<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

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

For the fiscal year ended January 31, 1999         Commission File No.  0-25858

                              DAVE & BUSTER'S, INC.

             (Exact name of registrant as specified in its charter)

         Missouri                                         43-1532756
(State or other jurisdiction of                      (I.R.S. employer
incorporation or organization)                       identification number)

2481 Manana Drive, Dallas, Texas                            75220
(Address of principal executive offices)                  (zip code)

                         Registrant's telephone number,
                       including area code (214) 357-9588

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

                               Title of Each Class
                          Common Stock, $0.01 par value

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

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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ___

The aggregate market value of the voting stock held by persons other than
directors and officers of registrant (who might be deemed to be affiliates of
registrant) at April 23, 1999 was $267,911,907.

The number of shares of common stock outstanding at April 23, 1999 was
13,076,600 shares.


                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement dated May 10, 1999, for its annual
meeting of Stockholders on June 15, 1999, are incorporated by reference into
Part III hereof, to the extent indicated herein.


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                                     PART I

Item 1.  BUSINESS.

         General

         Dave & Buster's, Inc. (the "Company") operates 19 large format,
         high-volume Restaurant/Entertainment Complexes ("Complexes" or
         "Stores") under the Dave & Buster's name. Each Dave & Buster's Complex
         offers a full menu of high quality food and beverage items combined
         with an extensive array of entertainment attractions such as pocket
         billiards, shuffleboard, state-of-the-art interactive simulators and
         virtual reality systems, and traditional carnival-style games of skill.
         The Company's large format is designed to promote easy access to, and
         maximize customer cross-over between, the multiple dining and
         entertainment areas within each Complex. The Company emphasizes high
         levels of customer service to create casual, yet sophisticated, "ideal
         playing conditions" for adults.


         The Dave & Buster's Concept

         The Company seeks to differentiate itself by providing high quality
         dining, bar service, and entertainment attractions in a comfortable,
         adult atmosphere. The key factors of the Company's market positioning
         and operating strategy are:

         Distinctive Concept. Each Dave & Buster's offers a distinctive
         combination of dining, bar service and entertainment. A full menu and
         complete bar service are available from early lunch until late at night
         in each restaurant and throughout almost all of the entertainment
         areas. The broad array of attractions, ranging from table and carnival
         games to state-of-the-art virtual reality games, is continuously
         reviewed and updated to maintain a fresh entertainment environment. The
         Company also actively seeks to enhance the popularity of its
         traditional games, such as pocket billiards and shuffleboard, by
         providing high quality tables, a clean and comfortable environment and
         a high standard of service.

         A Large, Multiple Attraction Destination. The Complexes range in
         approximate total area from 30,000 square feet to 70,000 square feet.
         The large scale of each operation, together with the numerous food,
         beverage and entertainment options offered, is designed to attract a
         diverse customer base and consolidate multiple-destination customer
         spending into one location. Each Dave & Buster's attracts local
         customers from a wide geographical area (estimated to be a twenty-mile
         radius) along with tourists, conventioneers, and business travelers.

         Commitment to Quality. The Company strives to provide its customers
         with good food and an inviting atmosphere. Accordingly, each Dave &
         Buster's offers an extensive menu which features popular, moderately
         priced food and beverage items that are individually prepared with a
         commitment to value and quality. The Company makes a significant
         investment in each Complex, and the Company's facilities are designed
         with an attention to detail. In addition, the customer-participation
         entertainment attractions are tastefully presented in an atmosphere
         that the Company defines as "ideal playing conditions."



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         High Standard of Customer Service. Through intensive personnel
         training, constant monitoring of operations and stringent operational
         controls, the Company strives to maintain a consistently high standard
         of food, beverage, and amusement service throughout each Complex. The
         Company's commitment to customer service is evidenced by the
         availability of full food and beverage service in entertainment areas
         as well as the restaurant and bar areas.

         With respect to entertainment, the Company's commitment to customer
         service is demonstrated by service staff in each of the entertainment
         areas who offer assistance in playing and enjoying the games. The
         Company believes its customer service is enhanced by a strong
         commitment to employee motivation and appreciation programs. The
         Company also believes that high service standards are critical to
         promoting customer loyalty and to generating frequent-visiting patterns
         and referrals by customers.

         Comfortable Adult Atmosphere. Each Dave & Buster's is primarily adult
         oriented and, while children are welcome, strict guidelines are
         enforced. Customers under twenty-one years of age must be accompanied
         by a parent or guardian (a person 25 years of age or older who agrees
         to be responsible for the conduct and safety of the underage guest) at
         all times during their visit and are not allowed in a Dave & Buster's
         after 10:00 p.m. (11:00 p.m. in the summer months). The Company
         believes that these policies help maintain the type of pleasant,
         relaxed atmosphere that appeals to adult customers. The Company also
         believes that this atmosphere attracts groups of customers such as
         private parties and business organizations.

         Integrated Systems. The Company utilizes centralized information and
         accounting systems that are designed to allow its management to
         efficiently monitor labor, food, and other direct operating expenses,
         and to provide timely access to financial and operating data.
         Management believes that its integrated computer systems permit it, on
         both an overall and per Complex basis, to efficiently operate the
         Restaurant/Entertainment Complexes.

         Restaurant/Entertainment Concept and Menu

         Dave & Buster's offers a full menu of high quality food and beverage
         items combined with an extensive array of entertainment attractions
         such as pocket billiards, shuffleboard, state-of-the-art interactive
         simulators and virtual reality systems, and traditional carnival-style
         games of skill. The Company's facilities are designed to promote easy
         access to, and maximize customer cross-over between, the multiple
         dining and entertainment areas within each Complex. The Company
         emphasizes high levels of customer service to create casual, yet
         sophisticated, "ideal playing conditions" for adults.

         The Dave & Buster's menu is offered from early lunch until late night
         and features moderately priced food designed to appeal to a wide
         variety of customers. This well-rounded fare includes gourmet pastas,
         individual sized pizzas, burgers, steaks, seafood and chicken. The menu
         is regularly updated to reflect current dining trends and incorporates
         "house specials" such as barbeque ribs, blackened chicken pasta,
         mesquite-peppered rib eye steak, and a Philadelphia cheesesteak
         sandwich. A wide variety of other appetizers, soups, salads, sandwiches
         and desserts is also available. Entree prices range from $6.50 to
         $16.95, with many entrees in the $7.95 to $9.95 price range. In order
         to promote customer flow and complement the entertainment areas, full,
         sit-down food service is offered not only in the restaurant areas, but
         throughout the entire Complex. In addition, throughout the restaurant
         and entertainment areas each Dave & Buster's 


                                      -3-
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         offers full bar service including over 50 different beers, an extensive
         wine selection, and a variety of non-alcoholic beverages such as its
         own private label, "D&B Old Fashioned Philly Root Beer."

         The entertainment attractions in each Dave & Buster's are geared toward
         customer participation and offer both traditional entertainment and
         "Million Dollar Midway" entertainment.

         Traditional Entertainment. Each Dave & Buster's offers a number of
         traditional entertainment options. These traditional offerings include
         "world class" pocket billiards, "championship-style" shuffleboard
         tables, and the Show Room which is designed for hosting private social
         parties and business gatherings as well as Company sponsored events.
         Traditional entertainment games are rented by the hour.

         Million Dollar Midway Games. The largest area in each Dave & Buster's
         is the Million Dollar Midway which is designed to provide high-energy,
         escapism entertainment through a broad selection of electronic, skill
         and sports-oriented games. The Dave & Buster's Power Card activates all
         the midway games (with the exception of coin action games) and can be
         recharged for additional play. The Power Card enables customers to
         activate games more easily and encourages extended play of games. By
         replacing coin activation, the Power Card has eliminated the technical
         difficulties and maintenance issues associated with coin activated
         equipment. Furthermore, the Power Card feature has increased the
         Company's flexibility in pricing and promoting of games.

         Attractions within the Million Dollar Midway include fantasy/high
         technology and classic midway entertainment. Fantasy/high-technology
         offerings include simulator games such as formula race cars, off-road
         vehicles, fighter jets and motorcycles; Galaxian Theater, a
         multi-participant, enclosed simulation theater where up to six players
         take part in mock battles with alien invaders; Virtuality, an
         interactive, electronic game designed to simulate an actual battlefield
         environment; Virtual World, a fantasy environment attraction; Iwerks
         Turbo Ride Theatre, a 16 to 18 seat motion simulation theater;
         large-screen interactive electronic games; and "The 19th Hole,"a
         state-of-the-art golf simulator.

         Classic midway entertainment includes sports-oriented games of skill;
         carnival-style games, which are intended to replicate the atmosphere
         found in many local county fairs; and D&B Downs which is one of several
         multiple-player race games offered in each Dave & Buster's. At the
         Winner's Circle, players can redeem coupons won from selected games of
         skill for a wide variety of prizes, many of which display the Dave &
         Buster's logo. The prizes include stuffed animals, ballcaps, T-shirts,
         boxer shorts, and small electronic items.




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         Locations

         At January 31, 1999, the Company operated a total of 17 locations in 11
states, which included:

<TABLE>
<CAPTION>
                                                          Approximate
    Location                              State          Square Footage
    --------                              -----          --------------
<S>                                      <C>            <C>

    Dallas (I)                              TX               40,000
    Dallas (II)                             TX               33,000
    Houston                                 TX               53,000
    Atlanta                                 GA               53,000
    Philadelphia                            PA               70,000
    Chicago (I)                             IL               50,000
    Chicago (II)                            IL               58,000
    Hollywood                               FL               50,000
    North Bethesda                          MD               60,000
    Ontario                                 CA               58,000
    Cincinnati                              OH               63,000
    Denver                                  CO               48,000
    Utica (suburban Detroit)                MI               53,000
    Irvine                                  CA               53,000
    Rockland County                         NY               53,000
    Orange                                  CA               53,000
    Columbus                                OH               37,500
</TABLE>


         Business Development

         The Company continually seeks to identify and evaluate new locations
         for expansion. The Company's goal is to open six and seven Complexes in
         fiscal years 1999 and 2000, respectively, and eight Complexes each
         fiscal year thereafter. The Company will open Complexes in 1999 as
         follows:

<TABLE>
<CAPTION>
                                                        Approximate           Development
             Location                   State         Square Footage             Status
             --------                   -----         --------------             ------
<S>                                     <C>          <C>                   <C>

             San Antonio                  TX              52,000           Opened February 1999
             Atlanta (II)                 GA              57,000           Opened April 1999
             St. Louis                    MO              56,000           Under construction
             Austin                       TX              40,000           Under construction
             Jacksonville                 FL              40,000           Under construction
             Providence                   RI              40,000           Under construction
</TABLE>

         Potential locations for openings in fiscal 2000 have been tentatively
         identified and site negotiations are currently in progress.



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         The Company believes that the location of its Complexes is critical to
         the Company's long-term success and devotes significant time and
         resources to analyzing each prospective site. In general, the Company
         targets high-profile sites within metropolitan areas of less than one
         million people for intermediate-size models and at least one million
         people for mega-size models. The Company carefully analyzes demographic
         information (such as average income levels) for each prospective site,
         the Company considers factors such as visibility; accessibility to
         regional highway systems; zoning; regulatory restrictions; and
         proximity to shopping areas, office complexes, tourist attractions and
         residential areas. The Company also carefully studies the restaurant
         and entertainment competition in prospective areas. In addition, the
         Company must select a site of sufficient size to accommodate its
         prototype facility with ample, convenient customer parking.

