<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

            FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13
                OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
   [ ]   Annual Report Pursuant to Section 13 OR 15(d) of the Securities
         Exchange Act of 1934

                   For the fiscal year ended _________________

                                       OR

   [X]   Transition Report Pursuant to Section 13 or 15 (d) of the Securities
         Exchange Act of 1934

       For the transition period from October 1, 2001 to December 31, 2001
                                      ----------------   -----------------

                         Commission file number 1-13806
                                                -------

                           iDINE REWARDS NETWORK INC.
                           --------------------------
             (Exact name of Registrant as specified in its charter)

                     DELAWARE                             84-6028875
                     --------                             ----------
         (State or other jurisdiction of                (I.R.S Employer
          incorporation or organization)               Identification No.)

                 11900 Biscayne Boulevard, Miami, Florida 33181
                 ----------------------------------------------
               (Address of principal executive offices) (Zip Code)

         Registrant's telephone number, including area code 305-892-3300
                                                            ------------

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

<TABLE>
<CAPTION>
                                                           Name of each exchange
             Title of each class                            on which registered
            -------------------                             -------------------
  <S>                                      <C>
  Common Stock, par value $.02 per share   American Stock Exchange and Philadelphia Stock Exchange
</TABLE>

Preferred Stock, par value $.10 per share            Philadelphia Stock Exchange

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

                               Title of each class
                               -------------------

                                      None
                                      ----

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 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 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. [ ]

<PAGE>

Based on the closing sale price of March 25, 2002, the aggregate market value of
voting stock held by non-affiliates of the Registrant was approximately
$85,950,301.

Number of shares outstanding of Registrant's common stock, as of
March 25, 2002: 15,879,293
                ----------

DOCUMENTS INCORPORATED BY REFERENCE:  None.
                                      -----

                                       2

<PAGE>

                                     PART I
                                     ------

We have made, and continue to make, various forward-looking statements with
respect to our financial position, business strategy, projected costs, projected
savings and plans and objectives of management. Such forward-looking statements
are identified by the use of forward-looking words or phrases such as
"anticipates," "intends," "expects," "plans," "believes," "estimates," or words
or phrases of similar import. Although we believe that our expectations are
based on reasonable assumptions within the bounds of our knowledge, investors
and prospective investors are cautioned that such statements are only
projections and that actual events or results may differ materially from those
expressed in any such forwarding looking statements. Our actual consolidated
quarterly or annual operating results have been affected in the past, or could
be affected in the future, by factors, including, without limitation, general
economic, business and market conditions; relationships with credit card issuers
and other marketing partners; regulations affecting the use of credit card
files; perceived desirability of alternate reward currencies such as frequent
flyer miles; extreme weather conditions; participating merchants' continued
acceptance of discount dining programs and the availability of other alternative
sources of capital to participating merchants.

Item 1.  Business
-----------------

Corporate Structure
-------------------

Effective February 1, 2002, we changed our corporate name to iDine Rewards
Network Inc. from Transmedia Network Inc. and commenced trading under the symbol
IRN. iDine Rewards Network Inc. and its subsidiaries administer consumer reward
programs which offer savings and rewards to our members principally when they
dine in our participating restaurants. To a lesser extent, we also offer rewards
for lodging and travel. We commenced operations in 1984 and were reincorporated
as a Delaware corporation in 1987. Our principal office is located at 11900
Biscayne Boulevard, North Miami, Florida 33181. Our principal telephone number
is (305)892-3300. Currently, we have the following principal operating
subsidiaries:

iDine Restaurant Group Inc. (IRG), formerly Transmedia Restaurant Company Inc.,
is responsible for soliciting, underwriting, contracting with and servicing
merchants that participate in the program. Other service establishments such as
hotels, resort destinations and retailers are also solicited to the program but
on a much smaller scale.

Transmedia Service Company Inc. (TSC) is responsible for (i) soliciting
accounts, managing partner relationships and servicing members in the United
States and (ii) providing support services to iDine Restaurant Group Inc.

RTR Funding LLC, a wholly owned subsidiary of Transmedia Service Company Inc.,
was established as a special purpose corporation for purposes of the
securitization of cash advances made to merchants referred to as Rights to
receive.

TMNI International Incorporated previously licensed the Transmedia Card, and
licensed any service marks, proprietary software and know-how outside the United
States.

iDine.com, Inc. was formed in April 2000 to provide restaurant operators with
the capability of using the Internet to provide yield management tools such as
variable promotions, dining incentives and off peak pricing to fill empty seats
and generate incremental business. The entire operations of iDine.com were
folded into IRG and TSC during the year ended September 30, 2001, to ensure a
more efficient distribution of the revenue management program. Effective
February 1, 2002, iDine.com merged with and into Transmedia Network Inc. which
simultaneously changed its name to iDine Rewards Network Inc.

Description of Rights to Receive and Registered Card
----------------------------------------------------

Our primary business is the administration of dining rewards programs. We
accomplish this through the acquisition of Rights to receive from participating
merchants which are then sold for cash to our members. Rights to receive are the
rights to receive the future cash flows associated with goods and services,
principally


                                       3

<PAGE>

food and beverage, which are acquired and purchased from participating
restaurants for an amount typically equal to approximately 50% of the retail
value of the food and beverage. Alternatively, we may acquire such Rights to
receive either by facilitating the merchant's purchase of other goods and
services or providing advertising and media placement services to the
participating establishments. Almost all Rights to receive are purchased for
cash. The typical discount to the menu price of 50% has merchant appeal due to
the fact that the cost of food and beverages at most fine dining establishments
is 30-40% of the retail value. Thus, the restaurant makes a wholesale profit in
advance in exchange for upfront cash and filling tables in the future that may
otherwise go empty. We typically purchase food and beverage credits that are
anticipated to be utilized by our members in a period of no more than six to
nine months from the date of purchase; however, it is not always possible for us
to predict with accuracy the amount of time in which such credits will be
consumed due to seasonality, the merchant's appeal to our members, or the
unfamiliarity associated with the opening of new market areas.

A critical part of our methodology for administering the dining rewards program
is referred to as the registered card platform. Obtained through the acquisition
of Dining A La Card ("DALC") in June 1999, and subsequently enhanced by us, it
has allowed us to replace the private label charge card program that we had
utilized since inception. Members that enroll in the our programs simply
register a valid major credit card with us and then present that registered
credit card while dining at a participating restaurant. Based on our agreements
with various processors and presenters throughout the country, we aggregate data
for all the credit card transactions at our participating merchants. The
transactions are then matched to a file containing the members' registered card.
The matched transactions are qualified via business rules as to whether they are
eligible for a reward. Qualified transactions are then used to provide member
savings or alternate currency benefits, as well as to invoice and collect from
merchants, principally via an electronic debit to the merchant's bank account.

The savings are delivered to the members in the form of a direct credit on their
credit card statement, cash rebate or a mileage credit to their frequent flyer
account. The credits typically represent approximately 20% of the member's
dining spend with participating restaurants. Alternatively, members can elect to
receive rewards in the form of ten frequent flyer miles for every dollar spent
with major airlines, such as United, American, Delta, Northwest, America West,
US Airways, British Airways, Continental and Alaska Airlines.

Business Developments
---------------------

In June 1999, we acquired from SignatureCard, Inc. ("SignatureCard"), a
subsidiary of Montgomery Ward & Co., Incorporated, certain assets related to a
membership discount dining program that SignatureCard operated under the DALC
trade and service name.

DALC had competed directly with us since 1995. The assets acquired in the
acquisition included various intellectual property rights and computer software,
membership and merchant data, Rights to receive, and most significantly, the
registered card platform. We simultaneously entered into a service agreement
with SignatureCard pursuant to which we obtained access to their sponsor
relationships with the nation's leading airlines. SignatureCard was to receive a
portion of the fees and profits derived from members either initially acquired
from SignatureCard or subsequently generated through their efforts. The
operations of DALC were consolidated with ours, and integration was completed in
November of 1999.

On December 28, 2000, we reached an agreement with GE Financial Assurance
("GEFA"), the successor parent of SignatureCard, to extinguish all remaining
obligations associated with the DALC acquisition, to eliminate the exclusive
right of SignatureCard to deal with the airline frequent flyer member files and
to fully resolve and terminate the relationship. In consideration for the above,
we paid GEFA $3.8 million in cash and honored GEFA's right to put 400,000 shares
held by it as part of the acquisition consideration, at a value of $8.00 per
share. This put right was exercised and we paid GEFA in two equal installments
on January 17 and February 13, 2001. We also cancelled 160,000 options of the
original 400,000 issued to SignatureCard as part of the original DALC purchase
price, leaving SignatureCard with 240,000 options which must be exercised by
June 30, 2002 at a strike price of $4.00 per share.

Following the acquisition, we converted our method of doing business from the
legacy private label Transmedia Card program to the Registered Card program.
This conversion was completed in August 2000. In order to


                                       4

<PAGE>

capitalize on this significant change in our business, we conducted numerous
customer research surveys and decided to re-brand the dining program under the
name iDine. In contrast to the Transmedia Card, which was a private label charge
card linked electronically to a member's bank credit card of choice, a
registered card is a major credit card that has been registered with iDine by
the holder. Members can make purchases that qualify for savings or rewards with
one of their existing "registered" credit cards and the fact that the
transaction may qualify for some form of savings or rewards is "blind" to both
merchants and member guests. Thus, the iDine program allows members to
accumulate savings by using conventional charge cards, such as MasterCard, Visa,
American Express and Discover. We believe that the registered card concept has
broader consumer and restaurant appeal due to its more discrete nature.

In connection with our conversion to the iDine registered card format, we
initially launched an e-commerce initiative through our wholly owned subsidiary
iDine.com. The on-line revenue management product, accessed through the iDine
website, allows restaurants to create special time and date specific incentives
and promotions in order to drive incremental traffic through the restaurant
during slow periods. Consumers have their choice of receiving these variable
benefits in either alternative currencies such as airline frequent flyer miles
or cash. The website also allows for national restaurant listings and access to
reviews. Specifically, the web site contains Zagat restaurant listings and
review content provided under our agreement with Zagat. Other popular member
enhancements are the member's review features and the ability of the member to
manage his or her account online and review their transaction history. The
significant business driver on the web site, however, is the revenue management
program whereby restaurants who no longer wish to participate in the fixed
incentive cash advance program have the ability to establish performance based
variable dining deals online (e.g., 20% discount on Tuesday nights) which may be
accepted by a member.

