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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 
20549

FORM 10-K

|(Mark
  One)                                 
|---------------------------------------------
|x                                            
|                                             
|For the fiscal year ended December
  28, 2003
|                                             
|OR                                           
|                                             
|o                                            

For the transition period from
__________ to __________.

Commission File Number 0-20792

FRESH
CHOICE, INC.(Exact name of registrant as specified in its charter)

|Delaware                                                         |  | 77-0130849                             
|---------------------------------------------------------------- |  | ---------------------------------------
|(State or other jurisdiction of
  incorporation or organization) |  | (I.R.S. Employer 
  Identification No.)
|                                                                 |  |                                        
|485 Cochrane Circle, Morgan Hill,
  CA                           |  | 95037-2831                             
|(Address of principal executive
  offices)                       |  | (Zip Code)                             

Registrants telephone number,
including area code:  (408) 776-0799

Securities registered pursuant to
Section 12(b) of the Act:  None

Securities registered pursuant to
Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of Class)

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.    YESxNoo

Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definite proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-Ko

Indicate by check mark
whether the registrant is an accelerated filer YesoNox

Approximate aggregate
market value of the registrants Common Stock held by non-affiliates of the
registrant computed by reference to the closing sales price of such stock as
reported in the Nasdaq National Market on June 13, 2003, the last business day
of the registrants second fiscal quarter, was $7,120,635.  Excludes shares of Common Stock held by
directors, officers and each person who holds 5% or more of the outstanding
Common Stock because such persons may be deemed to be affiliates.  This exclusion is not a conclusive determination
of such status for other purposes.

Number of shares of
Common Stock, $0.001 par value, outstanding as of March 5, 2004 was 6,017,190.

DOCUMENTS INCORPORATED BY REFERENCE

|                                                                                       | Documents |  | Form 10-K Reference
|-------------------------------------------------------------------------------------- | --------- |  | -------------------
|                                                                                       |           |  |                    
|                                                                                       |          
|(1) Proxy Statement for the Annual Meeting of
  Stockholders scheduled for May 5, 2004 | Part III 

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FRESH CHOICE, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

|                            |          | PageNo.                                                                                
|--------------------------- | -------- | ---------------------------------------------------------------------------------------
|                            |          |                                                                                        
|                            |          |                                                                                        
|PART I                      |          | 3                                                                                      
|                            |          |                                                                                        
|                            | Item 1.  | BUSINESS                                                                               
|                            | Item 2.  | PROPERTIES                                                                             
|                            | Item 3.  | LEGAL PROCEEDINGS                                                                      
|                            | Item 4.  | SUBMISSION OF MATTERS TO A VOTE OF
  SECURITY HOLDERS                                  
|                            |          |                                                                                        
|PART II                     |          | 15                                                                                     
|                            |          |                                                                                        
|                            | Item 5.  | MARKET FOR REGISTRANTS COMMON
  EQUITY AND RELATED STOCKHOLDER MATTERS                
|                            | Item 6.  | SELECTED FINANCIAL DATA                                                                
|                            | Item 7.  | MANAGEMENTS DISCUSSION AND ANALYSIS
  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                            | Item 7a. | QUANTITATIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISK                           
|                            | 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                                                                
|                            |          |                                                                                        
|PART III                    |          | 29                                                                                     
|                            |          |                                                                                        
|                            | Item 10. | DIRECTORS AND EXECUTIVE OFFICERS OF
  THE REGISTRANT                                   
|                            | Item 11. | EXECUTIVE COMPENSATION                                                                 
|                            | Item 12. | SECURITY OWNERSHIP OF CERTAIN
  BENEFICIAL OWNERS AND MANAGEMENT                       
|                            | Item 13. | CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONS                                       
|                            | Item 14. | PRINCIPLE ACCOUNTING FEES AND SERVICES                                                 
|                            |          |                                                                                        
|PART IV                     |          | 30                                                                                     
|                            |          |                                                                                        
|                            | Item 15. | EXHIBITS, FINANCIAL STATEMENT
  SCHEDULES, AND REPORTS ON FORM 8-K                     
|                            |          |                                                                                        
|SIGNATURES                  | 52      
|                            |          |                                                                                        
|INDEX TO FORM 10-K EXHIBITS | 53      
|                            |          |                                                                                        
|FORM 10-K EXHIBITS          |         

2

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PART I

Certain
statements set forth in or incorporated by reference into this Annual Report on
Form 10-K, including anticipated store openings, planned capital expenditures,
settlement of lease obligations and trends in or expectations regarding the
Companys operations, constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.  They use such words as may, will,
expect, believe, plan and other similar terminology. Such statements are based on currently
available operating, financial and competitive information and are subject to
various risks and uncertainties.  Actual
future results and trends may differ materially depending on a variety of
factors as set forth under the heading Business - Business Risks.  In particular, among these risks and
uncertainties is the ability of the Company to return to positive
comparable-store sales and improve newer restaurant sales, operate its
restaurants profitably and obtain additional financing, as well as general
economic conditions.  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.

|Item
  1. | BUSINESS.
|--------- | ---------

As
of March 5, 2004, the Company operated 57 restaurants of which 53 restaurants
operate under the Fresh Choice and Zoopa brand names, 1 operates under the
Fresh Choice Express brand name, two operate as dual branded Fresh Choice
Express and licensed Starbucks retail stores and one operates as a licensed
Starbucks retail store.  The Company
operates 43 restaurants in California, 4 restaurants in the state of Washington
and 10 restaurants in Texas, including the Fresh Choice Express restaurant, the
two dual branded Fresh Choice Express and licensed Starbucks retail stores and
the one licensed Starbucks retail store. 
Fresh Choice and Zoopa restaurants feature an extensive selection of
healthy, high-quality, freshly-made specialty and traditional salads, hot
pasta, pizza, hot baked potatoes, soups, fresh breads and muffins, frozen
low-fat soft serve and other desserts, offered in a limited-service
format.  The Companys goal is to create
a distinctive dining experience that combines the selection, quality and
ambiance of full-service, casual restaurants with the convenience and value
appeal of traditional buffet restaurants.

The
Fresh Choice and Zoopa restaurants use fresh produce and high-quality
ingredients in their menu offerings. 
Fresh produce is delivered several days per week to each restaurant, and
all menu items are prepared on-site.  To
reinforce the Companys commitment to freshness, many of the Companys food
offerings are prepared in exhibition-style cooking areas throughout the
day.  Guests make their selections from
salads, soups, baked potatoes, hot pasta, pizza, muffins, breads, bakery goods,
fresh fruit, frozen low-fat soft serve and specialty desserts.  Rotisserie chicken and related side dishes
are served in several Texas and selected rural California locations.

The
Company believes that its Fresh Choice and Zoopa restaurants provide guests an
excellent price/value relationship by offering unlimited servings for a single
price. Although prices vary, in most locations the prices as of March 5, 2004 are
$7.29 at lunch, $8.99 at dinner, $5.99 for teens thirteen to fifteen: $3.99 for
children ages nine to twelve; $2.99 for children ages six to eight and $0.99
for children three to five with children under three free, plus the cost of a
beverage.  The Companys wide variety of
high-quality food and attractive prices are designed to appeal to a broad range
of guests, including families, business professionals, students and senior
citizens.  In addition, the Company believes
the concept appeals to health-conscious diners who are focused on the
nutritional content of their meals.

Fresh
Choice Express is a concept designed as an extension of the Fresh Choice brand,
and existing local Fresh Choice restaurants. Two of the locations are in office
buildings providing breakfast and lunch, Monday through Friday.  One of these locations is dual branded with
a licensed Starbucks retail store. 
These restaurants allow a guest to choose from tossed-to-order salads,
made-to-order oven-toasted sandwiches, signature soups and baked potatoes.  The third location is in a mall and is dual
branded with a licensed Starbucks retail store.  The mall location is open seven days per week for breakfast, lunch and
dinner.  The menu features a selection
of tossed-to-order salads, made-to-order oven-toasted sandwiches and signature
soups.  The one licensed Starbucks
retail store and the two dual branded Fresh Choice Express and licensed
Starbucks retail stores were opened under a licensing agreement between Fresh
Choice and Starbucks Coffee Company and offer handcrafted espresso beverages,
drip coffee and a selection of freshly baked pastries.  Additional licensed Starbucks retail store
locations, if any, will be determined jointly between Starbucks Coffee Company
and Fresh Choice.

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The
Company views its commitment to its employees, or crewmembers, as critical to
its long-term success.  The Company
depends on a high rate of repeat business, and views the quality of its
crewmember interaction with guests as an important element of its
strategy.  By providing extensive
training and competitive compensation, the Company seeks to foster a strong
corporate culture and encourage a sense of personal commitment from crewmembers
at all levels.  The Company believes
that its strong culture helps it attract and retain highly-motivated
crewmembers who provide its guests with a level of service superior to that
traditionally associated with limited-service restaurants.

The
Company acquired the Zoopa trade name and three Zoopa restaurants in fiscal
1997 and currently operates its four Washington restaurants and one restaurant
in San Antonio, Texas under the Zoopa name. 
The Company opened four Fresh Choice restaurants in fiscal 2003.  Three of these restaurants were in California
and one in Texas. The Company has generally attempted to cluster its
restaurants in each market area to benefit from operating, purchasing and
advertising efficiencies, enhance brand-name recognition, and discourage
competition.

The
Company was incorporated in California on October 20, 1986 under the name
Gourmet California, Inc.  In August
1988, the Company was recapitalized as a result of a merger with Moffett
Partners, Inc., and the survivor of the merger was re-named Fresh Choice, Inc.  Effective December 4, 1992, the Company was
reincorporated in Delaware.  Unless the
context otherwise requires, all references to the Company or Fresh Choice
mean Fresh Choice, Inc. and its predecessors.

The
Company maintains a worldwide website at www.freshchoice.com.  Investors can obtain copies of our
Securities and Exchange Commission filings from this site free of charge.

Business Strategy

The
Companys objective is to create a distinctive dining experience that combines
the selection, quality and ambiance of full-service, casual dining restaurants
with the convenience and value appeal of traditional buffet restaurants.  Each element of the Companys strategy is
designed to exceed guests expectations, encourage repeat business, and
establish a significant presence in each of its targeted markets. The key
elements of the Companys strategy include the following:

Fresh,
Healthy, High-Quality Food.  The
Company is committed to using fresh produce and high-quality ingredients in its
menu offerings.  Fresh produce is
delivered several days per week to each restaurant, and all menu items are
prepared on-site.  To reinforce the
Companys commitment to freshness, many of the Companys food offerings are
prepared in separate exhibition-style cooking areas throughout the day.  The Company maintains stringent quality
standards in identifying, purchasing and preparing fresh food and ingredients.

Extensive
Food Selection.  The restaurants
broad selection of food offerings is designed to appeal to a wide range of
guests.  Each restaurant features a
selection of specialty salads daily, prepared from recipes developed or
acquired by the Company, as well as salad ingredients and a variety of
dressings that allow guests to create their own salads.  Each restaurant also offers a selection of
delicious freshly-prepared soups, hot pasta, pizza, hot breads, muffins and
other bakery goods, baked potatoes, fresh fruits, frozen low-fat soft serve and
other desserts.  Rotisserie chicken and
related side dishes are served in several Texas and selected rural California
locations.

Quality
Assurance/Food Safety Program.  The
Company is committed to ensuring the highest levels of product quality,
consistency and freshness.  The
Companys restaurant managers test the taste of the food and monitor safe food
temperatures throughout the day.  Strict
shelf life standards are required on all food items.  Only high quality ingredients from reputable sources are used in
the restaurants.  The regional managers
inspect the restaurants regularly to assure that all standards are in place and
the individual restaurants are complying with product specifications and recipe
adherence.

Fresh
Choice provides and requires food safety training to all crewmembers and
managers.  All restaurants food safety
practices are inspected by the regional manager regularly and typically once
per quarter by a trained home office crewmember or qualified outside service
provider. Prepared food and food storage temperatures are checked for adherence
to standards throughout the day with the results recorded.  Frequent crewmember hand

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washing is required
and monitored.  Fresh Choice restaurants
use a safe, flavor and odor free anti-microbial wash on all fruits and
vegetables to ensure that clean and safe produce is served to guests.  Digital cameras are strategically placed
throughout each restaurant to enhance safety in the restaurants.  These cameras are capable of being accessed
off premise to allow the regional managers and other authorized home office
crewmembers to observe the restaurants as deemed necessary.

Excellent
Price/Value Relationship.  The
Company believes its pricing strategy, for offering unlimited servings, is an
excellent price/value alternative to other casual dining restaurants.  Discounts are provided for children and
senior citizens receive a discount through the Companys Masters Club.

Commitment
to Guest Service.  The Company is
committed to providing its guests with a level of service superior to that
traditionally associated with limited-service restaurants.  Fresh Choice depends upon a high rate of
repeat business, and views the quality of its crewmember interaction with
guests as critical to its long-term success. 
By providing extensive training and competitive compensation, the
Company believes it fosters a strong corporate culture and encourages a sense of
personal commitment from crewmembers at all levels.

The
Company devotes substantial attention and resources to maintaining the
cleanliness and consistent high-quality presentation of the salad bar and other
exhibition cooking areas in order to enhance the visual appeal of the Companys
offerings.

Distinctive
Design and Casual Atmosphere.  The
Company devotes significant resources to the design and decor of its
restaurants.  The restaurants have a
flexible design which can accommodate a variety of available sites.  The Companys new restaurant design and
decor incorporated into its new restaurants and the current Fresh Choice
restaurants remodel plan, uses an interior design that is in the style of an
open-air international marketplace, like a farmers market.  The food is displayed in colorful arcades
with fun and distinctive signage segregating each arcade section.

Expansion Strategy

The
Company currently has no expansion plans for fiscal 2004.  The Company opened four new Fresh Choice
restaurants in 2003.  No new Fresh
Choice Express restaurants were opened in 2003 and no additional Fresh Choice
Express restaurants are planned for 2004. 
If and when the Company resumes expansion it intends to expand within
the Companys existing markets, which would allow the Company to generally
benefit from advertising, purchasing and operating efficiencies.  In addition, the Company believes clustering
allows the Company to capture more of the available guest base and to
discourage competition.  To the extent
that the Company elects to open new restaurants in markets outside of its
existing markets, the Company expects that these restaurants may benefit from
certain volume purchasing discounts and operating efficiencies generally
applicable to its current restaurants.

The Company currently operates all of its existing restaurants, and has no
current plans to offer franchises. In addition, the Company has no current
plans to begin purchasing rather than leasing its restaurant sites on a regular
basis.

Site Selection

To
date, the Company has located its restaurants in regional malls, strip centers
and freestanding locations.  The Company
considers the location of each restaurant to be critical to its long-term
success, and management devotes significant effort to the investigation and
evaluation of potential sites.  The site
selection process focuses on market area demographics including targets for
population, household income and education, as well as site specific characteristics
including daytime traffic volumes and patterns, visibility, accessibility and
availability of adequate parking.  The
Company also reviews potential competition and guest activity at other
restaurants operating in the area.  The
Company believes that its flexibility in utilizing its different restaurant
layouts gives it a competitive advantage in selecting sites.  The Company requires approximately twelve to
eighteen months after identifying a site to complete negotiation of a lease and
construct and open a new restaurant. 
While the Company currently leases most of its restaurant sites and
expects to lease virtually all of its sites in the future, it may purchase one
or more

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sites for construction of new restaurants if available on acceptable financial
terms.  Currently, the Company owns land
and buildings at two of its restaurant sites and owns buildings on leased land
at seven others.

Restaurant Economics

For
the 52 weeks ended December 28, 2003, the 43 comparable Fresh Choice and Zoopa
restaurants open throughout the entire period generated average net sales of
approximately $1,558,000 and average store level cash flow, after occupancy
expenses, of approximately $190,000 or 12.2% of net sales.  The Company does not include any new stores
as a comparable store until it has been open for 18 months. Store level cash
flow excludes depreciation and amortization expense, general and administrative
expense, store closure and asset impairment expense, restaurant opening expense
and net interest expense. During fiscal 2003 the Company opened four new Fresh
Choice restaurants and currently plans to add no new Fresh Choice restaurants
in fiscal 2004.  The average cash cost
of these four restaurants was $1.1 million, not including restaurant opening
expenses.  The investment of capital to
open a new restaurant typically includes the purchase and installation of
furniture, fixtures, equipment and leasehold improvements, and in the case of a
land lease the cost to construct the building. 
The Company currently leases the sites for most of its restaurants,
mixed between in-line, mall and stand-alone sites.

Concept and Menu

Each
Fresh Choice and Zoopa restaurant features a salad bar offering signature
specialty tossed and prepared salads with an extensive choice of salad
ingredients and dressings.  All
specialty tossed salads and specialty prepared salads are clearly marked, and
low-fat and fat-free items are prominently identified.  Throughout the day several crewmembers
maintain the salad bar and replenish individual salads and ingredients from the
opposite side of the salad bar, minimizing interference with guests.  Separate exhibition-style arcades offer
fresh soups, hot pasta dishes, pizza, baked potatoes, hot breads, muffins and
other bakery goods, fresh fruits, frozen low-fat soft serve and other
desserts.  Rotisserie chicken and
related side dishes are served in Texas and selected rural California
locations.  During peak hours, each
guest is escorted to his or her table. 
Each guest may obtain unlimited refills of all food and dessert dishes,
soft drinks, lemonade, coffee and tea.

The
Company has developed proprietary recipes for a broad assortment of specialty
salads, soups, pasta sauces, and muffins. 
In each product category, the restaurants offer several standard dishes
daily, and rotates additional offerings to provide variety for the Companys
many repeat guests.  Each category also
contains daily offerings that are particularly low in fat.  Because the restaurants utilize a broad
variety of produce and
other ingredients in its dishes and is not overly dependent on any individual
recipe, it is able to substitute dishes and ingredients in the event that
weather conditions or supply factors lead to high prices or shortages of
particular produce items or other ingredients. 
The Company believes that the flexibility of its menu allows it to
accommodate regional tastes and minimize the impact of cost increases.

Salads.  The restaurants offer signature specialty
tossed salads and specialty prepared salads, each of which is made from recipes
created by the Company, and salads made by the guest from a broad assortment of
salad ingredients.  The salad bar in
each restaurant features specialty tossed salads that are prepared
exhibition-style and are rotated frequently.

Each
day the salad bar features a selection of specialty prepared salads from among
the Companys more than 90 recipes.  The
Companys salad bar also offers more than 40 salad ingredients and toppings,
allowing guests to create their own salad. 
The ingredients include various types of lettuce and a broad assortment
of vegetables, cheeses, and other toppings. 
The Company offers 10 dressings and a selection of gourmet oils and
vinegars.

Soups.  The restaurants offer a variety of soups
selected daily from among its more than 50 soup recipes.  All soups are prepared on-site utilizing
fresh produce and other high-quality ingredients, and include low-fat and
non-fat selections.

Pasta.
 The Company expects to complete the
introduction of four daily-featured freshly tossed pastas with sauces prepared
from scratch in the first half of fiscal 2004. 
These pastas are tossed with fresh ingredients

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and garnished with fresh
herbs. The new offerings will enhance both the quality and selection of the
Companys pasta offerings.

Pizza.  In 2003 the Company introduced a new
Sicilian style freshly prepared pizza. 
The dough is prepared and proofed on premise daily by our bakery chefs
and topped with a variety of toppings including cheese, vegetables and
pepperoni.

Muffins,
Biscuits and Breads.  The
restaurants offer a variety of muffins daily, including a low-fat muffin,
selected from among its more than 70 muffin recipes.  All muffins and biscuits are baked in the exhibition bakery area
and are replenished frequently to ensure warmth and freshness.  The restaurants also offer warm sliced
sourdough and harvest breads and in 2003 the Company introduced a new garlic
herb focaccia bread.

Rotisserie
Chicken (Texas and selected California locations only).  These restaurants offer a savory herb
crusted rotisserie chicken served with a variety of side dishes including
mashed red potatoes, stuffing and macaroni and cheese.

Desserts.  The restaurants offer an assortment of
desserts, including fresh fruits, sugar free jello, tapioca, chocolate pudding,
frozen low-fat soft serve, tasty cakes, and a triple chocolate decadence
brownie.

Beverages.  For a separate charge the restaurants offer
an assortment of fruit juices, fresh lemonades and flavored iced teas.  Fresh Choice also offers sodas and sparkling
waters, and in most restaurants, beer and wine.  Refills of juices, lemonade, soft drinks, coffee and tea are
provided at no extra cost to our guests.

Protein
Toppings.  As a result of the
increasing trend to low carbohydrate and high protein diets, the Company
introduced, in 2003, pre-portioned seasoned chicken and tuna for an additional
charge.

Guest Service

The
Company is committed to providing a superior level of service in order to
distinguish itself from traditional limited-service restaurants.  During peak hours, guests are escorted from
the salad bar to a table. Crewmembers are in the dining area during meal hours
to ensure each guest leaves the restaurant with the intent to return.  Guest servers provide follow up beverage
service, clear and clean tables, and attend to other guest needs.

