SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

(Mark One)

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

     For the fiscal year ended December 31, 2002.

                                       OR

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

     For the transition period from __________ to _________.


                      Commission File Number: _____________


                            TOTAL ENTERTAINMENT INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its Charter)


             Indiana                                      35-1504940
  -------------------------------                     -------------------
  (State or Other Jurisdiction of                      (I.R.S. Employer
   Incorporation or Organization)                     Identification No.)

680 Branch Avenue
P.O. Box 8699  Red Bank, New Jersey                          07701
------------------------------------------                 ----------
 (Address of Principal Executive Offices)                  (Zip Code)

                                 (732) 842-5553
                           ---------------------------
                           (Issuer's telephone number)


      Securities registered pursuant to Section 12(b) of the Exchange Act:

                                                 Name of Each Exchange
    Title of Each Class                           on Which Registered
-----------------------------------    ----------------------------------------
          None                                          None
-----------------------------------    ----------------------------------------


         Securities registered under Section 12(g) of the Exchange Act:

                     COMMON STOCK, PAR VALUE $.001 PER SHARE
                     ---------------------------------------
                                (Title of Class)

Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

The issuer's net revenues for its most recent fiscal year were $914,399

<PAGE>

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked prices of such common equity, as of December
31, 2002 WAS $1,887,253.

As of December 31, 2002, there were 62,908,443 shares of the issuer's common
stock outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

Statements contained in the annual report that are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties, which could cause actual results to differ materially
from estimated results. Such risks and uncertainties are detailed in filings
with the Securities and Exchange Commission, including without limitation in
Descripition of Business and Management Discussion and Analysis Or Plan of
Operation.

<PAGE>


                          INDEX TO FINANCIAL STATEMENTS



Independent Auditor's Report                                                F-2

Financial Statements:

Balance Sheets as of December 31, 2002 and 2001                             F-3

Statements of Operations for the Year ended December 31, 2002 and 2001      F-4

Statement of Changes in Shareholders' Equity for the Year ended
December 31, 2002 and 2001                                                  F-5

Statement of Cash Flows for the Year ended December 31, 2002 and 2001       F-6

Notes to Financial Statements                                               F-7

<PAGE>

                                AUDITOR'S REPORT


To the Shareholder's of
Total Entertainment Inc. and Subsidiaries


I have audited the consolidated balance sheet of Total Entertainment Inc. (an
Indiana corporation) and Subsidiaries as at December 31, 2002 and 2001 and the
statements of operations, stockholders' equity (deficiency) and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audits.

I conducted my audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that I 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.

In my opinion, financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Total Entertainment
Inc. and Subsidiaries as of December 31, 2002 and 2001, and the consolidated
results of their operations and their consolidated cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the consolidated financial
statements, at December 31, 2002, the Company's current liabilities exceeded its
current assets by $1,800,575, and the Company lost $141,503 from operations for
the ended December 31, 2002. These factors, among others, as discussed in Note 6
to the financial statements, raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 3 (a). The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


North York, Ontario                         Stephen F. Diamond
April 24, 2003                              Chartered Accountant


                                      F-2
<PAGE>

TOTAL ENTERTAINMENT INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 and DECEMBER 31, 2001

Assets                                                   2002           2001
                                                     -----------    -----------
Current
  Cash                                               $       193    $    20,416
  Accounts receivable                                         --        232,527
                                                     -----------    -----------
                                                             193        252,943
                                                     -----------    -----------
Property and equipment:
  Computer equipment                                     314,744        354,893
  Furniture and fixtures                                  48,845         48,845
                                                     -----------    -----------
                                                         363,589        403,738

Less accumulated depreciation                           (334,811)      (304,310)
                                                     -----------    -----------
                                                          28,778         99,428
                                                     -----------    -----------
  Note receivable from NetForFun                              --        124,717
  Other assets                                                --         41,282
                                                     -----------    -----------
                                                     $    28,971    $   518,370
                                                     ===========    ===========
Liabilities

Current
  Accounts payable and accrued liabilities           $   163,258    $   348,004
  Customer deposits                                           --        373,381
  Current maturities of capital lease obligations             --         11,264
  Deferred compensation                                1,182,949      1,061,050
  Due to directors and stockholders                      454,561        354,965
                                                     -----------    -----------
                                                       1,800,768      2,148,664
                                                     -----------    -----------
Shareholders' Equity

Stockholders' equity (deficiency):
  Common stock, $.001 par value; authorized,
  200,000,000 shares; issued and outstanding,
  58,388,443 shares at DECEMBER 31, 2001 and 2002         58,388         58,388
  Additional paid-in capital                           2,684,695      2,684,695
  Accumulated deficit                                 (4,514,880)    (4,373,377)
                                                     -----------    -----------
                                                      (1,771,797)    (1,630,294)
                                                     -----------    -----------
                                                     $    28,971    $   518,370
                                                     ===========    ===========

                                      F-3
<PAGE>

TOTAL ENTERTAINMENT INC.
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                         2002           2001
                                                     -----------    -----------
Revenues:
  Gaming revenues (Note 3 (a) (i))                   $   914,399    $ 2,768,729
  Less: Charge backs                                     (34,302)      (207,469)
    Complimentary and bonus                             (122,423)      (631,776)
                                                     -----------    -----------
  Gaming revenues, net                                   757,674      1,929,484
  Royalty fees (Note3 (a))                                84,750             --
                                                     -----------    -----------
                                                         842,424      1,929,484
                                                     -----------    -----------
Expenses:
  Cost of operations                                     151,798        717,730
  Research and development                                    --         59,994
  Selling, general and administrative                    918,910      2,125,046
  Depreciation and amortization                           64,405        128,062
                                                     -----------    -----------
                                                       1,135,113        303,032
                                                     -----------    -----------
Loss from operations                                    (292,689)    (1,101,348)
Gain on settlement of note receivable                     21,201             --
Gain on sale of assets                                   129,985             --
                                                     -----------    -----------
Income (loss) before provision for income taxes         (141,503)    (1,101,348)
                                                     -----------    -----------
  Provision for income taxes                                  --             --
NET INCOME (LOSS)                                    $  (141,503)   $(1,101,348)
                                                     ===========    ===========
Basic and diluted income (loss) per common share     $       .00    $      (.02)
                                                     ===========    ===========

                                      F-4
<PAGE>

TOTAL ENTERTAINMENT INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
<TABLE>
<CAPTION>

                                           Common stock
                                         $.001 par value             Additional                             Total
                                   ---------------------------        Paid-in         Accumulated       Stockholders'
                                     Shares          Amount           Capital           deficit            equity
                                   ----------     -------------    -------------     -------------     -------------
<S>                                <C>            <C>              <C>               <C>               <C>
Balance, December 31, 1999         57,388,443     $      57,388    $   2,460,695     $  (3,298,293)    $    (780,210)

Net income for the year ended
December 31, 2000                                                                           26,264            26,264
Capital stock issued to
Northstar Advertising Inc.          1,000,000             1,000          224,000                             225,000
                                   ----------     -------------    -------------     -------------     -------------

Balance December 31, 2000          58,388,443            58,388        2,684,695        (3,272,029)         (528,946)
Net loss for the year ended
December 31, 2001                          --                --               --        (1,101,348)       (1,101,348)
                                   ----------     -------------    -------------     -------------     -------------
Balance December 31, 2001          58,388,443     $      58,388    $   2,684,695     $  (4,373,377)    $  (1,630,294)

Net loss for the year ended
December 31, 2002                          --                --               --          (141,503)         (141,503)
Capital stock issued in
exchange for Rock Candy
assets (Note 3(a) (ii))             4,520,000                --               --                --                --
                                   ----------     -------------    -------------     -------------     -------------
Balance December 31, 2002          62,908,443     $      58,388    $   2,684,695     $  (4,514,880)    $  (1,771,797)
                                   ==========     =============    =============     =============     =============
</TABLE>