To provide us with sufficient funds to launch our new revenue management
product, we raised $10 million in equity capital through a private placement.
The testing of the product was completed in December 2000, and it was rolled-out
on a national basis in April 2001. The revenue management product has helped to
increase the number of participating restaurants, as well as provide a retention
product for existing restaurants and has increased overall restaurant dining
sales.

In the past, we have derived income from franchising and licensing the
Transmedia Card trade name and service mark, and related proprietary rights and
know-how within and outside the United States. We have also received revenue
from licensing the Transmedia Card. In recent years, we started systematically
reacquiring the franchise sales territories to obtain greater control over our
national presence and growth plans. In June 2000, we completed the reacquisition
of the last of our previously franchised territories. In addition to reacquiring
all our previously franchised territories, in April 2000, we terminated, by
mutual consent, the license agreements with Transmedia Asia Pacific, Inc. and
Transmedia Europe. Following a brief transition period, Transmedia Asia Pacific,
Inc. and Transmedia Europe, Inc. have ceased using the Transmedia brand name for
their respective discount programs.

Member and Merchant Programs
----------------------------

Member Programs

Our members have a choice of programs, including (1) a $49.00 annual fee-based
program which typically offers a 20% savings at participating establishments on
charges for food, beverage, tax, and tip, and (2) a no-fee program which offers
alternative currency rewards, predominantly frequent flyer mileage credits with
participating airlines of ten miles for each dollar spent on charges for food,
beverage, tax and tips at participating establishments.

We also introduced a no upfront fee program where benefits and rewards are not
provided until the member reaches a certain level of qualified spending each
year. The typical usage requirements range from cumulative rewards of $40.00 to
$50.00, and the net effect is essentially that by the time the member receives a
benefit, we (by not providing a benefit for the first few dines) have
effectively received a fee.

Typically, iDine registered cardmembers (or members enrolled through an airline
program) can elect to earn ten frequent flyer miles for each dollar spent per
dine. This type of arrangement is advantageous for airlines as they


                                       5

<PAGE>

view miles acquired for use as rewards or rebates to be equivalent to a prepaid
ticket. We are able to purchase mileage from the airlines on an as needed basis
at favorable rates. Additionally, the contracts with the airlines provide that
additional affinity based accounts can be enrolled at virtually no cost. We
effectively reduce the cost of the 20% cash rebate discount to approximately
16-17% if airline miles are elected to be received in lieu of cash.

Merchant Programs

Fixed Incentive Plans
o Cash Advance Plan - Under this plan, the merchant receives cash in advance for
food and beverage credits typically in the ratio of 1:2. Gross dining sales are
recognized as the portion of the total ticket recovered from the merchant,
typically 80%. The 20% is left with the merchant to provide the merchant with
liquidity for items such as sales tax and tips.

o Arrears Plan - Under this plan, the merchant receives no cash in advance;
however, meals are discounted at a lower rate. The merchant is still listed in
our directory of participating merchants similar to the standard plan. When a
member visits the merchant, we may receive only 30% to 35% of the transaction
from the merchant. The gross margin on these transactions is the residual amount
after the member receives their 20% discount. While the actual cash received
from these transactions is less than the cash advance plan, there is very little
risk, and we do not have a cost of receivables or capital for those merchants.

Usually, both the cash advance and arrears plan are available to members seven
days a week at the conventional savings value.

Variable Incentive Plans
o The Revenue Management Plan - This performance based plan provides the
merchant with the ability to direct when they wish to offer incentive dining.
The merchant posts or make available a certain reward (i.e., percentage
discount) tied to specific days of the week or time of day, or both. The reward
is communicated to members via the iDine website, directories and through
wireless devices such as Palm pilots. The member either goes to the advertised
restaurant or, for certain "exclusives", selects the reward and then makes a
reservation to dine. We receive a portion of the transaction, the merchant gets
direct incremental business when they want it, and the member receives a reward.

Multi-Unit Plan - The multi-unit (or chain) restaurant plan specifically
addresses peak versus off-peak demand issues. Accordingly, we have in place with
certain merchants, a Sunday through Thursday plan designed to drive incremental
traffic at times when the multi-unit restaurants' capacity is underutilized. We
typically take a percentage of all such transactions and the member gets a
similar reward.

Participating Members and Merchants

As of December 31, 2001, we had approximately 7,700 merchants available to our
members. As of that date, accounts enrolled in various programs totaled
approximately 7,800,000 while active members who are described as members with a
dining transaction during the last twelve months were 1,200,000.

<TABLE>
<CAPTION>
                                                                       September 30,
                                December 31,  ----------------------------------------------------------------------
                                        2001          2001           2000          1999          1998          1997
------------------------------ -------------- ------------- -------------- ------------- ------------- -------------
<S>                                    <C>           <C>            <C>           <C>           <C>           <C>
Merchants                              7,700         7,800          7,000         7,200         7,300         7,100
---------
Credit cards on file              10,100,000     8,600,000      3,150,000     2,700,000     1,200,000     1,300,000
--------------------
Enrolled accounts                  7,800,000     6,650,000      2,750,000     2,400,000       850,000       900,000
-----------------
Active Members                     1,200,000     1,100,000         N/A           N/A           N/A           N/A
--------------
------------------------------ -------------- ------------- -------------- ------------- ------------- -------------
</TABLE>

                                       6

<PAGE>

The majority of all restaurants listed in the quarterly directories published by
us typically renew their contracts after the initial Rights to receive are used.
However, after the second renewal, attrition tends to increase because the
restaurants, with our help, have often either become successful and no longer
require our financial and marketing resources, or we choose not to renew them.
Offsetting this decrease are new restaurants that choose to participate as old
ones leave the program, and restaurants that were formerly on the program that
re-sign as they further expand and/or desire the program's benefits again. This
provides us with a continuous flow of restaurant prospects. Moreover, the
e-commerce enabled revenue management program has been helpful in restaurant
retention efforts by inducing merchants to remain in the program, and also to
attract restaurants that previously had chosen not to participate with a fixed
incentive plan.

The increase in accounts during the year ended September 30, 1999 was mainly due
to the addition of 1,700,000 accounts with the acquisition of DALC. The
substantial increase in the year ended September 30, 2001 was due mainly to the
establishment of direct relationship with our airline partners after the buyout
of GEFA in December 2000 and the subsequent addition of 2,800,000 new airline
frequent flyer accounts. Additional enrollments included 425,000 other partner
generated accounts and 225,000 corporate card accounts. The increase during the
three-month transition period ended December 31, 2001 was due mainly to the
addition of 800,000 new airline frequent flyer accounts and 300,000 partner
generated accounts.

We believe that in no area where we operate are we close to restaurant or
account saturation. During the year ended September 30, 2000, the integration of
DALC and subsequent conversion to the registered card platform also had the
effect of slightly lowering the number of restaurants participating in our
programs. Limited resources were focused on converting restaurants over to the
registered card program instead of acquiring new restaurants. Some of the
restaurants were uncomfortable converting to a program in which the "discount
diner" is imperceptible from the rest of the population. More significantly,
there were restaurants in both portfolios that were not economically viable for
us, and the conversion process served to flush these restaurants out. With the
conversion process completed, we were able to focus on acquiring new restaurants
and significantly increase new restaurants in fiscal 2001. Further, we continue
to aggressively pursue the multi-units or chain restaurants that, prior to the
conversion and institution of the variable incentive program, had previously
been outside of our scope of potential merchants.

Marketing
---------

During 2001, we aggressively pursued our large credit card file partners and our
corporate expense management program. The recently announced Upromise alliance
is an example of distribution of the dining program membership to a large
traffic group, in this case over 1,750,000 accounts. Another key marketing
initiative that is now possible through the registered card format is the
corporate expense management program. Participating companies enroll their
corporate card accounts with us on a no fee basis where a benefit is not
provided until the member reaches a certain level of qualified spending. After
reaching such level, the participating company receives a monthly check for the
aggregate benefits earned by their employees when dining out for business and
travel. Increasingly, companies are providing some of that benefit to employees
in the form of frequent flyer miles to encourage usage. Communicating restaurant
information to corporate card employees is most commonly done through a regular
content transmission to the corporation's intranet site or by directing them to
www.idinecorporate.com. Participation in this program has been well received,
and during the recent three-month transition period numerous well-known
entities, including E.I. Dupont de Nemours, Rockwell Automation, Cardinal
Health, and Arrow Electronics have been added.

We also continue to expand our airlines relationships, with the announcement of
the Alaska Mileage Dining Plan in late September 2001 and the subsequent
addition of over 400,000 frequent flyer accounts during the transition period to
American Advantage Dining, United Mileage Plus Dining, Delta Skymiles Dining,
USAirways Dividend Miles, America West FlightFund Dining, British Airways
Executive Club Dining, Continental OnePass Dining and Northwest WorldPerks
Dining. We operate nine airline dining reward programs that offer frequent flyer
miles as rewards. Under these arrangements, enrollment and fulfillment costs are
significantly reduced, the effective cost of the reward to members, when
compared to a cash rebate, is lowered and the demographic profile of the
members, principally business travelers and vacationers, is desirable. We
continue to negotiate with a number of other large partners and most of the
proposed alliances follow a variation of the above partnerships (i.e., large
enrollment potential, enabled through the registered card


                                       7

<PAGE>

format, at very low or no cost of acquisition and servicing, often coupled with
a cost effective alternative currency that is used as the reward to the
prospective members). These "wholesale" partner arrangements that allow for
large group enrollment efforts are enabled by our "registered card" methodology
and have significantly reduced our cost of account acquisition. Some of these
costs have been replaced by benefit awareness marketing expense used to convert
these accounts to active members using the program.