The
Company devotes substantial attention and resources to maintaining the
cleanliness and consistent high-quality presentation of the salad bar and other
exhibition cooking areas in order to enhance the visual appeal of the Companys
food offerings.  The restaurants
crewmembers are present behind the salad bar and in the exhibition cooking
areas to replenish and replace food offerings, to answer guest questions, and
to assist guests in serving themselves. 
All crewmembers in each restaurant are required to maintain a high
standard of dress and grooming.

The
Company actively solicits guest input through several sources.  In the restaurant, comment cards are
prominently displayed in several areas and guests can also submit their
comments via the Companys web site.

Restaurant Design

The
Companys restaurants utilize a salad bar, with the cash registers placed at
the end of the salad bar in most of the restaurants before the guest has access
to the other food service areas.  A few
of the Companys restaurants have been designed so that the cash registers are
positioned toward the front of the restaurant to provide guests with direct
access to the various food service areas. 
The Companys new restaurants incorporate an open, colorful, fun, brighter,
more inviting decor package and a more efficient layout.  This look was incorporated into the
Companys remodel program completed in fiscal 2000.

The
Companys restaurants range from 4,800 to 9,014 square feet, seating from 108
to 304 guests inside.  The Companys
average Fresh Choice restaurant is approximately 6,761 square feet and has
inside seats for approximately 218 guests. 
In addition, many of the Companys restaurants provide limited outdoor
seating.  The flexible design of the
restaurants enables the Company to take advantage of a broad range of available
sites.

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Remodeling

Remodeling
is an integral part of the Companys strategic plan.  Restaurants typically require remodeling every five to seven
years.  The Companys latest remodel
program incorporated an open, colorful, fun, brighter, more inviting decor
package. This remodeling program was completed in fiscal 2000.

Marketing and Promotion

The
Companys marketing strategy in its existing markets is to increase unaided
brand awareness toward building top-of-mind recall of the Fresh Choice or Zoopa
brand resulting in increased usage among targeted consumers.

The
Company intends to maximize exposure within its target market with a consistent
program of high impact, four color, broad reaching mediums such as freestanding
inserts in key newspapers.  These
tactics are designed to leverage both the high level of brand awareness and
build a positive identifiable perception of Fresh Choice and Zoopa in the mind of
the consumer.  Additionally, by consistently providing a
positive dining experience, the Company believes it benefits from significant
word-of-mouth advertising.

In
new markets, the marketing strategy is to build brand name awareness where no
or very low awareness exists.  The Company
intends to accomplish this through the use of appropriate local advertising
mediums and creative messages.  Prior to
opening each new restaurant, the Company typically sponsors fund-raisers and
pre-opening parties in the restaurant with local charities or schools to build
community relationships and attract customers to the restaurant.

Restaurant Operations and Management

Management
and Crewmembers.  The Company has
endeavored to establish a strong corporate identity and culture and to maintain
quality and consistency in its restaurants through the careful training of
personnel and the establishment of rigorous standards relating to food
purchasing and preparation and maintenance of the serving areas and facilities.  Responsibility for managing the Companys
restaurant operations is currently shared by eight Regional Managers, who
report to either the Area Vice President, or the Area Director who each reports
to the Executive Vice President and Chief Operating Officer who reports to the
President and Chief Executive Officer. 
Regional managers are generally responsible for four to ten restaurants.

The
management staff of a typical Fresh Choice restaurant consists of one general
manager, two or three restaurant managers and a shift manager.  The Company externally recruits most of its
restaurant managers, virtually all of whom have prior restaurant management
experience.  Most of the Companys
current general managers have been promoted from restaurant managers.  All newly hired managers participate in the
Companys training course.  Each
restaurant also employs approximately 35 hourly crewmembers, many of whom work
part-time.  The general manager of each
restaurant is responsible for the day-to-day operation and profitability of the
restaurant.  To enhance quality,
service, cleanliness, maintenance and safety, the Company has developed
detailed systems, procedures and controls with respect to labor and food cost
standards, food preparation, planning and scheduling.  The Companys culture emphasizes a sense of ownership and
entrepreneurship.  The Company maintains
a variety of programs to reward excellent service and performance by each
crewmember at the restaurant level.  In
addition to a competitive base salary, the Company has incentive plans that
rewards restaurant managers based upon achieving sales and profit targets,
controlling costs and tenure with the Company.

Food
Purchasing.   The Company has
designed systems for determining order quantities and has developed preparation
methods that together ensure freshness, maximize usage and minimize waste.  Most food items are purchased on a
centralized basis to ensure uniform quality and adequate supplies, and to
obtain competitive prices.  To the
extent possible, the Company purchases food items pursuant to fixed-price,
annual contracts that are not subject to minimum quantity requirements.  All produce is purchased from sources that
have been pre-qualified to meet the Companys specifications.  Produce is delivered directly to individual
restaurants.  At each restaurant, the
management team is responsible for assuring that all deliveries meet the
Companys guidelines regarding freshness and quality.  The Company believes alternate sources are available for all
products.

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Recipe
Development.   The Companys food
development efforts focus on introducing compelling and innovative new recipes,
as well as upgrading the flavor profiles and presentation standards of existing
recipe favorites.  Seasonal and upscale
produce items are rotated into the salad bar product mix to provide guests an
additional reason to return.

Training
and Support.  The Company believes
that its training programs have been successful in developing commitment to the
Company, a consistent level of execution, and high-quality guest service. Upon
joining Fresh Choice, each restaurant manager participates in a training course
that covers all aspects of restaurant operations and develops management
skills.  All crewmembers are instructed
through a combination of written materials and hands-on training prior to their
performance being validated by a certified
trainer and restaurant management.  In
addition, the Company creates and facilitates management and hourly crewmember
workshops that apply to and support the Companys current goals and objectives.

Information
Systems.  Each restaurant is
equipped with a computer containing programs to perform crewmember timekeeping
and daily cash and sales reporting.  The
automation of these important administrative responsibilities reduces the time
spent by restaurant managers preparing daily reports of cash, deposits, sales,
sales mix and guest counts, labor costs, and food waste.  In addition guest count forecasts are
generated automatically, which assists restaurant managers in the more accurate
scheduling of crewmembers and the production of food.  Reports are run and distributed automatically to regional
managers each morning as well as compiled for executive management review.  Payroll information is processed every two
weeks at the restaurants and transmitted electronically to the corporate
office.

Financial
controls are maintained centrally through a computerized accounting system at
the Companys corporate office.  Sales
are posted electronically to the general ledger from the central cash and sales
database.  Profit and loss statements
are compiled every four weeks by the accounting department and provided to the
general managers and regional managers for analysis and comparison to the
Companys budgets.

Hours
of Restaurant Operation.  Most of
the Companys restaurants are open seven days a week, typically from 11:00 a.m.
to 9:00 p.m. Sunday through Thursday, and from 11:00 a.m. to 10:00 p.m. on
Fridays and Saturdays.

Competition

The
Companys restaurants compete with the growing mid-price, full-service casual
dining segment; with traditional limited-service buffet, soup, and salad
restaurants; and, increasingly, with fast-casual and quick-service
outlets.  The Companys competitors
include national and regional chains, as well as local owner-operated
restaurants.  Key competitive factors in
the industry are the quality and value of the food products offered, quality
and speed of service, price, dining experience, restaurant location and the
ambiance of facilities.  The Company
believes that it competes favorably with respect to these factors, although
many of the Companys competitors have been in existence longer than the Company,
have a more established market presence, and have substantially greater
financial, marketing and other resources than the Company, which may give them
certain competitive advantages.  The
Company believes that its ability to compete effectively will continue to
depend in large measure upon its ability to offer a diverse selection of
high-quality, fresh food products with an attractive price/value
relationship.  In addition, if and when the Company resumes
expansion, it expects intense competition for restaurant sites, which may
result in the Company having difficulty leasing desirable sites on terms that
are acceptable to the Company. The Company expects that in some cases
competitors may be willing to pay more than the Company for sites.

Government Regulation

Each
of the Companys restaurants is subject to various federal, state and local
laws, regulations and administrative practices affecting its business, and must
comply with provisions regulating health and sanitation standards, equal
employment, minimum wages and licensing for the sale of food and alcoholic
beverages.  Difficulties or failures in
obtaining or maintaining required beer and wine licenses or other required
licenses or approvals could delay or prevent the opening of new restaurants or
adversely affect the operations of existing restaurants.  The Company has no reason to believe that
any of such future license applications would not be approved.

9

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Trademarks and Service Marks

Fresh
Choice, Zoopa, Fresh Choice Masters Club, Fresh Choice Express, The
Company Logo, Fresh Choice Restaurant and Design, Great Taste.  Its Our Bag, Now Thats Fresh, Fresh
Choice Express and Design, Fresh Choice Now Thats Fresh and Design, Fresh
Choice Ultimate Salad, Soup Bakery Pasta Bar and Design, and Your Fresh
Connection For Life and Design are registered marks of the Company. The
Companys policy is to strenuously police the use of its marks and to oppose
infringement of its marks.

Employees

As
of March 5, 2004, the Company had approximately 1,958 crewmembers.  These included approximately 1,765 hourly
restaurant crewmembers, of whom approximately 1,141 were part-time crewmembers,
approximately 161 full-time restaurant managers and trainees and approximately
32 full-time corporate management and staff. 
None of the Companys crewmembers is represented by a labor union.  The Company believes its employee relations
are excellent.

Executive Officers of the Registrant

The
executive officers of the Company as of March 5, 2004 are as follows:

|Name                 |  | Age |  | Position                                                
|-------------------- |  | --- |  | --------------------------------------------------------
|                     |  |     |  |                                                         
|                     |  |     |  |                                                         
|Everett F. Jefferson |  | 65  |  | President, Chief Executive Officer and Director         
|                     |  |     |  |                                                         
|Tim G. OShea        |  | 56  |  | Executive Vice President, Chief Operating Officer       
|                     |  |     |  |                                                         
|David E. Pertl       |  | 51  |  | Senior Vice President and Chief Financial Officer       
|                     |  |     |  |                                                         
|Joan M. Miller       |  | 51  |  | Senior Vice President, Human Resources                  
|                     |  |     |  |                                                         
|Tina E. Freedman     |  | 43  |  | Senior Vice President, Product Development andPurchasing

Mr.
Jefferson was elected President and Chief Executive Officer and a director of
the Company in February 1997.  Mr.
Jefferson has an extensive background in restaurant operations.  From June 1996 to February 1997 Mr.
Jefferson was an independent consultant. 
From June 1993 to June 1996 Mr. Jefferson was President and Chief
Executive Officer of Cucina Holding, Inc., the operator of Java City coffee and
bakery.  From March 1990 to June 1993 he
was an independent consultant and independent restaurant operator.  From May 1987 to March 1990 he was President
and Chief Executive Officer of Skippers, Inc. 
From May 1986 to April 1987 he was President of Kings Table, Inc.  Earlier in his career Mr. Jefferson was with
Pizza Hut, Inc. for five years including three years as Senior Vice President
of Operations and was with Saga Corporation for ten years including two years
as Regional Director of the Southeast and Caribbean.

Mr.
OShea joined Fresh Choice in March 1996 as Vice President, Marketing, was
named a Senior Vice President in December 1998 and was named Executive Vice
President and Chief Operating Officer in November 2002.  From July 1991 to March 1996 he was Vice
President, Marketing for retail and foodservice products for W.R. Grace and
Co., a food processor.  Mr. OShea has
over 25 years of experience in restaurant management and marketing including
positions as Vice President of Foodservice Marketing for Culinary Brands, Inc.
from January 1987 to June 1991 and Vice President and General Manager of the
hotel foodservices division of Saga Corporation from October 1975 to January
1987.

Mr.
Pertl joined Fresh Choice in January 1997 as Vice President and Chief Financial
Officer and was named a Senior Vice President in December 1998.  Mr. Pertl was Vice President and Chief
Financial Officer of Summit Family
Restaurants, Inc., a publicly-held family style restaurant company, from
September 1989 until July 1996, when Summit was acquired.  From September 1977 to September 1989 he
held various financial positions with Ponderosa, Inc., including Senior Vice
President and Chief Financial Officer from January 1987 to September 1989.

10

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Ms.
Miller joined Fresh Choice in June, 1995 as Vice President, Human Resources and
was named a Senior Vice President in December 1998.  From March 1992 to March 1995 she was Vice President, Human
Resources for Medallion Mortgage Co., a mortgage banking company.  From March 1990 to March 1992 she was an
attorney with Littler Mendelson Fastiff Tichy & Mathiason, specializing in
labor law.  From 1981 to 1990 Ms. Miller
was Senior Vice President, Human Resources for Pacific Western Bank.

Ms.
Freedman joined Fresh Choice in May 1992 as a restaurant manager and was named
Vice President, Product Development and Purchasing in August 1996, was elected
as an executive officer in March 1997 and was named a Senior Vice President in
December 1998.  Ms. Freedman has held
various positions at Fresh Choice, including Director of Product Development
from April 1995 to August 1996, Director of Training from December 1994 to
April 1995, Regional Manager from October 1993 to December 1994, and General
Manager from September 1992 to October 1993. 
From September 1982 to May 1992 she was Director of Food Services for
Macys, California, a retail/restaurant company.

Business
Risks

Certain
characteristics and dynamics of the Companys business and of financial markets
in general create risks to the Companys long-term success and to predictable
financial results.  These risks include:

Operating
Losses and Historical Declines in Comparable Store Sales.  Our
quarterly and annual operating results and same store sales have fluctuated
significantly in the past and are likely to fluctuate significantly in the
future.  The Company has reported a loss
for the last two years and there can be no assurance that the Company will be
profitable over the long or short term.

The
Companys comparable store sales have decreased for the three fiscal years of
2001 through 2003.  There can be no
assurance that the comparable store sales declines experienced in 2001 through
2003 will not continue or not decline further.

Expansion.  The Company believes its growth depends to a
significant degree on its ability to open new restaurants and to operate such
restaurants profitably.  The Company
resumed its expansion with one new Fresh Choice restaurant opening in 2001,
five opening in 2002 and four restaurants opening in 2003.  For fiscal 2003 certain of these ten new
locations have not met the Companys financial expectations with average sales
for the ten newer restaurants 27.5% below the comparable-store average
sales.  There can be no assurance that
these ten newly opened restaurants or future restaurants will be successful.  The Company recorded a non-cash impairment
charge of $3.7 million in 2003 primarily related to four of these restaurants
and one additional restaurant.  An
impairment charge was deemed appropriate based on the expected cash flows over
the remaining lease terms, as compared to the net book value of the restaurant
assets. If performance does not improve, or deteriorates further in certain
other new restaurants, the Company may be required to record additional
impairment expenses.

The
Company currently has no development plans beyond 2003.  The Companys ability to successfully
resume an expansion strategy will depend upon a variety of factors, many of
which may be beyond the Companys control, including the Companys ability to
locate suitable restaurant locations, negotiate acceptable lease terms, obtain
required government approvals, construct new restaurants in a timely manner,
attract, train and retrain qualified and experienced personnel and management,
operate its restaurants profitably and obtain additional capital to finance expansion
and  equipment costs, as well as general
economic conditions and the degree of competition in the particular
market.

The
Companys future expansion plans may include entering new geographic regions in
which the Company has no previous operating experience.  There can be no assurance that the Fresh
Choice concept will be successful in new geographic regions.  In addition the Company expects intense
competition for restaurant sites, which may result in the Company having difficulty
leasing desirable sites on terms that are acceptable to the Company. The
Company expects that in some cases competitors may be willing to pay more than
the Company for sites.  These
circumstances may make it difficult for the Company to achieve any new store
growth objectives.

Lease
Renewals.  As existing restaurant leases expire, the
Company must negotiate new leases or lease extensions in order to continue
operations at existing restaurants. 
There can be no assurance that the Company will

11

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be able to renew these
leases on favorable terms or at all.  If
the Company is unable to obtain favorable terms on new leases or extensions on
existing leases, it would increase costs and reduce the Companys operating
margins.  Moreover, if the Company is
unable to renew existing leases and is unable to find suitable alternate
locations, the Companys revenue and operating results would be adversely
affected.

Geographic
Concentration.  As of March 5, 2004, 43 of the Companys 57
restaurants were located in California, primarily in Northern California.  Accordingly, the Company is susceptible to
fluctuations in its business caused by adverse economic conditions in this
region.  In addition, net sales at
certain of the Companys restaurants have been adversely affected when a new
Company restaurant has been opened in relatively close geographic
proximity.  There can be no assurance
that expansion within existing or future geographic markets will not adversely
affect the individual financial performance of Company restaurants in such
markets or the Companys overall results of operations.  In addition, given the Companys present
geographic concentration in Northern California, adverse weather conditions or
increased utility costs in the region or negative publicity relating to an
individual Company restaurant could have a more pronounced adverse effect on
results of operations than if the Companys restaurants were more broadly
dispersed.

Sensitivity
to Economic Conditions and Consumer Spending.  The
restaurant industry historically has been subject to substantial cyclical
variation.  The California economy has
slowed and there has been a downturn in the general economy and a decline in
consumer spending in the restaurant industry. 
A continued decline could have a material adverse effect on the
Companys financial performance as restaurant sales tend to decline during
recessionary periods.  A prolonged
economic downturn could alter customers purchasing decisions, which most
likely would have a material adverse impact on the Companys revenue and
results of operations.

Seasonality
and Quarterly Fluctuations The Companys restaurants have typically experienced seasonal
fluctuations, as a disproportionate amount of net sales and net income are
generally realized in the second and third fiscal quarters.  In addition, the Companys quarterly results
of operations have been, and may continue to be, materially impacted by the
timing of new restaurant openings, restaurant closings and impairment
charges.  The fourth quarter normally
includes 16 weeks of operations as compared with 12 weeks for each of the three
prior quarters.  As a result of these
factors, net sales and net income in the fourth quarter are not comparable to
results in each of the first three fiscal quarters, and net sales can be
expected to decline in the first quarter of each fiscal year in comparison to
the fourth quarter of the prior fiscal year.

Dependence
on Key Personnel.  The success of the Company depends on the
efforts of key management personnel. 
The Companys success will depend on its ability to motivate and retain
its key crewmembers and to attract qualified personnel, particularly general
managers, for its restaurants.  The
Company faces significant competition in the recruitment of qualified
crewmembers.

Restaurant
Industry.  The restaurant industry is affected by
changes in consumer tastes, as well as national, regional and local economic conditions
and demographic trends.  The performance
of individual restaurants, including the Companys restaurants, may be affected by factors
such as traffic patterns, demographic considerations, and the type, number and
location of competing restaurants.  In
addition, factors such as inflation, increased food, labor and crewmember
benefit costs, and the availability of experienced management and hourly
crewmembers may also adversely affect the restaurant industry in general and
the Companys restaurants in particular. 
Restaurant operating costs are affected by increases in the minimum
hourly wage, unemployment tax rates, and various federal, state and local
governmental regulations, including those relating to the sale of food and
alcoholic beverages.  There can be no
assurance that the restaurant industry in general, and the Company in
particular, will be successful.

Competition.  The
Companys restaurants compete with the rapidly growing mid-price, full-service
casual dining segment; with traditional limited-service buffet, soup, and salad
restaurants; and, increasingly, with fast-casual and quick-service
outlets.  The Companys competitors
include national and regional chains, as well as local owner-operated
restaurants.  Key competitive factors in
the industry are the quality and value of the food products offered, quality
and speed of service, price, dining experience, restaurant location and the
ambiance of facilities.  Many of the
Companys competitors have been in existence longer than the Company, have a
more established

12

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market presence, and have substantially greater financial,
marketing and other resources than the Company, which may give them certain
competitive advantages.  The Company
believes that its ability to compete effectively will continue to depend in
large measure upon its ability to offer a diverse selection of high-quality,
fresh food products with an attractive price/value relationship.  In addition, if and when the Company resumes
expansion, it expects intense competition for restaurant sites, which may
result in the Company having difficulty leasing desirable sites on terms that
are acceptable to the Company.  The
Company expects that in some cases competitors may be willing to pay more than
the Company for sites.

Ability
to Obtain Additional Financing.  The Company resumed its
restaurant expansion in 2001.  The
Company currently has no expansion plans beyond 2003.  The Companys ability to resume an expansion strategy will depend
upon a variety of factors, including its ability to obtain funds.  The Company believes its near-term capital
requirements can be met through its existing cash balances, cash provided by
operations and its borrowing arrangements. Should the Company seek new financing
there can be no assurance that the Company would be able to obtain additional
financing on acceptable terms or at all.

Loan
Covenants.Based on
the Companys most current financial projections the Company may be out of
compliance with one or more of its existing loan covenants by the end of the
Companys first quarter 2004.  The
Company believes it can obtain a waiver or renegotiate these covenants with its
bank.  However, there can be no
assurance that the Company will be able to obtain a waiver or renegotiate its
covenants. If the Company is unable to renegotiate the covenants or obtain a
waiver from its bank, the bank could declare the Companys outstanding loans in
default and demand immediate payment in full of all outstanding principal and
interest.