                                      F-5
<PAGE>

TOTAL ENTERTAINMENT INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

                                                         2002           2001
                                                     -----------    -----------
Operating:

Net income (loss)                                    $  (141,503)   $(1,101,348)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
    Amortization of deferred licensing fees                   --        112,235
    Depreciation and amortization                         64,405        128,062
    Expenditures paid by directors and stockholders           --         39,542
    Gain on sale of assets (net)                           6,245        129,985
    Deferred compensation                                121,899        181,050
    Increase (decrease) in cash from changes in
    operating assets and liabilities:
      Accounts receivable                                232,527         84,928
      Prepaid expense and other                               --        275,750
      Accounts payable and accrued liabilities          (184,746)       123,498
      Customer account deposits                         (373,381)       162,263
                                                     -----------    -----------
                                                        (274,554)         5,980
                                                     -----------    -----------
Investing:

Purchase of property and equipment                            --         (3,845)
Other assets                                              41,282             --
Payment received on (increase in) note receivable        124,717        (10,019)
                                                     -----------    -----------

Net cash provided by (used in) investing activities      165,999        (13,864)
                                                     -----------    -----------
Financing:

Principal payments on capital leases                     (11,264)       (15,295)
Advances from directors and stockholders                  99,596         43,226
                                                     -----------    -----------
                                                          88,332         27,931
                                                     -----------    -----------

Net (Decrease) Increase in cash                          (20,223)        20,047

Cash at beginning of period                               20,416            369
                                                     -----------    -----------

Cash at end of period                                $       193    $    20,416
                                                     ===========    ===========

                                      F-6
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002


         BUSINESS, DESCRIPTION AND HISTORY OF COMPANY

Item 1.  CORPORATE STRUCTURE

         Total Entertainment Inc., formerly known as Kit Farms Inc. (the
         Company), incorporated in the state of Indiana, has three wholly-owned
         subsidiaries, Intercapital Global Fund Ltd. (Intercapital Global), an
         Antiguan company, Intercapital Canada Ltd. (Intercapital Canada),
         incorporated in the Province of Quebec, and Total Entertainment
         (Delaware) Inc. , an inactive Delaware company.

         The company offered software-based games of chance and sports wagering
         facilities on a worldwide basis through the Internet located at
         www.theonlinecasino.com, www.theonlineesportsbook.com,
         www.bingoonthenet.com as well as other sites (collectively the Online
         Casinos). There are significant legislative risks and uncertainties
         regarding on-line gaming operations (see Note D-1). The company
         launched its www.theonlinecasino.com Web site on September 12, 1998 and
         sold the online gaming assets were disposed of during the year.

         Intercapital Global, the operating company, owned a gaming license
         issued by the Government of Honduras and the Dominican Republic, and
         several Internet Web sites. The Company used state-of-the-art casino
         gaming and sports book software under an informal license arrangement
         with Montana S.A. (Montana), a leading casino software development
         company. In the fourth quarter of 2000 the Company used this software
         on a no-cost trial basis. In 2001 the Company began making volume-based
         monthly royalty payments to Montana pursuant to an informal license
         arrangement. The Company also licensed software for the gaming and
         sports book operations from Online Gaming Systems (formerly known as
         Atlantic Entertainment International Inc. (OGS), an independent
         software developer, and other vendors.

         Intercapital Global accepted wagers via the Internet through an
         E-commerce credit card processing agreement with MPACT Immedia
         Transaction Services Ltd. (MPACT). During 2000, this contract was
         transferred by MPACT to Surefire Commerce Ltd.

         Intercapital Canada provides Intercapital Global with technical and
         customer support and administrative services.

Item 2.  WWW.SLOTSVEGAS.COM TRANSACTIONS

(a)      SGL TRANSACTION. In June 1999, the Company launched an Online Casino
         geared toward slots players located at WWW.SLOTSVEGAS.COM (Slotsvegas).
         On May 5, 1999, the Company entered into an agreement with Summerhill
         Gaming Limited (SGL) to transfer a 50 % ownership interest and profit
         and loss participation in Slotsvegas. The agreement did not specify a
         fixed period and remains in effect as long as the Web site is in
         operation. In consideration for this interest, SGL paid $150,000 of
         obligations to vendors on behalf of the Company, which was recorded as
         deferred income. Such amounts are non-refundable.

                                      F-7
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

         The agreement requires the Company to pay SGL 50% of the net profits
         derived from the Slotsvegas site, on a monthly or other interim basis,
         as agreed to by the Company and SGL. To the extent that the Slotsvegas
         site inccurs net losses, SGL will pay the Company 50% of such amounts.

         The agreement with SGL in substance represents the sale of future
         income and was accounted for as deferred income in accordance with
         Emerging Issues Task Force issue No. 88-18. The amount of deferred
         income to be amortized was calculated using the ratio of the amounts to
         be paid to SGL over management's estimate of the total payments
         expected to be made to SGL over four years (the management's expected
         life of the website). At such time, if ever, that the deferred income
         balance is fully amortized, any payments to SGL will be charged to
         earnings in the current period. Further, SGL will pay Company 50% of
         any net losses of the Slotsvegas website; accordingly, any future
         amounts received by the Company will be recorded as a reduction of the
         Slotsvegas site's operating expenses.

         As part of the agreement, SGL agreed to make short-term loans up to
         $500,000 to the Company for liquidity purposes. The loans bear interest
         at 7% per annum, require interest payments on a monthly basis, and
         payment of the entire principal balance three years from the date of
         issuance. Through December 31, 1999, SGL loaned the Company
         approximately $502,958. The loans were made in the form of direct
         payments of obligations to vendors on behalf of Company and cash
         advances of $305,000. On December 31, 1999, the Company converted the
         cumulative cash advances of $502,958, accrued interest of $12,868 and
         net profits from Slotsvegas of $2,258 into 1,671,235 shares of common
         stock of the Company using the quoted value of the common stock of $.31
         per share.

(b)      NETFORFUN TRANSACTION.

         In March 2000, pursuant to a Purchase Agreement dated March 1, 2000
         between Intercapital Global and Netforfun.com, Inc. a publicly held
         Canadian company (NetForFun), the Company sold its remaining 50%
         interest in the Slotsvegas site and related assets and customer
         deposits to NetForFun for $2,000,000, payable as follows:

         o $100,000 in cash upon signing of the purchase agreement;

         o 400,000 in the form of a five-year promissory note bearing interest
           at 9% per annum and payable in equal quarterly installments of
           $24,910.02, commencing on or before July 1, 2000; and

         o $1,500,000 in the form of 15,000,000 shares of NetForFun common stock
           valued by the parties at $0.10 per share.

                                      F-8
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

         Given the current financial position of NetForFun, and its stock
         valuation profile, no amounts will be recognized by the Company
         relating to the sale of the website for common stock held until the
         uncertainty of realization is satisfied. The Company and NetForFun
         agreed in June 2000, that any winnings allocable to NetForFun were to
         be first applied against the principal of the note receivable.
         Approximately $35,000 in NetForFun's share of the winnings from the
         website has been applied against the note receivable. Effective June
         30, 2000, the Company assigned $240,000 of the note receivable from
         NetForFun to Intercapital Asset Management in partial satisfaction of
         amounts owed by the Company to Intercapital Asset Management. Effective
         October 31, 2000, SGL agreed to assume the obligation of NetForFun
         under the note receivable if the obligation is not satisfied. This
         guarantee was extended to October 31, 2003.

         In January 2002 NetForFun was taken over by Spectrafax. The NetForFun
         common stock was replaced by 1,800,000 shares of Spectrafax common
         stock valued at $0.10 per share. The Company received approximately
         $23,000 from the sale of 270,000 shares of Spectrafax in January and
         February 2002 which was applied against the note receivable from
         NetForFun.