         The typical cost of opening a mega-size Dave & Buster's ranges from
         approximately $7.0 million to $12.0 million (excluding preopening
         expenses and developer allowances), depending upon the location and
         condition of the premises. For intermediate-size models, the typical
         cost ranges from approximately $6.0 million and $8.0 million (excluding
         pre-opening expenses and developer allowances), depending upon the
         location and condition of the premises. The Company will base the
         decision of owning or leasing a site on the projected unit economics
         and availability of the site for purchase. The Complexes opened in 1998
         included both owned and leased facilities. Opening a leased facility
         reduces the Company's capital investment in a Complex because the
         Company does not incur land and site improvement costs and may also
         receive a construction allowance from the landlord for improvements.
         The exterior and interior layout of a Dave & Buster's is flexible and
         can be readily adapted to different types of buildings. The Company has
         opened Complexes in both new and existing structures, in both urban and
         suburban areas.


         International

         In August 1995, the Company entered into a license agreement with a
         subsidiary of Bass Plc ("Bass") to license the "Dave & Buster's" name
         and concept in the United Kingdom. Under this agreement, Bass opened a
         Complex in Birmingham, England in May 1997, a Complex in Bristol,
         England in July 1998, and has agreed to open a total of seven Complexes
         in the United Kingdom by 2005. Under the license agreement, Bass is
         required to pay the Company a royalty based upon gross revenues, net of
         value added taxes. The royalty rate paid by Bass is a sliding scale
         which averages 5% of gross revenues. The license agreement contains
         strict operating covenants to ensure consistency of the menu and
         entertainment offerings with those in the Company-operated Complexes.

         In February 1998, the Company entered into a license agreement with the
         TaiMall Development Company ("TaiMall") to license the "Dave &
         Buster's" name and concept in the Pacific Rim. Under this agreement,
         TaiMall expects to open seven Complexes in the Pacific Rim by the year
         2006, the first of which it anticipates opening in 1999. Under the
         license agreement, TaiMall is required to pay the Company a 5% royalty
         based upon gross revenues. The license agreement contains strict
         operating covenants to ensure consistency of the menu and entertainment
         offerings with those in the Company operated Complexes.

         In September 1998, the Company entered into a license agreement with
         the SVAG Development Corporation ("SVAG")to license the "Dave &
         Buster's" name and concept in Germany, 



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         Switzerland and Austria. Under this agreement, SVAG expects to open
         seven Complexes by the year 2007, and is required to pay the Company a
         5% royalty based upon gross revenues. The license agreement contains
         strict operating covenants to ensure consistency of the menu and
         entertainment offerings with those in the Company operated Complexes.

         In December 1998, the Company entered into a letter of intent to
         license the "Dave & Buster's" name and concept in Canada with W.I.N.
         Gaming Corp. It proposes to develop five locations in Canada, with the
         first location targeted to open in a Toronto retail center in the year
         2000. In October 1997, the Company entered into a letter of intent to
         license the "Dave & Buster's" name and concept in Mexico with ECE S.A.
         de C.V to develop five locations. There is no assurance that these
         letters of intent will result in definitive agreements.

         The Company is considering entering into agreements to license the
         "Dave & Buster's" name and concept in additional foreign countries. The
         Company does not have any current plans to invest its own capital in
         any foreign operations.

         Operations and Management

         The Company's ability to manage a complex operation, including both
         high volume restaurants, bars and diverse entertainment attractions,
         has been critical to its overall success. The Company strives to
         maintain quality and consistency in each of its Complexes through
         careful training and supervision of personnel and the establishing and
         adhering to, and adherence to, high standards relating to personnel
         performance, food and beverage preparation, entertainment productions
         and equipment, and facilities maintenance. The Company believes that it
         has been able to attract and retain high quality, experienced
         restaurant and entertainment management and personnel through its
         competitive compensation and bonus programs and its policy of promoting
         from within the Company. Staffing levels vary according to the size of
         the location, but a mega-size Dave & Buster's is managed by one general
         manager, two assistant general managers, seven line managers, and one
         business manager.

         In general, each mega-size Dave & Buster's also employs one purchasing
         agent, one amusement manager, two assistant amusement managers, one
         kitchen manager, two assistant kitchen managers, and one special events
         sales manager. The Company has experienced relatively little turnover
         of managerial employees. On average, the Company's current general
         managers possess approximately three-and-a-quarter years of experience
         with the Company. The general manager of each Dave & Buster's reports
         to a Regional Manager who reports to the Vice President, Director of
         Operations.

         All managers, many of whom are promoted from within, must complete an
         eleven-week training program during which they are instructed in areas
         such as food quality and preparation, customer service, alcoholic
         beverage service, entertainment management, and employee relations. The
         Company has also prepared operations manuals relating to food and
         beverage quality and service standards as well as proper operation and
         playing conditions of the Company's entertainment attractions. New
         sales staff and entertainment personnel participate in approximately
         two weeks of training under the close supervision of Company
         management. Management strives to instill enthusiasm and dedication in
         its employees, regularly solicits employee suggestions concerning
         Company operations and endeavors to be responsive to employees'
         concerns. In addition, the 


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         Company has extensive and varied programs designed to recognize and
         reward employees for superior performance.

         Efficient, attentive and friendly service is integral to the Company's
         overall concept. In addition to customer evaluations, the Company uses
         a "secret shopper" quality control program to independently monitor
         customer satisfaction. "Secret shoppers" are independent persons who,
         on a periodic basis, test the Company's food, beverage, and service as
         customers without the knowledge of restaurant management or personnel,
         and report their findings to corporate management.

         Each Complex uses a variety of integrated management information
         systems. These systems include a computerized point-of-sale system
         which facilitates the movement of customer food and beverage orders
         between the customer areas and kitchen operations, controls cash,
         handles credit card authorizations, keeps track of revenues on a
         per-employee basis for incentive awards, and provides management with
         revenue and inventory data.

         Marketing, Advertising and Promotion

         The Company operates its marketing, advertising, and promotional
         programs through an in-house Communications Department and employs a
         full-time corporate Communications and Special Events Director. The
         Company focuses on three primary marketing target audiences in its
         advertising and promotional programs: (1) local market-area customers;
         (2) out-of-town visitors; and (3) corporate and group customers.

         Local Market-Area Customers. Management believes that its strongest
         marketing tool is customer referrals. In addition, the Company
         continually updates its local customer database which is utilized for
         specifically targeted marketing and advertising programs to customers
         in a 10 to 20 mile radius. Through a mix of marketing techniques such
         as direct mailings, point-of-sale materials, outdoor advertising, and
         local-market print and broadcast media, the Company promotes seasonal
         events, in-house promotions, special offers, and new entertainment
         attractions.

         Out-of-Town Visitors. The Company markets aggressively to attract
         tourists and business travelers by placing advertisements in local
         tourist and special event guides and by otherwise promoting each Dave &
         Buster's as a local "must see" attraction. The Company monitors local
         tourist and visitors bureaus for convention schedulings, festivals and
         special sporting events. Additionally, through the use of local trade
         arrangements such as "concierge referral programs," the Company extends
         its marketing presence into local high-traffic tourist and business
         traveler areas.

         Corporate and Group Marketing. The Complex-based Special Events Sales
         Managers book group events such as business seminars, receptions and
         private parties. The Company develops and maintains a database for
         corporate and group bookings. Each Dave & Buster's has hosted events
         for many large multinational, national, and regional businesses. Many
         of the Company's corporate and group customers have hosted repeat
         events. In addition to the rapport developed with these clients, the
         Company stages and promotes its own local group marketing opportunities
         such as "Karaoke Sing-a-Longs", "Murder Mystery Dinner Theater,"
         televised sporting events and charity benefits. The corporate marketing
         department is also responsible for budgeting and 


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         controlling media and production costs. During fiscal 1998, the
         Company's expenditures for advertising and promotions were
         approximately 2.3% of its revenues.

         Competition

         The restaurant and entertainment industries are highly competitive.
         There are a great number of food and beverage service operations and
         entertainment businesses that compete directly and indirectly with the
         Company. Many of these entities are larger and have significantly
         greater financial resources and a greater number of units than does the
         Company. Although there are few other companies presently utilizing the
         concept of combining entertainment and restaurant operations to the
         same extent as the Company, the Company may encounter increased
         competition in the future, which may have an adverse effect on the
         profitability of the Company. In addition, the legalization of casino
         gambling in geographic areas near any restaurant/entertainment company
         would create the possibility for entertainment alternatives, which
         could have a material adverse effect on the Company's business.

         Employees

         At January 31, 1999, the Company employed approximately 5,000 persons,
         120 of whom served in administrative or executive capacities, 435 of
         whom served as restaurant and entertainment management personnel, and
         the remainder of whom were hourly restaurant and entertainment
         personnel.

         None of the Company's employees are covered by collective bargaining
         agreements, and the Company has never experienced an organized work
         stoppage, strike or labor dispute. The Company believes its working
         conditions and compensation packages are competitive with those offered
         by its competitors and considers relations with its employees to be
         very good.

         Intellectual Property

         The Company has registered the trademark "Dave & Buster's" with the
         United States Patent and Trademark Office and in various foreign
         countries. The Company has registered and/or applied for certain
         additional trademarks with the United States Patent and Trademark
         Office and in various foreign countries.

         Government Regulations

         The Company is subject to various federal, state and local laws
         affecting its business. Each Dave & Buster's is subject to licensing
         and regulation by a number of governmental authorities, which may
         include alcoholic beverage control, amusement, health and safety and
         fire agencies in the state or municipality in which the Complex is
         located. Each Dave & Buster's is required to obtain a license to sell
         alcoholic beverages on the premises from a state authority and, in
         certain locations, county and municipal authorities. Typically,
         licenses must be renewed annually and may be revoked or suspended for
         cause at any time. Alcoholic beverage control regulations relate to
         numerous aspects of the daily operations of each Dave & Buster's,
         including minimum age of patrons and employees, hours of operation,
         advertising, wholesale purchasing, inventory control and handling, and
         storage and dispensing of alcoholic beverages. The Company has not
         encountered any material problems relating to alcoholic beverage
         licenses to date. The failure to 



                                       9
<PAGE>   10

         receive or retain a liquor license in a particular location could
         adversely affect the Company's ability to obtain such a license
         elsewhere.

         The Company is subject to "dram-shop" statutes in the states in which
         Complexes are located. These statutes generally provide a person
         injured by an intoxicated person the right to recover damages from an
         establishment which wrongfully served alcoholic beverages to the
         intoxicated individual. The Company carries liquor liability coverage
         as part of its existing comprehensive general liability insurance which
         it believes is consistent with coverage carried by other entities in
         the restaurant and entertainment industries. Although the Company is
         covered by insurance, a judgment against the Company under a dram-shop
         statute in excess of the Company's liability coverage could have a
         material adverse effect on the Company.

         As a result of operating certain entertainment games and attractions
         including operations which offer redemption prizes, the Company is
         subject to amusement licensing and regulation by the states and
         municipalities in which it has opened Complexes. Certain entertainment
         attractions are heavily regulated and such regulations vary
         significantly between communities. From time to time, existing
         Complexes may be required to modify certain games, alter the mix of
         games or terminate the use of specific games as a result of the
         interpretation of regulations by state or local officials. The Company
         has, in the past, had to seek changes in state or local regulations to
         enable it to open in a given location. To date, the Company has been
         successful in seeking all such regulatory changes.