We have engaged a leading strategic customer marketing and technology firm, to
develop and implement new branding and targeted customer communication programs
for us. The firm will utilize its integrated strategic, analytic and creative
resources to emphasize the new brand image for iDine that continues to be more
representative of our current customer base and the varied consumer motivations
and aspirations surrounding "dining out." Our existing customer database of
dining enthusiasts and restaurant owners will help us to identify specific
customer segments which will drive some of the initial brand messaging,
activation and acquisition initiatives.

The success of our business depends on our ability to maintain an appropriate
ratio of members to merchants within each geographic market we serve. If we have
too many members and not enough restaurants, our member base may become
dissatisfied, and participating restaurants may experience a higher volume of
rewards business than anticipated. This could result in low program usage,
membership cancellations, and attrition in the restaurant base. Alternatively,
if too many restaurants participate in our programs with too few members, Rights
to receive turnover volume will be reduced resulting in reduced revenue and a
high cost of capital. Managing this ratio requires an ability, among other
things, to anticipate trends within a market and the desires of our customers
and participating restaurant partners. We analyze our markets in terms of member
and restaurant counts by zip code, cuisine types and restaurant quality. As we
expand both our demographic and geographic footprint, we continue to develop
alternative value propositions that appeal to the multi-unit restaurant
industry. The multi-unit casual dining market tends to be a lower margin, lower
average ticket business; however, there is still the need to fill empty seats
and drive traffic in off-peak time frames. We continue to have discussions with
a number of multi-unit operators to provide either the traditional cash advance,
unrestricted seven day a week offers, or Sunday to Thursday marketing only offer
and in the past year have enlisted major national chains and numerous regional
multi-unit operators to the program.

We are now focused on growth in revenue and taking advantage of the scale
inherent in our business. From the restaurant perspective, we continue to
develop alternative offers to meet off-peak or real time needs of the restaurant
operators, all of which are geared to retaining restaurants in the program. This
goal is accomplished by providing a suite of marketing propositions that meet
the needs of growing and expanding restaurants as well as the mature, successful
ones and include both fine dining and casual dining. We also know that it is
critical to continue to provide periodic reporting to the restaurants
demonstrating the positive impact we can have on their business. From a member
growth standpoint, the registered card platform appeals to partners with large
credit card files, and coupled with our technology competency and dominant
market position, sets the stage for significantly increasing the size of the
membership. Our challenge will continue to be the effective management of the
delicate balance between the restaurants and members in each market.

Dependence on marketing partners
--------------------------------

We have aggressively hired marketing personnel and entered into new marketing
relationships to help gain access to large groups of potential customers. We
have relationships with various organizations that provide the marketing,
support and endorsement of our services and products. For example, we rely on
our agreements with banks, credit unions, corporations, airline frequent flier
programs, and other entities across the country to assist us in marketing our
services to their existing and future customer base. However, we need to expand
these relationships and enter into new relationships. We have entered into
agreements to direct potential members to our programs via means of specific web
pages. The development and management of these partnerships, requires
experienced sales and marketing personnel. Sales generated from airline members
were approximately $23.6 million for the three months ended December 31, 2001
and $87.1 million, $71.1 million and $9 million for the years ended September
30, 2001, 2000 and 1999, respectively. We believe that the current environment
is conducive to partners who desire customer loyalty and that our dining
programs create both value and the vehicle to engender customer behavior that
meets the loyalty needs.


                                       8

<PAGE>

Competition
-----------

The dining rewards business remains competitive and we compete for both members
and participating merchants although we are the only national in scope dining
provider. We also anticipate continued growing competition from various
e-commerce ventures. Competitors include discount programs offered by major
credit card companies, other companies that offer different kinds of discount
marketing programs and numerous small companies which offer services which may
compete with the services offered or to be offered by us. Certain of our
competitors may have substantially greater financial resources and expend
considerably larger sums than we do for new product development and marketing.
Further, we must compete with many larger and better-established companies for
the hiring and retaining of qualified marketing personnel. We believe that the
unique features of our programs: (1) can be used by members at participating
establishments with very few restrictions; (2) provide substantial savings
without the need for a member to present discount coupons or a separate card
when paying for a meal; and (3) provide participating establishments with cash
in advance of customer charges, contribute to our competitiveness and allows us
to offer better value and service to our members and merchants.

Employees
---------

As of December 31, 2001, we had 245 full-time employees. We believe that our
relationships with our employees are good. None of our employees are represented
by a labor union.

Item 2. Properties
------------------

The principal leased properties of Transmedia and its subsidiaries are set forth
in the following table.

<TABLE>
<CAPTION>
------------------------------------  ------------ -------------------- ----------------
                   Location           Monthly Rent     Terms of Lease    Square Footage
------------------------------------  ------------ -------------------- ----------------
<S>                                      <C>        <C>                  <C>
Miami - call center, processing, and
executive office                       $ 42,000     05/01/01 - 04/30/04      22,430
------------------------------------  ------------ -------------------- ----------------
New York - Sales                         12,250     09/01/01 - 10/31/06       3,000
------------------------------------  ------------ -------------------- ----------------
Chicago - Sales                           3,987     08/01/98 - 07/31/04       1,876
------------------------------------  ------------ -------------------- ----------------
Boston - Sales                            4,618     09/01/00 - 08/31/03       1,500
------------------------------------  ------------ -------------------- ----------------
Los Angeles - Sales                       4,685     06/01/01 - 05/31/06       2,057
------------------------------------  ------------ -------------------- ----------------
San Francisco - Sales                     3,871     05/15/98 - 05/14/03       1,254
------------------------------------  ------------ -------------------- ----------------
Philadelphia - Sales                      2,660     10/01/98 - 09/30/03       1,641
------------------------------------  ------------ -------------------- ----------------
Dallas - Sales                            2,158     11/01/98 - 10/31/03       1,355
------------------------------------  ------------ -------------------- ----------------
Potomac, MD - Sales                       4,808     01/01/01 - 12/31/03       1,923
------------------------------------  ------------ -------------------- ----------------
</TABLE>

We believe our properties are generally well-maintained, in good condition and
adequate for our needs. Furthermore, we believe that suitable additional or
replacement space will be available when and if needed.

Item 3. Legal Proceedings
-------------------------

We are involved in various legal proceedings. While it is not currently possible
to predict or determine the outcome of these proceedings, it is the opinion of
our management that the outcome of any of these shall not have a material
adverse effect on our financial position or liquidity.

Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------

No matters were submitted to a vote of stockholders, through a solicitation of
proxies or otherwise, during the three-month transition period ended December
31, 2001.


                                       9

<PAGE>

PART II
-------

Item 5. Market for our Common Stock and Related Shareholder Matters
-------------------------------------------------------------------

Effective February 1, 2002, the Company changed its corporate name to iDine
Rewards Network Inc. and commenced trading under the symbol IRN. A series of
announcements and press releases were issued to adequately inform our
shareholders, and the investing community in general, prior to the effective
date.

On August 5, 1999, the New York Stock Exchange ("NYSE") notified us of the
pending adoption of amendments to its continued listing criteria and of our
noncompliance with the new standards which required, in part, that both market
capitalization and stockholders' equity be at least $50 million. In accordance
with the requirements of the notification, we submitted to the NYSE an 18-month
plan to come into compliance with the new criteria. On September 16, 1999, the
NYSE advised us that our plan had been accepted and that our common stock and
our Series A Senior Convertible Redeemable Preferred Stock would continue to be
listed on the Exchange.

On April 5, 2001, the New York Stock Exchange advised us that while we were in
compliance with the market capitalization threshold it intended to de-list our
common stock and our Series A Senior Convertible Redeemable Preferred Stock (the
"Series A convertible preferred stock") since we had not met the minimum
stockholders' equity requirement of $50 million. Effective April 16, 2001, our
common stock was listed on the American Stock Exchange ("AMEX") under the ticker
symbol TMN. Subsequently, we changed our name and symbol. The following table
sets forth the high, low and closing prices of our common stock for the
transition period and for each quarter of the year ended September 30, 2001 and
2000.

          Quarter Ended               Low        High        Close
          -------------               ---        ----        -----
         December 31, 1999         $ 2.125       2.938       2.500
         March 31, 2000              4.563       5.313       5.000
         June 30, 2000               2.938       5.000       4.250
         September 30, 2000          3.313       4.375       3.750
         December 31,  2000          2.250       3.750       3.000
         March 31, 2001              2.500       3.625       2.900
         June 30, 2001               2.700       4.090       3.500
         September 30, 2001          2.610       3.640       3.000
         December 31, 2001           2.477       4.400       4.350

No dividends have been paid on our common stock in each of the last two years
ended December 31, 2001. The payment of dividends to holders of common stock, if
any, in the future, will depend upon, among other things, our earnings and
financial requirements, as well as general business conditions.

On April 16, 2000, our Series A convertible preferred stock was reported on the
OTC Bulletin Board under the symbol TMNwp. On November 29, 2001, our Series A
convertible preferred stock began trading alongside our common stock on the
Philadelphia Stock Exchange under the symbol TMNpra. After we changed the name
of our company, we changed the Series A convertible preferred stock's ticker
symbol to IRNpra. Holders of our Series A convertible preferred stock are
entitled to receive dividends at the rate of $0.29 per share per annum, at least
$0.145 of which is payable in quarterly installments in arrears on the first
business day of January, April, July and October. Annual dividends in the amount
of $0.145 per share are not payable currently but can be deferred, accrued and
be payable upon a conversion or redemption of the Series A convertible preferred
stock or our liquidation, dissolution or winding up. We, however, may choose to
pay any or all deferred dividends currently. Dividends will accrue from and
including the issue date to and including the date on which the shares of Series
A convertible preferred stock are redeemed or converted or on which the
liquidation preference is paid. To the extent not paid, current dividends and
deferred dividends will be cumulative. The holders of Series A convertible
preferred stock are entitled to receive cash dividends on an as-converted basis
equal to the common stock, if dividends are paid on common stock. On July 27,
2001, 13,108 shares of Series A convertible preferred stock were converted into
14,405 shares of common stock. At December 31, 2001, the conversion rate of the
preferred shares was one preferred share for 1.12915 common shares. Dividends on
our


                                       10

<PAGE>

Series A preferred shares for the last two most recent years ended September 30,
2001 and the transition period are as follows:

          Quarter Ended                   Cash           Accrued
          -------------                   ----           -------

         December 31, 1999              $ 0.021         $   0.021
         March 31, 2000                   0.036             0.036
         June 30, 2000                    0.036             0.036
         September 30, 2000               0.036             0.036
         December 31, 2000                0.036             0.036
         March 31, 2001                   0.036             0.036
         June 30, 2001                    0.036             0.036
         September 30, 2001               0.036             0.036
         December 31, 2001                0.036             0.036

The aggregate number of holders of record of our common stock and Series A
convertible preferred stock on March 22, 2002 was approximately 2,200 and 400,
respectively.