         Intercapital Global has also entered into a Maintenance and Support
         Services Agreement with NetForFun pursuant to which Intercapital Global
         has agreed to provide certain maintenance and support services to
         NetForFun for the Slotsvegas software for an initial term of one year
         for a fee of $15,000 per month, subject to adjustment. The company
         received and recorded revenue of $45,000 under this agreement during
         the year ended December 31, 2000. The Company also agreed to defer
         further billing and revenue recognition under this agreement for
         monthly payments owed to us pursuant to the Maintenance and Support
         Services Agreement, from July 2000 until such time as the traffic of
         the Slotsvegas Web site becomes more significant.

Item 3.  BASIS OF PRESENTATION

         The accompanying financial statements have been prepared in conformity
         with generally accepted accounting principles, which contemplate
         continuation of the Company as a going concern. The Company has
         incurred a loss from operations since inception. At December 31, 2002
         and 2001, the Company has a working capital deficiency of approximately
         $1,800,575 and $1,896,000, respectively, and a stockholders' deficiency
         of approximately $1,772,000 and $1,630,000 respectively. The Company is
         also involved in litigation (Note 6(c)), which if the Company is
         unsuccessful in its defense, could have a material adverse effect on
         the Company. These factors raise substantial doubt about the Company's
         ability to continue as a going concern.

                                      F-9
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

         In view of the matters described in the previous paragraph, recover
         ability of a major portion of the recorded asset amounts shown in the
         accompanying balance sheet is dependent upon continued operations of
         the Company, which, in turn, are dependent upon the Company's ability
         to meet its financing requirements on a continuous basis and to succeed
         in its future operations. The financial statements do not include any
         adjustments relating to the recover ability and classification of
         recorded asset amounts or amounts of liabilities that might be
         necessary should the Company be unable to continue in existence.

3(a)(i)  In August 2002 the company concluded an agreement whereby it sold its
         interest in Online Sports Book.com ("Online") including the equipment
         the domain name and any goodwill associated with the business. The
         purchase price was satisfied by the purchaser assuming all liabilities
         of the Online Sports Book.com and a royalty agreement whereby Online
         shall pay to the seller 10% of the gross profit for 12 months following
         the date of closing. To December 31, 2002 the company has earned
         $84,750 in royalties.

         The company is no longer engaged in interest gaming activities.

(ii)     In October 2002 Total Entertainment Canada Ltd. purchased 100% of the
         business rights, domain names, trade marks and formulas ("the assets")
         owned by Rock Candy Cosmetics Inc.

         The purchase price of $678,000 was satisfied by issuance of 4,520,000
         common shares of the company. Since Rock Candy is a privately held
         company the fair value of the assets is not readily determinable. As a
         result, the assets were recovered at a nominal value.

(b)      Obtain advances from affiliated companies, officers or other sources,
         as necessary, to fund operating expenses.

(c)      Defer officers' salaries until such time the Board of Directors
         determines it is appropriate to commence payment.

Item 4.  ACCOUNTING POLICIES

         A summary of the significant accounting policies consistently applied
         in the preparation of the accompanying consolidated financial
         statements follows:

(a)      PRINCIPLES OF CONSOLIDATION

         These consolidated financial statements include the accounts of the
         Company and its subsidiaries. All significant intercompany accounts and
         transactions have been eliminated.

                                      F-10
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

(b)      FIXED ASSETS

         Computers and furniture and fixtures are stated at cost and are
         depreciated over their estimated useful lives of three to five years.

(c)      FOREIGN CURRENCY TRANSLATION

         The assets and liabilities of the Company's foreign operations are
         translated at the exchange rates prevailing at year-end and income and
         expenses are translated at the average exchange rate for the year.
         Balance sheet gains and losses arising from translation are immaterial.
         Translation gains or losses, for the periods presented, have been
         included in the results of operations and are not material.

(d)      EARNINGS (LOSS) PER SHARE

         Basic loss per share for the year ended December 31, 2002 and 2001 is
         computed by dividing the loss for the period by the weighted average
         number of common shares outstanding during the period. Diluted loss per
         share is computed by dividing the loss for the period by the weighted
         average number of common shares adjusted for the dilutive effect of any
         potential common shares issuable during the period. The denominator for
         the basic and diluted earnings per share calculation for the year ended
         December 31, 2001 is 58,388,433. The amount of options not considered
         in the loss per share calculation for the year ended December 31, 2001
         because their effect was anti dilutive was 69,250,000 shares. No shares
         were considered at December 31, 2002 as the options expired.

(e)      INCOME TAXES

         Total Entertainment is responsible for filling a United States Federal
         income tax return, while Intercapital Canada is responsible for filing
         a Canadian tax return. Intercapital Global is not required to file a
         United States corporate income tax return because it is a foreign
         corporation and has no U.S. source income or U.S. operations.
         Intercapital Global is not required to file an Antiguan tax return
         since it is an International Business Corporation not subject to
         taxation.

         Financial Accounting Standards Board Statement of Financial Accounting
         Standards No. 109 (SFAS No. 109), Accounting for Income Taxes, require
         the liability approach to accounting for deferred income taxes for
         financial reporting purposes. Under the provisions of SFAS No. 109,
         deferred tax assets and liabilities are determined based on tax rates
         expected to be in effect when the taxes are actually paid or refunds
         received.

                                      F-11
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

(f)      CONCENTRATION OF CREDIT OR MARKET RISK

         Statement of Financial Accounting Standards No. 105 (SFAS No. 105)
         requires the disclosure of significant concentration of credit or
         market risk, regardless of the degree of such risk. Financial
         instruments, as defined by SFAS No. 105, which potentially subject the
         Company and its subsidiaries to concentrations of risk, consist
         principally of cash, the note receivable from NetForFun, and accounts
         receivable. Substantially all of the accounts receivable at December
         31, 2002 are from Surefire Commerce Ltd. or other credit card
         processors.

(g)      USE OF ESTIMATES

         In preparing financial statements in conformity with generally accepted
         accounting principles, management is required to make estimates and
         assumptions that affect the reported amounts of assets and liabilities
         and the disclosure of contingent assets and liabilities at the date of
         the financial statements and revenues and expenses during the reporting
         period. Actual results could differ from those estimates.

(h)      VALUATION OF LONG-LIVED ASSETS

         The company has adopted Statement of Financial Accounting No. 121 (SFAS
         No.121), Accounting for the Impairment of Long-Lived Assets and for
         Long-Lived Assets to Be Disposed of. The statement requires that the
         Company recognize and measure impairment losses of long-lived assets
         and certain identifiable intangibles and value long-lived assets to be
         disposed of. The carrying values of the long-lived assets are reviewed
         if the facts and circumstances suggest that such assets may be
         permanently impaired. If the expected future undiscounted cash flows
         derived from such assets are less than the carrying value, such value
         would be reduced to its fair value.

(i)      RESEARCH AND DEVELOPMENT EXPENSES

         Costs associated with research and development, principally relating to
         website development and e-commerce development are expensed as
         incurred. Such costs also include expenditures for developing of
         certain software gaming products.

(j)      ADVERTISING EXPENSES

         Costs associated with advertising are expensed as incurred and amounted
         to $47,000 and $405,000 for the years ended December 31, 2002 and 2001,
         respectively.

                                      F-12
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002


(k)      SEGMENT AND RELATED INFORMATION

         The Company operated as one active segment, Internet-based gaming, and
         follows the requirements of SFAS No. 131, Disclosures About Segments of
         an Enterprise and Related Information.

(l)      CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid investments purchased with
         original maturities of three months or less to be cash equivalents.

(m)      REVENUE RECOGNITION

         Gaming revenues are recognized when the sporting event or game of
         chance has been completed. Credit card deposits held by the Company for
         individual customers are recorded as customer account deposits until
         earned by the Company or returned to the customer. Gaming revenues are
         presented on a net basis (i.e., net of customer winnings) (Note 3 (a)
         (i)).