         The Company's operations are also subject to federal and state laws
         governing such matters as wages, working conditions, citizenship
         requirements and overtime. Some states have set minimum wage
         requirements higher than the federal level, and the federal government
         recently increased the federal minimum wage. In September 1997, the
         second phase of an increase in the minimum wage was implemented in
         accordance with the Federal Fair Labor Standards Act of 1996.
         Significant numbers of hourly personnel at the Company's Complexes are
         paid at rates related to the federal minimum wage and, accordingly,
         increases in the minimum wage have increased labor costs at the
         Company's Complexes. Other governmental initiatives such as mandated
         health insurance, if implemented, could adversely affect the Company as
         well as the restaurant industry in general. The Company is also subject
         to the Americans With Disabilities Act of 1990, which among other
         things, may require certain minor renovations to its Complexes to meet
         federally mandated requirements. The cost of these renovations is not
         expected to be material to the Company.




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         RISK FACTORS

         The Company hereby cautions stockholders, prospective investors in the
         Company and other readers of this report that the following important
         factors, among others, could affect the Company's stock price or cause
         the Company's actual results of operations to differ materially from
         those expressed in any forward-looking statements, oral or written,
         made by or behalf of the Company:

                  Expansion Plans; Capital Resource Requirements

                  The Company presently plans to open six and seven Complexes
                  during each of fiscal years 1999 and 2000, respectively, and
                  eight Complexes each fiscal year thereafter. Accomplishing
                  these expansion goals will depend upon a number of factors,
                  including the Company's ability to raise sufficient capital;
                  locate and obtain appropriate sites; hire and train additional
                  management personnel; and construct or acquire, at reasonable
                  cost, the necessary improvements and equipment for such
                  Restaurant/Entertainment Complexes. In particular, the capital
                  resources required to develop each new
                  Restaurant/Entertainment Complex are significant.

                  There can be no assurance that the Company will be able to
                  complete its planned expansion, that the Company will continue
                  to be successful in its development of new
                  Restaurant/Entertainment Complexes or that new
                  Restaurant/Entertainment Complexes, if completed, will perform
                  in a manner consistent with the Company's most recently opened
                  Restaurant/Entertainment Complexes or make a positive
                  contribution to the Company's operating performance.


                  Small Number of Restaurant/Entertainment Complexes

                  As of January 31, 1999 the Company operated seventeen
                  Restaurant/Entertainment Complexes. The combination of the
                  relatively small number of locations and the significant
                  investment associated with each new Restaurant/Entertainment
                  Complex may cause the operating results of the Company to
                  fluctuate significantly and adversely affect the profitability
                  of the Company. Due to this relatively small number of
                  locations, poor results of operations at any one
                  Restaurant/Entertainment Complex could materially affect the
                  profitability of the entire Company. New
                  Restaurant/Entertainment Complexes have experienced a drop in
                  revenues after their first year of operation, and the Company
                  does not expect that in subsequent years, any increases in
                  comparable Complex revenues will be meaningful.

                  Future growth in revenues and profits will depend to a
                  substantial extent on the Company's ability to increase the
                  number of its Restaurant/Entertainment Complexes. Because of
                  the substantial up-front financial requirements which are
                  described above, the investment risk related to any one
                  Restaurant/Entertainment Complex is much larger than that
                  associated with most other companies' restaurant or
                  entertainment venues.



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<PAGE>   12



                  Dependence Upon Senior Management

                  The Company's future success will depend largely on the
                  efforts and abilities of its existing senior management,
                  particularly David O. "Dave" Corriveau and James W. "Buster"
                  Corley, the Company's Co-Chief Executive Officers and the
                  founders of the Company's business. The loss of the services
                  of certain of the Company's management team could have a
                  material adverse effect on the Company's business. Messrs.
                  Corriveau and Corley are employed pursuant to employment
                  agreements which will expire in June 2000.

                  Dependence on Discretionary Spending

                  The Company's profits are dependent on discretionary spending
                  by consumers, particularly by consumers living in the
                  communities in which the Restaurant/Entertainment Complexes
                  are located. A significant weakening in any of the local
                  economies in which the Company operates may cause the
                  Company's patrons to curtail discretionary spending which, in
                  turn, could materially affect the profitability of the entire
                  Company.

                  International Expansion; License Agreements

                  In August 1995, February 1998, and September 1998, the Company
                  entered into agreements with Bass, TaiMall and SVAG to license
                  the "Dave & Buster's" name and concept in the United Kingdom,
                  Pacific Rim, and Europe, respectively. In addition, the
                  Company is considering entering into agreements to license the
                  "Dave & Buster's" name and concept in other foreign countries.
                  The Company does not have any current plans to invest its own
                  capital in any foreign operations. The Company's concept is
                  untested outside the United States, and no assurance can be
                  given that any international location will be successful. In
                  addition, the Company's continued success is dependent to a
                  substantial extent on its reputation, and its reputation may
                  be affected by the performance of licensee-owned Complexes
                  over which the Company will have limited control. Any
                  international operations of the Company will also be subject
                  to certain external business risks such as exchange rate
                  fluctuations, political instability and a significant
                  weakening of a local economy in which a foreign Complex is
                  located. Certain provisions in a license agreement for the
                  benefit of the Company may be subject to restrictions in
                  foreign laws that limit the Company's ability to enforce such
                  contractual provisions. In addition, it may be more difficult
                  to register and protect the Company's intellectual property
                  rights in certain foreign countries.

                  Competition

                  The restaurant and entertainment industries are highly
                  competitive. There are a great number of food and beverage
                  service operations and entertainment businesses that compete
                  directly and indirectly with the Company. Many of these
                  entities are larger and have significantly greater financial
                  resources and a greater number of units than does the Company.
                  Although there are few other companies presently utilizing the
                  concept of combining entertainment and restaurant operations
                  to the same extent as the Company, 




                                       12
<PAGE>   13

                  the Company may encounter increased competition in the future,
                  which may have an adverse effect on the profitability of the
                  Company. In addition, the legislation of casino gambling in
                  geographic areas near any restaurant/entertainment company
                  would create the possibility for entertainment alternatives,
                  which could have a material adverse effect on the Company's
                  business.

                  Government Regulations

                  Various federal, state and local laws and permit and license
                  requirements affect the Company's business. Significant
                  numbers of hourly personnel at the Company's Complexes are
                  paid at rates related to the federal minimum wage and,
                  accordingly, legislated increases in the minimum wage will
                  increase labor costs at the Company's Complexes. Other
                  governmental initiatives such as mandated health insurance, if
                  implemented, could adversely affect the Company as well as the
                  restaurant industry in general.

                  Stock Price Volatility

                  The market price of the Common Stock could fluctuate
                  substantially due to a variety of factors, including quarterly
                  operating results of the Company or other restaurant or
                  entertainment companies; changes in general conditions in the
                  economy; the financial markets or the restaurant or
                  entertainment industries; natural disasters; or other
                  developments affecting the Company or its competitors. In
                  addition, in recent years the stock market has experienced
                  extreme price and volume fluctuations. This volatility has had
                  a significant effect on the market prices of securities issued
                  by many companies for reasons unrelated to the operating
                  performance of these companies.

                  Quarterly Fluctuations and Seasonality

                  As a result of the substantial revenues associated with each
                  new Restaurant/Entertainment Complex, the timing of new
                  Complex openings will result in significant fluctuations in
                  quarterly results. The Company expects seasonality to be a
                  factor in the operation or results of its business in the
                  future due to expected lower third quarter revenues due to the
                  fall season, and expects higher fourth quarter revenues
                  associated with the year-end holidays.






                                       13
<PAGE>   14


Item 2.  PROPERTIES.

         As of January 31, 1999 the Company operated a total of 17 Complexes
         located in 11 states. The Company is currently utilizing all available
         land at its owned locations. The Company's real estate leases are with
         unrelated third parties except where noted.

<TABLE>
<CAPTION>
                                                Owned or            Lease Expiration         Lease Expiration
         Location                State       Leased Property              Date               Date with Options
         --------                -----       ---------------              ----               -----------------
<S>                             <C>          <C>                    <C>                     <C>

         Dallas (I)                TX             Owned                   ---                       ---
         Dallas (II)               TX            Leased               December 2002            December 2007
         Houston                   TX             Owned                   ---                       ---
         Atlanta                   GA             Owned                   ---                       ---
         Philadelphia              PA            Leased               January 2015*            January 2024
         Chicago (I)               IL             Owned                   ---                       ---
         Chicago (II)              IL            Leased               January 2016             January 2026
         Hollywood                 FL            Leased**             April 2016               April 2031
         North Bethesda            MD            Leased               January 2018             January 2033
         Ontario                   CA            Leased               January 2018             January 2028
         Cincinnati                OH            Leased               January 2018             January 2038
         Denver                    CO            Leased               December 2017            December 2032
         Utica                     MI            Leased                June 2018                 June 2033
         Irvine                    CA            Leased                July 2018                 July 2028
         Rockland County           NY            Leased               January 2019             January 2034
         Orange                    CA            Leased               January 2019             January 2029
         Columbus                  OH             Owned                   ---                       ---
</TABLE>

         *        The Company also leases additional parking facilities which
                  expires January 2014.

         **       The Company owns the building and leases the real estate.

         The Company has also signed 20-year leases for Complexes due to open in
         fiscal 1999 in each of San Antonio, Texas; Atlanta, Georgia; St. Louis,
         Missouri; Austin, Texas; and Providence, Rhode Island. Twenty-year
         leases have also been signed for San Jose, California and Miami,
         Florida, which are scheduled to open in the year 2000. Third-party
         leases typically provide for a minimum base rent, additional rent based
         on a percentage of revenues and payment of certain operating expenses.

         The Company's San Antonio, Texas location is leased from CE San Antonio
         Investment Trust, whose managing trustee is a director of the Company.




                                       14
<PAGE>   15




Item 3.  LEGAL PROCEEDINGS.

         The Company is a defendant in litigation arising in the ordinary course
         of its business, including claims resulting from "slip and fall"
         accidents, claims under federal and state laws governing access to
         public accommodations, and employment-related claims. To date, none of
         such litigation, some of which is covered by insurance, has had a
         material effect on the Company.

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

         None.

                                     PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

         The Company's Common Stock trades on the Nasdaq National Market under
         the symbol DANB. The following table summarizes the high and low sale
         prices per share of Common Stock for the periods indicated, as reported
         on the Nasdaq National Market:

<TABLE>
<S>                                                    <C>               <C>   
         Fiscal Year 1996
         First Quarter                                 $16.42            $ 9.33
         Second Quarter                                 19.25             12.67
         Third Quarter                                  16.92             12.33
         Fourth Quarter                                 14.50             11.17

         Fiscal Year 1997
         First Quarter                                  16.92             12.67
         Second Quarter                                 21.83             13.58
         Third Quarter                                  22.50             20.17
         Fourth Quarter                                 27.63             18.38

         Fiscal Year 1998
         First Quarter                                  27.75             21.13
         Second Quarter                                 26.50             21.38
         Third Quarter                                  22.63             10.50
         Fourth Quarter                                 24.38             17.13
</TABLE>

         At April 23, 1999, the Company there were 2,242 holders of record.

         The Company has never paid cash dividends on its Common Stock and does
         not currently intend to do so as profits are reinvested into the
         Company to fund future expansion of its restaurant business. Payment of
         dividends in the future will depend upon the Company's growth,
         profitability, financial condition and other factors which the Board of
         Directors may deem relevant.




                                       15
<PAGE>   16




Item 6.  SELECTED FINANCIAL DATA.

