48,747Restaurant equipment


20,174



19,585Furniture and fixtures


13,922



14,040Computer and telephone equipment


11,901



11,883Construction in progress


69



174Vehicles


30



30Total furniture and fixtures, equipment and leasehold
    improvements


89,093



94,459Less accumulated depreciation and amortization


(59,314
)


(51,982
)Furniture and fixtures, equipment and leasehold improvements, net

$
29,779


$
42,477     6.
    Intangibles,
    Security Deposits and Other Assets    Fiscal Year2008


2007(In thousands)Security deposits

$
949


$
983Liquor licenses


385



392Trademarks


195



195Other


320



400Total other assets

$
1,849


$
1,970  64




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  7.
    Accrued
    Expenses    December 29,


December 31,2008


2007(In thousands)Payroll and related benefits and taxes

$
1,861


$
2,146Insurance


1,596



1,649Utilities


1,015



939Unredeemed gift cards/certificates


1,003



846Professional and legal


960



380Taxes other than income taxes


857



884Rent


474



484Deferred credits


466



514Other


1,603



1,172Total accrued expenses

$
9,835


$
9,014   8.
    Income
    Taxes    December 29,


December 31,2008


2007(In thousands)Deferred tax assets:Net operating loss carryforward

$
67,064


$
63,998Depreciation expense and impairment of long-lived assets


18,266



15,503Contractual lease increases


1,742



2,042Deferred franchise revenue


803



1,185Stock-based compensation


882



409Lease termination accrual


329



99Accrued expenses


949



331Allowance for doubtful accounts






1Total deferred tax assets


90,035



83,568Valuation allowance


(90,035
)


(83,568
)Net deferred taxes

$



$
    65




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 29,


December 31,


January 1,2008


2007


2007Statutory federal income tax rate


35.0
%


35.0
%


35.0
%State income taxes


3.0



3.0



3.038.0



38.0



38.0Less valuation allowance


(38.0
)


(38.0
)


(38.0
)Effective Tax Rate


0.0
%


0.0
%


0.0
%   9.
    Stockholders
    Equity  Common
    Stock Purchase Rights
         66




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Stock
    Purchase Warrants
    10.
    Stock-Based
    Employee Compensation  Share-Based Payments Accounting for Stock-Based Compensation
     67




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fiscal Year2008


2007


2006(In thousands)Stock option compensation expense

$
104


$
363


$
1,074Restricted stock compensation expense, net of forfeitures


1,245



1,605



3,946Total non-cash, stock-based compensation expense, net of
    forfeitures

$
1,349


$
1,968


$
5,020       2005Expected dividend yield


0
%Expected stock price volatility


68
%Average risk-free interest rate


3.79
%Average expected life of options


5 yearsWeighted average grant date fair value

$
3.89   paid-in-capital
   68




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    WeightedWeighted


Average


AggregateNumber of


Average Exercise


Remaining


IntrinsicOptions


Price


Contractual Term


Value(In thousands)Outstanding as of January 2, 2006


4,197,075


$
6.09Granted


Exercised


(341,640
)

$
3.99Cancelled/Expired


(576,427
)

$
2.31Outstanding as of January 1, 2007


3,279,008


$
6.32



5.9


$
4,338.5Granted






Exercised


(989,240
)

$
2.06Cancelled/Expired


(505,075
)

$
4.95Outstanding as of December 31, 2007


1,784,693


$
7.76



3.9


$
1.1Granted






Exercised


(23,971
)

$
2.24Cancelled/Expired


(456,652
)