                                       11

<PAGE>

   Item 6. Selected Financial Data (Dollars in thousands except for per share
   -----------------------------------------------------------------------------
data)
-----

The selected consolidated financial data set forth on the following page should
be read in conjunction with "Management Discussion and Analysis of Financial
Condition and Results of Operations," the Consolidated Financial Statements of
the Company and Notes thereto, and other financial information included
elsewhere herein of this Form 10-KT. Historical results are not necessarily
indicative of results that may be expected for future periods.

<TABLE>
<CAPTION>
                                             Three months ended
                                                December 31,                   Year ended September 30,
                                              2001       2000       2001       2000        1999       1998       1997
                                            -------    -------    --------   --------    --------    -------   --------
                                                    Unaudited
                                                    ---------
<S>                                         <C>        <C>        <C>        <C>         <C>          <C>        <C>
Statements of Operations Data:

Registered card sales                       $50,492    $39,643    $182,714   $103,950    $ 25,942    $    --   $     --

Private label sales                             137      4,338       7,323     76,677      94,530     95,549    101,301
                                            -------    -------    --------   --------    --------    -------   --------

Total dining sales                           50,629     43,981     190,037    180,627     120,472     95,549    101,301

Net revenue from dining sales                12,162      9,835      45,401     36,356      23,882     19,659     21,232

Membership and renewal fee income             1,563      1,727       7,009      8,444       8,281      7,321      7,251

Other operating revenue                          69        188         776      1,558       2,625      3,161      2,461

Total operating revenues                     13,794     11,750      53,186     46,358      34,788     30,141     30,944

Total operating expenses                     12,109     11,301      47,450     46,831      40,782     37,606     30,246

Operating income (loss)                       1,685        449       5,736       (473)     (5,994)    (7,465)       698

Other expense                                  (529)    (1,343)     (4,318)    (5,682)     (2,404)    (2,971)    (1,382)

Income (loss) before taxes and
extraordinary item                            1,156       (893)      1,419     (6,155)     (8,398)   (10,436)      (684)

Income tax benefit (provision)                  (71)        --         (85)        --      (2,000)     2,600        260


Extraordinary item, loss on early
extinguishment of debt, net of tax               --         --          --     (1,623)         --         --         --

Net income (loss)                           $ 1,085    $  (893)   $  1,334   $ (7,778)   $(10,398)   $(7,836)  $   (424)
                                            =======    =======    ========   ========   =========    =======   ========

Per Share Data:

Income (loss) before taxes
and extraordinary items                        0.05       (.07)       0.01       (.51)       (.80)      (.67)      (.04)

Extraordinary item, loss on early
extinguishment of debt                           --         --          --       (.12)         --         --         --

Net income (loss)
          Basic and diluted                    0.05       (.07)       0.01
                                                                                 (.63)       (.80)      (.67)      (.04)
Weighted average number of common and
common equivalent shares outstanding:
          Basic                              15,781     16,177      15,983     14,149      13,043     11,773     10,166
                                            =======    =======    ========   ========    ========    =======   ========
          Diluted                            16,089     16,177      16,281     14,149      13,043     11,773     10,166
                                            =======    =======    ========   ========    ========    =======   ========
</TABLE>

                                       12

<PAGE>

<TABLE>
<CAPTION>
                                          Three months ended
                                             December 31,                   Year ended September 30,
                                           2001       2000       2001       2000        1999       1998       1997
                                         -------    -------    --------   --------    --------     ------    -------
                                                 Unaudited
                                                 ---------
<S>                                         <C>        <C>        <C>        <C>         <C>          <C>        <C>
Balance Sheet Data:
-------------------

Total assets                              $ 109,390  $ 112,359   $ 108,320  $ 121,581   $ 119,710   $ 74,425   $ 72,685
Revolving securitization                     55,500     56,442      55,500     59,625          --         --         --
Long-term debt:
          Recourse                               --         --          --         --      10,000         --         --
          Non-recourse                           --         --          --         --      33,000     33,000     33,000

Redeemable preferred shares                   9,695      9,695       9,695     10,000          --         --         --
Stockholders' equity                         20,694     19,530      20,135     20,806      18,113     27,734     25,304
Debt to total assets                             --         --          --         --         36%        44%        45%
Earnings to fixed charges                      227%        54%        122%        17%       -109%      -245%        73%
Cash dividends per common share              $ 0.00     $ 0.00      $ 0.00     $ 0.00     $  0.00     $ 0.02     $ 0.02
</TABLE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations
         -------------

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires that we make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates, including those
related to the provision for rights to receive losses, the valuation allowance
for net deferred tax assets, investments and intangible assets. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of the consolidated
financial statements. We provide allowances for rights to receive losses based
on our estimate of losses resulting from the inability of our merchants to
remain in business and provide a vehicle to repay the cash advanced for food and
beverage. If the financial condition of our merchant base were to deteriorate,
resulting in their inability to provide food and beverage to our members thereby
reducing the cash we advanced to them, additional allowances may be required.

We record a valuation allowance to reduce our deferred tax assets when future
realization is in question. We consider future taxable income and ongoing
prudent and feasible tax planning strategies in assessing the need for the
valuation allowance. In the event we determine that we would be able to realize
our deferred tax assets in the future in excess of our net recorded amount, an
adjustment to the deferred tax asset would increase income in the period such
determination was made. Likewise, should we determine that we would not be able
to realize all or part of our net deferred tax asset in the future, an
adjustment to the deferred tax asset would be charged to income in the period
such determination was made.

We record an investment impairment charge when we believe an investment has
experienced a decline in value that is other than temporary. Future adverse
changes in market conditions or poor operating results of underlying investments
could result in losses or an inability to recover the carrying value of the
investments that may not be reflected in an investment's current carrying value,
thereby possibly requiring an impairment charge in the future.


                                       13

<PAGE>

We continually evaluate whether events and changes in circumstances warrant
revised estimates of useful lives or recognition of an impairment loss of
unamortized goodwill. The conditions that would trigger an impairment assessment
of unamortized goodwill include a significant, sustained negative trend in our
operating results or cash flows, a decrease in demand for our dining programs, a
change in the competitive environment and other industry and economic factors.
We measure impairment of unamortized goodwill utilizing the undiscounted cash
flow method. The estimated cash flows are then compared to our goodwill amount;
if the unamortized balance of the goodwill exceeds the estimated cash flows, the
excess of the unamortized balance is written off. As of December 31, 2001, we
determined that there has been no impairment of goodwill.

We will adopt SFAS No. 142 in the first quarter of 2002. With the adoption of
SFAS No. 142, we will assess the impact based on a two-step approach to assess
goodwill based on applicable reporting units and will reassess any intangible
assets, including goodwill, recorded in connection with our previous
acquisitions. We had recorded approximately $152 of amortization on goodwill
during the three months ended December 2001 and would have recorded
approximately $607 of amortization during 2002. In lieu of amortization, we are
required to perform an initial impairment review of our goodwill in 2002 and an
annual impairment review thereafter. We are currently assessing, but have not
yet determined the impact the adoption of SFAS No. 142 will have on our
consolidated financial statements. As of December 31, 2001, we had unamortized
goodwill of $9,671.

The Company recognizes gross dining sales as revenue when our members dine in
one of our participating restaurants. Revenue is only recognized if the member
dining transaction qualifies in accordance with the rules of the particular
dining program. The amount of revenue recognized is that portion of the total
spending by the member that the Company is entitled to receive in cash, in
accordance with the terms of the contract with the restaurant. For the typical
cash advance based contract where we have acquired or prepaid for food and
beverage credits on a wholesale basis, we often leave some portion of the
member's dining spend with the merchant to provide liquidity for payment of
sales tax and tips. For example, if the total dining spend by the member is one
hundred dollars at our participating restaurants, as evidenced by the full
amount of the credit card transaction, and our contract provides for us to leave
behind 20%, the amount of gross dining sales recognized is eighty dollars
representing what we will actually realize in cash. Similarly, for members'
dining transactions at restaurants in the revenue management program where we
have not advanced cash and the rewards or savings may vary by the time of day or
day of the week, revenue is only recognized to the extent that we are
contractually entitled to receive cash for a portion of the member's spend. The
same one hundred dollar transaction referred to above in a revenue management
restaurant may only yield thirty dollars in cash to be realized; however, there
is no cash advanced, the transaction has less risk, and there is no cost of the
rights to receive sold.

Fee income, which is now principally renewal fees from the cash reward iDine
Prime members, is recognized over a twelve-month period beginning in the month
the fee is received. Cardholder membership fees are cancelable and refunded to
members, if requested, on a pro rata basis based on the remaining portion of the
membership.

The forward-looking information set forth in this Form 10-K is as of December
31, 2001, and we undertake no duty to update this information. Should events
occur subsequent to make it necessary to update the forward-looking information
contained in this Form 10-K, the updated forward-looking information will be
filed with the SEC in a Quarterly Report on Form 10-Q or as an earnings release
included as an exhibit to a Form 8-K, each of which will be available at the
SEC's website at www.sec.gov.
                 -----------

The following discussion should be read in conjunction with the consolidated
financial statements provided under Part II, Item 8 of the Form 10-K. Certain
statements contained herein may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements involve a number of risks, uncertainties and other factors that could
cause actual results to differ materially, as discussed more fully herein.


                                       14

<PAGE>

As a means of better explaining our operations and results, the following table
illustrates the relationship between revenue and expense categories for the
three months ended December 31, 2001 and 2000, and the years ended September 30,
2001, 2000 and 1999, respectively.