The following table sets forth selected consolidated financial data for the
Company. This data should be read in conjunction with the Consolidated Financial
Statements of the Company and the Notes thereto included in Item 8 hereof and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in Item 7 hereof.

<TABLE>
<CAPTION>
                                 Fiscal Year       1998           1997            1996            1995           1994
                                                        (in thousands, except per share amounts and store data)
<S>                                             <C>            <C>             <C>             <C>            <C>       
Income Statement Data
Food and beverage revenues                      $   89,378     $   64,703      $   48,568      $   28,554     $   27,426
Amusement and other revenues                        92,906         63,801          40,207          23,990         21,997
                                                ----------     ----------      ----------      ----------     ----------
         Total revenues                            182,284        128,504          88,775          52,544         49,423

Cost of revenues                                    35,582         24,795          18,003          10,945         10,075
Operating payroll and benefits                      52,206         36,227          25,483          15,999         14,746
Other restaurant operating expenses                 45,862         32,787          20,582          11,481         11,760
General and administrative expenses                 10,579          8,489           5,734           3,905          2,724
Depreciation and amortization expense               12,163          8,470           5,647           3,538          2,827
Preopening cost amortization                         4,539          3,246           2,605             161          1,128
Earn-out and special compensation                       --             --              --           1,607          2,125
                                                ----------     ----------      ----------      ----------     ----------
         Total costs and expenses                  160,931        114,014          78,054          47,636         45,385

Operating income                                    21,353         14,490          10,721           4,908          4,038
Interest income (expense), net                         194           (179)            (38)            101             59
                                                ----------     ----------      ----------      ----------     ----------

Income before provision for income taxes            21,547         14,311          10,683           5,009          4,097
Provision for income taxes                           7,969          5,414           4,343           2,087          1,733
                                                ----------     ----------      ----------      ----------     ----------

         Net income                             $   13,578     $    8,897      $    6,340      $    2,922     $    2,364

Basic net income per share                      $     1.04     $      .77      $      .58      $      .34     $      .30
Basic weighted average shares outstanding           13,053         11,532          10,901           8,681          7,796
Diluted net income per share                    $     1.03     $      .76      $      .58      $      .34     $      .30
Diluted weighted average shares outstanding         13,246         11,711          10,969           8,681          7,796
</TABLE>




                                       16
<PAGE>   17

<TABLE>
<S>                                             <C>            <C>            <C>            <C>            <C>        
Balance Sheet Data
Working capital (deficit)                       $    8,220     $   26,408     $    1,077     $    5,634     $   (2,637)
Total assets                                       216,592        158,989         99,436         76,201         49,030
Long-term obligations                               42,500         12,000         14,250            500          9,986
Stockholders' equity (1)                           145,502        133,356         75,366         69,008             --

Number of Complexes Open at End of Period
     Company operated                                   17             12              9              7              5
</TABLE>


(1)  Prior to fiscal 1995, the Company was a subsidiary of Edison Brothers
     Stores, Inc.


Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS).

FISCAL 1998 COMPARED TO FISCAL 1997

Total revenues increased to $182,284 for fiscal 1998 from $128,504 for fiscal
1997, an increase of $53,780 or 42%. New Stores opened in fiscal 1998 (Utica,
Michigan; Irvine, California; Rockland County, New York; Orange, California; and
Columbus, Ohio) and in fiscal 1997 (Ontario, California; Cincinnati, Ohio; and
Denver, Colorado) accounted for 93% of the increase. Revenues at comparable
Stores increased 6% for fiscal 1998. Increases in revenues were also
attributable to a higher average guest check. Total revenues for fiscal 1998
from the Bass licensing agreement were $395. Food and beverage revenues, as a
percentage of total revenues, have decreased in comparison to prior year levels
as a result of higher percentage of floor space devoted to entertainment
activities within the Company's new Stores; the national trend towards lower
alcoholic beverage consumption; and the continuing impact of the Power Card.

Cost of revenues increased to $35,582 for fiscal 1998 from $24,795 for fiscal
1997, an increase of $10,787 or 44%. The increase was principally attributable
to the 42% increase in revenues. As a percentage of revenues, cost of revenues
increased to 19.5% in fiscal 1998 from 19.3% in fiscal 1997 due to higher
amusement redemption costs.

Operating payroll and benefits increased to $52,206 for fiscal 1998 from $36,227
for fiscal 1997, an increase of $15,979 or 44%. As a percentage of revenue,
operating payroll and benefits increased to 28.6% in fiscal 1998 from 28.2% in
fiscal 1997 due to higher variable labor costs.

Other restaurant operating expenses increased to $45,862 for fiscal 1998 from
$32,787 for fiscal 1997, an increase of $13,075 or 40%. As a percentage of
revenues, other restaurant operating expenses were 25.2% of revenues in fiscal
1998 as compared to 25.5% of revenues in fiscal 1997. Other restaurant operating
expenses were lower due to reduced repair and maintenance and fixed costs at the
Stores offset by higher occupancy costs associated with new Stores opened in
fiscal 1998 and in fiscal 1997.

General and administrative expenses increased to $10,579 for fiscal 1998 from
$8,489 for fiscal 1997, an increase of $2,090 or 25%. The increase over the
prior comparable period resulted from increased administrative payroll and
related costs for new personnel, and additional costs associated with the
Company's future growth plans. As a percentage of revenues, general and
administrative expenses decreased to 5.8% in fiscal year 1998 from 6.6% in
fiscal year 1997.



                                       17
<PAGE>   18

Depreciation and amortization expense increased to $12,163 for fiscal 1998 from
$8,470 for fiscal 1997, an increase of $3,693 or 44%. As a percentage of
revenues, depreciation and amortization increased to 6.7% from 6.6% for the
comparable prior period. The increase was attributable to new Stores opened in
fiscal 1998 and in fiscal 1997.

Preopening cost amortization increased to $4,539 for fiscal 1998 from $3,246 for
fiscal 1997, an increase of $1,293 or 40%. As a percentage of revenues,
preopening cost amortization was 2.5% for both fiscal 1998 and 1997.

Through January 31, 1999, the Company deferred its restaurant preopening costs
and amortized them over the twelve-month period following the opening of each
respective Complex. In April 1998, the Accounting Standards Executive Committee
of the American Institute of Certified Public Accountants issued a Statement of
Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities." SOP 98-5
requires entities to expense, as incurred, all start-up and preopening costs
that are not otherwise capitalizable as long-lived assets. SOP 98-5 is effective
for fiscal years beginning after December 15, 1998, although earlier adoption is
encouraged. Restatement of previously issued financial statements is not
permitted by SOP 98-5, and entities are not required to report the pro forma
effects of the retroactive application of the new accounting standard. The
Company's adoption of the expense-as-incurred accounting principle required by
SOP 98-5 will involve the recognition of the cumulative effect of the change in
accounting principle required by SOP 98-5 as a one-time charge against earnings,
net of any related income tax benefit in the first quarter of fiscal 1999 in the
amount of $4,441 or $.34 per diluted share.

As has been the case with the Company's current method of deferring preopening
costs, preopening expense comparisons under the new expense-as-incurred standard
will continue to vary from period to period, depending on the number and timing
of Complex openings and the specific preopening expenses incurred for each
Complex during each period being compared. Based on the Company's current
expansion plans, the Company believes total preopening expenses for fiscal 1999
under either accounting principle (deferred or expense-as-incurred) will likely
exceed the respective amount for each immediate prior year. However, the new
expense-as-incurred accounting principle required by SOP 98-5 will, by
definition, cause an accelerated recognition of preopening expenses. The impact
of this accelerated recognition on the Company's results of operations for any
given period could be significant, depending on the number of Complexes opened
during that period. 

Interest income for fiscal 1998 was $194 versus an interest expense of $179 for
fiscal 1997. The increase was primarily due to higher average debt in 1997
versus 1998.

The effective tax rate for fiscal year 1998 was 37.0% as compared to 37.8% for
fiscal year 1997, and the result of a lower effective state tax rate.



FISCAL 1997 COMPARED TO FISCAL 1996

Total revenues increased to $128,504 for fiscal 1997 from $88,775 for fiscal
1996, an increase of $39,729 or 45%. New Stores opened in fiscal 1997 (Ontario,
California; Cincinnati, Ohio; and Denver, Colorado) and in fiscal 1996
(Hollywood, Florida and North Bethesda, Maryland) accounted for 88% of the
increase. Increased revenues at comparable Stores increased 10% for fiscal 1997.
Increases in revenues were also attributable to a higher average guest check and
the addition of the Power Card. Total revenues for fiscal 1997 from the Bass
licensing agreement were $251. Food and beverage revenues, as a percentage of
total revenues, have decreased in comparison to prior year levels as a result of
higher percentage of floor space 


                                       18
<PAGE>   19

devoted to entertainment activities within the Company's new Stores; the
national trend towards lower alcoholic beverage consumption; and the addition of
the Power Card.

Cost of revenues increased to $24,795 for fiscal 1997 from $18,003 for fiscal
1996, an increase of $6,792 or 38%. The increase was principally attributable to
the 45% increase in revenues. As a percentage of revenues, cost of revenues
decreased to 19.3% in fiscal 1997 from 20.3% in fiscal 1996 due to lower food,
beverage, and amusement costs. The shift in revenue mix from food and beverage
to the higher margin amusement revenues also attributed to the decrease.

Operating payroll and benefits increased to $36,227 for fiscal 1997 from $25,483
for fiscal 1996, an increase of $10,744 or 42%. As a percentage of revenue,
operating payroll and benefits decreased to 28.2% in fiscal 1997 from 28.7% in
fiscal 1996 due to cost reductions in variable labor and leverage from increased
revenues offset partially by higher fixed labor and employee benefits costs.

Other restaurant operating expenses increased to $32,787 for fiscal 1997 from
$20,582 for fiscal 1996, an increase of $12,205 or 59%. As a percentage of
revenues, other restaurant operating expenses were 25.5% of revenues in fiscal
1997 as compared to 23.2% of revenues in fiscal 1996. Other restaurant operating
expenses were higher due to increased operating expenses at the Stores and
higher occupancy costs associated with new Stores opened in fiscal 1997 and in
fiscal 1996.

General and administrative expenses increased to $8,489 for fiscal 1997 from
$5,734 for fiscal 1996, an increase of $2,755 or 48%. The increase over the
prior comparable period resulted from increased administrative payroll and
related costs for new personnel, and additional costs associated with the
Company's future growth plans. As a percentage of revenues, general and
administrative expenses increased to 6.6% in fiscal year 1997 from 6.4% in
fiscal year 1996.

Depreciation and amortization expense increased to $8,470 for fiscal 1997 from
$5,647 for fiscal 1996, an increase of $2,823 or 50%. As a percentage of
revenues, depreciation and amortization increased to 6.6% from 6.4% for the
comparable prior period. The increase was attributable to new Stores opened in
fiscal 1997 and in fiscal 1996. Power Card installations completed in the fourth
quarter of 1996 and the first quarter of 1997 also contributed to this increase.

Preopening cost amortization increased to $3,246 for fiscal 1997 from $2,605 for
fiscal 1996, an increase of $641 or 25%. As a percentage of revenues, preopening
cost amortization decreased to 2.5% compared to 2.9% for the comparable prior
period. The percentage decrease is attributable to the leverage from increased
revenues.

Interest expense for fiscal 1997 was $179 versus $38 for fiscal 1996. The
increase was primarily due to higher average debt volumes in 1997 versus 1996.

The effective tax rate for fiscal year 1997 was 37.8% as compared to 40.7% for
fiscal year 1996, and the result of a lower effective state tax rate.