(n)      FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying value of cash and cash equivalents are assumed to be at
         fair value because of the liquidity of the instruments. Accounts and
         notes receivable and accounts payable are assumed to be at fair value
         because of the short term nature of the instruments.

(o)      RECENT ACCOUNTING PRONOUNCEMENTS

         In January 2000, the Emerging issues Task Force (EITF) reached a
         consensus on Issue No. 99-17, Accounting for Barter Transactions, to be
         effective for transactions entered into after January 20, 2000. The
         consensus states that advertising barter transactions should be
         accounted for at fair value and that the fair value recognized is
         disclosed in the financial statements, if there is verifiable objective
         evidence provided by sufficient cash transactions received by the
         seller of the advertising or similar advertising. The Company purchased
         advertising from barter transactions in 2001. The Company records
         advertising expense with a corresponding credit to customer account
         balance as advertising is incurred.

                                      F-13
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

         On July 20, 2002, the Financial Accounting Standards Board (FASB)
         issued SFAS 141, Business Combinations, and SFAS 142, Goodwill and
         Intangible Assets (the "Statements"). SFAS 141 is effective for all
         business combinations completed after June 30, 2002. SFAS 142 is
         effective for fiscal years beginning after December 15, 2002; however,
         certain provisions of this Statement apply to goodwill and other
         intangible assets acquired between July 1, 2002 and the effective date
         of SFAS 142. Major provisions of these Statements and their effective
         dates for the Company are as follows:

         o all business combinations initiated after June 30, 2002 must use the
           purchase method of accounting. The pooling of interest method of
           accounting is prohibited except for transactions initiated before
           July 1, 2002.

         o intangible assets acquired in a business combination must be recorded
           separately from goodwill if they arise from contractual or other
           legal rights or are separable from the acquired entity and can be
           sold, transferred, licensed, rented or exchanged, either individually
           or as part of a related contract, asset or liability.

         o goodwill, as well as intangible assets with indefinite lives,
           acquired after June 30, 2002, will not be amortized. Effective
           January 1, 2002, all previously recognized goodwill and intangible
           assets with indefinite lives will no longer be subject to
           amortization.

         o effective January 1, 2002 goodwill and intangible assets with
           indefinite lives will be tested for impairment annually and whenever
           there is an impairment indicator.

         o all acquired goodwill must be assigned to reporting units for
           purposes of impairment testing and segment reporting.

         Although it is still reviewing the provisions of these Statements,
         management's preliminary assessment is that these Statements will not
         have a material impact on the Company's financial position or results
         of operations.

         In August 2002, the FASB issued statement of Financial Accounting
         Standards No. 144 ("SFAS No. 144") "Accounting for the Impairment of
         Disposal of Long-lived Assets". This statement is effective for fiscal
         years beginning after December 15, 2002. This supersedes Statement of
         Financial Accounting Standards No. 121, "Accounting for the Impairment
         of Long-lived Assets and for Long-lived Assets to Be Disposed of,"
         while retaining many of the requirements of such statement.

(p)      RECLASSIFICATIONS

         Certain reclassifications to 2001 reported amounts have been made in
         the financial statements to conform to 2002 presentation.

(q)      DEFERRED LICENSING FEES

         Up front costs incurred to obtain software licenses are amortized over
         the term of the license agreement. As of December 31, 2002 all deferred
         licensing fees were written off due to uncertainty as to realization
         (through relicensing, refund or other) of the asset.

                                      F-14
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002



Item 5.  CAPITAL STOCK AND STOCK OPTIONS

(a)      COMMON STOCK TRANSACTIONS

(i)      During 2000, the Company entered into a transaction whereby 1,000,000
         common shares were issued to Northstar Advertising Inc. in exchange for
         consulting services for Internet-based advertising through July 31,
         2001. The company recorded the value of the advertising to be received
         based upon the quoted market value of the common shares at the date of
         issuance, which amounted to $225,000. Northstar fulfilled its
         obligation pursuant to the agreement in the first quarter 2001.
         Accordingly, the balance of the prepaid advertising of approximately
         $200,000 was expensed in the first quarter 2001.

(ii)     During 2000, the Company issued 370,000 shares of common stock to
         Online Gaming System Ltd. pursuant to the OGS Agreement. Upon
         cancellation of the OGS Agreement effective December 31, 2000, the
         shares were returned by Online Gaming System Ltd. to the Company.

(iii)    During 2000, the Company issued 500,000 shares to an individual in
         exchange for investor relations services. This agreement was rescinded,
         and the shares returned to the Company prior to the commencement of any
         investor relations activities by the individual.

(iv)     In October 2002 Total Entertainment Canada Ltd. purchased 100% of the
         business rights domain names, trade marks and formulas ("the assets")
         owned by Rock Candy Cosmetics Inc.

         The purchase price of $678,000 was satisfied by issuance of
         4,520,000common shares of the company. Since Rock Candy is a privately
         held company the fair value of the assets is readily determinable. As a
         result, the assets were recoverable at a normal value.

(b)      STOCK OPTIONS

         The company does not have a formal stock option plan; however, the
         Company has issued stock options under letter agreements to certain
         individuals. The options granted had an exercise price at least equal
         to the fair value of the Company's stock, and expire after eight years.
         The options granted vest immediately.

         As permitted by SFAS No 123, the Company has elected to follow
         Accounting Principles Board Opinion No. 25 (APB No. 25.), Accounting
         for Stock Issued to Employees, method of determining compensation cost.
         Under APB No. 25, because the exercise price of the Company's employee
         stock options equals or exceeds the market price of the underlying
         stock on the date of grant, no compensation expense is recognized for
         options issued to employees or Directors.

                                      F-15
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

         The Company had no options granted, exercised or forfeited during the
         years ended December 31, 2001 and 2002. The following table summarizes
         information about the shares outstanding and exercisable for options,
         including the option held by Intercapital Asset Management Limited at
         December 31, 2002.


                                         Weighted-average
   Remaining              Number         contractual life         Number
exercise prices        outstanding           in years          exercisable
---------------        -----------       ----------------      -----------
         $.1875         66,500,000                    5.1       66,500,000
            .15          2,750,000                   5.75        2,750,000
---------------        -----------       ----------------      -----------
                        69,250,000                              69,250,000
                       ===========                             ===========

Item 6.  COMMITMENTS AND CONTINGENCIES


(a)      OPERATING LEASES

         The Company signed a lease for office premises in June 1999 for a
         period of five years ending July 31, 2004 for a minimum annual rent of
         $22,000 plus operating costs. This lease has since been terminated.
         Additionally, the Company is committed under three operating leases for
         automobiles expiring on various dates in 2004. The approximate minimum
         annual rental commitments under these operating leases currently in
         effect at December 31, 2002 are as follows:

         Year ending December 31,
                 2003                            112,000
                 2004                             66,000
                                              ----------
         Total minimum payments               $  178,000
                                              ==========

         Rent expense for the years ended December 31, 2002 and December 31,
         2001 was approximately $ 82,460 and $157,000, respectively. The Company
         also paid for a portion of Intercapital Asset Management's leased
         facility in New Jersey under an informal agreement.

(b)      CAPITAL LEASE OBLIGATION

         The Company leases certain equipment under various capital leases which
         expired in 2002.

         Equipment recorded under capital leases was $100,427. Accumulated
         amortization of capital leases amounted to approximately $ 98,931 at
         December 31, 2001. Interest on capital leases amounted to approximately
         $4,000 and $ 4,000 for the years ended December 31, 2001 and 2002,
         respectively.