<TABLE>
<CAPTION>
                                                      Percentage of Gross Dining Revenue
                                                      ----------------------------------
                                                 Three months ended         Year ended
                                                     December 31,          September 30,
                                                    2001     2000     2001     2000     1999
                                                   -----    -----    -----    -----    -----
                                                         (Unaudited)
<S>                                                 <C>      <C>      <C>      <C>      <C>
Registered card                                     99.8     90.1     96.1     57.5     21.5
Private label                                         .2      9.9      3.9     42.5     78.5
                                                   -----    -----    -----    -----    -----
     Total dining sales                            100.0    100.0    100.0    100.0    100.0

Cost of sales                                       55.0     55.5     54.6     58.3     58.2
Rewards and savings                                 21.0     22.1     21.5     21.6     22.0
                                                   -----    -----    -----    -----    -----
     Net dining revenue                             24.0     22.4     23.9     20.1     19.8

Membership and renewal fee income                    3.1      3.9      3.7      4.7      6.9
Other revenue                                         .1       .4       .4       .9      2.2
                                                   -----    -----    -----    -----    -----

Total operating revenue                             27.2     26.7     28.0     25.7     28.9
                                                   -----    -----    -----    -----    -----

Selling, general and administrative expenses        11.1     12.5     11.4     12.4     15.3
Salaries and benefits                                7.6      7.9      8.8      7.0      8.2
Sales commission and expenses                        2.7      3.1      2.9      2.7      2.7
Member and merchant marketing expenses               2.5      2.2      1.9      3.8      5.4
Settlement of licensee litigation                     --       --       --       --      2.3
                                                   -----    -----    -----    -----    -----

             Total operating expenses               23.9     25.7     25.0     25.9     33.9
                                                    ----     ----     ----     ----     ----
Operating income (loss)                              3.3      1.0      3.0     (0.2)    (5.0)

Non-operating income and interest expense, net      (1.0)    (3.0)    (2.3)    (3.2)    (2.0)
                                                   -----    -----    -----    -----    -----

Income (loss) before income tax provision and
extraordinary item                                   2.3     (2.0)     0.7     (3.4)    (7.0)

Income tax provision                                  .2       --       --       --      1.6
                                                   -----    -----    -----    -----    -----

Extraordinary item, loss on early
Extinguishments of debt, net of tax                   --       --       --       .9       --
                                                   -----    -----    -----    -----    -----

Net income                                           2.1     (2.0)     0.7     (4.3)    (8.6)
                                                   =====    =====    =====    =====    =====
</TABLE>

Results of Financial Condition and Operations

iDine Rewards Network Inc. (IRN) changed its fiscal year end to December 31 from
September 30, effective the three-month period ended December 31, 2001.
References to fiscal 2001, 2000 and 1999 relate to the years ended September 30,
2001, 2000 and 1999. In view of the change in our fiscal year, management's
discussion and analysis of results of financial condition and operations will:

     o  compare the audited results of operations for the three months ended
        December 31, 2001, to the unaudited results of operations for the three
        months ended December 31, 2000;


                                       15

<PAGE>

     o  compare the results of operations for the fiscal year ended September
        30, 2001, to the results of operations for the fiscal year ended
        September 30, 2000;

     o  compare the results of operations for the fiscal year ended September
        30, 2000, to the results of operations for the fiscal year ended
        September 30, 1999.

Results of Operations (Three months ended December 31, 2001 versus three months
ended December 31, 2000)

<TABLE>
<CAPTION>
                                                       (in thousands)
                                                       --------------

                                                                                                  Three months ended
                                                 Three months ended                                December 31, 2000
                                                  December 31, 2001                                  (Unaudited)
                                         -------------------------------------         -------------------------------------
                                           RTR          NON-RTR         TOTAL            RTR           NON-RTR        TOTAL
                                         -------        -------        -------         -------         -------       -------
<S>                                      <C>            <C>            <C>             <C>              <C>          <C>
Gross qualified spend                    $62,509        $ 7,279        $69,788         $55,096          $1,794       $56,890
Sales yield                                77.5%          29.7%          72.5%           78.8%           30.2%         77.3%
Gross dining sales                        48,467          2,162         50,629          43,439             542        43,981
Cost of sales                             24,637             --         24,637          21,919              --        21,919
Provision for RTR losses                   3,016             --          3,016           1,943              --         1,943
Processing fee                               162             19            181             536              17           553
                                          ------          -----         ------          ------           -----        ------
              Total cost of sales        $27,815        $    19         27,834         $24,398          $   17        24,415
                                          ------          -----         ------          ------           -----        ------
Rewards and savings                                                     10,633                                         9,731
                                                                        ------                                        ------
Net dining revenue                                                     $12,162                                       $ 9,835
                                                                        ======                                         =====
</TABLE>

RTR     - Rights to receive
NON-RTR - represents sales where there was no cash advanced to the merchant
(i.e. arrears and revenue management)

Results of Operations (Three months ended December 31, 2001 versus three months
ended December 31, 2000) (in thousands)

Despite the economic uncertainty that existed after the events of September
11th, 2001, gross dining spend for the three months ended December 31, 2001 was
$69,788, an increase of $12,898 or 22.7% over the same period in the prior year.
The average ticket decreased from $56.27 for the three months ended December 31,
2000 to $55.89 for the same period in 2001, but a 23.5% increase in the number
of dines from 1,011 to 1,249, respectively, resulted in a higher overall spend
for the three months ended December 31, 2001 versus the prior year. The increase
in the number of dines was mainly the result of the increase in our enrolled
accounts from 4.2 million at December 31, 2000 to 7.8 million at December 31,
2001 and the corresponding increase in accounts active in the last 12-months
from 887 to 1,233, respectively. There has been a reduction of the average
ticket with the advent of the registered card program versus the private label
card.

Sales yield, which represents gross dining sales as a percentage of gross dining
spend, decreased from 77.3% for the three months ended December 31, 2000 to
72.5% for the three months ended December 31, 2001. The difference in the sales
yield reflects the various propositions available to our participating
merchants. Under our typical cash advance plan, the merchant receives cash in
advance for food and beverage credits in the ratio of 1:2. Gross dining sales
are recognized as the portion of the ticket recovered from the merchant,
typically 80%. The 20% is left with the merchants to provide the merchant with
liquidity for items such as sales tax and tips. In this example, our sales yield
would be 80%. The sales yield is affected not only by the percentage of spend
left behind in our cash advance deal, but also by the amount of sales associated
with our revenue management and arrears plan deals (non Rights to receive
plans). Non-Rights to receive sales increased 305.7% to $7,279 when comparing
the three months ended December 31, 2001 with the same period in the prior year.
In these plans, the


                                       16

<PAGE>

merchant receives no cash advance, but is still listed in our directory of
participating merchants. When a member dines at his or her establishment, we may
receive between 25% to 35% of the transaction from the merchant. In these
non-cash advance deals the sales yield would be between 25% to 35%. While the
actual cash received from these transactions is less than the cash advance plan,
there is very little risk, and we do not have a cost of capital for these
merchants.

Gross dining sales rebounded after reaching a low for 2001 in September 2001 due
to the events of September 11th. Gross dining sales for the three months ended
December 31, 2001 were $50,629, and increase of $6,648 or 15.1% over the same
period in the prior year. While some of the largest territories were down on a
year over year basis, including New York, Chicago and San Francisco, the
increase in virtually all other territories more than offset these declines. We
anticipate that with the addition of members and restaurants as well as planned
marketing activities in the upcoming fiscal year, sales will continue to
increase.

Cost of sales increased by $3,419 or 14% to $27,834 when comparing the three
months ended December 31, 2001 to the same period in the prior year. This
increase is attributable to the overall increase in sales. However, as a
percentage of sales, cost of sales decreased from 55.5% for the three months
ended December 31, 2000 to 55.0% for the three month ended December 31, 2001.
The decrease as a percentage is the result of (i) an increase in non-RTR sales
as a percentage of overall dining sales from $542 or 1.2% for the three months
ended December 31, 2000 to $2,162 or 4.3% for the three months ended December
31, 2001. There is no cost associated with these sales and therefore the higher
non-RTR sales results in a lower overall cost of sales as a percentage of gross
dining sales and (ii) lower processing costs (which are included in cost of
sales) associated with the registered card program versus the private label
program from $553 or 1.3% of sales for the three months ended December 31, 2000
to $181 or 0.4% of sales for the three months ended December 31, 2001. These
reductions are somewhat offset by an increase in the provision for rights to
receive losses from $1,943 or 4.5% of gross dining sales for the three months
ended December 31, 2000 to $3,016 or 6.2% of gross dining sales for the three
months ended December 31, 2000 reflecting our perception of the increased market
risk in the dining and hospitality industry subsequent to September 11th.

Member savings and rewards increased $902 or 9.3% when comparing the three
months ended December 31, 2001 with the same period in the prior year. However,
as a percentage of sales, member savings and rewards decreased from to 22.1%
during the three months ended December 31, 2000 to 21.0% during the three months
ended December 31, 2001. The reduction is mainly a result of the increased
spending by frequent flyer members and other rewards participants who receive an
alternate currency other than cash as the dining benefit. These alternate
currencies have an effective cost that is lower than the cash benefit,
principally as a result of the volume purchasing discount available to us
through the airlines. Additionally, certain revenue management and multi-unit
restaurant transactions have a reduced level of benefit from the conventional
rate. Finally, the corporate expense reduction program introduced in fiscal 2001
has a feature whereby the rebates back to the corporate partners are not paid
until a certain level of qualified spend is achieved by their employees. These
foregone savings are deferred and recognized on an effective rate basis as a
reduction in the overall savings and rewards expense.

Membership and renewal fee income decreased to $1,563, of which $38 was initial
fee income for the three months ended December 31, 2001, compared to $1,727, of
which $36 was initial fee income for the same period during 2000. The decreased
initial fee income is reflective of the change in our marketing strategy in
recent years. Marketing of the fee-based membership was reduced significantly
due to changes in the regulatory environment regarding direct marketing
solicitations. Our marketing strategy has shifted to focus mainly on marketing a
no-fee dining program to key affinity and loyalty partners where we can take
advantage of the registered card platform and enroll large quantities of
accounts at a very low cost of acquisition and solicitation.