$
8.52Outstanding as of December 29, 2008


1,304,070


$
7.60



1.7


$
Exercisable as of December 29, 2008


1,274,705


$
7.65



1.6


$
     WeightedAverageOptions


Exercise PriceTotal exercisable at the end of the year:As of December 29, 2008


1,274,705


$
7.65As of December 31, 2007


1,638,067


$
7.98As of January 1, 2007


3,040,567


$
6.58  69




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Options Outstanding


Options ExercisableWeightedAverage


Weighted





WeightedNumber of


Remaining


Average


Number of


AverageOptions


Contractual


Exercise


Options


ExerciseRange of Exercise Prices

Outstanding


Life in Years


Price


Exercisable


Price$1.36 - $2.04


660



4.3


$
1.48



660


$
1.48$2.09 - $3.14


390,993



0.4



2.79



390,773



2.79$4.33 - $6.50


322,698



3.0



5.04



294,228



5.01$6.52 - $9.78


2,525



5.8



6.71



1,850



6.68$9.84 - $12.25


587,194



1.9



12.21



587,194



12.211,304,070



1.7


$
7.60



1,274,705


$
7.65      70




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Number of


WeightedShares of


Average Grant-Restricted


Date FairStock


ValueNon-vested at January 2, 2006


688,000


$
5.99Granted


869,000



8.66Vested


353,300



7.46Forfeited


(54,000
)


7.74Non-vested at January 1, 2007


1,149,700


$
7.48Granted


698,250



3.73Vested


353,700



6.44Forfeited


(574,450
)


7.04Non-vested at December 31, 2007


919,800


$
5.31Granted


50,000



2.87Vested


288,600



4.95Forfeited/Canceled


(517,150
)


4.98Non-vested at December 29,2008


164,050


$
5.31   WeightedNumber of


Average Grant-Restricted


Date FairStock Units


ValueNon-vested at December 31, 2007





$
Granted


265,000



3.24Vested






Forfeited






Non-vested at December 29, 2008


265,000


$
3.24     11.
    Defined
    Contribution Plan   71




---



##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  12.
    Commitments
    and Contingencies  Commitments
    Fiscal Year

Amount(In thousands)2009

$
15,3372010


14,4592011


12,6332012


10,7742013


7,271Thereafter


16,117$
76,591            72




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##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Purchase
    Commitments
    Coca-Cola
    Self-Insurance
   73




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##### Table of Contents



COSI,
    INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Litigation
     74




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##### Table of Contents



SIGNATURES
      By:
    /s/  WILLIAM
    KOZIEL   Chief Financial Officer, Secretary and Treasurer
 (Principal Financial Officer and Principal
 Accounting Officer)
      Signature

Title

Date/s/  ROBERT
    MERRITTRobert
    Merritt

Chairman of the Board

March 16, 2009/s/  JAMES
    F. HYATTJames
    F. Hyatt

Chief Executive Officer, President and Director(Principal Executive Officer)

March 16, 2009/s/  WILLIAM
    E. KOZIELWilliam
    E. Koziel

Chief Financial Officer, Secretary and Treasurer (Principal
    Financial Officer and Principal Accounting Officer)

March 16, 2009/s/  CREED
    L. FORD IIICreed
    L. Ford III

Director

March 16, 2009/s/  MARK
    DEMILIOMark
    Demilio

Director

March 16, 2009/s/  MICHAEL
    ODONNELLMichael
    ODonnell

Director

March 16, 2009/s/  KARL
    S. OKAMOTOKarl
    S. Okamoto

Director

March 16, 2009  75




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description of Exhibit2
.1

Merger Agreement by and among Xando, Incorporated, Xando Merger
    Corp. and Cosi Sandwich Bar, Inc. dated as of October 4,
    1999 (Filed as Exhibit 2.1 to the Companys
    Registration Statement on
    Form S-1,
    file #333-86390).3
.1

Amended and Restated Certificate of Incorporation of Cosi, Inc.
    (Filed as Exhibit 3.1 to the Companys Annual Report
    on
    Form 10-K
    for the period ended December 30, 2002).3
.2

Amended and Restated By-Laws of Cosi, Inc. (Filed as
    Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended October 1, 2007).4
.1

Form of Certificate of Common Stock (Filed as Exhibit 4.1
    to the Companys Registration Statement on
    Form S-1,
    file #333-86390).4
.2