                                      F-16
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

(c)      LITIGATION

         Robert W. Knoblock, Carole Knoblock and Jille Knoblock, officers,
         directors and/or principal shareholders of Kit, predecessor to the
         Company, have filed a lawsuit against the Company and certain
         affiliates. The lawsuit arises out of January 1998 reverse merger
         between Kit and Mint and restrictive legends on certain Company stock
         certificates issued to the Knoblock's in connection with this merger.
         The Knoblocks claim that they are shareholders and that the restrictive
         legends are improper as a matter of law, and that the Company and other
         defendants are liable to them, under different theories, for failure to
         remove the restrictive legends. Some defendants are defendants for
         purposes of some counts, but not others. There is another count raised
         against defendant S. Masselli only, for payment under a $175,000
         promissory note but the Company is not a defendant to that claim.
         Plaintiffs seek more than $5.5 million in damages, in addition to
         prejudgment interest, punitive damages and attorney's fees. Defendant
         Equity Transfer Services, Inc. also filed a cross-claim against the
         Company for defense costs and indemnification.

         The case has was settled September 24, 2002 under the following terms.
         Management will seek to recapitalize the company by $2,200,000 and with
         the per share price of the company averaging a minimum of $ 0.30.

         Subsequent to year and debts due to related parties were settled in
         exchange for 2,963,038 common shares as part of the recapitalization
         plan described above.

                                      F-17
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002



(d)      DISCOUNT CHARGE CARD LIMITED

         Discount charge Card Limited ("DCC") filed an arbitration proceeding
         against the Company and Intercapital Global in state court in Florida
         alleging breach of contract. In turn, the Company and Intercapital
         Global have filed an action, in state court in Florida, asserting that
         DCC and other parties violated agreements with the Company and
         Intercapital Global, as well as committed fraud. Both matters are
         currently pending. DCC is seeking damages of $400,000 in the
         arbitration proceeding. The damages under the Company's state court
         counter-claim have not yet been ascertained.

         In addition to the foregoing, the Company is involved from time to time
         in various claims and lawsuits in the ordinary course of business, none
         of which is expected, either singly, or in the aggregate, to have a
         material effect on the Company.

         Although the Company's management believes it has meritorious defenses,
         there can be no assurance that the Company will prevail. If the Company
         does not prevail, it may have a material adverse impact of the
         financial condition of the Company.

(e)      OGS GAMING SOFTWARE CONTRACTS

         On April 9, 1999, the Company signed two agreements with OGS granting
         it the right to use casino and sports book gaming software for a
         four-year period ended April 9 2003. The terms of the agreement
         required payment of $247,500 upon signing (which amount was paid in
         1999) and an obligation to pay the licensor a royalty of 7% of the
         Company's gaming revenue.

         On June 23, 1999, the Company signed two additional agreements with OGS
         for the rights to two more games for a four-year period ended June 23,
         2003. Under the terms of this agreement, the Company paid $102,500 upon
         signing and must pay a royalty of 5% and 7% respectively of the
         Company's gaming revenue.

                                      F-18
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

         The company also signed an agreement with OGS for support and
         maintenance of the licensed software for an initial period of one year
         ending June 30, 2000, at a cost of $5,000 per month, subject to
         adjustments. As part of the termination of the OGS Agreement the
         Company will have no royalty payments and minimal maintenance costs on
         an ongoing basis.

         In March 2000, the Company returned software and the related licenses
         with an aggregate cost of $172,000 to OGS, of which approximately
         $95,000 was refunded to the Company and the remaining $77,000 was paid
         in 2001.

(f)      MONTANA S.A. SOFTWARE

         The Company was using state-of-the-art casino gaming and sports book
         software under an informal license arrangement with Montana S.A.
         (Montana), a leading casino software development company. In the fourth
         quarter of 2000 the Company used this software on a no-cost trial
         basis. In 2001 the Company began making volume-based monthly royalty
         payments to Montana pursuant to an informal license arrangement. There
         was a $10,000 per month minimum royalty fee.

(g)      INCOME AND OTHER TAX RETURNS

         Through December 31, 2002, Total Entertainment, its subsidiaries and
         its predecessor companies including Kit Farms, have not filed all
         required income tax returns or other tax returns or reports required by
         Federal, State, Local or other jurisdictions. The Company has been
         advised to investigate and consult with appropriate authorities to
         establish a plan to become compliant as soon as possible. For
         substantially all periods, these entities had not generated any taxable
         profits; therefore, management believes the amount of taxes due,
         including any potential penalties and interest, for past periods is not
         considered significant.

(h)      CREDIT CARD PROCESSING CONTRACT

         In August 1998, the Company entered into an agreement with MPACT,
         subsequently transferred to Surefire, whereby Surefire performs various
         credit card approval and processing services for the online casino
         operations. Surefire receives a fee equal to 5.75%, subsequently
         reduced to 5.25% in 2000 and 5.00% in 2001, of all approved and settled
         credit card transactions, subject to a minimum of $2,000 per month. The
         Agreement is terminable by the Company with 15 days' notice to
         Surefire. Surefire holds a security deposit of $25,000 from the
         Company, and has a personal guaranty of Mr. Masselli, the Company's
         Chief Executive Officer. The contract was terminated with the cessation
         of the online gaming business.

                                      F-19
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

Item 7.  RELATED PARTY TRANSACTIONS

(a)      DEFERRED COMPENSATION

         During 1998 through 2000, the officers of the Company did not receive
         any cash compensation for their services. Two other employees including
         the brother of Mr. Masselli had similar arrangements. Such amounts
         totaled approximately $880,000 at December 31, 2000 and are deferred by
         the Company until such time as determined by the relevant officer. The
         deferred salaries shall be paid to such persons in cash or stock of the
         Company at such time as each officer may elect by written notice to the
         Company by the Board of Directors of the Company to be paid. The total
         amount of deferred officer salaries at December 31, 2002 was
         approximately $1,182,949. During the year ended December 31, 2002,
         $0.00 of officers salaries were paid in cash and $121,900 was deferred.
         (Note 6 (e))

(b)      DUE TO DIRECTORS AND STOCKHOLDERS

         From time to time, directors and stockholders of the Company have
         directly paid certain Company expenses. Such directors and stockholders
         have also supplied the Company with cash advances during 2001 and 2002.
         Such transactions have been recorded as due to directors and
         stockholders, and do not bear interest. There are no scheduled terms of
         repayment of such amounts.

(c)      HISTORY OF COMPANY

         Mr. Sandy Masselli had effective control of Mint Energy and affiliates
         and Intercapital Global. Mr. Sandy Masselli has effective control of
         Intercapital Asset Management Limited.

         Kit Farms was incorporated on April 22, 1993 and was engaged in the pet
         food business until 1995, when the remaining assets and liabilities
         were liquidated. From that date to January 28, 1998, Kit Farms was an
         inactive public company trading on the NASDAQ over-the-counter bulletin
         board market (bulletin boards).

         From 1996 through 1998, Mint Energy and its subsidiaries had spent
         several years exploring the possibilities of and developing software
         for a gaming and wagering operation accessible through the Internet.
         These entities had no revenues or employees during this period. Funds

                                      F-20
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

         used by Mint Energy and subsidiaries to conduct these activities and
         develop the business were received as advances which are reflected as
         capital contributions from Sandy J. Masselli, Jr., Chairman of the
         Board (Mr. Masselli) and other shareholders of Mint Energy. At the time
         of the merger, the shareholders of Mint and Intercapital Global were
         identical (the Beneficial Owners).