                                       19
<PAGE>   20


LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operations increased to $28,246 for fiscal 1998 from $15,716 for
fiscal 1997. The increase was attributable to new Stores opened in fiscal 1998
and in fiscal 1997.

The Company has a secured revolving line of credit which permits borrowing up to
a maximum of $100,000. Borrowings under this facility bear interest at a
floating rate based on the London Interbank Offered Rate ("LIBOR") or, at the
Company's option, the bank's prime rate plus in each case a margin based upon
financial performance (7.3% at January 31, 1999) and is secured by all capital
stock or equity interest in the stock of the Company and its subsidiaries. The
facility, which matures in May 2001, has certain financial covenants including a
minimum consolidated tangible net worth level, a maximum leverage ratio, minimum
fixed charge coverage, and maximum level of capital expenditures on new Stores.
At January 31, 1999, $57,100 was available under this facility.

The Company has entered into an agreement that expires in 1999, to fix its
variable-rate debt to fixed-rate debt (6.75% at January 31, 1999) on notional
amounts aggregating $35,000. The market risks associated with the agreements are
mitigated because increased interest payments under the agreement resulting from
a decrease in LIBOR are effectively offset by decreased payments under the debt
obligation. The Company is exposed to credit losses for periodic settlements of
amounts due under the agreements. Such amounts were not material at January 31,
1999.

The Company's plan is to open six and seven complexes in fiscal 1999 and 2000,
respectively. The Company estimates that its capital expenditures will be
approximately $68,000 and $69,000 for 1999 and 2000, respectively. The Company
intends to finance this development with cash flow from operations and the
senior revolving credit facility.


QUARTERLY FLUCTUATIONS, SEASONALITY, AND INFLATION

As a result of the substantial revenues associated with each new Complex, the
timing of new Complex openings will result in significant fluctuations in
quarterly results. The Company expects seasonality to be a factor in the
operation or results of its business in the future due to expected lower third
quarter revenues due to the fall season, and expects higher fourth quarter
revenues associated with the year-end holidays. The effects of supplier price
increases have not been material. The Company believes low inflation rates in
its market areas have contributed to stable food and labor costs in recent
years. However, there is no assurance that low inflation rates will continue or
that the Federal minimum wage rate will not increase.



IMPACT OF THE YEAR 2000 ISSUE

The Year 2000 issues arose because many computer systems and software
applications as well as embedded computer chips in equipment currently in use
were constructed using an abbreviated date field that eliminates the first two
digits of the year. On January 1, 2000, these systems, applications and embedded
computer chips may incorrectly recognize the date as January 1, 1900.
Accordingly, many computer systems and software applications, as well as
embedded computer chips, may incorrectly process financial and operating
information or fail to process such information completely. The Company
recognized this problem and is addressing its potential effects on its computer
systems, software applications and equipment.



                                       20
<PAGE>   21

In December 1996, the Company established a Year 2000 initiative managed by a
team of internal staff that is being headed by an officer of the Company. The
mission of the initiative is to ensure that all critical systems, facilities,
and processes are identified, analyzed for Year 2000 compliance, corrected if
necessary, and tested if changes are necessary. The Company has a Year 2000
strategy in place and has begun the implementation of the Year 2000 plan to
manage and minimize risks associated with the Year 2000 issues.

The Company has contracted with an independent consulting firm who specializes
in such matters to assess the risks posed for the Company by the Year 2000
issues, including an assessment of its risks in every area involving the use of
computer technology and an assessment of the business and legal risks created
for the Company by the Year 2000 issues.

With respect to information technology (IT) systems, the Company has conducted
an inventory of and is evaluating and reviewing its application software on all
platforms such as the local area network and personal computers. Concerning
non-IT systems, including embedded technology, the Company has conducted an
inventory of and is reviewing and evaluating all of its telecommunications,
security access and building central systems.

The Company's Year 2000 plan includes specific timetables for the following
categories of tasks with respect to both IT systems and embedded technology as
follows:

Identification of Year 2000 issues - substantially completed

Prioritization of Year 2000 issues - substantially completed

Estimation of total Year 2000-related costs - $3,500

Implementation of Year 2000 solutions - in process and to be completed by 
August 31, 1999

Testing of Year 2000 solutions - in process and to be completed by May 1, 1999

Monitoring of all systems for changes in current systems that would require
changes in Year 2000 plan - in process and to be completed by September 30, 1999

Development of Year 2000 contingency plans - in process and to be completed by
June 30, 1999

Final Year 2000 tests - to be conducted starting September 30, 1999


The Company has contacted vendors who provide mission critical goods and
services to submit to the Company their compliance plans and to certify
compliance in order continue to do business with the Company.

As of January 31, 1999, the Company had incurred $2,200 in software costs, fees
and expenses in connection with its Year 2000 efforts. The Company currently
expects to spend $1,300 directly on Year 2000 efforts by January 30, 2000.

The Company believes its most significant worst case Year 2000 scenarios are
interference with its point of sale system and its inability to operate its
amusement games. In order to mitigate these risks, the Company is developing a
contingency plan to continue operations through manual intervention and other
procedures should it become necessary to do so.

Despite the Company's efforts, there can be no assurance that all material risks
associated with Year 2000 issues relating to systems within its control will
have been adequately identified and corrected before the end of 1999. However as
the result of its Year 2000 plan and the replacement of the accounting and


                                       21
<PAGE>   22

financial reporting system in 1999 and the human resource and payroll systems in
1998, the Company does not believe that in the aggregate Year 2000 issues with
respect to both its own IT and non-IT systems will be material to its business,
operations or financial condition.



"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM 
ACT OF 1995

Certain statements in this Annual Report constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties, and
other factors which may cause the actual results, performance, or achievements
of Dave & Buster's, Inc. to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: general economic
and business conditions; competition; availability, locations and terms of sites
for complex development; quality of management; changes in, or the failure to
comply with, government regulations; and other risks indicated in this filing.


Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's market risk exposure relates to changes in the general level of
interest rates. To mitigate the impact of fluctuations in interest rates, the
Company has entered into an agreement that expires in 1999 to fix $35,000 of its
variable-rate debt to fixed-rate debt at 6.75% at January 31, 1999. The Company
does not enter into contracts for speculative purposes.

The Company's earnings are affected by changes in interest rates due to the
impact those changes have on its interest expense from variable-rate debt. If
interest rates increased 10% from the floating rates as of January 31, 1999,
interest expense for the year ended January 30, 2000 would increase by
approximately $147. This amount is determined by considering the impact of
hypothetical rates on the Company's variable-rate debt as of January 31, 1999,
adjusted for known cash commitments during 2000.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         See Item 14 (a) (1).

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.



                                       22
<PAGE>   23


                                    PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

A brief description of each executive officer of the Company is provided below.
All officers serve at the discretion of the Board of Directors, except as
provided below. The information set under the caption "Directors and Executive
Officers" in the Company's Proxy statement dated May 10, 1999, for the annual
meeting of stockholders on June 15, 1999 is incorporated herein by reference.

Mr. David O. Corriveau, 47, a co-founder of the Dave & Buster's concept in 1982,
has served as Co-Chief Executive Officer and President since June 1995, and as a
director of the Company since May 1995 and as Co-Chairman of the Board since
February 1996. Mr. Corriveau served as President and Chief Executive Officer of
D&B Holding (a predecessor of the Company) from 1989 through June 1995. From
1982 to 1989, Messrs. Corriveau and Corley operated the Company's business.

Mr. James W. Corley, 47, a co-founder of the Dave & Buster's concept in 1982,
has served as Co-Chief Executive Officer and Chief Operating Officer since June
1995, and as a director of the Company since May 1995 and as Co-Chairman of the
Board since February 1996. Mr. Corley served as Executive Vice President and
Chief Operating Officer of D&B Holding from 1989 through June 1995. From 1982 to
1989, Messrs. Corley and Corriveau operated the Company's business.

Mr. Barry N. Carter, 51, has served as Vice President of Store Support
since June 1995 and as Vice President and Director of Store Support of D&B
Holding from November 1994 to June 1995. From 1982 to November 1994, he served
in operating positions of increasing responsibilities for the Company and its
predecessors.

Ms. Nancy J.Duricic, 44, has served as Vice President of Human Resources since
December 1997. From June 1989 to June 1997, she served in human resources
positions of increasing responsibilities, most recently as Vice President of
Human Resources for Eljer Resources, Inc. From 1986 to June 1989, Ms. Duricic
served in operating and human resources positions for ClubCorp International,
Inc.

Mr. Cory J. Haynes, 38, has served as Vice President of Beverage Operations
since May 1998, and as Vice President, Assistant Director of Operations from
September 1996 to May 1998. From January 1996 to September 1996, he served as
Corporate Director of Management and Development. From 1982 to January 1996, he
served in operating positions of increasing responsibilities for the Company and
its predecessors.

Mr. Charles Michel, 45, has served as Vice President and Chief Financial Officer
since February 1996, as Chief Financial Officer of the Company since June 1995
and as Chief Financial Officer of D&B Holding from November 1994 to June 1995.
From 1992 to October 1994, Mr. Michel served as Vice President and Chief
Financial Officer of Sfuzzi, Inc., a restaurant chain based in Dallas, Texas.
Mr. Michel was with the accounting firm of KPMG Peat Marwick from 1976 to 1992,
becoming a partner of such firm in 1986.

Mr. Reginald M. Moultrie, 43, has served as Vice President of Amusements since
January 1999, as Vice President of Games and Merchandising from April 1998 to
January 1999, and as Director of Amusements 


                                       23
<PAGE>   24

from February 1997 to April 1998. Mr. Moultrie served as Vice President of Sales
for Skeeball, Inc. from 1993 to 1997.

Mr. Alan L. Murray, 53, has served as Vice President, General Counsel and
Secretary since February 1996 and as Secretary and Director of Legal and
Administration since June 1995. Mr. Murray served as Director of Legal and
Administration of D&B Holding from November 1994 until June 1995. Mr. Murray
served as Vice President, Secretary, and General Counsel of Phillips Colleges,
Inc. from 1988 through 1994.

Mr. James M. Newberry, 43, has served as Vice President of Training since
December 1997. From February 1997 to November 1997, he served as Vice President
of Training for Einstein Bros. Bagels. Mr. Newberry served as Vice President of
Show Biz Pizza Time, Inc. (d/b/a Chuck E. Cheese's Pizza) in the disciplines of
Training, Recruitment, Entertainment, New Concepts and Product Licensing from
September 1990 to February 1997.

Mr. Dennis C. Paine, 51, has served as Vice President of Communications since
September 1996. From November 1994 to September 1996 he served as Director of
Communications. From 1983 to 1994, Mr. Paine was President of Dennis Paine &
Associates, an advertising firm based in Woodland Hills, California.

Mr. J. Michael Plunkett, 48, has served as Vice President of Information Systems
since November 1996, as Vice President, Director of Training from June 1995
until November 1996 and as Vice President and Director of Training of D&B
Holding from November 1994 to June 1995. From 1982 to November 1994, he served
in operating positions of increasing responsibilities for the Company and its
predecessors.

Mr. Sterling R. Smith, 46, has served as Vice President of Operations since June
1995 and as Vice President and Director of Operations of D&B Holding from
November 1994 to June 1995. From 1983 to November 1996. Mr. Smith served in
operating positions of increasing responsibilities for the Company and its
predecessors.