Rights Agreement between Cosi, Inc. and American Stock Transfer
    and Trust Company as Rights Agent dated November 21,
    2002 (Filed as Exhibit 4.2 to the Companys Annual
    Report on
    Form 10-K
    for the period ended December 30, 2002).4
.3

Amended and Restated Registration Agreement, dated as of
    March 30, 1999 (Filed as Exhibit 4.3 to the
    Companys Registration Statement on
    Form S-1,
    file #333-86390).4
.4

Supplemental Registration Rights Agreement, dated as of
    August 5, 2003 by and among the Company and the parties
    thereto (Filed as Exhibit 4.4.2 to the Companys
    Registration Statement on
    Form S-1,
    file #333-107689).4
.5

Amendment No. 1 to Rights Agreement dated as of
    November 21, 2002, between Cosi, Inc. and American Stock
    Transfer and Trust Company, as rights agent (Filed as
    Exhibit 4.3 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2003).4
.6

Investment Agreement, dated as of August 5, 2003, among the
    Company, Eric J. Gleacher, Charles G. Phillips, LJCB Nominees
    Pty Ltd, and ZAM Holdings, L.P. (Filed as Exhibit 4.9 to
    the Companys Registration Statement on
    Form S-1/A,
    file #333-107689).4
.7

Letter Agreement, dated as of August 5, 2003, among the
    Company, Eric J. Gleacher, Charles G. Phillips, LJCB Nominees
    Pty Ltd, and ZAM Holdings, L.P. (Filed as Exhibit 4.10 to
    the Companys Registration Statement on
    Form S-1/A,
    file #333-107689).10
.1

Cosi, Inc. 2005 Omnibus Long-Term Incentive Plan (Filed as
    Exhibit C to the Companys Proxy Statement on
    Schedule 14A filed on March 31, 2005, file #000-50052.10
.2

Cosi Employee Stock Purchase Plan (Filed as Exhibit 10.2 to
    the Companys Registration Statement on
    Form S-1,
    file #333-86390).10
.3

Cosi Non-Employee Director Stock Incentive Plan (Filed as
    Exhibit 10.3 to the Companys Registration Statement
    on
    Form S-1,
    file #333-86390).10
.4

Cosi Sandwich Bar, Inc. Incentive Stock Option Plan (Filed as
    Exhibit 10.4 to the Companys Registration Statement
    on
    Form S-1,
    file #333-86390).10
.5.3

Employment Agreement between Cosi, Inc. and Kevin Armstrong,
    dated May 9, 2005. (Filed as Exhibit 10.51.11 to the
    Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended April 4, 2005).10
.5.4

Separation and Release Agreement between Cosi, Inc. and Cynthia
    Jamison, dated August 17, 2005 (Filed as Exhibit 10.1
    to the Companys Current Report on
    Form 8-K,
    dated August 23, 2005).10
.5.5

Employment Agreement between Cosi, Inc. and William D. Forrest,
    dated December 12, 2005 (Filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K,
    dated December 16, 2005).10
.5.6

Terms of Employment between Cosi, Inc. and William E. Koziel,
    effective as of August 17, 2005 as described in the
    Companys Current Report on
    Form 8-K
    (Filed on August 23, 2005).10
.5.7

Terms of Employment between Cosi, Inc. and Christopher Carroll,
    effective as of May 22, 2006 as described in the
    Companys Current Report on
    Form 8-K
    (Filed on May 25, 2006).10
.5.8

Terms of Employment between Cosi, Inc. and Christopher Ames,
    effective as of November 13, 2006 as described in the
    Companys Current Report on
    Form 8-K
    (Filed on November 17, 2006). 76




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##### Table of Contents



ExhibitNumber

Description of Exhibit10
.5.9

Terms of Employment between Cosi, Inc. and Robert Merritt,
    effective as of March 12, 2007 as described in the
    Companys Current Report on
    Form 8-K
    (Filed on March 12, 2007).10
.5.10

General separation and release agreement by and between the
    Company and Patrick Donnellan, dated August 8, 2007 (Filed
    as Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended October 1, 2007).10
.5.11