         On January 28, 1998 and as amended, Kit Farms Inc. (Kit Farms) merged
         with Mint Energy including its subsidiaries, and the Beneficial Owners
         of Intercapital Global contributed their shares of Intercapital Global
         to Kit Farms. At the time of the Kit Farms merger, it had been
         purported that 7.37 million shares of Kit Farms were outstanding.
         Subsequent to the merger, the Company was informed that there may be
         additional shares outstanding, which were subsequently cancelled by the
         Company. This matter is currently under arbitration (see Note D-4).
         Notwithstanding the arbitration issue, the existing stockholders of Kit
         Farms were to continue to hold the 7.37 million shares of the common
         stock to the merged entity. Intercapital Global, in its role as agent
         the Beneficial Owners, received 104.8 million shares common stock of
         Kit Farms, with an aggregate value of approximately $2 million pursuant
         to the merger of Mint Energy into Kit Farms, and the contribution, by
         the Beneficial Owners, of their shares of Intercapital Global. The
         aggregate value was determined through negotiations among the Boards of
         Directors of Kit Farms and Mint Energy, in the absence of reliable
         quoted market prices on the bulletin boards.

         In February 1998, the Beneficial Owners voluntarily returned to
         treasury 57 million shares. The shares were subsequently cancelled by
         the Company. On February 3, 1998, the Company granted an option (the
         Global Option), to replace the returned shares, to acquire 57 million
         shares at $1.875 per share, exercisable at any time through February 3,
         2006, to Intercapital Global in its role as agent for the Beneficial
         Owners. Intercapital Global subsequently transferred the option to
         Intercapital Asset Management Limited, an investment management company
         controlled by Mr. Masselli, which had the same Beneficial Owners as
         Mint Energy and Intercapital Global.

         Intercapital Global, in its role as agent for the Beneficial Owners,
         subsequently distributed 47.8 million shares of common stock it
         received to its Beneficial Owners, which together with the Global
         Option were consideration for the merger.

         In June 1998, the Company issued an additional 537,000 shares to the
         former principal shareholders and directors of Kit Farms to facilitate
         the merger. The acquisition resulted in the owners and management of
         Mint Energy having effective control of the combined entity.

         Kit Farms changed its name to Total Entertainment Inc. on February 19,
         1998.

         Under accounting principles generally accepted in the United States of
         America, the acquisition is considered to be a capital transaction in
         substance, rather than a business combination. That is, the acquisition
         is equivalent to the issuance of stock by Mint Energy for the net
         monetary assets of Kit Farms, accompanied by a recapitalization, and is
         accounted for as a change in capital structure. Accordingly, the
         accounting for the acquisition is identical to that resulting from a

                                      F-21
<PAGE>

TOTAL ENTERTAINMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

         reverse acquisition, except that no goodwill is recorded. Under reverse
         takeover accounting, the post-reverse-acquisition comparative
         historical financial statements of the legal acquire (Kit Farms) are
         those of the accounting acquirer (Mint Energy). Earnings per share
         (EPS) are calculated to reflect the Company's change in capital
         structure for all periods presented.

         Intercapital Global was organized in 1993 by Mr. Masselli, as an
         offshore private investment fund, which from time to time conducted
         certain investment activities not related to the online gaming business
         for the benefit of the Beneficial Owners. At the time, Mr. Masselli had
         voting and investment control over all of Intercapital Global's assets
         and control over all outstanding shares of capital stock issued by
         Intercapital Global. Intercapital Global later became a wholly-owned
         subsidiary of the Company when its Beneficial Owners contributed their
         shares to Kit Farms as part of the merger. At the time of the transfer
         of ownership, Intercapital Global held no assets or liabilities other
         than the gaming license.

Item 8.  INCOME TAXES

         Upon filing income tax returns, the Company could have net operation
         losses of approximately $2 million, which could be used to offset
         future United States taxable income. However, net operating losses and
         other deferred expenses generated in years for which no income tax
         returns have been filed, or are not accepted by the Internal Revenue
         Service, may not be available. The Company is consulting with legal
         council to determine a plan to become compliant. Deferred tax assets
         arising from these net operating loss carry forward, deferred
         compensation and certain accruals, if any, are fully reserved due to
         the uncertainty of future utilization. The Company did not have any
         significant taxable income in the United States or Canada for the years
         ended December 31, 2002 and 2001, and income generated in Antigua is
         not subject to income taxes.

         Changes in ownership resulting from transactions among our stockholders
         and sales of common stock by us, may limit annual realization of the
         tax net operating loss carry forwards that could become available under
         Section 382 of the Internal Revenue Code.

Item 9.  SUPPLEMENTARY CASH FLOW INFORMATION

(a)      NON-CASH TRANSACTION

         The Company issued Common Stock, with a fair value of $678,000, for the
         business rights, domain names, trademarks and formulas owned by Rock
         Candy Cosmetics Inc.

(b)      INTEREST AND TAXES PAID.

         During 2002 the Company paid approximately $0 of taxes and $4,000 of
         interest. During 2001 the Company paid approximately $0 of taxes and
         $4,000 of interest.

                                      F-22
<PAGE>

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

OFFICERS AND DIRECTORS

The Company's officers and directors are as follows:


     Name                       Age       Position(s)

Sandy J. Masselli, Jr.          40        Chairman of the Board, Chief
                                          Executive Officer and Secretary
Mitchell Brown                  37        Director, President and Chief
                                          Operating Officer
Robert D. Bonnell               57        Director
Richard B. Davis                56        Director and Chief Financial Officer
John Masselli                   32        Director


TERMS OF DIRECTORS

Mr. Sandy Maselli and Mr. Brown have served as directors of the Company since
January 21, 1998. Mr. Bonnell, and Mr. Davis have served as directors of the
Company since September 30, 1998. Mr. John Masselli has served as director of
the Company since July 2, 2001. The directors of the Company serve as such until
the next annual meeting of stockholders and until their successors are elected
and qualified.

BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS

Sandy J. Masselli, Jr. has served as the Chairman of the Board, Chief Executive
Officer, and a Director of the Company since January 1998. From May 1990 to the
present, Mr. Masselli has served as Managing Director of Intercapital Asset
Management Company, Inc., an investment advisory company, where he has been
responsible for the selection and monitoring of investments as well as merchant
banking activities. From May 1981 until May 1990, Mr. Masselli worked as a Vice
President or Senior Vice President at several major securities and brokerage
firms, including Prudential Securities, Inc., Drexel Burnham Lambert, Inc.,
Shearson Lehman Hutton, Inc. and Merrill Lynch Pierce Fenner & Smith, Inc. He
holds a Bachelor of Arts degree in Political Science from Monmouth College.

Mitchell Brown has served as the President, Chief Operating Officer and a
Director of the Company since January 1998. He has over 11 years experience in
the sales and marketing industry. From January 1990 to December 1997, Mr. Brown
worked as a sales representative at Feldman Associates where his
responsibilities included the sale of licensed and generic toys, candy, seasonal
and novelty products. Mr. Brown holds a Bachelor of Science degree in Business
Administration from Monmouth University.

<PAGE>

Robert D. Bonnell has served as a Director of the Company since September 30,
1998. He has over 25 years experience in the marketing and public relations
industries. From 1992 to the present, Mr. Bonnell has served as Chairman and
Chief Executive Officer of Skiff Lake Holdings Limited, a private holding
company with positions in real estate, investments and trusts. During this
period, he also served as Chairman of Communicer, an international company
specializing in corporate communications and advice in connection with mergers
and acquisitions. Previously, Mr. Bonnell worked as Managing Director and in
other senior positions for Public & Industrial Relations, Canada's largest
public relations firm. In addition, Mr. Bonnell has in the past served as a
director of several other companies, including Windsor Investments S.A. in
Luxemburg, Tudor Deutche International and Windsor Energy Corporation in Tulsa,
Oklahoma (which position he currently holds). He holds a Bachelor of Arts
(Honors) degree in Political Science and Economics from Ricker College,
University of New Brunswick.

Richard B. Davis has served as a Director of the Company since September 30,
1998. He is a Certified Public Accountant licensed to practice in New York and
New Jersey. From 1976 to the present, Mr. Davis has been engaged in the private
practice of accounting, providing services to many companies and individuals.
Prior to that time, Mr. Davis spent many years working in the tax and other
departments at several major accounting firms, including Peat Marwick, Mitchell
& Co. and Touche Ross & Co. Mr. Davis is a member of the American Institute of
Certified Public Accountants, the New York State Society of Certified Public
Accountants and the New Jersey Society of Certified Public Accountants. He holds
a Bachelor of Business Administration degree from City College of New York.