Control
by Major Shareholder. 
Crescent Real Estate Equities Limited Partnership (Crescent) holds
1,187,906 shares of Series B non-voting convertible preferred stock, which is
convertible into Series A voting convertible preferred stock at any time at the
option of the holder.  Upon conversion,
holders of Series A preferred stock would be entitled to vote with common
stockholders and would have a separate right to approve certain corporate
actions, such as amending the Companys Certificate of Incorporation or Bylaws,
effecting a merger or sale of the Company, or making a fundamental change in
the Companys business activity.  In
addition, because the Company did not achieve a specified earnings target in
1998, the holders of Series A preferred stock would have the right to elect a
majority of the Companys Board of Directors. 
Crescent has entered into a letter agreement waiving this right until
the date that Crescent elects to sell, transfer, convey or otherwise dispose of
all its shares.  These factors could
have the effect of delaying, deferring or preventing a change in control of the Company and, as a result,
could discourage acquisition bids for the Company and limit the price that
investors are willing to pay for shares of common stock.

|Item
  2. | PROPERTIES.
|--------- | -----------

The
Company currently owns both the land and buildings at two of its restaurant
locations, and owns restaurant buildings on leased land at seven other
locations.  The Company leases all of its
other restaurant locations, but may purchase future restaurant locations where
it believes it is cost-effective to do so. 
The Companys restaurants are located in regional malls, strip centers,
and freestanding locations.

The
Companys restaurants range from 4,800 to 9,014 square feet with inside seating
for 108 to 304 guests. Many of the Companys restaurants provide limited
outdoor seating.

Restaurant
locations leased by the Company are typically leased under triple net leases
that require the Company to pay real estate taxes, maintenance costs and
insurance premiums and, in many cases, to pay contingent rentals based on sales
in excess of specified amounts. 
Generally, the leases have initial terms of ten to twenty years, with options
to renew for additional periods, which range from five to fifteen years.  Of the Companys current leases all, except
four, have remaining terms or renewal options extending more than five years
following the date of this report.  Of
these four, two expire in 2004, one in 2006 and one in 2007.  There can be no assurance that the Company
will be able to extend these four leases on favorable terms or at all.  To the extent the Company is unable to
extend these leases, or secure alternative locations on favorable terms, the
Companys operating results would be adversely impacted.

13

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The
Company currently leases a separate facility for its executive headquarters
pursuant to a lease that expires July 31, 2010.  The Company believes that such facility is adequate for its
office space requirements through fiscal 2004. 
If additional space is required in the future, the Company further
believes that suitable facilities can be leased on commercially reasonable terms.

|Item
  3. | LEGAL
  PROCEEDINGS.
|--------- | --------------------

From
time to time, the Company may be involved in litigation relating to claims
arising out of its operations.  As of
the date of this Annual Report on Form 10-K, the Company is not engaged in any
legal proceedings that are expected by the Companys management, individually
or in the aggregate, to have a material adverse effect on the Companys
business, financial condition or results of operations.

|Item
  4. | SUBMISSION
  OF MATTERS TO A VOTE OF SECURITY HOLDERS.
|--------- | ------------------------------------------------------

None.

14

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PART II

|Item
  5. | MARKET
  FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
|--------- | ------------------------------------------------------------------------

Stock
Information.  Fresh Choice, Inc.s
common stock trades on The Nasdaq Stock Marketâunder the Symbol: SALD.  On March 5,
2004, 6,017,190 shares were owned by 313 stockholders of record.  The following are the Companys common stock
high and low closing sales prices for the fiscal years 2002 and 2003:

| | 2002           |  | High |       | Low |  
| | -------------- |  | ---- | ----- | --- | -
| |                |  |      |       |     |  
| |                |  |      |       |     |  
| | First Quarter  |  | $    | 3.000 |     | $
| | Second Quarter |  |      | 2.700 |     |  
| | Third Quarter  |  |      | 2.501 |     |  
| | Fourth Quarter |  |      | 2.090 |     |  
| |                |  |      |       |     |  
| | 2003           |  | High |       | Low |  
| |                |  |      |       |     |  
| |                |  |      |       |     |  
| | First Quarter  |  | $    | 1.920 |     | $
| | Second Quarter |  |      | 2.000 |     |  
| | Third Quarter  |  |      | 2.190 |     |  
| | Fourth Quarter |  |      | 2.199 |     |  

Fresh
Choice, Inc. had its initial public offering on December 9, 1992 at a price of
$13.00.  Fresh Choice, Inc. had a
follow-on public offering on July 15, 1993 at a price of $25.00.

The
Company has not paid cash dividends on its common or preferred stock, and presently
intends to continue this policy in order to retain its earnings for the
development of the Companys business. 
In addition, the Companys current loan and security agreement prohibits
the payment of dividends.

On
September 13, 1996, the Company sold to Crescent Real Estate Equities Ltd.
(Crescent) 1,187,906 shares of Series B Non-Voting Convertible Participating
Preferred Stock (Series B Preferred Stock), and granted Crescent an option to
purchase 593,953 shares of Series C Non-Voting Convertible Participating
Preferred Stock, which expired in 1999, (Series C Preferred Stock)
(collectively, the Stock) for an aggregate purchase price of approximately
$5.5 million, or $4.63 per share of Series B Preferred Stock pursuant to a
Preferred Stock Purchase Agreement dated April 26, 1996.  The Series B Preferred Stock is convertible
into Series A Voting Convertible Participating Preferred Stock (Series A
Preferred Stock) at any time at the option of the holder, and the Series A and
Series B Preferred Stock is convertible into Common Stock at any time at the
option of the holder.  The Company
offered and sold the Stock to Crescent, a sophisticated investor who purchased
such shares for investment purposes, as transactions not involving a public
offering pursuant to the exemption from registration provisions of Section 4(2)
of the Securities Act of 1933, as amended.

The
Company currently maintains two compensation plans that provide for the
issuance of the Companys Common Stock to officers and other employees,
directors and consultants.  These
consist of the 1998 Stock Option Plan (the Option Plan) and the 2001 Employee
Stock Purchase Plan (the Purchase Plan), both of which have been approved by
stockholders.

15

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The
following table sets forth information regarding outstanding options and shares
reserved for future issuance under the foregoing plans, as well as
non-qualified options issued outside of the Option Plan, as of December 28,
2003:

|Plan Category                                                  |  | Number of Securities to
  be issued upon exercise
  of outstanding options,
  warrants and rights
  (a) |           | Weighted-average
  exercise price of
  outstanding options,
  warrants and rights
  (b) |  | Number of securities
  remaining available for
  future issuance under
  equity compensation
  plans (excluding
  securities reflected in
  column (a))
  (c) |  
|-------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------- | --------- | --------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|                                                               |  |                                                                                                         |           |                                                                                         |  |                                                                                                                                                               |  
|Equity compensation
  plans approved by
  security holders     |  |                                                                                                         | 1,051,269 | (1)                                                                                     |  |                                                                                                                                                               | $
|Equity compensation
  plans not approved by
  security holders |  |                                                                                                         | 120,000   | (2)                                                                                     |  |                                                                                                                                                               | $
|                                                               |  |                                                                                                         |           |                                                                                         |  |                                                                                                                                                               |  
|Total                                                          |  |                                                                                                         | 1,171,269 |                                                                                         |  |                                                                                                                                                               | $
|                                                               |  |                                                                                                         |           |                                                                                         |  |                                                                                                                                                               |  

| | 1 | Reflects options issued or outstanding under the
  Companys Option Plan.                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| | 2 | Reflects non-qualified options issued to an
  executive officer, by the Board of Directors, in 1997 outside of the option
  Plan.
| | 3 | Includes 206,557 shares that are reserved for
  issuance under the Purchase Plan.                                                

16

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|Item
  6. | SELECTED
  FINANCIAL DATA.
|--------- | --------------------------

A
five-year summary of selected financial data follows:

|(Dollars in thousands, except per share amounts)                                |  | December 28,2003 |        | December 29,2002 |   | December 30,2001 |   | December 31,2000 |        | December 26,1999 |  
|------------------------------------------------------------------------------- |  | ---------------- | ------ | ---------------- | - | ---------------- | - | ---------------- | ------ | ---------------- | -
|                                                                                |  |                  |        |                  |   |                  |   |                  |        |                  |  
|Consolidated statement of operations data:                                      |  |                  |        |                  |   |                  |   |                  |        |                  |  
|Net
  sales                                                                     |  | $                | 78,492 |                  | $ | 74,951           |   | $                | 74,152 |                  | $
|Operating
  income (loss) (1)                                                   |  |                  | (5,584 | )                |   | (1,331           | ) |                  | 1,666  |                  |  
|Income
  (loss) from continuing operations                                      |  |                  | (6,006 | )                |   | (1,534           | ) |                  | 1,397  |                  |  
|Basic
  income (loss) per share from continuing operations                      |  |                  | (1.00  | )                |   | (0.26            | ) |                  | 0.24   |                  |  
|Diluted
  income (loss) per share from continuing operations                    |  |                  | (1.00  | )                |   | (0.26            | ) |                  | 0.20   |                  |  
|Net
  income (loss)                                                             |  |                  | (6,006 | )                |   | (1,719           | ) |                  | 1,125  |                  |  
|Basic
  net income (loss) per share                                             |  |                  | (1.00  | )                |   | (0.29            | ) |                  | 0.19   |                  |  
|Diluted
  net income (loss) per share                                           |  |                  | (1.00  | )                |   | (0.29            | ) |                  | 0.16   |                  |  
|                                                                                |  |                  |        |                  |   |                  |   |                  |        |                  |  
|Consolidated balance sheet data:                                                |  |                  |        |                  |   |                  |   |                  |        |                  |  
|Total
  assets                                                                  |  |                  | 30,854 |                  |   | 36,329           |   |                  | 34,915 |                  |  
|Working
  capital (deficiency)                                                  |  |                  | (5,734 | )                |   | (4,104           | ) |                  | (607   | )                |  
|Long-term
  debt and capital lease
      obligations, including current portion |  |                  | 4,927  |                  |   | 4,916            |   |                  | 3,224  |                  |  
|Stockholders
  equity                                                          |  | $                | 15,710 |                  | $ | 21,632           |   | $                | 23,259 |                  | $
|                                                                                |  |                  |        |                  |   |                  |   |                  |        |                  |  
|Number of restaurants open at end of year:                                      |  |                  |        |                  |   |                  |   |                  |        |                  |  
|Fresh
  Choice and Zoopa                                                        |  |                  | 53     |                  |   | 49               |   |                  | 47     |                  |  
|Fresh
  Choice Express                                                          |  |                  | 4      |                  |   | 4                |   |                  | 4      |                  |  

|(1) | Includes store closure and asset impairment expenses of $3,700 in 2003; $1,751 in 2002; $75 in 2001; $157 in 2000 and $458 in 1999
|--- | ----------------------------------------------------------------------------------------------------------------------------------

Net
sales, operating income (loss), income (loss) and income (loss) per share from
continuing operations presented for all years in the above table excludes the
one restaurant closed in the fourth quarter of 2002 that is included in
discontinued operations pursuant to the Companys adoption, in the first
quarter of fiscal 2002, of Statement of Financial Accounting Standards (SFAS)
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

|Item
  7. | MANAGEMENTS
  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|--------- | ---------------------------------------------------------------------------------------

CAUTIONARY
STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION   REFORM ACT OF 1995

Certain
statements set forth in this discussion and analysis of financial condition and
results of operations are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. They use such words as may,
will, expect, believe, plan and other similar terminology. These
statements reflect managements current expectations regarding future events
and operating performance and speak only as of the date of this release.  These forward-looking statements involve a
number of risks and uncertainties. Actual future

17

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results and trends may differ
materially depending on a variety of factors as set forth under the heading
Business Risks.  In particular, among
these risks and uncertainties is the ability of the Company to return to positive
comparable-store sales and improve newer restaurant sales, operate its
restaurants profitably and obtain additional financing, as well as general
economic conditions.

In
addition, terrorist threats and the possible responses by the U.S. government,
the effects on consumer demand, the financial markets, food supply and
distribution and other conditions increase the uncertainty inherent in
forward-looking statements. 
Forward-looking statements reflect the expectations of the Company at
the time they are made, and investors should rely on them only as expressions
of opinion about what may happen in the future and only at the time they are
made.  The Company undertakes no
obligation to update any forward-looking statement.  Although the Company believes it has an appropriate business
strategy and the resources necessary for its operations, future revenue and margin trends cannot be
reliably predicted and the Company may alter its business strategies to address
changing conditions.

GENERAL

Fresh
Choice, Inc. operates limited-service restaurants offering high quality,
freshly made specialty and traditional salads, hot pasta, pizza, hot baked
potatoes, soups, fresh breads and muffins, frozen low-fat soft serve and other
desserts.  The Company operated 57
restaurants at December 28, 2003, 53 restaurants at December 29, 2002 and 51
restaurants at December 30, 2001.  The
Companys fiscal year ends on the last Sunday in December.

After
opening its first restaurant in 1986, Fresh Choice expanded steadily, its early
growth driven by the strong unit economics of its restaurants.  The Company operated 22 restaurants at the
time of its initial public offering in December 1992.  With $12.7 million in net proceeds from its initial offering and
an additional $19.6 million in net proceeds from a secondary offering in July
1993, the Company accelerated its growth, opening 29 new restaurants in 1993
and 1994. During this period the Company opened a number of locations that did
not reach anticipated sales levels.  At
the same time, the Company experienced unanticipated declines in sales at its
other restaurants, resulting in part from increased competition in the
casual/family dining sector and greater than expected cannibalization of its existing
restaurants.  From 1995 through 2003 the
Company opened or acquired 25 and closed 23 Fresh Choice restaurants.  In addition the Company opened 4 Fresh
Choice Express restaurants.  The
underperformance of certain restaurants, including the restaurants that were
closed resulted in asset impairment and closure charges being recorded in each
year from 1995 to 2003, except 1997. 
These charges, in combination with inconsistent comparable stores sales
performance has resulted in inconsistent profit performance over this nine-year
time horizon.  Over this time period the
Company has experienced four profitable and five unprofitable years, including
the last two.

Net
sales reflect discounts and coupons. Costs of sales consists primarily of food
and beverage costs. Food costs can vary significantly depending upon pricing
and availability of produce and grocery items. The Company attempts to minimize
cost fluctuations for some of its foods by entering into fixed price supply
contracts of varying lengths, which have no minimum purchase requirements.
Restaurant operating expenses include all restaurant-level operating costs, the
significant components of which are (i) direct and indirect labor expenses
(including benefits) and (ii) occupancy and other operating expenses which
includes advertising expenses, rent, real estate taxes, common area
maintenance, insurance and supply, maintenance and utility expenses. Certain
elements of the Companys restaurant operating expenses and, in particular,
occupancy costs, are relatively fixed. However, a significant majority of the
Companys leases provide for either fixed periodic escalation of minimum annual
rentals or periodic increases based upon increases in the consumer price index.
Occupancy costs, as well as depreciation and amortization expenses, will vary
between restaurants depending on whether a restaurant site is leased or owned.

OVERVIEW

During
2001, the Companys comparable store sales turned negative in the third and
fourth quarters after ten consecutive quarters of comparable store sales
growth.  The Company believes the
negative comparable store sales were primarily the result of a weakening
economy and lower consumer confidence following the September 11,

18

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2001 tragedy.  Despite the softening sales,
the Company continued its management of costs and reported net income of $1.1
million in 2001.  The Company resumed
the expansion of the Fresh Choice concept, opening one new Fresh Choice
restaurant in 2001.  The Company also
recorded a store closure and asset impairment charge of $181,000 ($106,000 of
which is included in loss from
discontinued operations) for the planned closure of two restaurants whose
leases expired in 2002 and the planned conversion of one Fresh Choice Express
to a licensed Starbucks retail store.

During
2002, the Company reported four consecutive quarters of comparable store sales
declines.  The Company believes the
negative comparable store sales were primarily the result of the continued weak
economic environment in the Companys core markets.  The Company continued its management of costs, but this was not
sufficient to offset the continued declining sales, and reported a net loss of
$1.7 million in 2002.  The Company
continued the expansion of the Fresh Choice concept, opening five new Fresh
Choice restaurants in 2002. The Companys net loss included a non-cash
impairment charge of $1.8 million for the write-down of assets to fair value
for four restaurants.  An impairment
charge for these restaurants was deemed appropriate based on the expected cash
flows over the remaining lease terms, as compared to the net book value of the
restaurant assets.

During
2003, the Companys comparable store sales improved each quarter with the
Company reporting positive comparable store sales of 0.1% in the fourth
quarter.  However, despite this
improving trend, the Company reported its third consecutive year of comparable
store sales declines. In addition, the Company experienced significant cost
increases, especially in workers compensation, medical and utility costs. Additionally, certain of the Companys new
locations have not met the Companys financial expectations with the ten newer
restaurants average sales 27.5% below the comparable-store average sales. The
soft sales, increased costs, weak financial performance of certain newer
restaurants and a non-cash asset impairment charge resulted in the
Company reporting a $6.0 million loss for 2003. The  non-cash impairment charge of
$3.7 million in 2003, for the write down of assets to fair value, was primarily
related to four of the newer restaurants and one additional restaurant.  An impairment charge for these restaurants
was deemed appropriate based on the expected cash flows over the
remaining lease terms, as compared to the net book value of the restaurant
assets.

CRITICAL ACCOUNTING POLICIES

Our
accounting policies are more fully described in Note 1 of the Companys audited
December 28, 2003 financial statements. 
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America (US GAAP)
requires management to make estimates and assumptions that affect reported
amounts of assets, liabilities, revenues and expenses and related disclosures
of contingent assets and liabilities as of the dates and for the periods
presented.  Management believes the
following accounting policies, among others, represent its more critical or
complex estimates and assumptions used in preparation of its consolidated
financial statements.

The
Company evaluates its estimates and assumptions on an on-going basis and
believes its estimates and assumptions are reasonable based on historical
experience and other factors.  However,
actual results could differ from those estimates and these differences could be
material to the consolidated financial statements.  The accounting policies management has identified as critical or
complex accounting policies are described below.

Long-lived
assets impairment. 
The Company reviews its long-lived assets related to each restaurant
annually for impairment, or whenever events or changes in circumstances
indicate that the carrying amount of a restaurant and the related equipment may
not be recoverable.  The Company
considers a history of operating losses to be its primary indicator of
potential impairment, therefore new restaurants are generally not identified
for impairment until a sufficient operating history has been developed.  Assets are grouped and evaluated for
impairment at the lowest level for which there are identifiable cash flows, the
individual restaurants.  Impairment
evaluations require an estimation of cash flows over the remaining useful life
of the restaurants.  If the long-lived
assets of a restaurant are not recoverable based upon
forecasted undiscounted cash flows, the Company writes down an impaired
restaurant to its estimated fair value, which becomes its new cost basis.  Generally, management considers the present
value of a restaurants projected future cash flows and estimated sales values
of a restaurants long-lived assets in

19

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determining fair value.  Considerable management judgment is
necessary to estimate projected future operating cash flows.  Accordingly, if actual results vary from
such estimates, significant future impairment could result.

Workers
Compensation Claims Accrual. 
The Company records estimates for workers compensation claims under its
workers compensation program.  The
Company evaluates the adequacy of these accruals by evaluating information
periodically provided by its insurance carrier regarding the Companys
historical experience and trends relating to insurance claims and payments and
general industry experience regarding the expectation of future trends in
claims development. If such information indicates that the accruals are
overstated or understated, the Company will reduce or provide additional
accruals as appropriate. If a greater number of claims occur in comparison to
the amount of claims estimated or medical costs increase beyond anticipated
costs, additional charges may be required in the period such determination was
made.

Discontinued
Operations. Considerable management judgment is necessary to determine whether
a closed restaurant should be classified as discontinued operations.  In general, the Company considers the extent
to which the restaurants operations and cash flow are expected to be absorbed
by other currently operated restaurants or replaced with a new restaurant in
making this determination.  A closed
restaurant, or group of restaurants, which is located in an isolated market and
not replaced, would generally be classified as discontinued operations.

Income
taxes.The Companys
net deferred tax assets consist primarily of the tax benefit related to
operating loss carryforwards, alternative minimum tax credits and asset
write-downs, in connection with store asset impairments, that are not
deductible for tax purposes until the assets are disposed.  The Company has provided valuation
allowances against its deferred net tax assets based on managements most
recent assessment that it is not deemed more likely than not that the deferred
tax assets will be realized.  If future
assessments by management were to determine that the Company would be able to
realize its deferred tax assets in excess of their net recorded amounts, an
adjustment to the deferred tax assets could result in an increase in net income
in the period such determination was made.

Property
and equipment. Property
and equipment are stated at cost. 
Depreciation and amortization are computed using the straight-line
method over the estimated useful lives of the assets which range from 5 to 30
years or the lease term of a restaurant including option periods, as
appropriate, not to exceed 25 years.