Mr. Bryan L. Spain, 51, has served as Vice President of Real Estate since March
1997. From 1993 until joining Dave & Buster's, Mr. Spain managed the Real Estate
Acquisition and Development Program for Incredible Universe and Computer City
Divisions of Tandy Corporation. In addition, from 1991 to 1993, Mr. Spain served
as Director Real Estate Financing for Tandy Corporation.




                                       24
<PAGE>   25



Item 11. COMPENSATION INFORMATION.

         The information set under the caption "Directors and Executive
         Officers" in the Company's Proxy Statement dated May 10, 1999, for the
         annual meeting of stockholders on June 15, 1999 is incorporated herein
         by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information set under the caption "Beneficial Ownership of Common
         Stock" in the Company's Proxy Statement dated May 10, 1999, for the
         annual meeting of stockholders on June 15, 1999 is incorporated herein
         by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information set under the caption "Certain Transactions" in the
         Company's Proxy Statement dated May 10, 1999, for the annual meeting of
         stockholders on June 15, 1999 is incorporated herein by reference.



                                       25
<PAGE>   26


                                     PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS OF FORM 8-K.

         (a)      (1)  Financial Statements.

<TABLE>
<CAPTION>

                                                                                          Page
                                                                                          ----
<S>                                                                                   <C>

              Consolidated Balance Sheets -
                 January 31, 1999 and February 1, 1998                                     F-1

              Consolidated Statements of Income -
                 Fiscal years ended January 31, 1999, February 1, 1998,
                 and February 2, 1997                                                      F-2

              Consolidated Statements of Stockholders' Equity Fiscal years ended
                 January 31, 1999, February 1, 1998,
                 and February 2, 1997                                                      F-3

              Consolidated Statements of Cash Flows Fiscal years ended January
                 31, 1999, February 1, 1998,
                 and February 2, 1997                                                      F-4

              Notes to Consolidated Financial Statements                               F-5 - F-11

              Report of Independent Auditors                                              F-12
</TABLE>

         All schedules are omitted as the required information is inapplicable
         or the information is presented in the financial statements or related
         notes.

         (a)      (3) Exhibits.

         Reference is made to the Exhibit Index preceding the exhibits attached
         hereto on page 29 for a list of all exhibits filed as a part of this
         Report.


         (b)      Reports of Form 8-K.

        The Company was not required to file a current report on Form 8-K during
        the thirteen weeks ended January 31, 1999.



                                       26
<PAGE>   27



                                   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.

                                      Dave & Buster's, Inc.,
                                      a Missouri corporation




                                      By: /s/ Charles Michel
                                         ------------------------
                                          Charles Michel,
                                          Vice President and Chief Financial
                                          Officer


Dated:  May 3, 1999



                                       27
<PAGE>   28




Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons of the registrant and in the
capacities indicated on May 3, 1999.

<TABLE>
<CAPTION>
        Name                             Title
        ----                             -----
<S>                               <C>
/s/ David O. Corriveau             Co-Chairman of the Board,
-----------------------            Co-Chief Executive Officer, President,
David O. Corriveau                 and Director
                                   (Principal Executive Officer)


/s/ James W. Corley                Co-Chairman of the Board,
-----------------------            Co-Chief Executive Officer, Chief
James W. Corley                    Operating Officer and Director


/s/ Charles Michel                 Vice President and Chief Financial
-----------------------            Officer
Charles Michel                     (Principal Financial and Accounting
                                   Officer)

                                   Director
-----------------------
Allen J. Bernstein


/s/ Peter A. Edison                Director
-----------------------
Peter A. Edison

/s/ Bruce H. Hallett
-----------------------            Director
Bruce H. Hallett


/s/ Walter S. Henrion              Director
-----------------------
Walter S. Henrion


-----------------------            Director
Christopher C. Maguire


-----------------------            Director
Mark B. Vittert
</TABLE>



                                       28
<PAGE>   29


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       Exhibit
       -------
<S>               <C>

         3.1      Restated Articles of Incorporation of the Company. (1)

         3.2      Bylaws of the Company. (1)

         10.7     Rights Agreement between the Company and Rights Agent, dated
                  June 16, 1995 (1)

         10.8     1995 Stock Option Plan. (2)

         10.9     Stock Option Plan for Outside Directors (4)

         10.11    Employment Agreement for Co-Chief Executive Officers, dated
                  June 16, 1995 (1)

         10.12    Form of Indemnity Agreements with Executive Officers and
                  Directors (2)

         21.1     Subsidiaries of the Company. (3)

         23       Independent Auditors' Consent. (3)

         27       Financial Data Schedule. (3)

         99       Proxy Statement, dated May 10,1999. (5)
</TABLE>




                                       29
<PAGE>   30



--------------------------

(1)      Filed as an Exhibit to the registrant's Form 10-Q for the 13-week
         period ended April 30, 1995 and incorporated herein by reference.

(2)      Filed as an Exhibit to the registrant's Form 10 filed April 11, 1995
         and incorporated herein by reference.

(3)      Filed herewith.

(4)      Filed as an Exhibit to the registrant's Form 10-K for the 52 week
         period ended February 1, 1997 and incorporated herein by reference.

(5)      To be filed with the Commission on or before May 10, 1999.




                                       30
<PAGE>   31


CONSOLIDATED BALANCE SHEETS
DAVE & BUSTER'S, INC.

<TABLE>
<CAPTION>
                                                                                              January 31,  February 1,
in thousands, except share and per share amounts                                                 1999         1998
<S>                                                                                            <C>          <C>     
Assets
Current assets:
     Cash and cash equivalents                                                                 $  4,509     $ 14,309
     Short-term investments                                                                          --        8,507
     Inventories                                                                                 10,811        6,222
     Prepaid expenses                                                                             1,743        1,234
     Preopening costs                                                                             7,369        3,415
     Other current assets                                                                         5,286        2,018
                                                                                               --------     --------
         Total current assets                                                                    29,718       35,705
Property and equipment, net (note 2)                                                            177,910      114,060
Goodwill, net of accumulated amortization of $1,502 and $1,121                                    8,206        8,587
Other assets                                                                                        758          637
                                                                                               --------     --------
                                                                                               $216,592     $158,989

Liabilities and Stockholders' Equity Current liabilities:
     Accounts payable                                                                          $ 13,695     $  4,075
     Accrued liabilities (note 3)                                                                 3,785        3,255
     Deferred income taxes (note 5)                                                               4,018        1,967
                                                                                               --------     --------
         Total current liabilities                                                               21,498        9,297
Deferred income taxes (note 5)                                                                    5,638        3,530
Other liabilities                                                                                 1,454          806
Long-term debt (note 4)                                                                          42,500       12,000
Commitments and contingencies (notes 4, 6 and 11) Stockholders' equity (note 7):
     Preferred stock, 10,000,000 authorized; none issued                                             --           --
     Common stock, $0.01 par value, 50,000,000 authorized;
        13,069,050 and 13,019,050 shares issued and outstanding
         as of January 31, 1999 and February 1, 1998, respectively                                  131          130
     Paid in capital (note 9)                                                                   114,621      116,054
     Retained earnings                                                                           30,750       17,172
                                                                                               --------     --------
         Total stockholders' equity                                                             145,502      133,356
                                                                                               --------     --------
                                                                                               $216,592     $158,989
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F-1


<PAGE>   32


CONSOLIDATED STATEMENTS OF INCOME
DAVE & BUSTER'S, INC.

<TABLE>
<CAPTION>
in thousands, except per share amounts     Fiscal Year    1998          1997           1996
<S>                                                    <C>           <C>            <C>      

Food and beverage revenues                             $  89,378     $  64,703      $  48,568
Amusement and other revenues                              92,906        63,801         40,207
                                                       ---------     ---------      ---------
     Total revenues                                      182,284       128,504         88,775

Cost of revenues                                          35,582        24,795         18,003
Operating payroll and benefits                            52,206        36,227         25,483
Other restaurant operating expenses                       45,862        32,787         20,582
General and administrative expenses                       10,579         8,489          5,734
Depreciation and amortization expense                     12,163         8,470          5,647
Preopening cost amortization                               4,539         3,246          2,605
                                                       ---------     ---------      ---------
     Total costs and expenses                            160,931       114,014         78,054

Operating income                                          21,353        14,490         10,721
Interest income (expense), net                               194          (179)           (38)
                                                       ---------     ---------      ---------

Income before provision for income taxes                  21,547        14,311         10,683
Provision for income taxes (note 5)                        7,969         5,414          4,343
                                                       ---------     ---------      ---------

Net income                                             $  13,578     $   8,897      $   6,340

Basic net income per share (note 8)                    $    1.04     $     .77      $     .58
Basic weighted average shares outstanding                 13,053        11,532         10,901
Diluted net income per share (note 8)                  $    1.03     $     .76      $     .58
Diluted weighted average shares outstanding               13,246        11,711         10,969
</TABLE>



See accompanying notes to consolidated financial statements.



                                       F-2


<PAGE>   33


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
DAVE & BUSTER'S. INC.

<TABLE>
<CAPTION>
                                                      Common Stock      
                                               -------------------------      Paid in         Retained
in thousands                                     Shares         Amount        Capital         Earnings         Total
<S>                                            <C>           <C>            <C>              <C>            <C>
Balance, February 4, 1996                          10,901     $      109     $   66,945      $    1,954      $   69,008

Proceeds from exercising stock option                   1             --             18              --              18
Net income                                             --             --             --           6,340           6,340
                                               ----------     ----------     ----------      ----------      ----------
Balance, February 2, 1997                          10,902            109         66,963           8,294          75,366

Proceeds from exercising stock options                 17             --            203              --             203
Tax benefit related to stock
     option exercises                                  --             --             54              --              54
Purchase of fractional shares from
     three-for-two stock split                         --             --             --             (19)            (19)
Issuance of common stock,
     net of offering costs                          2,100             21         48,834              --          48,855
Net income                                             --             --             --           8,897           8,897
                                               ----------     ----------     ----------      ----------      ----------
Balance, February 1, 1998                          13,019            130        116,054          17,172         133,356

Proceeds from exercising stock
     options                                           50              1            603              --             604
Tax benefit related to stock
     option exercises                                  --             --            208              --             208
Spin-off and related transactions (note 9)             --             --         (2,244)             --          (2,244)
Net income                                             --             --             --          13,578          13,578
                                               ----------     ----------     ----------      ----------      ----------
Balance, January 31, 1999                          13,069     $      131     $  114,621      $   30,750      $  145,502
</TABLE>


See accompanying notes to consolidated financial statements.




                                       F-3


<PAGE>   34


CONSOLIDATED STATEMENTS OF CASH FLOWS
DAVE & BUSTER'S, INC.