John J. Masselli has served as a Director and Secretary of the Company since
July 2001. From March 1998 to present, Mr. John J. Masselli has been employed by
the Company as Executive Vice President, Marketing/Development. From March 1993
to March 1998, Mr. John J. Masselli was employed by Merrill Lynch & Co., Inc.,
U.S. Private Client Services; his responsibilities included brokerage operations
and customer service. Mr. John J. Masselli holds a Bachelor of Science degree in
Communications from The University of Miami, Florida. Mr. John J. Masselli is
the brother of Sandy J. Masselli, Jr., Chairman of the Board, Chief Executive
Officer and a director of the Company.

FAMILY RELATIONSHIPS

John J. Masselli, Director is the brother of Sandy Masselli, Jr. Chairman of the
Board. There are no other family relationships among directors, executive
officers or other persons nominated or chosen by the Company to become officers
or executive officers.

<PAGE>

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

The Company is not aware of any material legal proceedings that have occurred
within the past five years concerning any director, director nominee, promoter
or control person which involved a criminal conviction, a pending criminal
proceeding, a pending or concluded administrative or civil proceeding limiting
one's participation in the securities or banking industries, or a finding of
securities or commodities law violations.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the SEC). Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.

Based solely on the Company's review of the copies of such forms received by it,
or written representations from certain reporting persons, the Company believes
that, during the fiscal year ended December 31, 2001, all filing requirements
applicable to the Company's officers, directors and greater than ten percent
beneficial owners were complied with.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth certain summary information concerning the
aggregate compensation paid to the Company's Chief Executive Officer. There were
no other executive officers of the Company who earned in excess of $100,000 for
the year ended December 31, 2001:

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                   Long-Term
                                                                                  Compensation
                                          Annual Compensation                      Securities
Name and                                  -------------------    Other Annual      Underlying
Principal Position(s)             Year    Salary ($)    Bonus    Compensation    Options/SARs (#)
------------------------------    ----    ----------    -----    ------------    ----------------
<S>                               <C>     <C>             <C>          <C>             <C>
Sandy J. Masselli, Jr.(1)         2002    100,000(2)      0            0               0
Chairman of the Board             2001    100,000(2)      0            0               0
and Chief Executive Officer
</TABLE>

<PAGE>

1.   Sandy Masselli, Jr. became Chief Executive Officer of the Company as of
     January 23, 1998 as part of the Merger.

2.   See Deferred Compensation Arrangements below.

STOCK OPTIONS

No stock options were granted or exercised during 2002 to or by any of the
Company's named executive officers.

LONG-TERM INCENTIVE PLANS

The Company made no awards to the named executive officers under any long-term
incentive plan in 2002.

COMPENSATION OF DIRECTORS

Directors of the Company do not receive any stated salary or other compensation
for their services as directors or members of committees of the Board of
Directors, but by resolution of the board, a fixed fee and expenses of
attendance may be allowed for attendance at each meeting. Directors of the
Company may also serve the Company in other capacities as an officer, agent or
otherwise, and may receive compensation for their services in such other
capacity.

DEFERRED COMPENSATION ARRANGEMENTS

Sandy Masselli, together with certain other senior officers and employees of the
Company, have agreed to defer their annual salaries until such time as
determined by the relevant officer, without interest and not funded. The
deferred salaries shall be paid to such persons in cash or stock of the Company
at such future time as each person may elect by written notice to the Company.

EMPLOYMENT AGREEMENTS

The Company is not a party to any employment or consulting agreement with any
named executive officer.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth certain information regarding beneficial
ownership of the Company's Common Stock by (i) each person who is known by the
Company to beneficially own more than five percent of the Company's Common
Stock, (ii) each of the Company's directors, (iii) each of the executive
officers named in the Summary Compensation Table set forth in Item 10 --
EXECUTIVE COMPENSATION, and (iv) all directors and executive officers of the
Company as a group. Unless otherwise indicated, the address of such persons is
P.O. 8699 Red Bank, New Jersey 07701.

<PAGE>

                                        Number of Shares
                                        of Common Stock
Name and Address of Beneficial Owner  Beneficially Owned(1)  Percent of Class(2)
------------------------------------- ---------------------  -------------------

Sandy J. Masselli, Jr                       72,500,000(3)             59.5
Mitchell Brown                               3,500,000(4)              5.8
Robert D. Bonnell                            2,350,000(5)              4.0
John Masselli                                  750,000(6)              1.2
Richard B. Davis                               250,000(8)               .4
Robert and Carole Knoblock                   4,140,000                 7.2
  294 South 200 W
  Valparaiso, Indiana 46383
Intercapital Asset Management Limited       57,000,000(9)             49.8
  c/o The Royal Bank of Scotland
  Shirley & Charlotte Street
  Nassau, The Bahamas
All directors and executive officers        79,600,000                71.3
as a group (first 6 persons)

1.   Beneficial ownership is determined in accordance with the rules of the
     Securities and Exchange Commission and generally includes voting or
     investment power with respect to securities. Except as indicated by
     footnotes and subject to community property laws, where applicable, the
     persons named above have sole voting and investment power with respect to
     all shares of Common Stock shown as beneficially owned by them.

2.   With respect to option holders, the calculation of percentage ownership
     assumes the exercise of the relevant option or options beneficially owned
     by the holder but not by other option holders.

3.   This amount consists of (i) 10,000,000 shares of Common Stock held,
     directly or indirectly, by Sandy Masselli's family and relatives, with
     respect to which Mr. Masselli is in a position to exercise voting and
     investment power, (ii) 3,000,000 common stock options issued to Mr.
     Masselli, (iii) 2,500,000 common stock options issued to Mr. Masselli's
     brother, Joseph H. Masselli, with respect to which Mr. Masselli is in a
     position to exercise voting and investment power, and (iv) 57,000,000
     common stock options (the Global Options) held by Intercapital Asset
     Management Limited, a Bahamian corporation (ICAM) as transferee from
     Intercapital Global, with respect to which Mr. Masselli is in a position to
     exercise voting and investment power. All of the 62,500,000 common stock
     options referred to in clauses (ii), (iii), and (iv) above are exercisable
     at any time at $0.1875 per share and expire on February 3, 2006. ICAM is
     also listed in the table as an additional beneficial owner of the Global
     Options.

<PAGE>

4.   2,500,000 of this amount consists of common stock options issued to Mr.
     Brown. The options are exercisable at any time at $0.1875 per share and
     expire on February 3, 2006.

5.   2,000,000 of this amount consists of common stock options issued to Mr.
     Bonnell. The options are exercisable at any time at $0.15 per share and
     expire on September 30, 2006. Of the remaining 350,000 shares beneficially
     owned by Mr. Bonnell, 170,000 are held directly and 180,000 are held
     through a family holding company of which Mr. Bonnell is the Chairman and
     CEO.

6.   This amount consists of 750,000 common stock options issued to Mr. John
     Masselli. The options are exercisable at any time at $0.1875 per share and
     expire on February 3, 2006.

7.   This amount consists of 250,000 common stock options issued to Mr. Malcom.
     The options are exercisable at any time at $0.15 per share and expire on
     September 30, 2006.

8.   This amount consists of 250,000 common stock options issued to Mr. Davis.
     The options are exercisable at any time at $0.15 per share and expire on
     September 30, 2006.