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RESULTS OF OPERATIONS

The
following table presents the components of average restaurant operating income
on a per restaurant basis, for the comparable Fresh Choice and Zoopa
restaurants open during each year (the Companys Fresh Choice Express
restaurants are excluded):

|(Dollars
  in thousands)         |  | 2003 |       | 2002 |  | 2001  |  
|-------------------------------- |  | ---- | ----- | ---- |  | ----- | -
|                                 |  |      |       |      |  |       |  
|                                 |  |      |       |      |  |       |  
|NET SALES                        |  | $    | 1,558 |      |  | 100.0 | %
|                                 |  |      |       |      |  |       |  
|                                 |  |      |       |      |  |       |  
|COSTS AND EXPENSES:              |  |      |       |      |  |       |  
|Cost of sales                    |  |      | 347   |      |  | 22.2  |  
|Restaurant operating
  expenses: |  |      |       |      |  |       |  
|Labor                            |  |      | 516   |      |  | 33.1  |  
|Occupancy
  and other            |  |      | 506   |      |  | 32.5  |  
|Depreciation and
  amortization  |  |      | 59    |      |  | 3.8   |  
|                                 |  |      |       |      |  |       |  
|                                 |  |      |       |      |  |       |  
|Total
  costs and expenses       |  |      | 1,427 |      |  | 91.6  |  
|                                 |  |      |       |      |  |       |  
|                                 |  |      |       |      |  |       |  
|RESTAURANT OPERATING INCOME      |  | $    | 131   |      |  | 8.4   | %
|                                 |  |      |       |      |  |       |  
|                                 |  |      |       |      |  |       |  
|Number of comparable restaurants |  |      | 43.0  |      |  |       |  
|                                 |  |      |       |      |  |       |  

The following table sets forth items in the Companys
statements of operations as a percentage of sales:

|(Dollars
  in thousands)                      |  | 2003 |        | 2002 |  | 2001  |   
|--------------------------------------------- |  | ---- | ------ | ---- |  | ----- | --
|                                              |  |      |        |      |  |       |   
|                                              |  |      |        |      |  |       |   
|NET SALES                                     |  | $    | 78,492 |      |  | 100.0 | % 
|                                              |  |      |        |      |  |       |   
|                                              |  |      |        |      |  |       |   
|COSTS AND EXPENSES:                           |  |      |        |      |  |       |   
|Cost
  of sales                               |  |      | 17,822 |      |  | 22.7  |   
|Restaurant
  operating expenses:              |  |      |        |      |  |       |   
|Labor                                         |  |      | 27,058 |      |  | 34.5  |   
|Occupancy
  and other                         |  |      | 26,207 |      |  | 33.4  |   
|General
  and administrative expenses         |  |      | 5,461  |      |  | 7.0   |   
|Depreciation
  and amortization               |  |      | 3,560  |      |  | 4.5   |   
|Store
  closure and asset impairment expenses |  |      | 3,700  |      |  | 4.7   |   
|Restaurant
  opening costs                    |  |      | 268    |      |  | 0.3   |   
|                                              |  |      |        |      |  |       |   
|Total
  costs and expenses                    |  |      | 84,076 |      |  | 107.1 |   
|                                              |  |      |        |      |  |       |   
|                                              |  |      |        |      |  |       |   
|OPERATING INCOME (LOSS)                       |  |      | (5,584 | )    |  | (7.1  | ) 
|                                              |  |      |        |      |  |       |   
|Interest
  income                             |  |      | 4      |      |  | -     |   
|Interest
  expense                            |  |      | (438   | )    |  | (0.6  | ) 
|                                              |  |      |        |      |  |       |   
|                                              |  |      |        |      |  |       |   
|Interest
  expense, net                       |  |      | (434   | )    |  | (0.6  | ) 
|                                              |  |      |        |      |  |       |   
|                                              |  |      |        |      |  |       |   
|INCOME (LOSS) BEFORE INCOME
  TAXES           |  |      | (6,018 | )    |  | (7.7  | ) 
|                                              |  |      |        |      |  |       |   
|Provision for (benefit
  from) income taxes   |  |      | (12    | )    |  | -     |   
|                                              |  |      |        |      |  |       |   
|                                              |  |      |        |      |  |       |   
|INCOME (LOSS) FROM
  CONTINUING OPERATIONS    |  |      | (6,006 | )    |  | (7.7  | ) 
|                                              |  |      |        |      |  |       |   
|LOSS FROM DISCONTINUED
  OPERATIONS           |  |      | -      |      |  | -     |   
|                                              |  |      |        |      |  |       |   
|                                              |  |      |        |      |  |       |   
|NET INCOME (LOSS)                             |  | $    | (6,006 | )    |  | (7.7  | )%
|                                              |  |      |        |      |  |       |   

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Net
sales.  In 2003, net sales increased
$3.5 million, or 4.7%, to $78.5 million. 
Sales decreased $0.8 million at the Companys 43 restaurants open in
both 2003 and 2002.  The two restaurants
closed in 2002 that were included in continuing operations, accounted for a
$1.3 million decline in sales.  The ten
newer Fresh Choice restaurants opened in 2001, 2002 and 2003 contributed $5.5
million in additional net sales.  The
Fresh Choice Express, dual branded Fresh Choice Express and licensed Starbucks
retail stores and the licensed Starbucks retail store sales contributed $0.1
million to the net sales increase.

In
2002, net sales increased $0.8 million, or 1.1%, to $75.0 million.  Sales decreased $1.8 million at the
Companys 43 restaurants open in both 2002 and 2001.  The two restaurants closed in 2002 that were included in
continuing operations, accounted for a $1.9 million decline in sales.  The six new Fresh Choice restaurants opened
in 2001 and 2002 contributed $4.2 million in additional net sales.  The Fresh Choice Express, dual branded Fresh
Choice Express and licensed Starbucks retail stores and the licensed Starbucks
retail store sales contributed $0.3 million to the net sales increase.

The
Company does not include any new stores in its comparable store sales until a
store has been open for 18 months. 
Management believes utilizing an 18-month basis for reporting comparable
store sales represents a more realistic indication of the base business
trends.  On this basis, comparable store
sales decreased 1.1 % in 2003 following decreases of 2.5% in 2002 and 1.2% in
2001. Comparable store guest counts decreased 3.1% in 2003 following decreases
of 3.3% in 2002 and 4.8% in 2001.

The
comparable store average check increased 1.3% in 2003, 0.8% in 2002 and 3.8% in
2001, reflecting price increases and coupon offerings at a lower discount.

Cost
of sales.  Cost of sales (food and
beverage costs) were 22.7%, 22.3% and 22.7% of net sales in 2003, 2002 and
2001, respectively.  In 2003, food and beverage costs increased as a
percentage of sales primarily from inflationary cost increases and the
introduction of a new menu rotations and selections intended to increase the
value offering to the guest. Food and beverage costs declined as a
percentage of sales in 2002 due to the combined effect of controlling food cost
per guest and increases in the average check.

Restaurant
Operating Expenses.  Restaurant
operating expenses (labor, occupancy and other) were 67.9%, 64.4% and 61.8%, of
net sales in 2003, 2002 and 2001, respectively.

In
2003, labor was 1.7 % higher, as a percent of sales, than in 2002 and in 2002,
labor was 1.1% higher, as a percent of sales, than in 2001.  The labor cost increase for 2003 was
primarily the result of a decline in average store sales, higher workers
compensation and medical insurance costs, increased hours resulting from a
revised labor scheduling matrix to enhance guest service, a higher average wage
and labor inefficiencies with the start up of new restaurants.  The labor cost percentage increase for 2002
was primarily the result of lower average restaurant sales and higher salaries
and wages, partially offset by a higher average check and better management of
hours worked in the restaurants.

Occupancy
and other costs in 2003 were 1.8% higher, as a percent of sales, than in 2002
primarily due to the lower average store sales.  In addition, gas and electricity costs increased to 3.9% of sales
versus 3.5% of sales in 2002 and advertising costs increased to 3.6% of sales
versus 3.3% of sales in 2002. Occupancy and other costs in 2002 were 1.5 %
higher, as a percent of sales, than in 2001 primarily due to the lower average
sales and higher repair and maintenance expenses, which increased to 2.0% of
sales versus 1.7% in 2001.

Depreciation
and Amortization.  Depreciation and
amortization expenses were 4.5% of sales in 2003, 2002 and 2001.  Higher depreciation expense in newer
restaurants was offset by a decline in depreciation in the older restaurants as
equipment becomes fully depreciated or is written down due to impairment.

General
and Administrative Expenses. 
General and administrative expenses were 7.0%, 7.7% and 8.3% of sales in
2003, 2002 and 2001, respectively.  General and administrative costs decreased as
a percent of sales as spending decreased by $308,000 compared to last year and
the Company had higher sales.  During
the second quarter of 2003 the Company eliminated eleven mid-level management
and clerical positions or approximately 30% of its corporate office staff. General
and administrative expenses decreased $403,000 in 2002, primarily due to the

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Companys overall efforts to keep the costs down during the current weak
economic environment, lower legal expenses, lower recruiting costs and reduced
spending on the Companys annual general managers conference.

Restaurant
Opening Costs.  Restaurant opening
costs, which consist of the direct costs associated with opening a new
restaurant including the costs of hiring and training the initial workforce,
were $268,000, $438,000 and $219,000 and in 2003, 2002 and 2001 respectively.  Restaurant opening costs in 2003 were
related to the four restaurants opened in 2003.  Restaurant opening costs in 2002 were for seven Fresh Choice
restaurants, two of which opened in early 2003, and for two existing Fresh
Choice Express restaurants that were temporarily closed for conversion to
either a licensed Starbucks retail store or a dual branded Fresh Choice Express
and licensed Starbucks retail store. 
Restaurant opening costs in 2001 were for two new Fresh Choice
restaurants, one of which opened in early 2002, and two new Fresh Choice
Express restaurants.

Store
Closure and Asset Impairment Expenses. 
In 2001, the Company recorded a store closure and asset impairment
charge of $75,000 for the planned closure of one restaurant whose lease expired
in 2002 and the planned conversion of one Fresh Choice Express to a licensed
Starbucks retail store.  This charge is
comprised of a $68,000 non-cash charge for the write down of assets to fair
value and a $7,000 charge to cover the estimated closure costs associated with
the planned restaurant closure.  The
impairment charge for this restaurant was deemed appropriate based on the
expected cash flows over the remaining lease terms, as compared to the net book
value of the restaurants assets.

In
2002, the Company reversed $4,000 of the 2001 estimated closure costs and
recorded a non-cash impairment charge of $1,755,000 million for the write-down
of assets to fair value for four restaurants. 
The impairment charge for these restaurants was deemed appropriate based
on the expected cash flows over the remaining lease terms, as compared to the
net book value of the restaurant assets.

In
2003, the Company
recorded a non-cash impairment charge of $3,700,000 primarily related to four
newer restaurants and one additional restaurant.  An impairment charge was deemed appropriate based on the
expected cash flows over the remaining lease terms, as compared to the net book
value of the restaurant assets.

The
Company reviews the cash flow of each restaurant throughout any given reporting
period, and performs an analysis for potential impairment of its investment in
property and equipment at any given restaurant during a reporting period if
deemed necessary based on the restaurants cash flow performance.  At least annually, the Company conducts an
impairment review of its investment in property and equipment for all of its
restaurants.

Interest
Expense, net.  Interest expense, net
was $434,000 in 2003, $215,000 in 2002 and $220,000 in 2001.  The increase in 2003 is due to additional equipment lease financing for
the new stores and
lower interest earned on the Companys average cash balances.  The slight decrease in 2002 was due
to reduced interest on borrowings partially offset by reduced interest income
due to lower cash balances in its bank accounts and lower interest rates.
Interest expense, net consisted primarily of fees and interest related to the
Companys long-term borrowings and capital lease obligations for equipment
leases and interest income on the investment of excess cash balances.

Provision
for (Benefit from) Income Taxes. 
The Company recorded a net tax benefit in 2003 as a result of recording
a credit for the over-accrual of state taxes in 2002.  The Company recorded a tax benefit in 2002 as a result of
recording a credit for the over-accrual of federal taxes in 2001 partially
offset by state tax payments estimated for 2002.  The Company
recorded an income tax provision for 2001, despite net operating loss
carryforwards available to offset taxable income, due to projected fiscal 2001
net income being subject to alternative minimum tax.  The
Companys net deferred tax assets consist primarily of the tax benefit related
to operating loss carryforwards, alternative minimum tax credits and asset
write-downs, in connection with store asset impairments, that are not
deductible for tax purposes until the assets are disposed.  The Company will continue to provide a full
valuation allowance for its deferred tax assets until it becomes more likely
than not, in managements assessment, that any portion of the Companys
deferred tax assets will be realized.

Loss
from Discontinued Operations.  Loss
from discontinued operations includes the revenue and expenses of one restaurant
that was closed during 2002 when its lease term expired.  This restaurant was located in an isolated
market and was not replaced.  The loss
from discontinued operations of $185,000 in 2002 reflects the revenue and
expenses for this store and includes an $8,000 reversal of the 2001 estimated
closure costs.

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The
loss from discontinued operations of $272,000 in 2001 reflects the revenue and
expenses for this store and includes a non-cash charge of $93,000 for the
write-down of assets to fair value and a $13,000 charge to cover the estimated
closure costs associated with the planned closure.

QUARTERLY
INFORMATION

The
following table sets forth certain unaudited quarterly results of operations
for 2003 and 2002:

|                                                    |  | Year Ended
  December 28, 2003 |        | Year Ended
  December 29, 2002 |  
|--------------------------------------------------- |  | ------------------------------ | ------ | ------------------------------ | -
|                                                    |  |                                |        |                                |  
|(In thousands, except
     per share amounts)       |  | First 12Weeks                  |        | Second 12Weeks                 |  
|                                                    |  |                                |        |                                |  
|                                                    |  |                                |        |                                |  
|Net sales                                           |  | $                              | 17,684 |                                | $
|Operating income (loss)                             |  |                                | (464   | )                              |  
|Income (loss) from continuing operations            |  |                                | (541   | )                              |  
|Net income (loss)                                   |  |                                | (541   | )                              |  
|                                                    |  |                                |        |                                |  
|Income (loss) per share from continuing operations: |  |                                |        |                                |  
|Basic*                                              |  | $                              | (0.09  | )                              | $
|Diluted*                                            |  | $                              | (0.09  | )                              | $
|                                                    |  |                                |        |                                |  
|Net income (loss) per share                         |  |                                |        |                                |  
|Basic*                                              |  | $                              | (0.09  | )                              | $
|Diluted*                                            |  | $                              | (0.09  | )                              | $

|* | The sum of the quarterly
  net income (loss) per share amounts will not necessarily equal the net income
  (loss) per share for the total fiscal year
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(1) | Includes store closure and
  asset impairment expenses of $730 in 2003                   
|--- | -----------------------------------------------------------------------------------------
|(2) | Includes store closure and asset impairment expenses of $2,970 in
2003 and $1,751 in 2002

Net
sales, operating income (loss), income (loss) from continuing operations and
income (loss) per share from continuing operations presented for all quarters
in the above table for 2002 excludes the one restaurant closed in the fourth
quarter of 2002 that is included in discontinued operations pursuant to the
Companys adoption, in the first quarter of fiscal 2002, of Statement of
Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets.

The
Companys restaurants experience seasonal fluctuations, as a disproportionate
amount of net sales and restaurant operating income are generally realized in
the second and third fiscal quarters. 
In addition, the Companys quarterly results of operations have been,
and may continue to be, materially impacted by the timing of asset impairment
charges and new restaurant openings and closings.  The fourth quarter normally includes 16 weeks of operations as
compared with 12 weeks for each of the three prior quarters. As a result of
these factors, net sales and net income in the fourth quarter are not
comparable to results in each of the first three fiscal quarters, and net sales
can be expected to decline in the first quarter of each fiscal year in
comparison to the fourth quarter of the prior fiscal year.  Because of prior year operating losses,
impairment charges, restaurant closures, the seasonality of the Companys
business and the impact of new restaurant openings, results for any quarter
cannot be relied upon as indicative of the results that may be achieved for a
full fiscal year.

24

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LIQUIDITY AND CAPITAL RESOURCES

The
Companys primary capital requirements have been for the expansion of its
restaurant operations and remodeling of its restaurants.  The Company has traditionally financed these
requirements with funds from equity offerings, cash flow from operations,
landlord allowances, capital equipment leases and short-term bank debt.  The Company does not have significant trade
receivables or inventory and receives trade credit based upon negotiated terms
in purchasing food and supplies.

During
2001, the Company closed on a $2,200,000 loan (the Loan), with a commercial
bank.    In 2003, the Company amended
this Loan to; (i) exclude restaurant opening costs in calculating the minimum
debt service coverage ratio, (ii) reduce the minimum debt service coverage
ratio, and (iii) reduce the required minimum tangible net worth.  Under the terms of the Loan, the Company
issued a promissory note (the Note) in the amount of $2,200,000.  The Note is secured by a deed of trust on
certain Company-owned real estate.  The
Note bears interest at the prime rate (4.00% at December 28, 2003) plus
0.625%.  The Note has a fifteen-year
amortization period and matures after 84 monthly payments of principal and
interest.  All unpaid principal and
interest shall be due and payable on the Notes maturity date of September 2,
2008.

The
Company had $1,923,000 and $2,061,000 of debt outstanding under the Loan
described above at December 28, 2003 and December 29, 2002 respectively.  At December 28, 2003, $1,776,000 was
included in long-term debt and $147,000 was included in the current portion of
long-term obligations.  At December 29,
2002, $1,935,000 was included in long-term debt and $126,000 was included in
the current portion of long-term obligations. 
The Deed of Trust requires the Company to maintain a minimum debt
service coverage ratio and to maintain a minimum tangible net worth.

During
2003 the Company amended its $2,000,000 revolving line of credit (the  Agreement) with its bank to; (i) exclude
restaurant opening costs in calculating the minimum debt service coverage
ratio, (ii) reduce the minimum debt service coverage ratio, (iii) reduce the
minimum required tangible net worth and (iv) increase the maximum debt to
tangible net worth requirement. 
Borrowings bear interest at the prime rate (4.00% at December 28, 2003)
plus 0.5%.  Borrowings under the
Agreement are collateralized by the Companys personal property.  On December 28, 2003 the Company had no
borrowings under the Agreement.  This
Agreement expires on June 3, 2004.

The
amended Agreement requires the Company to maintain (i) a minimum tangible net
worth, (ii) a minimum debt service coverage ratio and (iii) a maximum debt to
tangible net worth ratio.  The Agreement
also limits the Companys fixed asset acquisitions and requires approval before
paying dividends or repurchasing outstanding shares of stock.  In addition the Agreement requires the
outstanding principal balance of the loan to be zero for at least one period of
thirty consecutive days during the term of the loan.

Covenant
compliance is reported quarterly and the Company was in compliance with all
covenants under the amended Agreement at December 28, 2003.  Based on the Companys most current
financial projections the Company may be out of compliance with one or more of
these covenants by the end of the Companys first quarter 2004.  The Company believes it can obtain a waiver
or renegotiate these covenants with its bank. 
However, there can be no assurance that the Company will be able to
obtain a waiver or renegotiate its covenants.

On
December 28, 2003 the Company had a commitment from the bank, separate from the
Agreement, which makes $1,372,000 available to the Company in support of
outstanding letters of credit required under its workers compensation
program.  This commitment, which was
scheduled to expire February 28, 2004, was automatically extended for a
one-year period.

During
2003 the Company entered into equipment leases, which provided $904,000 in
financing under capital lease arrangements expiring in 2008.  These and other capital lease obligations at
December 28, 2003 totaled $2,892,000 of which $769,000 was included in current
portion of long-term debt.  Long-Term
Debt also included a $112,000 note for site construction costs of which $2,000
was included in the current portion of long-term obligations.

The
Companys other long term liabilities includes deferred rent of $2,361,000 and
$2,027,000 at December 28, 2003 and December 29, 2002, respectively.  The Companys deferred rent liability
consists of the net cumulative

25

---

---

rent expensed in excess of rent payments since inception
of these leases. In addition other long term liabilities includes $175,000 and
$193,000 of deferred income at December 28, 2003 and December 29, 2002,
respectively, from a gain on the 1993 sale and leaseback of a building and land
for one of the Companys restaurants. 
The Company is amortizing the gain over the 20-year initial term of the
lease. The remaining balance in other long term liabilities is the non-current
portion of certain employee benefit plans.

Net
cash provided by operating activities from continuing operations in 2003 was
$1.7 million and consisted of:

|Loss from continuing operations                                                                                                       |  | $ | (6,006 | )
|------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------ | -
|Adjustments to reconcile loss from continuing
  operations to net 
   cash provided by operating activities of continuing operations: |  |   |        |  
|Depreciation and amortization                                                                                                         |  |   | 3,776  |  
|Non-cash store closure and asset
  impairment expenses                                                                                |  |   | 3,700  |  
|Other                                                                                                                                 |  |   | 422    |  
|Change in operating assets and
  liabilities                                                                                          |  |   | (172   | )
|                                                                                                                                      |  |   |        |  
|Net cash provided by operating activities of
  continuing operations                                                                  |  | $ | 1,720  |  
|                                                                                                                                      |  |   |        |  

During
the same period, the Company invested $3.5 million in property and equipment,
which included $2.3 million for new restaurants including the equipment
acquired under capital leases.