Selling, general and administrative expenses increased $112 or 2.0% to $5,613
when comparing the three months ended December 31, 2001 with the same period in
the prior year. The increase in expenses is related to an increase in
professional fees of $262 (mainly accounting and legal fees associated with the
Company's name and fiscal year end change as well as a VISA Cardholder
Information Security Program assessment and a Service Auditor Report (SAS 70)
review to develop security policies and risk matrix) and an increase of $366 in
other expenses (mainly for consulting charges relating to a sales compensation
study performed and for media barter implementation). These increases in
expenses are somewhat offset by a decrease of $147 in rent and


                                       17

<PAGE>

other offices expense (partly due to the decrease in rent expense for the New
York office) and a decrease of $402 in programming and systems (reflecting the
elimination during late 2001 of charges associated with the upgrade of the iDine
website).

Salaries and benefits increased $390 or 11.2% from $3,472 during the three
months ended December 31, 2000 to $3,862 during the three months ending December
31, 2001 mainly as a result of higher head count levels (237 and 245 employees
at December 31, 2000 and 2001, respectively), principally in marketing and
information technology as well as severance payments made to terminated or
retiring employees.

Member and merchant marketing expenses were $1,251 for the three months ended
December 31, 2001 versus $976 for the three months ended December 31, 2000, an
increase of $275 or 28.2% reflecting additional rewards and incentives paid to
increase member spending.

Other expense, net of income during the three months ended December 31, 2001
amounted to $529 versus $1,342 for the same period in 2000, a decrease of $813
while the effective rate of the securitization decreased from 10.7% for the
three months ended December 31, 2000 to 4.8% for the three months ending
December 31, 2001. The principal reasons for the change was a decrease of $909
in interest expense and financing costs during the three months ended December
31, 2001. The decrease related to reduced amortization of upfront financing fees
and favorable interest rates.

Income before taxes was $1,156 for the three months ended December 31, 2001
compared to a loss of $893 for the same period in 2000. A net operating loss
carryforward of $11,387 was available at December 31, 2001. The net deferred tax
asset, principally related to the net operating loss carryforward and the
provision for losses on rights to receive remains fully reserved. We recorded
alternative minimum tax of $71 for the three months ended December 31, 2001
versus $0 for the same period in the prior year.

Net income was $1,085 or $0.05 per share for the three months ended December 31,
2001 compared to a net loss of $893 or $0.07 per share for the same period of
2000.

Results of Operations (year ended September 30, 2001 versus 2000)

Gross dining sales for the fiscal year ended September 30, 2001 increased 5.2%
to $190,037 as compared to $180,627 for the year ended September 30, 2000. The
conversion of our private label membership and restaurant base to the registered
card platform, substantially completed in August 2000, resulted in a decrease in
private label sales of $69,354 in fiscal 2001 when compared to the prior year.
This decrease was more than offset by the increase in the registered card sales
of $78,764.

Gross member dining spend in participating restaurants that qualified for
rewards and savings in fiscal 2001 increased an estimated 14% to approximately
$258 million compared to approximately $225 million in fiscal 2000. The increase
in gross member dining spend exceeded the increase in actual gross dining sales
recognized as a result of the continued implementation of the program with
restaurants to allow for more cash to be left with the merchant per transaction
in exchange for a more favorable ratio of cash for food and beverage credits.
Consequently, the Company realized less cash per transaction, but with the
improved funding ratio, at a more favorable dining margin.

Sales in traditional Transmedia territories declined $4,014 from $163,932 during
fiscal 2000 to $159,918 during fiscal 2001. Although these territories had
decreased sales, the actual member spend increased over prior year as discussed
above. The main declines were in the markets of New York, Chicago, San
Francisco, Philadelphia and Miami. These declines were somewhat offset by higher
sales in Los Angeles, Atlanta, Dallas, the Carolinas, Phoenix and the west coast
of Florida.

Franchises repurchased in fiscal 2000 accounted for additional sales of $9,347
when comparing fiscal 2001 with prior year. The Washington DC franchise
repurchased in June 2000, the New Jersey franchise repurchased in March 2000 and
the San Antonio franchise repurchased in December 1999 had $5,848, $3,057 and
$442, respectively, of additional sales when comparing fiscal 2001 with the
prior year.


                                       18

<PAGE>

Territories in which we did not do business prior to the acquisition of Dining A
la Card ("DALC") had an increase in sales of $2,261 from $8,387 in fiscal 2000
to $10,648 in fiscal 2001. Territories with significant increases were Hawaii,
Las Vegas, Kansas City and Minneapolis. We expect these markets to continue to
grow in the future.

In late fiscal 2000 and during fiscal 2001, we expanded into new territories
such as Columbus, Cincinnati, New Orleans, Salt Lake City, Pittsburgh,
Buffalo/Rochester and Louisville. These and other new markets accounted for an
additional $1,816 in sales during fiscal 2001 with $639 and $561 coming from
Columbus and Cincinnati, respectively. We anticipate continued growth and
further expansion in the new markets in the coming year.

Leveraging our national position in the fine dining rewards space along with
capitalizing on the conversion to universal use of the registered card, we have
focused on large partner marketing opportunities to efficiently grow our base of
enrolled accounts and active members. Expansion of the airlines relationships
and their frequent flyer files, the wider acceptance of the "expense management
program" which involves registering corporate credit cards and rebating savings
back to the participating company, and alliances with other reward programs,
have resulted in significant increases in our enrolled account base. Enrolled
accounts at September 30, 2001 and 2000 were approximately 6,650,000 and
3,150,000, respectively. Credit cards registered associated with the enrolled
accounts totaled 8,566,000 at September 30, 2001 compared to 4,266,000 a year
earlier. Of the 6,650,000 accounts at September 30, 2001, approximately
1,750,000 were non-airline accounts of which 600,000 were corporate card
accounts and 450,000 from alliance with reward partners versus 1,000,000
non-airline accounts of which 350,000 were corporate card accounts and 50,000
from alliances with other rewards partners in the prior year. Airline accounts
accounted for approximately 74% of total accounts and 46% of sales during fiscal
2001 compared to 68% of total accounts and 40% of sales during the prior year.
Airline accounts do not pay membership fees and typically receive rebates in the
form of frequent flyer miles.

At September 30, 2001, the average Rights to receive balances per participating
merchant were approximately $8.8 and $9.8 at September 30, 2001 and 2000,
respectively. The Rights to receive turnover for the combined funded portfolio
for fiscal 2001 is 1.30 or 9.22 months on hand compared to 1.19 or 10.10 months
on hand in the prior year.

Cost of sales decreased to $103,832 or to 54.6% of gross dining sales down from
$105,239 or to 58.3% a year earlier. The reduction in cost of sales is directly
related to the conversion of the acquired DALC portfolio of restaurants. Prior
to the acquisition, DALC often competed against us on price, offering merchants
an advance rate less than our customary rate of 2:1 without the level of secured
interest that we required. While this provided for a faster turn of the rights
to receive, it also resulted in a higher cost of rights to receive sold and a
more at-risk investment. As these acquired contracts came up for renewal, they
were re-signed and converted by us to the 2:1 rate. While this initially
resulted in a somewhat slower turn, the individual dining transactions are more
profitable due to the corresponding lower cost of the Rights to receive
consumed. The provision for Rights to receive losses, which are included in cost
of sales, increased to $8,586 or 4.5% of gross dining sales in 2001, compared to
$7,391 or 4.1% in the prior year period due to the increased allowance recorded
principally for the additional collection risk associated with the registered
card process. With the registered card programs, we collect payment for
qualified dines from the merchant primarily via an electronic funds debit
processed daily, while with the private label program, we collected directly
from the members (i.e., we processed the receipts through the members
electronically linked credit card accounts, and the full amount of the funds
billed to the credit card is remitted directly to us). Processing fees based on
transactions processed, and included in cost of sales, decreased as a percentage
of gross dining sales from 2.2% for fiscal 2000 to slightly less than 1.0% for
fiscal 2001, reflecting the lower processing cost per transaction with the
registered card program versus the private label.

Member savings and rewards increased $1,772 or 4.5% when comparing fiscal 2001
to prior year. However, as a percentage of sales, member savings and rewards
decreased slightly from to 21.6% in 2000 to 21.5% in 2001. The slight reduction
is mainly a result of the increased spending by frequent flyer members and other
rewards participants who receive an alternate currency other than cash as the
dining benefit. These alternate currencies have an effective cost that is lower
than the cash benefit, principally as a result of the volume discount available
to us through the airlines. Additionally certain revenue management and
multi-unit restaurant transactions have a reduced level of benefit from the
conventional rate. Finally, the corporate expense reduction program


                                       19

<PAGE>

introduced in fiscal 2001 has a feature whereby the rebates back to the
corporate partners are not paid until a certain level of qualified spend is
achieved by their employees. These foregone savings are deferred and recognized
on an effective rate basis as a reduction in the overall savings and rewards
expense.

Membership and renewal fee income decreased to $7,009, of which $151 was initial
fee income in 2001, compared to $8,444, of which $1,654 was initial fee income
in 2000. The decreased initial fee income is reflective of the change in our
marketing strategy in fall of 1999. Marketing of the fee-based membership was
reduced significantly due to changes in the regulatory environment regarding
direct marketing solicitations. Our marketing strategy has shifted to focus
mainly on marketing a no-fee dining program to key affinity and loyalty partners
where we can take advantage of the registered card platform and enroll large
quantities of accounts at a very low cost of acquisition and solicitation. One
such program is the aforementioned corporate card program geared towards
assisting companies in reducing their travel and entertainment expense.
Participating companies enroll their corporate card accounts with us and after
the required spend by the employee, the participating company receives a monthly
check for the aggregate benefits earned by their employees when dining out. We
anticipate that a number of significant additional corporate programs will
continue to be added next year. Our strategy is also to continue to enroll
members of the airline mileage programs for which there is also no fee but very
little acquisition cost and a lower cost of rewards. Fee income, which is now
principally renewal fees from the cash reward iDine Prime members, is recognized
over a twelve-month period beginning in the month the fee is received.
Cardholder membership fees are cancelable and refunded to members, if requested,
on a pro rata basis based on the remaining portion of the membership.