9.   This amount consists of the 57,000,000 Global Options issued to
     Intercapital Global as an agent for the beneficial owners of Mint and
     Intercapital Global. The Global Options were subsequently transferred by
     Intercapital Global to ICAM. The Global Options are exercisable at any time
     at $0.1875 per share and expire on February 3, 2006. Sandy J. Masselli, Jr.
     is also listed in the table as an additional beneficial owner of the Global
     Options.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

FORMATION OF THE COMPANY

The Company was incorporated on April 22, 1993 in the State of Indiana under the
name Kit Farms Inc. (Kit). From 1993 until 1995, Kit engaged in the business of
pet food manufacturing and processing. From 1995 until January 1998, Kit was
inactive. On January 28, 1998, Mint Energy Corporation, a Delaware corporation
(Mint), merged with and into Kit, with Kit being the surviving corporation (the
Merger). Concurrently, Intercapital Global was contributed to Kit by its
shareholders, and became a wholly-owned subsidiary of Kit. Mint and Intercapital
Global had the same beneficial owners (the beneficial owners) at the date of the
Merger. After the Merger, Kit changed its name to the present name of the
Company and in September 1998, the Company commenced its present Internet casino
business.

The Merger was effected pursuant to the terms of a Merger Agreement dated
November 17, 1997 entered into between Mint and Kit, as amended by the First
Amendment thereto dated January 15, 1998, and as further amended by certain oral
agreements in February 1998 (as amended, the Merger Agreement). Pursuant to the
Merger Agreement, the shareholders of Mint and Intercapital

<PAGE>

Global received approximately 104.8 million shares of Common Stock (the Merger
Shares) with a negotiated value of $2 million in consideration for entering into
the Merger. Through the Merger, the shareholders and management of Mint acquired
control over the Company as the surviving entity.

Prior to the Merger, Mint owned certain Internet casino hardware and software
through its two wholly-owned subsidiaries, Online Software, Inc., a Delaware
corporation (OSI), and Online Casinos, Inc. a Delaware corporation (OCI), and
Intercapital Global owned a gaming license issued by the government of Honduras.
From 1996 through the date of the Merger, the beneficial owners of these
entities advanced approximately $2 million which are reflected as capital
contributions to such entities to fund expenditures relating to research and
development of the online gaming business and software. As a result of the
Merger, OSI and OCI became wholly-owned subsidiaries of the Company and were
later merged with and into the Company with the Company surviving. Intercapital
Global was organized in October 1993 as an offshore private corporation.


Other

         From time to time, certain officers and directors of the Company have
directly paid certain Company expenses. Such transactions have been recorded in
the Company's books as due to officers, and do not bear interest. There are no
scheduled terms of repayment of such amounts.

         From 1996 to 1998, Mint and its subsidiaries (predecessor of the
Company) had expenses, principally for computer programming services, that
included approximately $65,000 paid to entities controlled by certain officers
of the Company. During this period, Mint also received advances which are
reflected as capital contributions in the amount of approximately $2,000,000
from the beneficial owners.


ITEM 14. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's Common Stock is currently traded on the OTC bulletin board market
maintained by Nasdaq under the symbol TlEI.ob. The following table sets forth
the range of the high and low bid quotations for the Company's Common Stock for
the periods indicated (as reported by Nasdaq). The bid quotations set forth
below reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions:

<PAGE>


                                                      High        Low
                                                      ----        ---

Fiscal Year Ended December 31, 2002: .........       $ 0.01     $ 0.04
    First Quarter ............................         0.08       0.03
    Second Quarter ...........................         0.04       0.03
    Third Quarter ............................         0.05       0.01
    Fourth Quarter ...........................         0.04       0.01


                                                      High        Low
                                                      ----        ---

Fiscal Year Ended December 31, 2001:
    First Quarter ............................       $ 0.17     $ 0.05
    Second Quarter ...........................         0.32       0.05
    Third Quarter ............................         0.12       0.06
    Fourth Quarter ...........................         0.08       0.04


SECURITY HOLDERS AND DIVIDENDS

As of December 31, 2002, there were approximately 133 holders of record of the
Company's Common Stock. The Company has not declared or paid any cash dividends
on its Common Stock during the past two fiscal years. The Company's board of
directors currently intends to retain all earnings for use in the Company's
business for the foreseeable future. Any future payment of dividends will depend
upon the Company's results of operations, financial condition, cash requirements
and other factors deemed relevant by the Company's board of directors.


ITEM 15. EXHIBITS INDEX

The exhibits designated with an asterisk (*) have been previously filed with the
Commission and, pursuant to 17 C.F.R. Section 230.411, are incorporated by
reference to the document referenced in brackets following the descriptions of
such exhibits.

<PAGE>

     3.1   Certificate of Incorporation and amendments*
     3.2   Bylaws*
    10.1   Merger Agreement dated November 17, 1997 entered into between Mint
           Energy Corporation and Kit Farms Inc., as amended by the First
           Amendment thereto dated January 15, 1998, and Plan of Merger/Exchange
           dated January 23, 1998*
    10.2   License Agreements dated April 9, 1999 and June 23, 1999 between
           Intercapital Global Fund, Ltd. and Online Gaming Systems, Ltd (f/k/a.
           Atlantic International Entertainment, Ltd.), and related Software
           Support Maintenance Agreements*
    10.3   Amended and Restated Purchase Agreement dated May 5, 1999 between
           Intercapital Global Fund, Ltd. and Summerhill Gaming Limited*
    10.4   Agreement dated August 18, 1998 between Intercapital Global Fund,
           Ltd. and MPACT Immedia Transaction Services Ltd.*
    10.5   Equipment Lease Agreement dated August 18, 1999 between Total
           Entertainment Canada, Ltd. (formerly Intercapital Canada Ltd.) and
           Dell Financial Services Canada Limited*
    10.6   Lease Agreement dated June 22, 1999 between Marine Properties Ltd.,
           as Landlord, and Total Entertainment Canada, Ltd. (formerly
           Intercapital Canada Ltd.), as Tenant*
    10.7   Lease Agreement dated July 30, 1999 between Devonshire House, Ltd.,
           as Landlord, and Intercapital Global Fund, Ltd., as Tenant*
    10.8   Revolving Credit Note dated May 5, 1999 payable to Summerhill Gaming
           Limited*
    10.9   Marketing and License Agreement dated January 14, 2000 between
           Intercapital Global and Online Gaming Systems, Ltd.*
    10.10  Information Services Provider Agreement dated February 1, 2000
           between Intercapital Global and Caribbean Entertainment
           International, S.A.*
    10.11  Purchase Agreement dated March 1, 2000 between Intecapital Global and
           Netforfun.com Inc., and related Software Support Maintenance
           Agreement*
    10.12  Agreement with Summerhill Gaming Limited dated March 24, 2000
           regarding debt to equity conversion*
    10.13  Form 8-K dated September 10,2002*
    10.14  Form 8-K dated November 18,2002*
    99.1   Certification of Sandy J. Masselli pursuant to 18 U.S.C. Section
           1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
           2002.
    99.2   Certification of Mitchell H. Brown pursuant to 18 U.S.C. Section
           1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
           2002.
    99.3   Certification of Richard B. Davis pursuant to 18 U.S.C. Section 1350,
           as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

<PAGE>

SIGNATURES

In accordance with Section 13 or15 (d) of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.


                                       TOTAL ENTERTAINMENT INC.

                                       By /s/ SANDY J. MASSELLI, JR.
                                          --------------------------------------
                                          Sandy J. Masselli, Jr.,
                                          Chairman of the Board, Chief Executive
                                          Officer Director

Dated July 24, 2003

In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

SIGNATURE                       TITLE                                DATE
---------                       -----                                ----

/s/ MITCHELL BROWN             President, Chief Operating         July 24, 2003
--------------------------     Officer and Director

/s/ ROBERT D. BONNELL          Director                           July 24, 2003
--------------------------

/s/ RICHARD B. DAVIS           Director                           July 24, 2003
--------------------------     and Chief Financial Officer

/s/ JOHN J. MASSELLI           Director                           July 24, 2003
--------------------------