The
Companys contractual obligations as of December 28, 2003 are as follows:



|(In
  thousands)                     |  |       |        
|------------------------------------ |  | ----- | -------
|                                     |  | Total |        
|                                     |  |       |        
|Capital Lease Obligations            |  | $     | 2,892  
|Secured Note                         |  |       | 1,923  
|Other Note Payable                   |  |       | 112    
|Operating Leases                     |  |       | 119,036
|Purchase Obligations                 |  |       | 511    
|                                     |  |       |        
|Total Contractual Cash
  Obligations |  | $     | 124,474
|                                     |  |       |        

The
Companys outstanding Series B non-voting convertible preferred stock is
currently held by one entity and is convertible, at the holders option, into
Series A voting convertible preferred stock on a one-for-one basis.  Although no Series A preferred stock is
currently outstanding, holders of Series A preferred stock, if any, would be
entitled to vote with common stockholders on all matters submitted to a vote of
stockholders.  When and if issued, the
holders of a majority of the outstanding Series A preferred stock will have a
separate right to approve certain corporate actions.

In
fiscal 1998, the Company failed to achieve a specified earnings target (before
interest, taxes, depreciation and amortization) of at least $5.5 million which
constituted an event of default of the terms of the preferred stock agreement
and which triggered the right of the Series A preferred stockholders to elect a
majority of the Companys Board of Directors. 
The holder of the Series B preferred stock has not initiated any action
to convert such shares into shares of Series A preferred stock nor has it
exercised its right to elect a majority of the Board of Directors.  In December 2003 such holder entered into a
letter agreement whereby
the holder of the Series B preferred stock agreed to not convert any of its
shares of Series B preferred stock into Series A preferred stock so long as the
holder owns the Series B preferred shares.

The
Companys continued growth depends to a significant degree on its ability to
open new restaurants and to operate such restaurants profitably.  The Company does not currently have plans to
open any new restaurants in 2004.  The
Companys ability to resume an expansion strategy will depend upon a variety of
factors, including its return to profitability and the Companys ability to
obtain funds.  See Business Risks
included herein.

The
Company intends to finance its operating cash requirements and fiscal 2004
capital requirements through existing cash balances, cash provided by
operations and its borrowing arrangements. 
However, the Companys

26

---

---

operating cash flow is impacted by the Companys
comparable store sales increases or decreases. 
In 2003 comparable store sales declined 1.1% and in 2002 comparable
store sales declined 2.5%.  The Company
expects comparable store sales to improve, but there can be no assurance that
comparable store sales will improve.  In
addition, the Company may seek additional financing to provide greater
flexibility.  There can be no assurance
that the Company will be able to obtain additional financing when needed on
acceptable terms or at all.  To the
extent operating cash flow declines, or financing cannot be obtained, the
Company intends to further curtail its capital spending plans in 2004 and
beyond.

INFLATION

Many
of the Companys employees are paid hourly rates related to the federal and
state minimum wage laws.  Accordingly,
increases in the minimum wage could materially increase the Companys labor
costs.  In addition, the cost of food
commodities utilized by the Company are subject to market supply and demand
pressures.  Shifts in these costs may
have a significant impact on the Companys food costs.  The Company anticipates that increases in
these costs may be offset through pricing and other cost control efforts; however,
there is no assurance that the Company would be able to pass such costs on to
its guests or that even if it were able to do so, it could do so in a short
period of time.

OFF
BALANCE SHEET ARRANGEMENTS

The
Company has no off balance sheet arrangements.

RECENTLY
ISSUED ACCOUNTING STANDARDS

In
June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities which addresses accounting for restructuring and
similar costs.  SFAS No. 146 supercedes
previous accounting guidance, principally EITF Issue No. 94-3.  The Company adopted the provisions of SFAS
No. 146 for restructuring activities initiated after December 29, 2002.  SFAS No. 146 requires that the liability for
costs associated with an exit or disposal activity be recognized when the
liability is incurred.  Under Issue 94-3,
a liability for an exit cost was recognized at the date of the Companys
commitment to an exit plan.  SFAS No.
146 also establishes that the liability should initially be measured and
recorded at fair value.  Accordingly,
SFAS No. 146 may affect the timing of recognizing future restructuring costs as
well as the amounts recognized.  The
adoption of SFAS No. 146 did not have a material impact on the Companys
consolidated financial statements.

In
November 2002, the FASBs Emerging Issues Task Force (EITF) discussed Issue
02-16 (EITF 02-16), Accounting by a Customer (including a Reseller) for Cash
Consideration Received from a Vendor. Issue 02-16 provides guidance on how a
customer should account for cash consideration received from a vendor. This
Issue is effective for new arrangements entered into after December 15, 2002.
The Company adopted the provisions of Issue 02-16 at the beginning of fiscal
year 2003 for all prospective agreements with effective dates after January 1,
2003 and the adoption did not have a material impact on the results of
operations or financial position as these type of agreements were previously
accounted for in a similar manner.

In
November 2002, the FASB issued FASB Interpretation No. 45 (FIN No. 45), Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, an interpretation of FASB Statements No.
5, 57, and 107 and Rescission of FASB Interpretation No. 34. FIN No. 45
elaborates on the disclosures to be made by a guarantor in its interim and
annual financial statements about its obligations under certain guarantees that
it has issued. It also requires that a guarantor recognize, at the inception of
a guarantee, a liability for the fair value of certain guarantees. The initial
recognition and initial measurement provisions of FIN No. 45 are applicable on
a prospective basis to guarantees issued or modified after December 31, 2002.
The disclosure requirements of FIN No. 45 are effective for interim or annual
periods ending after December 15, 2002. The Company adopted the disclosure
provisions of FIN No. 45 as of January 1, 2003, which did not have a material
effect on the financial statements.

In
January 2003, the FASB issued FASB Interpretation No. 46 (FIN No. 46),
Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.
FIN No. 46 requires existing unconsolidated variable interest entities


27

to be
consolidated by their primary beneficiaries if the entities do not effectively
disperse risks among parties involved. Variable interest entities that
effectively disperse risk will not be consolidated unless a single party holds
an interest or combination of interests that effectively recombines risks that
were previously dispersed. FIN No. 46 also requires enhanced disclosure
requirements related to variable interest entities. FIN No. 46 was revised in
December 2003 and is effective for the first financial reporting period ending
after March 15, 2004. Accordingly, FIN No. 46 is applicable to the Company for
the fiscal quarter ending March 21, 2004. The Company does
not believe that the adoption of this accounting pronouncement will have a
material impact on its financial statements.


In
May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity.  The provisions of SFAS No. 150 are effective
for financial instruments entered into or modified after May 31, 2003 and with
one exception, is effective at the beginning of the first interim period
beginning after June 15, 2003.  The
provisions of SFAS No. 150 have been delayed indefinitely, except for required
disclosures, for certain mandatorily redeemable noncontrolling interests, while
its measurement provisions have been delayed indefinitely for other mandatorily
redeemable noncontrolling interests prior to November 5, 2003.  The adoption of SFAS No. 150 did not have a
material effect on the Companys financial statements.
Item
  7a.
  QUANTITATIVE
  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThe
Company is exposed to interest rate risk primarily through its borrowing
activities.  The Company has not used
derivative financial instruments to hedge such risks.  There is inherent rollover risk for borrowings as they mature and
are renewed at current market rates. 
The extent of this risk is not quantifiable or predictable because of
the variability of future interest rates and business financing
requirements.  If market rates were to
increase immediately by 10 percent from levels at December 28, 2003, the fair
value of the Companys borrowings would not be materially affected as
borrowings are primarily subject to variable interest rates.
Item
  8.
  FINANCIAL
  STATEMENTS AND SUPPLEMENTARY DATA.The
Company adopted SFAS No. 146 and SFAS No. 148 for the fiscal year beginning
December 30, 2002 (fiscal year 2003). 
The Company also adopted SFAS No. 150 for the interim period beginning
June 16, 2003 and SFAS No. 149 for contracts entered into or modified after
September 30, 2003. The Companys financial statements as of December 28, 2003
and December 29, 2002 and for each of the three fiscal years in the period
ended December 28, 2003, and the Independent Auditors Report, are included in
the report as listed on Page 32 of this Report, Item 15(a).
Item
  9.
  CHANGES
  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.On
March 12, 2003, the Company engaged the services of Grant Thornton LLP (Grant
Thornton) as its new independent auditors for its fiscal year ended
December 28, 2003.  The Companys
Audit Committee of the Board authorized the engagement of Grant Thornton.  During the two most recent fiscal years of
the Company ended December 29, 2002 and December 30, 2001, the Company did
not consult with Grant Thornton regarding any of the matters or events set
forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.  Deloitte & Touche LLP (Deloitte) was
the Companys prior independent auditor. The audit reports of Deloitte on the
consolidated financial statements of the Company for the fiscal years ended
December 29, 2002 and December 30, 2001 did not contain an adverse opinion
or disclaimer of opinion, nor were they qualified as to
uncertainty, audit scope or accounting principles.  The audit report of Deloitte on
the consolidated financial statements of the Company at December 29, 2002 and for each of the
two fiscal years in the period ended December 29, 2002, includes an explanatory
paragraph regarding the Companys adoption of Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets, and No. 144, Accounting for the
Impairment of Long-Lived Assets. There were no disagreements between the Company and Deloitte on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to Deloittes satisfaction, would have caused Deloitte to make
reference to the subject matter of the disagreement in connection with its
reports for these years; and there were no reportable events described under
Item 304(a)(1)(v) of Regulation S-K for the years covered by these
reports.

28


Item 9a.
  CONTROLS AND PROCEDURESUnder
the supervision and with the participation of management, including the
principal executive and principal
financial officers, we evaluated the effectiveness of our disclosure controls
and procedures, as such term is defined under Rule 13a-15(e) promulgated under
the Securities Exchange Act of 1934, as amended. Based on this evaluation, our
principal executive officer and principal financial officer concluded that the
Companys disclosure controls and procedures were effective as of the end of
the period covered by this annual report. There were no changes in internal
control over financial reporting that would require additional disclosure under
Regulation S-K 308(c).
PART III
Certain
information required by Part III is omitted from this Report.  The Company plans to file its Proxy
Statement (the Proxy Statement) pursuant to Regulation 14A not later than 120
days after the end of the fiscal year covered by this Report, and certain
information included therein is incorporated herein by reference.
Item
  10.
  DIRECTORS
  AND EXECUTIVE OFFICERS OF THE REGISTRANTThere
is incorporated by reference the information relating to the directors of the
Company set forth under the caption Election of Directors in the Proxy
Statement.  Information relating to the
executive officers of the Company is set forth in Part I of this Report
under the caption Executive Officers of the Registrant.
Item
  11.
  EXECUTIVE
  COMPENSATIONThere
is incorporated by reference the information relating to executive compensation
set forth under the caption Executive Compensation and Other Matters in the
Proxy Statement.
Item 12.
  SECURITY OWNERSHIP OF CERTAIN
  BENEFICIAL OWNERS AND MANAGEMENTThere
is incorporated by reference the information relating to ownership of equity
securities of the Company by certain beneficial owners and management set forth
under the caption General Information -- Stock Ownership of Certain Beneficial
Owners and Management and the information relating to equity compensation
plans under the caption Equity Compensation Plan Information in the Proxy
Statement.

Item 13.
  CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONSThere
is incorporated by reference the information relating to certain relationships
and related transactions set forth under the caption Compensation Committee
Interlocks and Insider Participation in the Proxy Statement.


Item 14.
  PRINCIPLE ACCOUNTING FEES AND
  SERVICESThere
is incorporated by reference the information relating to independent auditor
fees and services and other information set forth under the caption Proposal
Two  Ratification of Appointment of Independent Accountants in the Proxy
Statement.
29


PART IV

Item
  15.
  EXHIBITS,
  FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-KThe
following documents are filed as part of this Report:

(a)1.   Financial
  Statements.Page Nos.Consolidated Balance Sheets at December 28, 2003
      and December 29, 2002
  F-1Consolidated Statements of Operations for the Fiscal
      Years Ended December 28, 2003, December 29, 2002
      and December 30, 2001
  F-2Consolidated Statements of Stockholders Equity for
  the
      Fiscal Years Ended December 28, 2003, December 29,
  2002
      and December 30, 2001
  F-3Consolidated Statements of Cash Flows for the Fiscal
  Years Ended
      December 28, 2003, December 29, 2002 and December 30,
  2001
  F-4Notes to the Consolidated Financial Statements
  F-5Independent Auditors Report
  F-20Independent Auditors Report
  F-212.   Financial Statement Schedules.  All schedules have been omitted because
  the information required to be set forth therein is not applicable or is
  shown in the consolidated financial statements or notes thereto.3.   Exhibits.  The Exhibits listed in the accompanying
  Exhibit Index are filed or incorporated by reference as part of this
  Report.  Exhibit Nos. 10.2, 10.3,
  10.26, 10.27, 10.28,10.34, 10.37, 10.43, 10.44, 10.45, 10.46, 10.47, 10.55,
  10.56, 10.60 and 10.66 are management contracts or compensatory plans covering
  executive officers and directors of Fresh Choice, Inc.(b)
  Reports
  on Form 8-K.  The
  registrant filed a report on Form 8-K on October 2, 2003 regarding a press
  release dated October 2, 2003 reporting the results for the third quarter
  ended September 7, 2003. No other reports on Form 8-K were filed in the
  fourth quarter of fiscal 2003.30

Fresh
Choice, Inc.CONSOLIDATED BALANCE SHEETS(In thousands, except per share and share
amounts)

December 28,
  2003
  
  December 29,
  2002ASSETSCURRENT ASSETS:Cash and cash
  equivalents
  
  $
  1,379
  
  $
  2,994Inventories
  
  
  473
  
  
  467Prepaid expenses and
  other current assets
  
  
  780
  
  
  524Total current assets
  
  
  2,632
  
  
  3,985PROPERTY AND EQUIPMENT, net
  
  
  27,497
  
  
  31,475DEPOSITS AND OTHER ASSETS
  
  
  725
  
  
  869TOTAL ASSETS
  
  $
  30,854
  
  $
  36,329LIABILITIES AND
  STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
  
  $
  1,948
  
  $
  2,825Other accrued expenses
  
  
  3,411
  
  
  2,331Accrued salaries and
  wages
  
  
  1,538
  
  
  1,582Sales tax payable
  
  
  551
  
  
  614Current portion of
  long-term obligations
  
  
  918
  
  
  737Total current
  liabilities
  
  
  8,366
  
  
  8,089CAPITAL LEASE OBLIGATIONS
  
  
  2,123
  
  
  2,132LONG-TERM DEBT
  
  
  1,886
  
  
  2,047DEFERRED RENT AND OTHER LONG-TERM LIABILITIES
  
  
  2,769
  
  
  2,429Total liabilities
  
  
  15,144
  
  
  14,697COMMITMENTS AND CONTINGENCIES (Notes 2, 6 and 9)STOCKHOLDERS EQUITY:Convertible preferred
  stock, $.001 par value; 3.5 million shares
            authorized;
  Series B shares outstanding: 2003 and 2002 -1,187,906;
            liquidation
  preference: 2003 - $8,826; 2002- $8,161
  
  
  5,175
  
  
  5,175Common stock, $.001
  par value; 15 million shares authorized;
            shares
  outstanding: 2003-6,170,190; 2002-5,964,068
  
  
  42,714
  
  
  42,630Accumulated deficit
  
  
  (32,179
  )
  
  (26,173
  )Total stockholders equity
  
  
  15,710
  
  
  21,632TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
  
  $
  30,854
  
  $
  36,329See accompanying notes to
consolidated financial statements

F-1

Fresh
Choice, Inc.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per  share amounts)

Fiscal
  Year EndedDecember 28,
  2003
  
  December 29,
  2002
  
  December 30,
  2001NET SALES
  
  
  $
  78,492
  
  
  
  $
  74,951
  
  
  
  $
  74,152COSTS AND EXPENSES:Cost
  of sales
  
  
  
  17,822
  
  
  
  
  16,730
  
  
  
  
  16,852Restaurant
  operating expenses:Labor
  
  
  
  27,058
  
  
  
  
  24,549
  
  
  
  
  23,478Occupancy
  and other
  
  
  
  26,207
  
  
  
  
  23,700
  
  
  
  
  22,354General
  and administrative expenses
  
  
  
  5,461
  
  
  
  
  5,769
  
  
  
  
  6,172Depreciation
  and amortization
  
  
  
  3,560
  
  
  
  
  3,345
  
  
  
  
  3,335Store
  closure and asset impairment expenses
  
  
  
  3,700
  
  
  
  
  1,751
  
  
  
  
  75Restaurant
  opening costs
  
  
  
  268
  
  
  
  
  438
  
  
  
  
  219Total
  costs and expenses
  
  
  
  84,076
  
  
  
  
  76,282
  
  
  
  
  72,486OPERATING INCOME (LOSS):
  
  
  
  (5,584
  )
  
  
  
  (1,331
  )
  
  
  
  1,666Interest
  income
  
  
  
  4
  
  
  
  
  48
  
  
  
  
  166Interest
  expense
  
  
  
  (438
  )
  
  
  
  (263
  )
  
  
  
  (386
  )Interest
  expense, net
  
  
  
  (434
  )
  
  
  
  (215
  )
  
  
  
  (220
  )INCOME (LOSS) FROM
  CONTINUING OPERATONS BEFORE INCOME TAXES
      AND EFFECT FROM DISCONTINUED OPERATIONS
  
  
  
  (6,018
  )
  
  
  
  (1,546
  )
  
  
  
  1,446Provision
  for (benefit from) income taxes
  
  
  
  (12
  )
  
  
  
  (12
  )
  
  
  
  49INCOME (LOSS) FROM
  CONTINUING OPERATIONS
  
  
  
  (6,006
  )
  
  
  
  (1,534
  )
  
  
  
  1,397LOSS FROM DISCONTINUED
  OPERATIONS, NET OF TAX
  
  
  
  -
  
  
  
  
  (185
  )
  
  
  
  (272
  )NET INCOME (LOSS)
  
  
  $
  (6,006
  )
  
  
  $
  (1,719
  )
  
  
  $
  1,125Basic net income (loss) per
  common share:Basic
  income (loss) from continuing operations
  
  
  $
  (1.00
  )
  
  
  $
  (0.26
  )
  
  
  $
  0.24Basic
  loss from discontinued operations
  
  
  
  -
  
  
  
  
  (0.03
  )
  
  
  
  (0.05
  )Basic net income (loss) per
  common share:
  
  
  $
  (1.00
  )
  
  
  $
  (0.29
  )
  
  
  $
  0.19Shares used in computing
  basic per share amounts
  
  
  
  5,982
  
  
  
  
  5,929
  
  
  
  
  5,860Diluted net income (loss)
  per common share:Diluted
  income (loss) from continuing operations
  
  
  $
  (1.00
  )
  
  
  $
  (0.26
  )
  
  
  $
  0.20Diluted
  loss from discontinued operations
  
  
  
  -
  
  
  
  
  (0.03
  )
  
  
  
  (0.04
  )Diluted net income (loss)
  per common share
  
  
  $
  (1.00
  )
  
  
  $
  (0.29
  )
  
  
  $
  0.16Shares used in computing
  diluted per share amounts
  
  
  
  5,982
  
  
  
  
  5,929
  
  
  
  
  7,133See
accompanying notes to consolidated financial statements
F-2


Fresh
Choice, Inc.CONSOLIDATED  STATEMENTS OF STOCKHOLDERS EQUITY  (Dollars in thousands)

Convertible
  Preferred Stock
  
  Common
  Stock
  
  Accumulated
  Deficit
  
  Total
  Stockholders
  EquityShares
  
  Amount
  
  Shares
  
  AmountBALANCES-January1, 2001
  
  
  1,187,906
  
  $
  5,175
  
  
  5,833,282
  
  $
  42,405
  
  $
  (25,579
  )
  $
  22,001Exercise of stock options
  
  
  -
  
  
  -
  
  
  6,458
  
  
  11
  
  
  -
  
  
  11Sales of common stock under
  employee
        stock purchase plan
  
  
  -
  
  
  -
  
  
  67,225
  
  
  101
  
  
  -
  
  
  101Issuance of stock options
        for consulting services
  
  
  -
  
  
  -
  
  
  -
  
  
  21
  
  
  -
  
  
  21Net income
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  1,125
  
  
  1,125BALANCES-December 30, 2001
  
  
  1,187,906
  
  
  5,175
  
  
  5,906,965
  
  
  42,538
  
  
  (24,454
  )
  