Other operating revenue decreased $782 from $1,558 for the year ended September
30, 2000 to $776 for the current year mainly as a result of a decrease in
continuing franchise fee and royalty income. Continuing franchise fee and
royalty income decreased for the year ended September 30, 2001 to $0 from $568
in the prior year. In June 2000, we completed the reacquisition of the last of
our franchises. As such, there were no franchise royalty fees collected in
fiscal 2001.

Selling, general and administrative expenses decreased $875 or 3.9% to $22,431
when comparing fiscal 2001 to prior year. The reduction in expenses relating to
the development of the iDine.com website in the prior year is the main reason
for the decrease during fiscal 2001. We launched our e-commerce dining venture,
iDine.com in April 2000. Expenses recognized in fiscal 2000 associated with
iDine.com related to business plan development, business concept definition and
testing, deal support during venture capital negotiations, project management,
and support costs. The costs associated with the startup of iDine.com were
substantially incurred in fiscal 2000. Support costs and personnel relating to
iDine.com, have been integrated and are no longer maintained as a separate
division. Another significant component decrease for the year ended September
30, 2001 was professional fees of $428. These decreases were somewhat offset by
increases in programming and systems of $845, depreciation of $513 and printing
and postage of $214.

Salaries and benefits increased $4,120 or 32.5% from $12,683 in fiscal 2000 to
$16,803 in the current year mainly as a result of higher head count levels (226
and 254 employees at September 30, 2000 and 2001, respectively), principally in
marketing and information technology as well as severance and bonus for fiscal
2001.

Sales commission and expenses increased $670 or 13.8% from $4,842 for fiscal
2000 compared to $5,512 for fiscal 2001. The increase is due mainly to the
increased level of dining sales as well as special incentives commission paid to
sales personnel in an effort to increase restaurant count.

In 2001, member and merchant marketing expenses were $3,579 versus $6,875 in
2000, a decrease of $3,296 or 47.9%. Included in member and merchant marketing
expenses is the amortization of deferred acquisition costs, which amounted to
$55 in 2001 and $1,654 in 2000. Acquisition expenses represent the cost of
acquiring members and restaurants and consist primarily of direct-response
advertising costs incurred in excess of fees received and amortization of
previously deferred costs and costs associated with soliciting no-fee members.
We previously used various direct marketing techniques at different levels of
cost to solicit new members. Consumer privacy regulations adopted in 1999
required us to change our methods of solicitations of members. Acquisition costs
capitalized in 2001 and 2000 were $0 and $153, respectively due to the
previously discussed change in marketing strategy away from individual
solicitation to large affinity and loyalty partners where the


                                       20

<PAGE>

dining savings becomes an embedded benefit to the partners' membership
constituency and enrollment of accounts is expedited by the efficient
registration of their credit cards. During fiscal 2001, we aggressively pursued
our large credit card file partners and our corporate expense management
program. Since no fees are generated from these programs, there are no costs
capitalized. The change in marketing to the large credit card and affinity
partners resulted in lower member and merchant marketing cost in fiscal 2001
compared to prior year. However, in order to establish and manage these large
affinity partner relationships, we reinvested the savings by hiring additional
personnel to strengthen our internal marketing group, evidenced by the increase
in salaries and benefits previously mentioned.

Other expense, net of income in 2001 amounted to $4,317 versus $5,682 in 2000, a
decrease of $1,365. The principal reasons for the change was a decrease of
$1,233 in interest expense and financing costs in 2001. Although the effective
rate of the securitization decreased only slightly from 8.9% during fiscal 2000
to 8.7% during 2001, the average outstanding balance decreased from $62,062 in
fiscal 2000 to $56,647 in fiscal 2001. While we have experienced favorable
interest rates with our securitization in the latter part of fiscal 2001,
particularly in the fourth quarter, the extension fee paid in December 2000, and
to a lesser extent the facility renewal fees paid in May 2001, had an adverse
impact on the effective rate for the year but still resulted in a lower cost of
financing compared to the prior year. It should be noted that prior to entering
into the securitization in December 1999, we financed the purchase of DALC with
a bridge loan from a bank and short-term borrowings from an affiliate. These
loans had a much higher interest rate than the current securitization.

Income before taxes was $1,419 in fiscal 2001 compared to a loss of $6,155 in
2000. A net operating loss carryforward of $11,911 was available at September
30, 2001. The net deferred tax asset, principally related to the net operating
loss carryforward and the provision for losses on rights to receive remains
fully reserved.

On December 30, 1999, we entered into an $80,000 revolving securitization of the
combined Rights to receive of both the private label and the registered-card
dining programs. The securitization was privately placed through an asset backed
commercial paper conduit. The proceeds drawn down at closing, approximately
$65,000 based on a borrowing base formula, were utilized to terminate and payoff
$33,000 in non-recourse notes from the 1996 securitization and $27,000
outstanding under a bridge loan. The early extinguishment of the 7.4% notes
resulted in an extraordinary charge of $1,623 or 12 cents per share in fiscal
2000. Capacity at September 30, 2001 was $57,690 and the outstanding borrowings
at that date was $55,500. Net income was $1,334 or $0.01 per share for fiscal
2001 compared to a net loss of $7,778 or $.63 per share in fiscal 2000.

Results of Operations (year ended September 30, 2000 versus 1999)

Gross dining sales for the fiscal year ended September 30, 2000 increased 49.9%
to $180,627 as compared to $120,472 for the year ended September 30, 1999,
primarily reflecting a full twelve months of registered card dining sales
associated with the acquisition of DALC which occurred on June 30, 1999.
Registered card sales for the fiscal year ended September 30, 2000 and 1999 were
$85,174 and $25,942, respectively. Fiscal 1999 results reflect three months of
registered card sales associated with the acquisition.

In March 2000, we initiated a plan to convert our private label membership and
restaurant base to the registered card platform. With the registered card
program, members enrolled in the program simply register a valid major credit
card with us, and then present their registered card while dining at a
participating restaurant. Based on our agreements with various processors and
presenters throughout the country, we receive transaction data for participating
merchants. These transactions are then matched to the current registered card
file. These matched transactions are qualified via business rules as to whether
they are eligible for a rebate. Qualified transactions are then used to provide
member savings or alternate currency benefits, as well as to invoice and collect
from merchants, principally via an electronic debit to their bank account. This
conversion was completed in August 2000. Registered card sales associated with
converted private label members were $18,776 for the fiscal year ended September
30, 2000.

Actual sales for our private label program decreased 18.9% to $76,677 compared
to $94,530 for the year ended September 30, 1999. As more and more private label
members started using their registered credit card instead of the private label
card, private label sales declined, with a corresponding increase in the
registered card program.


                                       21

<PAGE>

Our member acquisition strategy has undergone certain revisions that are
reflected in a changing member profile. Leveraging a dominant national position
in the fine dining rewards space along with the recent conversion to universal
use of the registered card, we have focused on large partner marketing
opportunities. Expansion of the airline frequent flyer base of members, the
recent launch of the "expense management program" that involves registering
corporate credit cards and rebating discounts back to the participating company
and alliances with other reward programs, are examples of this strategy.
Characteristic of these partnerships is either a lower member acquisition cost,
an alternative currency to cash rewards that have a positive margin implication,
or a lower cost of servicing. We believe that this strategy provides excellent
opportunities with increased scale and is very focused on expansion of the
member base and the incremental sales volume that it should provide.

Registered card accounts at September 30, 2000 and 1999 were approximately
3,150,000 and 1,700,000, respectively. Of these accounts, 1,000,000 were
non-airline accounts of which 350,000 were corporate card accounts and 50,000
from alliances with other rewards partners. Airline accounts, which accounted
for approximately 68% of total accounts and approximately 40% of sales, do not
pay membership fees and typically receive rebates in the form of frequent flyer
miles.

At September 30, 2000, the combined average Rights to receive balance per
participating merchant were approximately $10 and $8 at September 30, 2000 and
1999, respectively. The Rights to receive turnover for the combined portfolio
for fiscal 2000 is 1.09 or 10.99 months on hand compared to 1.16 or 10.36 months
on hand, in the prior year.

Cost of sales increased to 58.3% of gross dining sales up slightly from 58.2% a
year earlier. The increase in cost of sales is directly related to the addition
of the acquired DALC registered card portfolio which was traditionally offered
to merchants at an advance rate less than our customary private label rate of
2:1, and therefore, results in a somewhat higher cost of sales than the private
label portfolio. The acquisition was completed in June 1999, and therefore the
results of fiscal 1999 reflect only three months with this portfolio versus the
full twelve months reflected in fiscal 2000. The increase would have been
greater, if not for the fact that the majority of those contracts renewed by us
were converted to the 2:1 rate during fiscal 2000. While this initially results
in a somewhat slower inventory turn, the individual dining transactions are more
profitable due to the corresponding reduction in the cost of the Rights to
receive consumed. The provision for Rights to receive losses, which are included
in cost of sales, increased to $7,391 or 4.1% of gross dining sales in 2000,
compared to $4,088 or 3.4% in the prior year period due to the additional
allowance recorded for collection from registered card merchants. With the
registered card programs, we collect payment for qualified dines from the
merchant, while with the private label program, we collected directly from the
members (i.e., we processed the receipts through the members electronically
linked credit card accounts, and the full amount of the funds billed to the
credit card is remitted directly to us). Processing fees based on transactions
processed, and included in cost of sales, decreased as a percentage of gross
dining sales from 3.0% for fiscal 1999 to 2.2% for fiscal 2000, reflecting the
impact of the lower processing cost per transaction with the registered card
program versus the private label.

Member savings and rewards as a percentage of sales decreased slightly from to
22.0% in 1999 to 21.6% in 2000. The majority of the registered card members are
enrolled in the airline program and typically earn ten miles for each dollar
spent at participating merchants. We purchase airline mileage from the airlines
on an as needed basis at a contractual rate that allows us to effectively reduce
the cost of the member rebate in the airline program to less than that of the
conventional 20% cash rebates. Fiscal 2000 reflects twelve months of registered
card usage versus only three months in fiscal 1999.