Employment agreement, dated as of September 15, 2007 by and
    between the Company and James F. Hyatt (Filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K,
    dated September 18, 2007).10
.5.12

General separation and release agreement by and between the
    Company and Gilbert Melott, dated October 17, 2007 (Filed
    as Exhibit 10.2 to the companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended October 1, 2007).10
.5.13

General Separation and Release Agreement by and between the
    Company and Christopher Ames, dated August 26, 2008 (Filed
    as Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 29, 2008).10
.5.14

General Separation and Release Agreement by and between the
    Company and Christopher Carroll, dated August 26, 2008
    (Filed as Exhibit 10.2 to the Companys Quarterly
    Report on
    Form 10-Q
    for the fiscal quarter ended September 29, 2008).10
.5.15

Form of Indemnification Agreement, dated as of December 19,
    2008 by and between the Directors and Officers of the Company
    (filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K,
    dated December 18, 2008).10
.5.16

Change in Control Severance Agreement, dated as of
    December 18, 2008 by and between William Koziel and the
    Company (filed as Exhibit 10.2 to the Companys
    Current Report on
    Form 8-K,
    dated December 18, 2008).10
.5.17

Change in Control Severance Agreement, dated as of
    December 18, 2008 by and between Vicki Baue and the Company
    (filed as Exhibit 10.2 to the Companys Current Report
    on
    Form 8-K,
    dated December 18, 2008).10
.5.18

Change in Control Severance Agreement, dated as of
    December 18, 2008 by and between Paul Bower and the Company
    (filed as Exhibit 10.2 to the Companys Current Report
    on
    Form 8-K,
    dated December 18, 2008).10
.5.19

Change in Control Severance Agreement, dated as of
    December 18, 2008 by and between Becky Iliff and the
    Company (filed as Exhibit 10.2 to the Companys
    Current Report on
    Form 8-K,
    dated December 18, 2008).10
.5.20

First Amendment to Employment Agreement, dated as of
    December 18, 2008 by and between the Company and James
    Hyatt (filed as Exhibit 10.5 to the Companys Current
    Report on
    Form 8-K,
    dated December 18, 2008).10
.6.1

Foodservice Distribution Agreement between Cosi, Inc. and
    Distribution Market Advantage, Inc. dated as of November 1,
    2005.(1)10
.7.1

Cosi, Inc. Form of Area Developer Franchise Agreement (Filed as
    Exhibit 10.6 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended July 4, 2005).10
.7.2

Cosi, Inc. Form of Area Developer Franchise Agreement (Filed as
    Exhibit 10.6 to the Companys Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended July 4, 2005).10
.8

Form of Senior Secured Note and Warrant Purchase Agreement
    (Filed as Exhibit 10.7 to the Companys Registration
    on
    Form S-1,
    file #333-86390).10
.9

Securities Purchase Agreement dated as of April 27, 2004
    (Filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K,
    dated April 28, 2004).10
.10

Form of Restricted Stock Award Agreement (Filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K,
    dated June 6, 2005).16


Letter from Ernst & Young LLP to the Securities and
    Exchange Commission, dated as of August 13, 2004,
    acknowledging its agreement with the statements made in Current
    Report on
    Form 8-K
    (Filed as Exhibit 16 to the Companys Current Report
    on
    Form 8-K,
    dated August 13, 2004. 77




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##### Table of Contents



ExhibitNumber

Description of Exhibit21


Subsidiaries of Cosi, Inc. (Filed as Exhibit 21.1 to the
    Companys Registration Statement on
    Form S-1,
    file #333-86390)23
.1

Filed herewith Consent of BDO Seidman, LLP, Independent
    Registered Public Accounting Firm31
.1

Filed herewith Certification of the Chief Executive Officer
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Filed herewith Certification of the Chief Financial Officer
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of the Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.     (1)
    
    Portions of Exhibit 10.6.1 have been omitted and filed
    separately with the Securities and Exchange Commission pursuant
    to a request for confidential treatment. 78