  23,259Exercise of stock options
  
  
  -
  
  
  -
  
  
  2,875
  
  
  5
  
  
  -
  
  
  5Sales of common stock under
  employee
        stock purchase plan
  
  
  -
  
  
  -
  
  
  54,228
  
  
  89
  
  
  -
  
  
  89Issuance of stock options
         for consulting services
  
  
  -
  
  
  -
  
  
  -
  
  
  (2
  )
  
  -
  
  
  (2
  )Net loss
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  (1,719
  )
  
  (1,719
  )BALANCES-December 29, 2002
  
  
  1,187,906
  
  
  5,175
  
  
  5,964,068
  
  
  42,630
  
  
  (26,173
  )
  
  21,632Exercise of stock options
  
  
  -
  
  
  -
  
  
  9,249
  
  
  16
  
  
  -
  
  
  16Sales of common stock under
  employee
        stock purchase plan
  
  
  -
  
  
  -
  
  
  43,873
  
  
  67
  
  
  -
  
  
  67Issuance of stock options 
        for consulting services
  
  
  -
  
  
  -
  
  
  -
  
  
  1
  
  
  -
  
  
  1Net loss
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  (6,006
  )
  
  (6,006
  )BALANCES-December 28, 2003
  
  
  1,187,906
  
  $
  5,175
  
  
  6,017,190
  
  $
  42,714
  
  $
  (32,179
  )
  $
  15,710See accompanying notes to consolidated
financial statements
F-3
Fresh
Choice, Inc.CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands)

Fiscal Year EndedDecember 28,
  2003
  
  December 29,
  2002
  
  December 30,
  2001OPERATING ACTIVITIES OF CONTINUING OPERATIONS:Income (loss) from continuing operations
  
  $
  (6,006
  )
  $
  (1,534
  )
  $
  1,397Adjustments to reconcile income (loss) from
  continuing operations to net
     cash provided by operating activities from continuing operations:Depreciation
  and amortization
  
  
  3,776
  
  
  3,546
  
  
  3,573Non-cash
  store closure and asset impairment expenses
  
  
  3,700
  
  
  1,751
  
  
  75Issuance
  of common stock for consulting services
  
  
  1
  
  
  (2
  )
  
  21Loss on
  disposal of property and equipment
  
  
  105
  
  
  177
  
  
  106Deferred
  rent
  
  
  316
  
  
  295
  
  
  247Change in
  operating assets and liabilities:Inventories
  
  
  (34
  )
  
  (76
  )
  
  52Prepaid
  expenses and other current assets
  
  
  (280
  )
  
  945
  
  
  23Accounts
  payable
  
  
  (877
  )
  
  391
  
  
  415Accrued
  salaries and wages
  
  
  (31
  )
  
  178
  
  
  204Other
  accrued expenses
  
  
  1,050
  
  
  505
  
  
  157Store
  closure reserve
  
  
  -
  
  
  (3
  )
  
  (351
  )Net cash
  provided by operating activities of continuing operations
  
  
  1,720
  
  
  6,173
  
  
  5,919INVESTING ACTIVITIES:Capital
  expenditures
  
  
  (3,502
  )
  
  (8,663
  )
  
  (5,120
  )Proceeds
  from sale of property and equipment
  
  
  4
  
  
  29
  
  
  2Deposits
  and other assets
  
  
  68
  
  
  (6
  )
  
  (186
  )Net cash
  used in investing activities
  
  
  (3,430
  )
  
  (8,640
  )
  
  (5,304
  )FINANCING ACTIVITIES:Common
  stock sales
  
  
  84
  
  
  94
  
  
  112Long-term
  debt - borrowings
  
  
  -
  
  
  -
  
  
  2,200Long-term
  debt - repayments
  
  
  (139
  )
  
  (118
  )
  
  (1,223
  )Capital
  lease obligations - borrowings
  
  
  904
  
  
  1,960
  
  
  434Capital
  lease obligations - repayments
  
  
  (754
  )
  
  (678
  )
  
  (592
  )Net cash
  provided by financing activities
  
  
  95
  
  
  1,258
  
  
  931CASH PROVIDED (USED) BY CONTINUING OPERATIONS
  
  
  (1,615
  )
  
  (1,209
  )
  
  1,546CASH USED BY DISCONTINUED OPERATIONS
  
  
  -
  
  
  (165
  )
  
  (96
  )INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
  
  
  (1,615
  )
  
  (1,374
  )
  
  1,450CASH AND CASH EQUIVALENTS:Beginning
  of year
  
  
  2,994
  
  
  4,368
  
  
  2,918End of
  year
  
  $
  1,379
  
  $
  2,994
  
  $
  4,368Supplemental Disclosure of Cash Flow Information:Cash paid
  during the year for interest
  
  $
  412
  
  $
  257
  
  $
  243Cash paid
  during the year for income taxes
  
  $
  53
  
  $
  15
  
  $
  59Noncash
  Investing and Financing Activities -   
  Equipment acquired under capital leases
  
  $
  -
  
  $
  528
  
  $
  -See accompanying notes to consolidated financial statements
F-4

Fresh
Choice,  Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFiscal Years ended December 28,
2003, December 29,  2002, and December 30, 2001

1.     Organization
and Significant Accounting Policies
Description
of business.  Fresh Choice, Inc.
(the Company) is incorporated in Delaware and operates in one segment
consisting of limited-service restaurants, under the names Fresh Choice, Fresh
Choice Express and Zoopa, featuring an extensive selection of healthy, high
quality freshly-made specialty and traditional salads, hot pasta, pizza, hot
baked potatoes, soups, fresh breads and muffins, frozen low-fat soft serve and
other desserts.  In addition the Company
operates one licensed Starbucks retail store. 
The Company operated 57 restaurants at December 28, 2003 including one
Fresh Choice Express restaurant, two dual branded Fresh Choice Express and
licensed Starbucks retail stores and one licensed Starbucks retail store, 53
restaurants at December 29, 2002 including one Fresh Choice Express restaurant
and two dual branded Fresh Choice Express and licensed Starbucks retail stores
and one licensed Starbucks store and 51 restaurants at December 30, 2001
including three Fresh Choice Express restaurants and one dual branded Fresh
Choice Express and licensed Starbucks retail store.
Basis
of presentation.  The consolidated
financial statements include the accounts of the Company and Moffett Design
Corporation, a wholly-owned subsidiary, after elimination of intercompany
transactions and balances.  The
Companys fiscal year ends on the last Sunday in December.  Fiscal years 2003, 2002 and 2001 each
contained 52 weeks.  As a result of the
adoption of Financial Accounting Standard (SFAS) No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets for fiscal year 2002, the Company
has classified the revenues and expenses of one restaurant which was closed
during 2002 as discontinued operations in the accompanying consolidated
financial statements.
Estimates.  The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect
reported amounts of assets, liabilities, revenues and expenses as of the dates
and for the periods presented.  Such
management estimates include the asset impairment expenses, the store closure
reserve, the valuation allowance for deferred income taxes, estimated useful
lives of property and equipment, accrual for claims outstanding under the
Companys workers compensation policy and certain other accrued expenses.  Actual results could differ from those
estimates.
Cash
and cash equivalents.  The Company
considers all highly liquid debt instruments with a maturity of three months or
less, when purchased, to be cash equivalents.
Fair
value of financial instruments.  The
Company believes that the carrying amount for cash and cash equivalents,
accounts payable and long-term debt borrowings approximated fair values at
December 28, 2003.
Concentrations
and Risks.  Financial instruments
which potentially subject the Company to concentration risk principally consist
of cash and cash equivalents.  The
Company places its cash and cash equivalents with what it believes are high
credit quality financial institutions, which are subject to the FDIC rules. 
As of December 28, 2003, the Company had $1.4 million on deposit with
one institution that was above the insured limits.
The
Company has geographic concentration risk as 43 of the Companys 57 restaurants
are located in California, primarily in Northern California.  Accordingly, the Company is susceptible to
fluctuations in its business caused by adverse economic conditions in this
region.
The
Company intends to finance its operating cash requirements and fiscal 2004
capital requirements through existing cash balances, cash provided by
operations and its borrowing arrangements. 
However, the Companys operating cash flow is impacted by the Companys
comparable store sales increases or decreases. 
In 2003 comparable store sales declined 1.1% and in 2002 comparable
store sales declined 2.5%.  The Company
expects comparable store sales to improve, but there can be no assurance that
comparable store sales will improve.  In
addition, the Company may seek additional financing to provide greater
flexibility.  There can be no assurance
that the Company will be able to obtain additional financing when needed on
acceptable terms or at all.  To the
extent operating cash flow declines, or financing cannot be obtained, the Company
intends to further curtail its capital spending plans in 2004 and beyond.



F-5
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001


Inventories.  Inventories consist principally of food and
supplies stated at the lower of cost (first in, first out) or market.
Restaurant
opening costs.  Restaurant opening
costs consist of the direct costs associated with opening a new restaurant
including the costs of hiring and training the initial workforce.  These costs are expensed as incurred.
Property
and equipment.  Property and
equipment are stated at cost. 
Depreciation and amortization are computed using the straight-line
method over the estimated useful lives of the assets which range from 5 to 30
years or the lease term of a restaurant including option periods, as appropriate,
not to exceed 25 years.  Construction in
progress is not being depreciated.
Long-lived
assets impairment.  The Company
reviews its long-lived assets related to each restaurant annually for
impairment, or whenever events or changes in circumstances indicate that the
carrying amount of a restaurant may not be recoverable.  The Company considers a history of operating
losses to be its primary indicator of potential impairment, therefore new
restaurants are generally not identified for impairment until a sufficient
operating history has been developed. 
Assets are grouped and evaluated for impairment at the lowest level for
which there are identifiable cash flows, the individual restaurants.  If the long-lived assets of a restaurant are
not recoverable based upon forecasted undiscounted cash flows, the Company
writes down an impaired restaurant to its estimated fair value, which becomes
its new cost basis.  The Company
considers a restaurants projected future cash flow and estimated sales values
of a restaurants long-lived assets in determining fair values.  Considerable management judgment is
necessary to estimate projected future operating cash flows.  Accordingly, if actual results vary from
such estimates, significant future impairment could result.

Lease
acquisition costs.  Lease
acquisition costs are amortized using the straight-line method over the
remaining term of the acquired lease including option periods, as appropriate,
not to exceed 25 years.
Deferred
rent.  The Company computes rent
expense on a straight-line basis for operating leases that contain provisions
for scheduled rent increases over the lease term.  The Companys deferred rent liability consists of the net
cumulative rent expensed in excess of rent payments since inception of these
leases.
Income
taxes.  Deferred tax assets and liabilities
are recognized to reflect the estimated future tax effects, calculated at
currently effective tax rates, of differences between the carrying amounts of
assets and liabilities for financial reporting and income tax purposes.  A valuation allowance related to a deferred
tax asset is recorded until it is deemed more likely than not that the deferred
tax asset will be realized.
Net
income (loss) per common share. 
Basic net income (loss) per common share is computed by dividing net income
by the weighted average of common shares outstanding for the year.  Diluted net income (loss) per common share
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common
stock.  The Company converts common
stock options and warrants into dilutive potential shares using the treasury
stock method and converts preferred stock into dilutive potential shares using
the if converted method.
Stock-based
compensation.  The Company accounts
for stock-based awards to employees using the intrinsic value method in
accordance with Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees.  The
Company accounts for stock-based awards to non employees in accordance with
Statement of Financial Accounting Standards (SFAS) No. 123 Accounting for
Stock-Based Compensation and Emerging Issues Task Force (EITF) Issue No.
96-18 Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

F-6
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001


The
following table illustrates the effect on net income and net income (loss) per
common share if the Company had applied fair value recognition provisions of
SFAS No. 123 to stock based employee compensation.

(In
  thousands, except per share data)
  
  December 28,2003
  
  December 29,2002
  
  December 30,2001Net
  income (loss)
  
  
  $
  (6,006
  )
  
  
  $
  (1,719
  )
  
  
  $
  1,125Deduct:
  Total stock-based employee
      compensation expense determined under
      fair value based method for all awards,
      net of related tax effects
  
  
  
  (210
  )
  
  
  
  (337
  )
  
  
  
  (388
  )Pro
  forma net income (loss)
  
  
  $
  (6,216
  )
  
  
  $
  (2,056
  )
  
  
  $
  737Net
  income (loss) per common share:Basic-as reported
  
  
  $
  (1.00
  )
  
  
  $
  (0.29
  )
  
  
  $
  0.19Basic-pro forma
  
  
  $
  (1.04
  )
  
  
  $
  (0.35
  )
  
  
  $
  0.13Diluted-as reported
  
  
  $
  (1.00
  )
  
  
  $
  (0.29
  )
  
  
  $
  0.16Diluted-pro forma
  
  
  $
  (1.04
  )
  
  
  $
  (0.35
  )
  
  
  $
  0.10Reclassifications.  Certain amounts for the fiscal year ended
December 30, 2001 have been reclassified to conform to the December 28, 2003
and the December 29, 2002 presentations.
Recently
Issued Accounting Standards.          In June 2002, the FASB issued SFAS No.
146, Accounting for Costs Associated with Exit or Disposal Activities which
addresses accounting for restructuring and similar costs.  SFAS No. 146 supercedes previous accounting
guidance, principally EITF Issue No. 94-3. 
The Company adopted the provisions of SFAS No. 146 for restructuring
activities initiated after December 29, 2002. 
SFAS No. 146 requires that the liability for costs associated with an
exit or disposal activity be recognized when the liability is incurred.  Under Issue 94-3, a liability for an exit
cost was recognized at the date of the Companys commitment to an exit
plan.  SFAS No. 146 also establishes
that the liability should initially be measured and recorded at fair
value.  Accordingly, SFAS No. 146 may
affect the timing of recognizing future store closure costs as well as the
amounts recognized.  The adoption of
SFAS No. 146 did not have a material impact on the Companys consolidated
financial statements.
In
November 2002, the FASBs Emerging Issues Task Force (EITF) discussed Issue
02-16 (EITF 02-16), Accounting by a Customer (including a Reseller) for Cash
Consideration Received from a Vendor. Issue 02-16 provides guidance on how a
customer should account for cash consideration received from a vendor. This
Issue is effective for new arrangements entered into after December 15, 2002.
The Company adopted the provisions of Issue 02-16 at the beginning of fiscal
year 2003 for all prospective agreements with effective dates after January 1,
2003 and the adoption did not have a material impact on the results of
operations or financial position as these type of agreements were previously
accounted for in a similar manner.
In November 2002, the
FASB issued FASB Interpretation No. 45 (FIN No. 45), Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107
and Rescission of FASB Interpretation No. 34. FIN No. 45 elaborates on the disclosures to be made by
a guarantor in its interim and annual financial statements about its
obligations under certain guarantees that it has issued. It also requires that
a guarantor recognize, at the inception of a guarantee, a liability for the
fair value of certain guarantees. The initial recognition and initial
measurement provisions of FIN No. 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements of FIN No. 45 are effective for interim or annual periods ending
after December 15, 2002. The Company adopted the disclosure provisions of FIN
No. 45 as of January 1, 2003, which did not have a material effect on the
financial statements.


F-7
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
In
January 2003, the FASB issued FASB Interpretation No. 46 (FIN No. 46), Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51. FIN No. 46
requires existing unconsolidated variable interest entities to be consolidated
by their primary beneficiaries if the entities do not effectively disperse
risks among parties involved. Variable interest entities that effectively
disperse risk will not be consolidated unless a single party holds an interest
or combination of interests that effectively recombines risks that were
previously dispersed. FIN No. 46 also requires enhanced disclosure requirements
related to variable interest entities. FIN No. 46 was revised in December 2003 and is
effective for the first financial reporting period ending after March 15, 2004. Accordingly,
FIN No. 46 is applicable to the Company for the fiscal quarter ending March 21, 2004. The Company does not believe
that the adoption of this accounting pronouncement will have a material impact
on its financial statements.
In
May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity.  The provisions of SFAS No. 150 are effective
for financial instruments entered into or modified after May 31, 2003 and with
one exception, is effective at the beginning of the first interim period
beginning after June 15, 2003.  The
provisions of SFAS No. 150 have been delayed indefinitely, except for required
disclosures, for certain mandatorily redeemable noncontrolling interests, while
its measurement provisions have been delayed indefinitely for other mandatorily
redeemable noncontrolling interests prior to November 5, 2003.  The adoption of SFAS No. 150 did not have a
material effect on the Companys financial statements.
2.  Store Closure and Asset Impairment
2001
Store Closure Reserve.  In 2001, the
Company recorded a store closure and asset impairment charge of $75,000 for the
planned closure of one restaurant whose lease expires in 2002 and the planned
conversion of one Fresh Choice Express to a licensed Starbucks retail
store.  This charge is comprised of a
$68,000 non-cash charge for the write down of assets to fair value and a $7,000
charge to cover the estimated closure costs associated with the planned
restaurant closure.  The impairment
charge for this restaurant was deemed appropriate based on the expected cash
flows over the remaining lease terms, as compared to the net book value of the
restaurants assets.

2002
Asset Impairment. In 2002, the
Company reversed $4,000 of the 2001 estimated closure costs and recorded a
non-cash impairment charge of $1,755,000 for the write-down of assets to fair
value for four restaurants.  The
impairment charge for these restaurants was determined based on the expected
cash flows over the remaining lease terms, as compared to the net book value of
the restaurant assets.
2003
Asset Impairment.  In 2003, the
Company recorded a non-cash impairment charge of $3,700,000 for the write-down
of assets to fair value, primarily for four newer restaurants and one
additional restaurant.  An impairment
charge for these restaurants was deemed appropriate based on the expected cash
flows over the remaining lease terms, as compared to the fair value of the
restaurant assets.


F-8
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
The
following table sets forth the Companys store closure reserve and asset
impairment charge as of and for the years ended December 28, 2003, December 29,
2002 and December 30, 2001:

(In
  thousands)
  
  Balance
  2000
  
  Provided(Reversed)
  in 2001
  
  Utilized
  in 2001
  
  Balance
  2001
  
  Provided(Reversed)
  in 2002
  
  Utilized
  in 2002
  
  Balance
  2002
  
  Provided
  in 2003
  
  Utilized
  in 2003
  
  Balance
  20032000 Reserve:Restaurant closures:Estimated cash costs
  associated withrestaurant closures and settlement oflease obligations
  
  $
  (364
  )
  $
  -
  
  $
  (364
  )
  $
  -
  
  $
  -
  
  $
  -
  
  $
  -
  
  $
  -
  
  $
  -
  
  $
  -2000 Reserve
  
  
  (364
  )
  
  -
  
  
  (364
  )
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -2001 Reserve:Restaurant closures:Estimated cash costs
  associated withrestaurant closures
  
  
  -
  
  
  7
  
  
  -
  
  
  7
  
  
  (4
  )
  
  (3
  )
  
  -
  
  
  -
  
  
  -
  
  
  -Impaired restaurants:Non-cash write-down of
  assets to
  estimated fair value and other relatedcosts
  
  
  -
  
  
  68
  
  
  (68
  )
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -2001 Reserve
  
  
  -
  
  
  75
  
  
  (68
  )
  
  7
  
  
  (4
  )
  
  (3
  )
  
  -
  
  
  -
  
  
  -
  
  
  -2002 Reserve:Impaired restaurants:Non-cash write-down of assets to
  estimated fair value and other relatedcosts
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  1,755
  
  
  (1,755
  )
  
  -
  
  
  -
  
  
  -
  
  
  -2002 Reserve
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  1,755
  
  
  (1,755
  )
  
  -
  
  
  -
  
  
  -
  
  
  -2003 Reserve:Impaired restaurants:Non-cash write-down of
  assets to
  estimated fair value and other relatedcosts
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  3,700
  
  
  (3,700
  )
  
  -2003 Reserve
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  -
  
  
  3,700
  
  
  (3,700
  )
  
  -Totals
  
  $
  364
  
  $
  75
  
  $
  (432
  )
  $
  7
  
  $
  1,751
  
  $
  (1,758
  )
  $
  -
  
  $
  3,700
  
  $
  (3,700
  )
  $
  -The
following table presents the results of operations for two restaurants closed
in 2002, whose results were included in continuing operations in 2002 and 2001;
no restaurants were closed in 2003 or 2001:

(In
  thousands)
  
  2002
  
  2001Net sales
  
  $
  1,298
  
  $
  3,182Cost of sales
  
  
  298
  
  
  719Restaurant operating
  expenses:Labor
  
  
  475
  
  
  1,028Occupancy and other
  
  
  478
  
  
  1,014Depreciation and
  amortization
  
  
  57
  
  
  209Total costs and expenses
  
  
  1,308
  
  
  2,970Operating income (loss)
  
  $
  (10
  )
  $
  212F-9
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
3. Discontinued Operations
As
discussed in Note 1  Basis of Presentation, discontinued operations includes
the revenue and expenses of one restaurant that was closed during 2002 when its
lease term expired.  This restaurant was
located in an isolated market and is not being replaced.  The consolidated financial statements
present this restaurants operations as discontinued operations for 2002 and
2001.  Operating results for this restaurant
are summarized as follows:

(In
  thousands)
  
  2002
  
  2001Net sales
  
  $
  849
  
  $
  1,056Cost of sales
  
  
  202
  
  
  249Restaurant operating
  expenses:Labor
  
  
  334
  
  
  376Occupancy and other
  
  
  473
  
  
  513Depreciation and amortization
  
  
  33
  
  
  84Store closure and asset
  impairment expenses
  
  
  (8
  )
  
  106Total costs and expenses
  
  
  1,034
  
  
  1,328Operating loss
  
  $
  (185
  )
  $
  (272
  )4. 
Property and Equipment
Property
and equipment consists of:

(In
  thousands)
  
  December 28,
  2003
  
  December 29,
  2002Buildings and improvements
  
  
  $
  8,074
  
  
  
  $
  6,856Leasehold improvements
  
  
  
  18,602
  
  
  
  
  20,065Equipment
  
  
  
  11,610
  
  
  
  
  10,199Furniture and fixtures
  
  
  
  10,402
  
  
  
  
  9,830Equipment under capital
  leases
  
  
  
  5,235
  
  
  
  
  5,219Total depreciable property
  and equipment
  
  
  
  53,923
  
  
  
  
  52,169Accumulated depreciation
  and amortization
  
  
  
  (28,395
  )
  
  
  
  (25,133
  )Total depreciable property
  and equipment,net
  
  
  
  25,528
  
  
  
  
  27,036Land
  
  
  
  1,795
  
  
  
  
  1,795Construction in Progress
  
  
  
  174
  
  
  
  
  2,644Property and equipment, net
  
  
  $
  27,497
  
  
  
  $
  31,475Accumulated amortization of equipment leased under
capital leases was $2,198,000 and $1,673,000 at December 28, 2003 and December
29, 2002, respectively.