<TABLE>
<CAPTION>
in thousands                                        Fiscal Year      1998            1997            1996
<S>                                                              <C>             <C>             <C>       

Cash flows from operating activities
     Net income                                                  $   13,578      $    8,897      $    6,340
     Adjustments to reconcile net income to net cash
       provided by operating
         activities:
              Depreciation and amortization                          16,702          11,716           8,252
              Provision for deferred income taxes                     4,159           2,249           1,241
              Changes in assets and liabilities
                  Inventories                                        (4,589)         (2,332)         (1,269)
                  Prepaid expenses                                     (509)           (353)           (521)
                  Preopening costs                                   (8,493)         (4,714)         (2,606)
                  Other assets                                       (3,401)         (1,311)           (198)
                  Accounts payable                                    9,620             901             718
                  Accrued liabilities                                   530           1,508             393
                  Income taxes payable                                   --            (924)            924
                  Other liabilities                                     649              79            (149)
                                                                 ----------      ----------      ----------
Net cash provided by operating activities                            28,246          15,716          13,125
Cash flows from investing activities:
     Capital expenditures                                           (75,621)        (40,101)        (30,860)
     Purchase of short-term investments                                  --          (8,507)             --
     Proceeds from sale of short-term investments                     8,507              --              --
                                                                 ----------      ----------      ----------
Net cash used in investing activities                               (67,114)        (48,608)        (30,860)
                                                                 ----------      ----------      ----------
Cash flows from financing activities:
     Spin-off and related transactions                               (2,244)             --              --
     Borrowings under long-term debt                                 33,500          18,519          16,450
     Repayments of long-term debt                                    (3,000)        (20,769)         (2,700)
     Proceeds from issuance of common stock, net                        812          49,093              18
                                                                 ----------      ----------      ----------
Net cash provided by financing activities                            29,068          46,843          13,768
                                                                 ----------      ----------      ----------
Increase (decrease) in cash and cash equivalents                     (9,800)         13,951          (3,967)
Beginning cash and cash equivalents                                  14,309             358           4,325
                                                                 ----------      ----------      ----------

Ending cash and cash equivalents                                 $    4,509      $   14,309      $      358

Supplemental disclosures of cash flow information:
     Cash paid for income taxes                                  $    5,674      $    4,693      $    1,815
     Cash paid for interest, net of amounts capitalized          $      263      $      727      $      118
</TABLE>


See accompanying notes to consolidated financial statements.


                                       F-4


<PAGE>   35



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DAVE & BUSTER'S, INC.

IN THOUSANDS EXCEPT PER SHARE AMOUNTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION -- The consolidated financial statements include the
accounts of Dave & Buster's, Inc. and all wholly-owned subsidiaries (the
"Company"). All material intercompany accounts and transactions have been
eliminated in consolidation. The Company's one industry segment is the ownership
and operation of restaurant/entertainment complexes (a "Complex" or "Store")
under the name "Dave & Buster's," which are located in Texas, Georgia,
Pennsylvania, Illinois, Florida, Maryland, California, Ohio, Colorado, Michigan,
and New York.

SPIN-OFF TRANSACTION -- Prior to June 29, 1995, the Company was a subsidiary of
Edison Brothers Stores, Inc. ("Edison Brothers"). On June 29, 1995, Edison
Brothers distributed all of the outstanding shares of common stock of the
Company owned by Edison Brothers to the holders of common stock of Edison
Brothers (the "Distribution"). Edison Brothers provided certain general and
administrative services to the Company prior and subsequent to the Distribution.
Edison Brothers charged rent on certain of the Company's facilities.

USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

FISCAL YEAR -- The Company's fiscal year ends on the Sunday after the Saturday
closest to January 31. References to 1998, 1997, and 1996 are to the 52 weeks
ended January 31, 1999, February 1, 1998, and February 2, 1997.

CASH AND CASH EQUIVALENTS -- Cash equivalents for 1997 consist of investments
which are readily convertible to cash with maturities of three months or less.

INVESTMENTS -- Investment securities with original maturities of more than three
months and less than one year on their acquisition date are accounted for as
short-term investments. The Company's investments consisted of a corporate bond
as of February 1, 1998 (there was no difference between cost and estimated fair
value).

INVENTORIES -- Inventories, which consist of food, beverage, merchandise, and
supplies, are reported at the lower of cost or market determined on the
first-in, first-out method.

PREOPENING COSTS -- Through January 31, 1999, the Company's capitalized
preopening costs, consisting of promotional costs, direct costs related to
hiring and training the initial workforce, and other direct costs associated
with opening a Complex, were amortized over the one year period following the
opening of the Complex. Beginning February 1, 1999, such cost will be required
to be expensed as incurred to conform to new accounting standards. See Recent
Accounting Pronouncements.

PROPERTY AND EQUIPMENT -- Expenditures for new facilities and those which
substantially increase the useful lives of the property, including interest
during construction, are capitalized. Interest capitalized in 1998, 1997, and
1996 was $1,375, $851, and $377, respectively. Equipment purchases are
capitalized at cost. Property and equipment lives are estimated as follows:
buildings, 40 years; leasehold and building improvements, shorter of 20 years or
lease life; furniture, fixtures and equipment, 5 to 10 years; games, 5 years.

GOODWILL -- Goodwill of $8,952 is being amortized over 30 years. Whenever there
is an indication of impairment, the Company evaluates the recoverability of
goodwill using future undiscounted cash flows.

DEPRECIATION AND AMORTIZATION -- Property and equipment, excluding most games,
are depreciated on the straight-line method over the estimated useful lives of
the assets. Games are generally depreciated on the 150%-double-declining-balance
method over the estimated useful lives of the assets. Intangible assets are
amortized on the straight-line method over estimated useful lives as follows:
trademarks over statutory lives; lease rights over remaining lease terms.


                                       F-5


<PAGE>   36

INTEREST RATE SWAP AGREEMENTS -- The Company enters into interest rate swap
agreements to effectively convert a portion of its variable-rate borrowings into
fixed-rate obligations. The interest rate differential to be received or paid is
recognized over the lives of the agreements as an adjustment to interest
expense.

INCOME TAXES -- The Company uses the liability method which recognizes the
amount of current and deferred taxes payable or refundable at the date of the
financial statements as a result of all events that have been recognized in the
financial statements and as measured by the provisions of enacted tax laws.
Prior to June 29, 1995, the Company was included in the consolidated federal
income tax return of Edison Brothers.

STOCK OPTION PLAN -- The Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and
related Interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under SFAS No. 123, "Accounting
for Stock-Based Compensation," requires use of option valuation models that were
not developed for use in valuing employee stock options. Under APB 25, because
the exercise price of the Company's employee stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.

REVENUE RECOGNITION -- Foreign license revenues are deferred until the Company
fulfills its obligations under license agreements, which is upon the opening of
the Complex. The license agreements provide for continuing royalty fees based on
percentage of gross revenues and are recognized when assured. Food, beverage,
and amusement revenues are recorded at point of sale.

RECENT ACCOUNTING PRONOUNCEMENTS -- In April 1998, the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-5 entitled "Reporting on the Costs of
Start-Up Activities." The SOP, which is effective for fiscal years beginning
after December 15, 1998, requires entities to expense as incurred all start-up
and preopening costs that are not otherwise capitalizable as long-lived assets.
Restatement of previously issued annual financial statements is not permitted by
the SOP, and entities are not permitted to report the pro forma effects of the
retroactive application of the new accounting standard. The Company's adoption
of the new accounting standard will involve the recognition of the cumulative
effect of the change in accounting principle required by the SOP as a one-time
charge against earnings, net of any related income tax benefit in the first
quarter of fiscal 1999 in the amount of $4,441 or $.34 per diluted share.

RECLASSIFICATION -- Certain amounts for 1997 have been reclassified to conform
to 1998 presentations.

NOTE 2: PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                                           1998           1997
<S>                                                                                   <C>            <C>      
Land ............................................................................     $   8,192      $   8,192
Buildings .......................................................................        42,686         35,250
Leasehold and building improvements .............................................        54,370         37,030
Games ...........................................................................        36,283         26,233
Furniture, fixtures, and equipment ..............................................        38,179         23,375
Construction in progress ........................................................        32,707          6,716
                                                                                      ---------      ---------
     Total cost .................................................................       212,417        136,796
Accumulated depreciation ........................................................       (34,507)       (22,736)
                                                                                      ---------      ---------
                                                                                      $ 177,910      $ 114,060
</TABLE>


                                       F-6



<PAGE>   37
Note 3: ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                                  1998         1997
<S>                           <C>          <C>     
Payroll .................     $    865     $    686
Sales and use tax .......        1,046        1,031
Real estate tax .........          674          545
Other ...................        1,200          993
                              --------     --------
                              $  3,785     $  3,255
</TABLE>


Note 4: LONG-TERM DEBT

The Company has a secured revolving line of credit which permits borrowing up to
a maximum of $100,000. At January 31, 1999, $57,100 was available under this
facility. Borrowings under this facility bear interest at a floating rate based
on LIBOR or, at the Company's option, the bank's prime rate plus in each case a
margin based upon financial performance (7.3% at January 31, 1999) and is
secured by all capital stock or equity interest in the stock of the Company's
subsidiaries. The facility, which matures in May 2001, has certain financial
covenants including a minimum consolidated tangible net worth level, a maximum
leverage ratio, minimum fixed charge coverage and maximum level of capital
expenditures on new stores. The fair value of the Company's long-term debt
approximates its carrying value.

The Company has entered into an agreement that expires in 1999, to fix its
variable-rate debt to fixed-rate debt (6.75% at January 31, 1999) on notional
amounts aggregating $35,000. The market risks associated with the agreement are
mitigated because increased interest payments under the agreement resulting from
a decrease in LIBOR are effectively offset by decreased payments under the debt
obligation. The Company is exposed to credit losses for periodic settlements of
amounts due under the agreements. Such amounts were not material at January 31,
1999.

Note 5: INCOME TAXES

<TABLE>
<CAPTION>
                                                                                 1998          1997          1996
<S>                                                                          <C>           <C>           <C>     
Current Expense
     Federal ...........................................................     $  3,188      $  2,802      $  2,296
     State and local ...................................................          622           363           806
Deferred tax expense ...................................................        4,159         2,249         1,241
                                                                             --------      --------      --------  
     Total provision for income taxes ..................................     $  7,969      $  5,414      $  4,343
</TABLE>

Significant components of the deferred tax liabilities and assets in the
consolidated balance sheets are as follows:

<TABLE>
<CAPTION>
                                                                                 1998          1997          1996

<S>                                                                          <C>           <C>           <C>     
Accelerated depreciation ...............................................     $  6,215      $  3,893      $  2,464
Preopening costs .......................................................        2,928         1,411           813
Prepaid expenses .......................................................          131           112           185
Capitalized interest costs .............................................        1,022           463           200
                                                                             --------      --------      --------  
     Total deferred tax liabilities ....................................       10,296         5,879         3,662

Workers' compensation ..................................................          183           168           235
Net asset basis difference at acquisition ..............................           --            25            84
Other ..................................................................          457           189            95
                                                                             --------      --------      --------  
     Total deferred tax assets .........................................          640           382           414
                                                                             --------      --------      --------  
Net deferred tax liability .............................................     $ (9,656)     $ (5,497)     $ (3,248)
</TABLE>


                                       F-7


<PAGE>   38

Reconciliation of federal statutory rates to effective income tax rates:

<TABLE>
<CAPTION>
                                                      1998           1997           1996
<S>                                                   <C>            <C>            <C>  

Federal corporate statutory rate ............         35.0%          35.0%          34.0%
State and local income taxes, net
     of federal income tax benefit ..........          1.9%           1.6%           5.0%
Goodwill amortization and other
     nondeductible expenses .................          1.5%           1.8%           1.5%
Tax credits .................................         (1.4)%         (1.4)%         (2.0)%
Effect of change in deferred tax rate .......         (1.5)%          (.5)%           .9%
Other .......................................          1.5%           1.3%           1.3%
                                                    ------         ------         ------  
Effective tax rate ..........................         37.0%          37.8%          40.7%
</TABLE>

NOTE 6: LEASES

The Company leases certain properties and equipment under operating leases. Some
of the leases include options for renewal or extension on various terms. All
leases require the Company to pay property taxes, insurance and maintenance of
the leased assets. Some leases have provisions for additional percentage rentals
based on revenues; however, payments of percentage rent were minimal during the
three-year period ended January 31, 1999. For 1998, 1997, and 1996, rent expense
for operating leases was $8,267, $5,404, and $2,751, respectively. At January
31, 1999, future minimum lease payments required under operating leases are
$9,047, 1999; $8,329, 2000; $7,939, 2001; $7,873, 2002; $7,389, 2003; and
$114,045, total.

NOTE 7: COMMON STOCK

In 1995, the Company adopted the Dave & Buster's, Inc. 1995 Stock Option Plan
(the "Plan") covering 675 shares of common stock. In 1997, the Company increased
the shares of common stock covered by the Plan to 1,350. The Plan provides that
incentive stock options may be granted at option prices not less than fair
market value at date of grant (110% in the case of an incentive stock option
granted to any person who owns more than 10% of the total combined voting power
of all classes of stock of the Company). Non-qualified stock options may not be
granted for less than 85% of the fair market value of the common stock at the
time of grant and are exercisable 20% per year after one year from the date of
grant. 

In connection with the Distribution, the Company granted on the date of the
Distribution, non-qualified stock options to certain minority shareholders
entitling them to purchase Company common stock equal to 2% of the total Company
common stock outstanding immediately prior to the Distribution (approximately
156 shares). The per share exercise price for each such option is $10.00. Twenty
percent of such options were exercisable seven months after the public offering
by the Company of its common stock, which was completed in October 1995.
Thereafter, 20% of such options become exercisable on the second, third, fourth
and fifth anniversary of the Distribution.

In 1996, the Company adopted a stock option plan for outside directors (the
"Directors Plan"). A total of 150 shares of common stock are subject to the
Directors Plan. The options granted under the Directors Plan vest ratably over a
three year period.

Pro forma information regarding net income and earnings per common share is
required by SFAS 123, and has been determined as if the Company had accounted
for its employee stock options under the fair value method. The fair value for
these options was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions for 1998, 1997,
and 1996, respectively: risk-free interest rates of 5.36%, 6.09%, and 5.75%;
dividend yields of 0.0%; volatility factors of the expected market price of the
Company's common stock of .386, .363, and .344; and a weighted-average life of
the option of 4.8, 4.4, and 4.2 years.


                                       F-8


<PAGE>   39

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options. 

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the option's vesting period. Because SFAS 123
requires compensation expense to be recognized over the vesting period, the
impact on pro forma net income and pro forma earnings per common share as
reported below may not be representative of pro forma compensation expense in
future years. The Company's pro forma information follows:

<TABLE>
<CAPTION>
                                                     1998           1997           1996
<S>                                               <C>            <C>            <C>       
Net income, as reported .....................     $   13,578     $    8,897     $    6,340
Pro forma net income ........................     $   12,699     $    8,353     $    6,057
Basic net income per share, as reported .....     $     1.04     $      .77     $      .58
Pro forma basic net income per share ........     $      .97     $      .72     $      .56
Diluted net income per share, as reported ...     $     1.03     $      .76     $      .58
Pro forma diluted net income per share ......     $      .96     $      .71     $      .55
</TABLE>

A summary of the Company's stock option activity, and related information is as
follows:

<TABLE>
<CAPTION>
                                                          1998                         1997                          1996
                                                    Weighted-Average             Weighted-Average             Weighted-Average
                                           Options   Exercise Price     Options  Exercise Price      Options    Exercise Price

<S>                                        <C>      <C>                 <C>     <C>                  <C>      <C>
Outstanding - beginning of year...........   949         $14.88           534        $ 11.11           383        $ 11.29 
Granted...................................   395         $20.89           432        $ 19.41           164        $ 10.74 
Exercised.................................   (50)        $11.88           (17)       $ 11.91            (1)       $ 12.17 
Forfeited.................................  (149)        $16.92            --        $    --           (12)       $ 11.59 
Outstanding - end of year................. 1,145         $16.82           949        $ 14.88           534        $ 11.11 
Exercisable at end of year................   332         $13.59           174        $ 11.06            75        $ 11.27 
Weighted-average fair value of options
    granted during the year...............               $ 8.56                      $  7.48                      $  3.89
</TABLE>

As of January 31, 1999, exercise prices for 658 options and 487 options ranged
from $10.00 to $15.50 and $18.50 to $24.91, respectively. The weighted-average
remaining contractual life of the options is 8.0 years.

Under a Shareholder Protection Rights Plan adopted by the Company, each share of
outstanding common stock includes a right which entitles the holder to purchase
one one-hundredth of a share of Series A Junior Participating Preferred Stock
for seventy five dollars. Rights attach to all new shares of common stock
whether newly issued or issued from treasury stock and become exercisable only
under certain conditions involving actual or potential acquisitions of the
Company's common stock. Depending on the circumstances, all holders except the
acquiring person may be entitled to 1) acquire such number of shares of Company
common stock as have a market value at the time of twice the exercise price of
each right, or 2) exchange a right for one share of Company common stock or
one-hundredth of a share of the Series A Junior Participating Preferred Stock,
or 3) receive shares of the acquiring company's common stock having a market
value equal to twice the exercise price of each right. The rights remain in
existence until ten years after the Distribution, unless they are redeemed (at
one cent per right).


                                       F-9



<PAGE>   40
NOTE 8: EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
shares:

<TABLE>
<CAPTION>
                                                                    1998         1997         1996
<S>                                                              <C>          <C>          <C>     
Numerator-Net Income                                             $ 13,578     $  8,897     $  6,340
                                                                 --------     --------     --------
Denominator:
  Denominator for basic net income per share -
  weighted average shares                                          13,053       11,532       10,901
Effect of dilutive securities - employee stock options                193          179           68
                                                                 --------     --------     --------
Denominator for diluted earnings per share - adjusted
weighted average shares                                            13,246       11,711       10,969

Basic net income per share                                       $   1.04     $    .77     $    .58

Diluted net income per share                                     $   1.03     $    .76     $    .58
</TABLE>

Options to purchase 210 shares of common stock at prices ranging from $23.63 to
$24.75 were outstanding during the second half of 1997, but were not included in
the computation of diluted net income per share because the options would be
antidilutive. Options to purchase 178 and 262 shares of common stock at prices
ranging from $24.75 to $24.91 and $21.19 to $23.75, respectively, were
outstanding during all of 1998, but were not included in the computation of
diluted net income per share for the whole year and second half of the year,
respectively, because the options would be antidilutive.

NOTE 9: RELATED PARTY ACTIVITY

In April 1998, a limited liability litigation corporation owned by the creditors
of Edison Brothers filed a lawsuit against the Company and related parties,
seeking recovery in connection with the Distribution and certain related
transactions. In August 1998, the Company settled the litigation with the
limited liability litigation corporation. In full and final settlement of all
claims, the Company paid $2,244 and charged such amount to paid in capital
because all alleged claims were associated with the spin-off transactions.

The Company is party to a consulting agreement with Sandell Investments
("Sandell"), a partnership whose controlling partner is a director of the
Company. Sandell advises the Company with respect to expansion and site
selection, market analysis, improvement and enhancement of the Dave & Buster's
concept and other similar and related activities. Annual fees of $125 were paid
to Sandell in 1998, 1997, and 1996, the maximum fee provided for under the
agreement.

The Company is party to a lease agreement with CE San Antonio Investment Trust
("Trust") for its San Antonio, Texas location. A director of the Company is the
managing trustee of CE San Antonio Investment Trust. Payments to Trust in 1998
were $110.



                                      F-10



<PAGE>   41

NOTE 10: EMPLOYEE BENEFIT PLAN

The Company sponsors a plan to provide retirement benefits under the provision
of Section 401(k) of the Internal Revenue Code (the 401(k) Plan) for all
employees who have completed a specified term of service. Company contributions
may range from 0% to 100% of employee contributions, up to a maximum of 6% of
eligible employee compensation, as defined. Employees may elect to contribute up
to 20% of their eligible compensation on a pretax basis. Benefits under the
401(k) Plan are limited to the assets of the 401(k) Plan.

NOTE 11: CONTINGENCIES

The Company is subject to certain legal proceedings and claims that arise in the
ordinary course of its business. In the opinion of management, based on
discussions with and the advice of legal counsel, the amount of ultimate
liability with respect to all actions will not materially affect the
consolidated results of operations or financial condition of the Company.

NOTE 12: QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
Fiscal 1998                                           First       Second        Third       Fourth
<S>                                                 <C>          <C>          <C>          <C>     
Total revenues ................................     $ 38,917     $ 40,691     $ 45,409     $ 57,267
Operating income ..............................        4,318        4,380        4,388        8,267
Net income ....................................        2,866        2,801        2,734        5,177
Basic net income per share ....................     $    .22     $    .22     $    .21     $    .40
Basic weighted average shares outstanding .....       13,031       13,052       13,062       13,068
Diluted net income per share ..................     $    .22     $    .21     $    .21     $    .39
Diluted weighted average shares outstanding ...       13,274       13,272       13,183       13,253
</TABLE>


<TABLE>
<CAPTION>
Fiscal 1997                                           First       Second        Third       Fourth
<S>                                                 <C>          <C>          <C>          <C>     
Total revenues ................................     $ 28,632     $ 29,671     $ 30,840     $ 39,361
Operating income ..............................        3,476        3,216        2,655        5,143
Net income ....................................        2,001        1,789        1,535        3,572
Basic net income per share ....................     $    .18     $    .16     $    .14     $    .27
Basic weighted average shares outstanding .....       10,902       10,907       11,300       13,018
Diluted net income per share ..................     $    .18     $    .16     $    .13     $    .27
Diluted weighted average shares outstanding ...       10,994       11,061       11,541       13,249
</TABLE>



                                      F-11



<PAGE>   42


REPORT OF INDEPENDENT AUDITORS



STOCKHOLDERS AND BOARD OF DIRECTORS
DAVE & BUSTER'S, INC.


We have audited the accompanying consolidated balance sheets of Dave & Buster's,
Inc. as of January 31, 1999 and February 1, 1998, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended January 31, 1999. 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 generally accepted auditing
standards. 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.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Dave & Buster's,
Inc. at January 31, 1999 and February 1, 1998 and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended January 31, 1999, in conformity with generally accepted accounting
principles.

                                                         Ernst & Young LLP



Dallas, Texas
March 29, 1999






                                      F-12





<PAGE>   43


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       Exhibit
       -------
<S>               <C>

         3.1      Restated Articles of Incorporation of the Company. (1)

         3.2      Bylaws of the Company. (1)

         10.7     Rights Agreement between the Company and Rights Agent, dated
                  June 16, 1995 (1)

         10.8     1995 Stock Option Plan. (2)

         10.9     Stock Option Plan for Outside Directors (4)

         10.11    Employment Agreement for Co-Chief Executive Officers, dated
                  June 16, 1995 (1)

         10.12    Form of Indemnity Agreements with Executive Officers and
                  Directors (2)

         21.1     Subsidiaries of the Company. (3)

         23       Independent Auditors' Consent. (3)

         27       Financial Data Schedule. (3)

         99       Proxy Statement, dated May 10,1999. (5)
</TABLE>

--------------------------

(1)      Filed as an Exhibit to the registrant's Form 10-Q for the 13-week
         period ended April 30, 1995 and incorporated herein by reference.

(2)      Filed as an Exhibit to the registrant's Form 10 filed April 11, 1995
         and incorporated herein by reference.

(3)      Filed herewith.

(4)      Filed as an Exhibit to the registrant's Form 10-K for the 52 week
         period ended February 1, 1997 and incorporated herein by reference.

(5)      To be filed with the Commission on or before May 10, 1999.