F-10
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
5. Other
Accrued Expenses
The
components of other accrued expenses are as follows:

(In
  thousands)
  
  December 28,
  2003
  
  December 29,
  2002Accrued workers compensation
  
  
  $
  836
  
  
  
  $
  516Unredeemed gift certificates
  
  
  
  645
  
  
  
  
  572Deferred vendor allowances
  
  
  
  483
  
  
  
  
  15Accrued utilities
  
  
  
  400
  
  
  
  
  300Accrued advertising
  
  
  
  245
  
  
  
  
  230Accrued property taxes
  
  
  
  189
  
  
  
  
  196Accrued insurance
  
  
  
  156
  
  
  
  
  43Accrued professional fees
  
  
  
  108
  
  
  
  
  154Other
  
  
  
  349
  
  
  
  
  305$
  3,411
  
  
  
  $
  2,331Workers
Compensation Claims Accrual.  The Company records estimates for workers
compensation claims under its workers compensation program.  The Company evaluates the adequacy of these
accruals by evaluating information periodically provided by its insurance
carrier regarding the Companys historical experience and trends relating to insurance
claims and payments and general industry experience regarding the expectation of
future trends in claims development. If such information indicates that the
accruals are overstated or understated, the Company will reduce or provide
additional accruals as appropriate. If a greater number of claims occur in
comparison to the amount of claims estimated or medical costs increase beyond
anticipated costs, additional charges may be required in the period such
determination was made.
6.  Borrowing Arrangements
Loan
and Security Agreement.  During 2001, the Company closed on a
$2,200,000 loan (the Loan), with a commercial bank.  Under the terms of the Loan, the Company issued a promissory note
(the Note) in the amount of $2,200,000. 
The Note is secured by a deed of trust on certain Company-owned real
estate.  The Note bears interest at the
prime rate (4.00% at December 28, 2003) plus 0.625%.  The Note has a fifteen year amortization period and matures after
84 monthly payments of principal and interest. 
All unpaid principal and interest shall be due and payable on the Notes
maturity date of September 2, 2008.
The
Company had $1,923,000 and $2,061,000 of debt outstanding under the Loan
described above at December 28, 2003 and December 29, 2002 respectively.  At December 28, 2003 $1,776,000 was included
in long-term debt and $147,000 was included in the current portion of long-term
obligations.  At December 29, 2002,
$1,935,000 was included in long-term debt and $126,000 was included in the
current portion of long-term obligations. 
The Deed of Trust requires the Company to maintain a minimum debt
service coverage ratio and to maintain a minimum tangible net worth.
Line
of Credit.  On June 3, 2002 the
Company renegotiated its $2,000,000 revolving line of credit (the  Agreement) with its bank, which extended
the Agreements expiration date to June 3, 2004.  Borrowings bear interest at the prime rate (4.00% at December 28,
2003) plus 0.5%.  Borrowings under the
Agreement are collateralized by the Companys personal property.  On December 28, 2003 the Company had no
borrowings under the Agreement.
The
Agreement requires the Company to maintain (i) a minimum tangible net worth,
(ii) a minimum debt service coverage ratio and (iii) a maximum debt to tangible
net worth ratio.  The Agreement also
limits the Companys fixed asset acquisitions and requires approval before
paying dividends or repurchasing outstanding shares of stock.  In addition the Agreement requires the
outstanding principal balance of the loan to be zero for at least one period of
thirty consecutive days during the term of the loan.

F-11
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
Covenant
compliance is reported quarterly and the Company was in compliance with all
covenants under the amended Agreement at December 28, 2003.  Based on the Companys most current
financial projections the Company may be out of compliance with one or more of
these covenants by the end of the Companys first quarter 2004.  The Company believes it can obtain a waiver
or renegotiate these covenants with its bank.  However, there can be no assurance that the
Company will be able to obtain a waiver or renegotiate its covenants.
On
December 28, 2003 the Company had a commitment from the bank, separate from the
Agreement, which makes $1,372,000 available to the Company in support of
outstanding letters of credit required under its workers compensation
program.  This commitment, which was
scheduled to expire February 28, 2004, was automatically extended for a one
year period.
Other
Note Payable.  At December 28, 2003,
the Company had a $112,000 promissory note included in long-term debt of which
$2,000 was included in the current portion of long-term obligations.  The promissory note is payable through 2029,
bears interest at 8% and is secured by property at one of the Companys
restaurants.  Payments are due
approximately $2,000 per calendar year through 2006 with the balance due
thereafter.
The Companys debt payments for 2003 and
subsequent years are summarized as follows:

(In
  thousands)Total
  
  2004
  
  2005
  
  2006
  
  2007
  
  2008
  
  ThereafterCapital Lease Obligations
  
  $
  2,892
  
  $
  769
  
  $
  846
  
  $
  764
  
  $
  478
  
  $
  35
  
  
  $
  -Secured Note
  
  
  1,923
  
  
  147
  
  
  155
  
  
  162
  
  
  170
  
  
  1,289
  
  
  
  -Other Note Payable
  
  
  112
  
  
  2
  
  
  1
  
  
  2
  
  
  2
  
  
  2
  
  
  
  103Total Debt Payments
  
  $
  4,927
  
  $
  918
  
  $
  1,002
  
  $
  928
  
  $
  650
  
  $
  1,326
  
  
  $
  1037. 
Common Stock
Stock
Option Plan.  The Company has
reserved 1,500,000 shares for issuance to employees, management, directors and
consultants under an incentive stock option plan and a non-qualified stock
option plan (the Plan).  Under the
Plan, the Company may grant options at prices not less than the fair market
value of the Companys common stock at the grant date.  Options generally have a ten-year term and
vest over a four or five-year period commencing one year after grant.
During
1997, the Company granted non-qualified options to purchase 120,000 common
shares, having terms similar to options granted under the Plan, to an executive
officer of the Company to purchase shares of common stock at $4.375 per
share.  These non-qualified options were
outstanding as of December 30, 2001, December 29, 2002 and December 28, 2003
and are reflected in the summary of stock option activity below.
F-12
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
A summary of stock option activity follows:

Number of
  Shares
  
  Weighted
  Average
  Exercise PriceOutstanding - January 1,
  2001
      (421,498 exercisable at a weighted average price of
  $4.59)
  
  
  996,901
  
  
  $
  3.55Options granted (weighted
  average fair value of $2.00)
  
  
  127,000
  
  
  $
  2.87Options cancelled
  
  
  (32,011
  )
  
  $
  2.36Options exercised
  
  
  (6,458
  )
  
  $
  1.74Outstanding - December 30,
  2001
      (606,193 exercisable at a weighted average price of
  $4.11)
  
  
  1,085,432
  
  
  $
  3.52Options granted (weighted
  average fair value of $1.53)
  
  
  220,500
  
  
  $
  2.36Options cancelled
  
  
  (50,651
  )
  
  $
  2.95Options exercised
  
  
  (2,875
  )
  
  $
  1.75Outstanding - December 29,
  2002
      (831,516 exercisable at a weighted average price of
  $3.80)
  
  
  1,252,406
  
  
  $
  3.34Options granted (weighted
  average fair value of $1.92)
  
  
  40,240
  
  
  $
  1.92Options cancelled
  
  
  (112,128
  )
  
  $
  4.57Options exercised
  
  
  (9,249
  )
  
  $
  1.75Outstanding - December 28,
  2003
  
  
  1,171,269
  
  
  $
  3.19Additional information regarding options outstanding
as of December 28, 2003 is as follows:

Options Outstanding
  
  Options ExercisableRange of
  Exercise Prices
  
  Number
  Outstanding
  
  Weighted
  Average
  Contractual
  Life in Years
  
  Weighted
  Average
  Exercise
  Price
  
  Number
  Excercisable
  
  Weighted
  Average
  Exercise
  Price$1.39 -
  $   1.75
  
  
  199,848
  
  
  
  6.3
  
  
  
  $
  1.71
  
  
  
  166,823
  
  
  
  $
  1.721.78
  -      2.55
  
  
  248,990
  
  
  
  7.8
  
  
  
  
  2.32
  
  
  
  118,789
  
  
  
  
  2.352.63 -      2.90
  
  
  269,750
  
  
  
  6.8
  
  
  
  
  2.83
  
  
  
  198,748
  
  
  
  
  2.823.00
  -      4.25
  
  
  149,320
  
  
  
  4.1
  
  
  
  
  3.49
  
  
  
  148,298
  
  
  
  
  3.504.38
  -      4.38
  
  
  220,000
  
  
  
  3.1
  
  
  
  
  4.38
  
  
  
  220,000
  
  
  
  
  4.384.63
  -    23.38
  
  
  83,361
  
  
  
  2.1
  
  
  
  
  6.80
  
  
  
  83,361
  
  
  
  
  6.80$1.39 -
  $ 26.13
  
  
  1,171,269
  
  
  
  5.6
  
  
  
  $
  3.19
  
  
  
  936,019
  
  
  
  $
  3.39At December 28, 2003, 218,242 shares were available
for future grants under the Plan.

During
1998, the Company granted options to purchase 50,000 shares of common stock
under the Plan at an exercise price of $3.375 pursuant to the terms of a
consulting agreement with the Chairman of the Companys Board of
Directors.  The options vest over five
years, and the Company measures expense quarterly based on the then current
fair value of the options.  In 2003,
2002 and 2001, the Company recorded $1,000, ($2,000) and $21,000 in consulting
expense (recovery) related to these options.

F-13
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
Stock
Purchase Plans.  The Company has two
Employee Stock Purchase Plans, the Old Plan and the New Plan.  Under both the Old and New Plan, eligible
employees may authorize payroll deductions of up to 10% of their base
compensation, as defined, to purchase up to 329,600 and 290,000 shares of
common stock under the Old and New Plan, respectively, at a price equal to 85%
of the lower of the fair market value as of the beginning or end of each
six-month offering period.  Shares of
common stock issued under the Old Plan were 14,658 and 67,225 shares in 2002
and 2001 at weighted average prices of 
$1.52 and $1.51 per share, respectively.  Shares of common stock issued under the New Plan were 43,873 and
39,570 in 2003 and 2002 at weighted average prices of $1.40 and $1.70,
respectively. No shares were available for issuance under the Old Plan after
2002.  As of December 28, 2003, there
were 206,557 shares available under the New Plan.
Accounting
for Stock-Based Compensation.  As
discussed in Note 1, the Company accounts for its stock-based awards to
employees using the intrinsic value method in accordance with APB Opinion No.
25, Accounting for Stock Issued to Employees and its related
interpretations.  Accordingly, no
compensation expense has been recognized in the financial statements for
employee stock arrangements.
Under
SFAS No. 123 Accounting for Stock-Based Compensation, the fair value of
stock-based awards to employees is calculated through the use of option pricing
models.  Such models were developed to
estimate the fair value of freely tradable, fully transferable options without
vesting restrictions which differs significantly from stock option awards.  These models also require subjective
assumptions, including future stock price volatility and expected time to
exercise, which greatly affect the calculated values.  The Companys calculations were made using the Black-Scholes
option pricing model with the following assumptions:  expected life, twenty four months following vesting for officers
and directors and twelve months following vesting for all other employees;
stock volatility, 93.3% in 2003, 94.0% in 2002 and 94.0% in 2001; risk free
interest rate, 3.0% in 2003, 3.8% in 2002 and 5.2% in 2001; and no dividends
during the expected term.  The Companys
calculations are based on a multiple option valuation approach and forfeitures
are recognized as they occur.  The fair
value of the employee purchase rights under the Employee Stock Purchase Plan
was estimated using the same model, but with the following weighted average
assumptions:  expected option life, six
months, stock volatility, 58.8% in 2003, 90.0% in 2002 and 100.0% in 2001;
risk-free rates, 1.2% in 2003, 1.8% in 2002 and 1.8% in 2001; and no dividends
during the expected term.  The effect on
net income (loss) and net income (loss) per common share if the Company had
applied the fair value provisions of SFAS 123, to stock based compensation is
discussed in Note 1.

Other
Stock Transactions.  At December 28,
2003, the Company had an outstanding warrant, issued in 1995 to outside
consultants in connection with the Companys restructuring plan, to purchase
100,000 shares of its common stock at an exercise price of $6.875.  The warrant expires in 2005.


F-14
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
Basic
and Diluted Net Income (Loss) Per Common Share.  A reconciliation of the components of basic and diluted net
income (loss) per common share follows:

(In
  thousands, except per share data)
  
  December 28,
  2003
  
  December 29,
  2002
  
  December 30,
  2001Basic Net Income (Loss) Per
  Common ShareIncome (loss) from
  continuing operations
  
  
  $
  (6,006
  )
  
  
  $
  (1,534
  )
  
  
  $
  1,397Loss from discontinued
  operations
  
  
  
  -
  
  
  
  
  (185
  )
  
  
  
  (272
  )Net Income (Loss)
  
  
  $
  (6,006
  )
  
  
  $
  (1,719
  )
  
  
  $
  1,125Average common shares
  outstanding
  
  
  
  5,982
  
  
  
  
  5,929
  
  
  
  
  5,860Basic income (loss) per
  share from continuing operations
  
  
  $
  (1.00
  )
  
  
  $
  (0.26
  )
  
  
  $
  0.24Basic loss per share from
  discontinued operations
  
  
  
  -
  
  
  
  
  (0.03
  )
  
  
  
  (0.05
  )Basic net income (loss) per
  common share
  
  
  $
  (1.00
  )
  
  
  $
  (0.29
  )
  
  
  $
  0.19Diluted Net Income (Loss)
  Per Common ShareIncome (loss) from
  continuing operations
  
  
  $
  (6,006
  )
  
  
  $
  (1,534
  )
  
  
  $
  1,397Loss from discontinued
  operations
  
  
  
  -
  
  
  
  
  (185
  )
  
  
  
  (272
  )Net Income (Loss)
  
  
  $
  (6,006
  )
  
  
  $
  (1,719
  )
  
  
  $
  1,125Average common shares
  outstanding
  
  
  
  5,982
  
  
  
  
  5,929
  
  
  
  
  5,860Dilutive shares:Stock options
  
  
  
  -
  
  
  
  
  -
  
  
  
  
  86Convertible preferred stock
  
  
  
  -
  
  
  
  
  -
  
  
  
  
  1,187Total shares and dilutive
  shares
  
  
  
  5,982
  
  
  
  
  5,929
  
  
  
  
  7,133Diluted income (loss) per
  share from continuing operations
  
  
  $
  (1.00
  )
  
  
  $
  (0.26
  )
  
  
  $
  0.20Diluted loss per share from
  discontinued operations
  
  
  
  -
  
  
  
  
  (0.03
  )
  
  
  
  (0.04
  )Diluted net income (loss)
  per common share
  
  
  $
  (1.00
  )
  
  
  $
  (0.29
  )
  
  
  $
  0.16The
Company excluded certain potentially dilutive securities each year from its
dilutive net income (loss) per common share computation because either the
exercise price of the securities exceeded that average fair values of the
Companys common stock or the Company had a net loss and therefore, these
securities were anti-dilutive.

A
summary of the excluded potential dilutive securities as of the end of each
fiscal year follows:

(In
  thousands)
  
  December 28,
  2003
  
  December 29,
  2002
  
  December 30,
  2001Stock Options
  
  
  947
  
  
  
  1,028
  
  
  
  785Stock Warrants
  
  
  100
  
  
  
  100
  
  
  
  100Convertible Preferred Stock
  
  
  1,187
  
  
  
  1,187
  
  
  
  -Total
  
  
  2,234
  
  
  
  2,315
  
  
  
  8858. 
Convertible Preferred Stock
At
December 28, 2003 the Company had outstanding 1,187,906 shares of its Series B
non-voting convertible preferred stock which it sold in 1996 at $4.63 per share
to Crescent Real Estate Equities Limited Partnership (Crescent) in a private
offering for net proceeds of $5,175,000 (net of $325,000 of issuance costs).
The
Series B non-voting convertible preferred stock converts, at the holders
option, into Series A voting convertible preferred stock on a one-for-one
basis, and the Series A voting convertible preferred stock and Series


F-15
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
B non-voting convertible preferred stock convert, at the holders option, into
common stock on a one-for-one basis. 
The Series A preferred stock entitles its holders to vote with common
stockholders on all matters submitted to a vote of stockholders.  In addition, when and if issued, the holders
of a majority of the outstanding Series A preferred stock will have a separate
right to approve certain corporate actions.  
The Company did not achieve a specified earnings target in 1998, which
constituted an event of default under the terms of the preferred stock agreement
and which triggered the right of the Series A preferred stockholders to elect a
majority of the Companys Board of Directors. 
The holder of the Series B preferred stock has not initiated any action
to convert such shares into shares of Series A preferred stock nor has it
exercised its right to elect a majority of the Board of Directors.  In December 2003, such holder entered into a
letter agreement whereby the holder of the Series B preferred stock agreed to
not convert any of its shares of Series B preferred stock into Series A
preferred stock, so long as the holder owns the Series B preferred shares.
If
(i) either (A) the average closing price of the Companys common stock during
any 120 consecutive trading days equals or exceeds $15.00 per share (as
adjusted for stock dividends, combinations or splits) or (B) the Company sells
common stock equal to or greater than 25% of the total number of shares
outstanding at a price per share equal to or greater than $15.00 and (ii) the
shares of stock issuable upon conversion of the Series A preferred stock are
registered for resale on the open market, the Company may force a mandatory
conversion of the Series A preferred stock to common stock.  All shares of Series A and Series B
preferred stock are senior to the Companys common stock with respect to
dividends and with respect to distributions on liquidation.  Upon any liquidation, after an event of
default, the holders of Series A and Series B preferred stock are entitled to
be paid in full an amount equal to $4.63 per share, together with all accrued
dividends at an annual rate of $0.56 per share calculated from the first date
of an event of default, which occurred in fiscal 1998.  In connection with the agreement, the Company also has granted to
Crescent registration rights with respect to the Common Stock issuable upon
conversion of the Series A and Series B preferred stock.
9.  Lease Commitments and Contingencies
The
Company leases restaurant and office facilities under operating lease
agreements that expire at various dates, including renewal options, through
2033.  The Company also leases equipment
under capital lease agreements that expire at various dates through 2008.  The Company pays real estate taxes,
insurance and maintenance expenses related to these leases.
At
December 28, 2003, future minimum lease payments, including option periods for
leases the Company intends to renew under all noncancelable lease agreements
are presented below:

(In
  thousands)
  
  Capital
  Leases
  
  Operating
  LeasesYear Ending:2004
  
  $
  1,021
  
  $
  9,0632005
  
  
  1,017
  
  
  8,7472006
  
  
  848
  
  
  8,7282007
  
  
  504
  
  
  8,6442008
  
  
  36
  
  
  8,682Thereafter
  
  
  -
  
  
  75,172Minimum lease payments
  
  
  3,426
  
  $
  119,036Amount representing
  interest
  
  
  (534
  )Present value of minimum
  lease payments
  
  
  2,892Current portion
  
  
  (769
  )Long term portion of
  capital lease obligation
  
  $
  2,123F-16
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
The
Companys rent is composed of minimum rental payments under operating lease
agreements.  Rent expense for continuing
and discontinued operations was $9,029,000 in 2003, $8,415,000 in 2002 and
$7,697,000 in 2001.  For several
location leases, contingent rent is paid if the minimum lease payment is less
than the rent based as a percentage of restaurant sales.  The Company was not required to pay
contingent rental payments based upon a percentage of sales during 2003, 2002
and 2001.
Deferred
rent included in other long-term liabilities was $2,361,000 and $2,027,000 at
December 28, 2003 and December 29, 2002, respectively.
Deferred
income included in other long-term liabilities was $175,000 and $193,000 at
December 28, 2003 and December 29, 2002, respectively, from a gain on the
1993 sale and leaseback of a building and land for one of the Companys
restaurants.  The Company is amortizing
the gain over the 20-year initial term of the lease.


10. 
Legal Proceedings
The
Company is subject to other legal proceedings and claims, either asserted or
unasserted, which arise in the ordinary course of business.  While the outcome of these claims cannot be
predicted with certainty, management does not believe that the outcome of any
of these legal matters will have a material adverse effect on the Companys
consolidated results of operations or consolidated financial position.
11.  Income Taxes
The
provision for (benefit from) income taxes of continuing operations consists of:

(In
  thousands)
  
  2003
  
  2002
  
  2001Federal current
  
  $
  -
  
  $
  (47
  )
  $
  20State current
  
  
  (12
  )
  
  35
  
  
  29Total Current
  
  
  (12
  )
  
  (12
  )
  
  49Federal deferred
  
  
  2,312
  
  
  487
  
  
  1,018State deferred
  
  
  177
  
  
  217
  
  
  698Valuation allowance
  
  
  (2,489
  )
  
  (704
  )
  
  (1,716
  )Total deferred
  
  
  -
  
  
  -
  
  
  -Total
  
  $
  (12
  )
  $
  (12
  )
  $
  49The
deferred portion of the Companys tax provision (benefit) reflects the tax
effects of differences between the carrying amounts of assets and liabilities
for financial reporting and income tax purposes.  The Company has recorded net deferred tax assets which consist
primarily of the tax benefit related to operating loss carryforwards and asset
write-downs that are not deductible for tax purposes until the assets are
disposed.  Based on managements
assessment that it is not deemed more likely than not that the deferred tax
assets will be realized, the Company provided valuation allowances against its
deferred net tax assets.  The Company
had valuation allowances of $12,736,000 and $10,247,000 at December 28, 2003
and December 29, 2002, respectively.


F-17
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
The
provision for (benefit from) income taxes of continuing operations differs from
the amount computed by applying the federal statutory income tax rate to income
before taxes as follows:

2003
  
  2002
  
  2001Tax computed at federal
  statutory rate
  
  
  (34.0
  )%
  
  (35.0
  )%
  
  35.0
  %State income taxes, net of
  federal effect
  
  
  (3.3
  )
  
  (11.5
  )
  
  23.9Valuation allowance
  
  
  41.4
  
  
  42.3
  
  
  (107.2
  )Other
  
  
  (4.3
  )
  
  3.4
  
  
  51.7Effective tax rate
  
  
  (0.2
  )%
  
  (0.8
  )%
  
  3.4
  %The
components of the net deferred tax asset (liability) are as follows:

(In
  thousands)
  
  December 28,
  2003
  
  December 29,
  2002Deferred tax assets
  (liabilities):Net operating loss
  carryforwards
  
  
  $
  9,511
  
  
  
  $
  8,868Alternative minimum tax
  credits
  
  
  
  937
  
  
  
  
  937Deferred rent
  
  
  
  1,004
  
  
  
  
  914Accruals recognized in
  different periods
  
  
  
  873
  
  
  
  
  773Federal tax credits
  
  
  
  280
  
  
  
  
  280Tax basis depreciation and
  operating lease expenses
  
  
  
  131
  
  
  
  
  (1,525
  )Valuation allowance
  
  
  
  (12,736
  )
  
  
  
  (10,247
  )Net deferred tax asset
  (liability)
  
  
  $
  0
  
  
  
  $
  0At
December 28, 2003, the Company had net operating loss carryforwards of
approximately $27,176,000 and $4,644,000 for federal and state income tax
purposes, respectively.  These federal
and state net operating loss carryforwards expire beginning 2010 through 2023
and beginning 2004 through 2013, respectively. 
The net operating loss carryforwards available for state tax purposes
are substantially less than for federal tax purposes, because only 50% - 60% of
net operating losses can be utilized to offset future state taxable income and
because state net operating loss carryforwards generated in earlier years have
already expired.  The extent to which
the loss carryforwards can be used to offset future taxable income may be
limited, depending on the extent of ownership changes within any three-year
period.
12.  Employee Benefit Plans
401(k)
Savings Plan.  The Company has a 401
(k) tax deferred savings plan (the Plan) which allows eligible employees to
contribute from 1% to 25% of pre-tax compensation.  Discretionary matching contributions are determined annually by
the Board of Directors.  Employees vest
immediately in their contributions and vest in Company contributions over a
five year period.  The Company
contributed $20,000, $13,000 and $16,000 to the Plan in 2003, 2002 and 2001,
respectively.
Deferred
Compensation Plan.  In December 2001
the Company adopted a deferred compensation plan which allows a select group of
management employees to elect to defer up to 100% of their compensation into
the plan.  Annually, at the discretion
of the Board of Directors, the Company may make matching contributions to each
participant.  Matching contributions
vest 20% for each year of service up to five years.  Deferred compensation and matching contributions are invested by
each participant based on their selection of portfolio options specified in the
plan.  All contributions and earnings
held under the plan are assets of the Company and are subject to the claims of
general creditors of the Company.  The
plan is not intended to be a qualified plan under Section 401(a) of the
Internal Revenue Code.  The Company made
no contributions in 2003 or 2002.
F-18
Fresh
Choice,  Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years ended
December 28, 2003, December 29,  2002, and December 30, 2001
13. Quarterly Financial Information
(unaudited)
Summarized
quarterly unaudited financial information for fiscal years 2003 and 2002 is as
follows:

Year Ended
  December 28, 2003
  
  Year Ended
  December 29, 2002(In thousands, except
      per share amounts)
  
  First 12
  Weeks
  
  Second 12
  Weeks
  
  Third 12
  Weeks
  
  Last 16
  Weeks
  
  First 12
  Weeks
  
  Second 12
  Weeks
  
  Third 12
  Weeks
  
  Last 16
  WeeksNet sales
  
  $
  17,684
  
  $
  18,879
  
  $
  19,496
  
  $
  22,433
  
  $
  17,029
  
  $
  17,487
  
  $
  18,507
  
  $
  21,928Operating income (loss)
  
  
  (464
  )
  
  (126
  )
  
  (148
  )(1)
  
  (4,846
  )(2)
  
  205
  
  
  574
  
  
  814
  
  
  (2,924
  )(2)Income (loss) from continuing operations
  
  
  (541
  )
  
  (231
  )
  
  (251
  )
  
  (4,983
  )
  
  157
  
  
  521
  
  
  688
  
  
  (2,900
  )Net income (loss)
  
  
  (541
  )
  
  (231
  )
  
  (251
  )
  
  (4,983
  )
  
  113
  
  
  474
  
  
  646
  
  
  (2,952
  )Income (loss) per share from continuing operations:Basic*
  
  $
  (0.09
  )
  $
  (0.04
  )
  $
  (0.04
  )
  $
  (0.83
  )
  $
  0.03
  
  $
  0.09
  
  $
  0.12
  
  $
  (0.49
  )Diluted*
  
  $
  (0.09
  )
  $
  (0.04
  )
  $
  (0.04
  )
  $
  (0.83
  )
  $
  0.03
  
  $
  0.08
  
  $
  0.10
  
  $
  (0.49
  )Net income (loss) per shareBasic*
  
  $
  (0.09
  )
  $
  (0.04
  )
  $
  (0.04
  )
  $
  (0.83
  )
  $
  0.02
  
  $
  0.08
  
  $
  0.11
  
  $
  (0.50
  )Diluted*
  
  $
  (0.09
  )
  $
  (0.04
  )
  $
  (0.04
  )
  $
  (0.83
  )
  $
  0.02
  
  $
  0.07
  
  $
  0.09
  
  $
  (0.50
  )*
  The sum of the quarterly
  net income (loss) per share amounts will not necessarily equal the net income
  (loss) per share for the total fiscal year(1)
  Includes store closure and
  asset impairment expenses of $730 in 2003(2)
  Includes store closure and
  asset impairment expenses of $2,970 in 2003 and $1,751 in 2002Net
sales, operating income (loss), income (loss) from continuing operations and
income (loss) per share from continuing operations presented for all quarters
for the year ended December 29,2002 in the above table excludes the one
restaurant closed in the fourth quarter of 2002 that is included in
discontinued operations pursuant to the Companys adoption, in the first
quarter of fiscal 2002, of SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets.
F-19
INDEPENDENT AUDITORS REPORT
To the Stockholders and Board of Directors 
of Fresh Choice, Inc.
We
have audited the accompanying consolidated balance sheet of Fresh Choice, Inc.
and subsidiary (the Company) as of December 28, 2003 and the related
consolidated statements of operations, stockholders equity and cash flows for
the fiscal year ended December 28, 2003. 
These financial statements are the responsibility of the Companys
management.  Our responsibility is to
express an opinion on these financial statements based on our audit.
We
conducted our audit in accordance with auditing standards generally accepted in
the United States of America.  Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.  We believe that our audit
provides a reasonable basis for our opinion.
In
our opinion, the fiscal 2003 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of the Company as of December 28, 2003 and the consolidated results of
its operations and its cash flows for the fiscal year ended December 28, 2003
in conformity with accounting principles generally accepted in the United
States of America.
/s/ Grant Thornton, LLP
GRANT THORNTON LLP
San Jose, California
February 13, 2004
F-20
INDEPENDENT AUDITORS REPORT
To the Stockholders and Board of Directors 
of Fresh Choice, Inc.
We
have audited the accompanying consolidated balance sheet of Fresh Choice, Inc.
and subsidiary (the Company) as of December 29, 2002, and the related
consolidated statements of operations, stockholders equity and cash flows for
each of the two fiscal years in the period ended December 29, 2002.  These financial statements are the
responsibility of the Companys management. 
Our responsibility is to express an opinion on these financial
statements based on our audits.
We
conducted our audits in accordance with auditing standards generally accepted
in the United States of America.  Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.  We believe that our
audits provide a reasonable basis for our opinion.

As
discussed in Note 1 to the financial statements, during the year ended December 29, 2002, the
Company adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets, and No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets.

In
our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of
December 29, 2002, and the results of its operations and its cash flows for
each of the two fiscal years in the period ended December 29, 2002 in
conformity with accounting principles generally accepted in the United States
of America.
/s/ Deloitte & Touche, LLP
DELOITTE & TOUCHE LLP
San Jose, California
February 14, 2003
F-21
SIGNATURES
Pursuant to the
requirements of Section 13 or 15(d) 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.

Date:  March
  18, 2004
  FRESH CHOICE, INC.By:
  /s/  Everett
  F. JeffersonEverett
  F. JeffersonPresident,
  Chief Executive Officer and Director(Principal
  Executive Officer)Pursuant to the
requirements of the Securities Exchange Act of 1934, this Report has been
signed below on March 18, 2004 by the following persons on behalf of the
registrant and in the capacities indicated.
/s/  Charles A. Lynch
  
  Chairman of the Board and DirectorCharles A. Lynch/s/  Everett F.
  Jefferson
  
  President, Chief Executive Officerand DirectorEverett F. Jefferson
  
  (Principal Executive Officer)/s/  David E. Pertl
  
  Senior Vice President and ChiefFinancial Officer (PrincipalDavid E. Pertl
  
  Accounting and Financial Officer)/s/  Charles
  L. Boppell
  
  DirectorCharles L. Boppell/s/  Vern O. Curtis
  
  DirectorVern O. Curtis/s/  Yong
  Ping Duan
  
  DirectorYong Ping Duan/s/  Carl R. Hays
  
  DirectorCarl R. Hays/s/  Barry E. Krantz
  
  DirectorBarry E. Krantz52

INDEX TO FORM 10-K EXHIBITS
Exhibit
  No.
  
  
  Description3.1
  (1)
  
  Restated Certificate of Incorporation of Fresh
  Choice, Inc.3.2
  (8)
  
  Amended By-Laws of Fresh Choice, Inc. dated April
  11, 19963.3
  (10)
  
  Certificate of Amendment of Restated Certificate of
  Incorporation of Fresh Choice, Inc.3.4
  (10)
  
  Certificate of Designation of Series A Voting
  Participating Convertible Preferred Stock of Fresh Choice, Inc.3.5
  (10)
  
  Certificate of Designation of Series B Non-Voting
  Participating Convertible Preferred Stock of Fresh Choice, Inc.3.6
  (10)
  
  Certificate of Designation of Series C Non-Voting
  Participating Convertible Preferred Stock of Fresh Choice, Inc.4.1
  (10)
  
  Registration Rights Agreement dated September 13,
  1996 between Fresh Choice, Inc. and Crescent Real Estate Equities Limited Partnership
  Crescent Real Estate Equities Limited Partnership10.1
  (1)
  
  Form of Indemnity Agreement for directors and
  officers10.2
  (2)
  (3)
  Second Amended and Restated 1988 Stock Option Plan10.3
  (2)
  (3)
  1992 Employee Stock Purchase Plan10.8
  (8)
  
  Preferred Stock Purchase Agreement with Crescent
  Real Estate Equities Limited Partnership dated April 26, 199610.18
  (6)
  
  Warrant to Purchase up to 75,000 Shares of the
  Companys Common Stock issued to Silicon Valley Bank on December 20,
  1995 Valley Bank on December 20, 199510.19
  (6)
  
  Common Stock Purchase Warrant to Purchase 100,000
  Shares of the Companys Common Stock issued to Bain & Company, dated
  December 15, 1995 Stock issued to Bain & Company, dated December 15, 199510.26
  (11)
  (3)
  Employment Offer Letter to David E. Pertl dated
  January 24, 199710.27
  (11)
  (3)
  Employment Offer Letter to Everett F. Jefferson
  dated January 30, 199710.28
  (11)
  (3)
  Amendment to Employment Offer Letter to Everett F.
  Jefferson dated February 10, 199710.34
  (13)
  (3)
  Consulting Agreement with Charles A. Lynch dated
  April 17, 199810.36
  (14)
  
  Loan and Security Agreement dated December 29, 1998
  with FINOVA Capital Corporation10.37
  (14)
  (3)
  Form of Severance Agreement with Senior Vice
  Presidents10.43
  (17)
  (3)
  Amendment to Employment offer letter to David E.
  Pertl dated August 23, 200110.44
  (17)
  (3)
  Employment Agreement with Everett F. Jefferson dated
  October 9, 200110.45
  (17)
  (3)
  Amended and Restated Form of Severance Agreement
  with Senior Vice Presidents dated August 14, 200110.46
  (17)
  (3)
  2001 Employee Stock Purchase Plan10.47
  (17)
  (3)
  Second Amended and Restated 1988 Stock Option Plan
  as amended through July 12, 200110.48
  (17)
  
  Promissory Note Secured by Deed of Trust dated
  August 13, 2001 with Mid-Peninsula Bank10.49
  (17)
  
  Commercial Deed of Trust, Financing Statement, Security
  Agreement and Fixture Filing dated August 13, 2001 with Mid-Peninsula Bank10.50
  (17)
  
  Revolving Loan Agreement dated October 5, 2001 with
  Mid-Peninsula Bank10.51
  (17)
  
  Pledge Agreement dated October 5, 2001 with
  Mid-Peninsula Bank10.52
  (17)
  
  Promissory Note dated October 5, 2001 with Mid
  Peninsula Bank10.55
  (18)
  (3)
  Non Qualified Deferred Compensation Plan of Fresh
  Choice, Inc. effective as of December 1, 200153

Exhibit
  No.
  
  Description10.56
  (18)
  (3)
  Trust Agreement Under The Non Qualified Deferred
  Compensation Plan of Fresh Choice, Inc. dated December 17, 200110.57
  (19)
  
  Letter dated April 25, 2002 amending the Revolving
  Loan Agreement dated October 5, 2001 with Mid-Peninsula Bank10.58
  (20)
  
  Change in Terms Agreement dated June 3, 2002
  amending the Revolving Loan Agreement dated October 5, 2001 with
  Mid-Peninsula Bank10.59
  (21)
  
  Letter dated December 10, 2002 amending the
  Revolving Loan Agreement dated October 5, 2001 as amended June 3, 2002 with
  Mid-Peninsula Bank10.60
  (21)
  (3)
  2003 Home Office Incentive Plan10.61
  (22)
  
  Letter dated April 7, 2003
  amending the Revolving Loan Agreement dated October 5, 2001 as amended June
  3, 2002 and December 10, 2002 with Mid-Peninsula Bank10.62
  (23)
  
  Letter dated August 13,
  2003 amending the Revolving Loan Agreement dated October 5, 2001 as amended
  June 3, 2002, December 10, 2002 and April 7, 2003 with Mid-Peninsula Bank.10.63
  (23)
  
  Letter dated August 13,
  2003 amending the Commercial Deed of Trust, Financial Security Agreement and
  Fixture Filing dated Aug 13, 2001 with Mid Peninsula Bank.10.64
  
  
  Letter dated November 19,
  2003 amending the Revolving Loan Agreement dated October 5, 2001 as amended
  June 3, 2002, December 10, 2002, April 7, 2003 and August 13, 2003 with
  Mid-Peninsula Bank.10.65
  
  
  Letter dated November 19,
  2003 amending the Commercial Deed of Trust, Financial Security Agreement and
  Fixture Filing dated Aug 13, 2001 as amended August 13, 2003 with Mid
  Peninsula Bank.10.66
  
  (3)
  2004 Home Office Incentive Plan10.67
  
  
  Letter agreement dated
  December 11, 2003 whereby Crescent Real Estate Equities Ltd. (Crescent)
  agrees to not convert any of its shares of Series B Preferred into Series A
  Preferred so long as Crescent owns the Series B Preferred shares21.1
  
  
  Subsidiaries of the Company23.1
  
  
  Consent of Grant Thornton LLP23.2
  
  
  Consent of Deloitte & Touche31.1
  
  
  Certification by the Chief Executive Officer of his
  responsibility for financial reports under section 302 of the Sarbanes-Oxley
  Act.31.2
  
  
  Certification by the Chief
  Financial Officer of his responsibility for financial reports under section
  302 of the Sarbanes-Oxley Act.32.1
  
  
  Certification by the Chief
  Executive Officer of his responsibility for financial reports under section
  906 of the Sarbanes-Oxley Act.32.2
  
  
  Certification by the Chief
  Financial Officer of his responsibility for financial reports under section
  906 of the Sarbanes-Oxley Act.(1)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Registration Statement on Form
  S-1 (No. 33-53904) filed October 29, 1992, as amended by Amendment No. 1 to
  Form S-1 (No. 33-53904) filed December 7, 1992, except that Exhibit 3.1 is
  incorporated by reference from Exhibit 3.1C and Exhibit 3.2 is incorporated
  by reference from Exhibit 3.2B.(2)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Quarterly Report on Form 10-Q
  for the quarter ended September 4, 1994.(3)
  Agreements or compensatory plans covering executive
  officers and directors of Fresh Choice, Inc.(6)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Annual Report on Form 10-K for
  the year ended December 31, 1995.54


(8)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Quarterly Report on form 10-Q
  for the quarter ended March 24, 1996.(10)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Quarterly Report on Form 10-Q
  for the quarter ended September 8, 1996.(11)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Annual Report on Form 10-K for
  the year ended December 29, 1996.(13)
  Incorporated by reference from Exhibits with
  corresponding numbers filed with the Companys Quarterly Report on Form 10-Q
  for the quarter ended June 14, 1998.(14)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Annual Report on Form 10-K for
  the year ended December 27, 1998.(15)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Annual Report on Form 10-K for
  the year ended December 26, 1999.(16)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Annual Report on Form 10-K for
  the year ended December 31, 2000.(17)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Quarterly Report on Form 10-Q
  for the quarter ended September 9, 2001.(18)
  Incorporated by reference from the Exhibits with
  corresponding numbers filed with the Companys Annual Report on Form 10-K for
  the year ended December 30, 2001.(19)
  Incorporated by reference from Exhibits with
  corresponding numbers filed with the Companys Quarterly Report on Form 10-Q
  for the quarter ended March 24, 2002.(20)
  Incorporated by reference from Exhibits with
  corresponding numbers filed with the Companys Quarterly Report on Form 10-Q
  for the quarter ended June 16, 2002.(21)
  Incorporated by reference from Exhibits with
  corresponding numbers filed with the Companys Annual Report on Form 10-K for
  the year ended December 29, 2002.(22)
  Incorporated by reference from Exhibits with
  corresponding numbers filed with the Companys Quarterly Report on Form 10-Q
  for the quarter ended March 23, 2003.(23)
  Incorporated by reference from Exhibits with
  corresponding numbers filed with the Companys Quarterly Report on Form 10-Q
  for the quarter ended September 7, 2003.55