Membership and renewal fee income increased to $8,444, of which $1,654 was
initial fee income in 2000, compared to $8,281, of which $3,387 was initial fee
income in 1999. The increase in renewal fees is mainly as a result of a full
year's renewal fees on the members acquired through the purchase of DALC.
Renewal fees recognized for these members during the year ended September 30,
2000 were $1,088 versus $53 for the same period in the prior year. The decreased
initial fee income is reflective of the change in our marketing strategy in fall
of 1999. Marketing of the fee-based private label membership was reduced
significantly due to changes in regulatory environment regarding direct
marketing solicitations. Our marketing strategy has shifted to focus


                                       22

<PAGE>

mainly on marketing to key partner affinity programs. Our strategy is also to
continue to enroll members of the airline mileage programs for which there is
very little acquisition cost and the rebate percentage tends to be lower and
also to commence marketing a fee-based registered card. Fee income is recognized
over a twelve-month period beginning in the month the fee is received.
Cardholder membership fees are cancelable and refunded to members, if requested,
on a pro rata basis based on the remaining portion of the membership.

Other operating revenue decreased $1,067 when comparing the year ending
September 30, 2000 to the prior year mainly as a result of a decrease in
continuing franchise fee and royalty income as well as processing income.
Continuing franchise fee and royalty income decreased for the year ended
September 30, 2000 to $568 from $1,073 in the prior year. In June 2000, we
completed the reacquisition of the last of our franchises. As such, franchise
royalty fees have ceased at that date. Processing income which represents the
net fees charged to restaurants when the Company serves as merchant of record
for processing all other non-Company point of sale transactions has decreased
for the year ended September 30, 2000 to $915 from $1,402 in the prior year.

Although overall selling, general and administrative expenses increased $4,001
or 21.7% over the prior year, it decreased from 15.3% in fiscal 1999 to 12.4% in
fiscal 2000 as a percentage of gross dining sales. There are two main factors
contributing to the increased dollar amount of expenses during fiscal 2000.
First, we launched our e-commerce dining venture, iDine.com in April 2000.
Expenses recognized in fiscal 2000 associated with iDine.com were approximately
$3,501. Some significant component increases for the year ended September 30,
2000 were printing and postage of $987, mostly related to the mailing of member
correspondence related the conversion from the private label program to the
universal registered card program, depreciation and amortization of $627, rent
and other expenses of $410 associated with the increased corporate office space,
and startup cost relating to business plan, business concept definition and
testing, deal support during venture capital negotiations, project management
for the iDine.com venture of $2,371. Offsetting these increases during the year
ending September 30, 2000, were declines in professional fees of $145 and
telephone expense of $358 from the prior year.

Salaries and benefits increased $2,858 or 29.1% over the prior year. Of this
increase in salaries and benefits, $615 related to employees hired to support
iDine.com. Also, in the earlier part of the year, there were salaries and
benefits paid to the DALC employees during the integration. These amounts were
substantially cut back after January 1, 2000, and now reflect only a few
permanent employees required to support the addition of the registered card
programs, primarily relating to information technology, sales and customer
service.

Sales commission and expenses increased $1,597 or 49.2% from $3,245 in fiscal
1999 to $4,842 in fiscal 2000. The main reason is the increased sales in fiscal
2001 which results in a corresponding increase in the commission paid on those
sales. Also, during fiscal 2000 special incentive commissions were paid for the
conversion of restaurants from the private label program to the registered card
platform.

In 2000, member and merchant marketing expenses were $6,875 versus $6,447 in
1999, an increase of $428. Included in member and merchant marketing expenses is
the amortization of deferred acquisition costs, which amounted to $1,654 in 2000
and $3,335 in 1999. We previously used various direct (one-on-one) marketing
techniques at different levels of cost to solicit new members. Consumer privacy
regulations adopted in 1999 required us to change certain methods of
solicitations that had resulted in favorable response rates. Costs capitalized
in 2000 and 1999 were $153 and $4,184, respectively. Included in member and
merchant marketing expenses was approximately $1,836 relating to the write down
of our inventory of plastic cards as well as fees for artwork used to make the
Transmedia private label card. The conversion to the registered card program
rendered the inventory of plastic card obsolete. The cost of the plastic cards
was amortized over the estimated conversion period of nine months which ended
September 30, 2000. Prospective members continue to be solicited through direct
mail on a greatly reduced basis, and also through the use of affinity and
loyalty programs with major credit card issuers and corporations. Third party
and strategic marketing partners are compensated through a commission on fees
received, and to a lesser degree, on an activation basis or through wholesaling
of the fee based card. The mix of solicitation programs used has a direct
correlation to the overall acquisition cost per member and the spending profile
of members acquired.

In order to avoid prolonged litigation, we settled an outstanding lawsuit with
our former licensee, Sports & Leisure, Inc., in November of 1999. Under the
terms of the settlement, Sports & Leisure, Inc. received $2,100


                                       23

<PAGE>

in cash and 280,000 shares of common stock for a total of $2,835. Based on the
fair value of the common stock included in the settlement and net of reserve
amounts previously provided by us in the first quarter of 1999, a charge of
$1,835 was recognized in the fourth fiscal quarter of 1999.

Other expense, net of income in 2000 amounted to $5,682 versus $2,404 in 1999,
an increase of $3,278. The principal reasons for the change was a decrease of
$1,109 of realized gain on sale of securities available for sale coupled with an
increase in interest expense and financing costs in 2000, as a result of having
one full year of additional borrowings, in part, used for the purchase of the
DALC Rights to receive.

Earnings before taxes amounted to a loss of $6,155 in 2000 compared with loss of
$8,398 in 1999. A net operating loss carryforward of $17,791 was available at
the year ended September 30, 2000. The net deferred tax asset principally
related to the net operating loss carryforward remains fully reserved.

On December 30, 1999, we entered into an $80,000 revolving securitization of the
combined Rights to receive of both the private label and the registered-card
dining programs. The securitization was privately placed through an asset backed
commercial paper conduit. The proceeds drawn down at closing, approximately
$65,000 based on a similar borrowing base formula used in the bridge loan, were
utilized to terminate and payoff $33,000 in non-recourse notes from the 1996
securitization and $27,000 outstanding under a bridge loan. The early
extinguishment of the 7.4% notes resulted in an extraordinary charge of $1,623
or 12 cents per share. At September 30, 2000, the balance outstanding under the
new revolving securitization was $59,625.

Net loss was $7,778 or $.63 per share in 2000, versus net loss of $10,398 or
$.80 per share in 1999.

Liquidity and Capital Resources

Our working capital was $12,552, $12,188 and $17,216 at December 31, 2001,
September 30, 2001 and 2000, respectively. The increase from September 30, 2001
to December 31, 2001 is mainly a result of the Company's increased sales and
profitability during the three-month period. The decrease from September 30,
2000 to 2001 resulted principally from the execution of a Payment and
Termination of Exclusivity Agreement (the "Agreement") with GE Financial
Assurance ("GEFA"), the parent of SignatureCard, to extinguish all obligations
associated with the DALC acquisition. The Agreement also eliminated
SignatureCard's exclusivity rights in dealing with the airline frequent flyer
member files, and fully resolved and terminated the joint marketing and revenue
sharing relationship. In consideration for the above, the Company paid GEFA
$3,800 in cash and honored GEFA's right to put 400,000 shares held by it as part
of the acquisition consideration, at a value of $8 per share. This put right was
exercised and the Company paid GEFA $3,200 in two equal installments on January
17 and on February 13, 2001. Transmedia also cancelled 160,000 options of the
original 400,000 issued as part of the original DALC purchase price, leaving
SignatureCard with 240,000 options which must be exercised by June 30, 2002 at a
strike price of $4.00. We believe that the clear and direct access we now have
to the airline partners has had and will continue to have a very favorable
impact on our operating results.

Securitization of Rights to Receive

On December 30, 1999, the Company entered into an $80,000 revolving
securitization of the combined Rights to receive of both the private label and
the registered card dining programs. The new securitization was privately placed
through an asset backed commercial paper conduit. The proceeds drawn down at
closing, approximately $65,000 based on a borrowing base formula, were utilized
to terminate and payoff $33,000 in non-recourse notes from a previous
securitization and $27,000 then outstanding under a bridge loan used in the
acquisition of Dining a La Card ("DALC"). Additionally, the Company was required
to pay a termination payment of approximately $1,100 to the noteholders and
non-recourse partners in the prior securitization.

Borrowing capacity under the facility is recalculated weekly based on a formula
driven advance rate applied to the current balance of Rights to receive that are
eligible to be securitized. The advance rate is determined based on recent sales
trends and months on hand of Rights to receive. Available capacity at December
31, 2001 was $58,300 and the outstanding borrowings were $55,500. The facility
provides various restrictive covenants


                                       24

<PAGE>

regarding collateral eligibility, concentration limitations and also requires
the Company to maintain net worth of at least $24,000. At December 31, 2001 the
company was in compliance with the covenants.

The interest rate applicable to the new facility is the rate equivalent to the
rate (or if more than one rate, the weighted average of the rates) at which
commercial paper ("CP") having a term equal to the related CP tranche period
that may be sold by any placement agent or commercial paper dealer selected by
the conduit on the first day of such CP tranche period, plus the amount of any
placement agent or commercial paper dealer fees and commissions incurred or to
be incurred in connection with such sale. For the three months ended December
31, 2001 and the years ended September 30, 2001 and 2000, the effective interest
rate for the facility was 4.4%, 8.6% and 8.9% per annum, respectively.

The conduit requires that a liquidity facility be provided by an A1/P1 rated
financial institution in the amount equal to 102% of the securitization amount.
This liquidity facility must be renewed annually. Our primary bank, JP Morgan
Chase, formerly Chase Manhattan Bank ("Chase"), provided the liquidity facility
in the initial year and indicated a desire to syndicate all or a portion of the
liquidity facility, or alternatively, bring in a co-purchaser conduit for a
percentage of the securitization. On December 27, 2000, the credit agreements
were amended to provide an extension of the initial term for 90 days to March
28, 2001 to complete the syndication and our borrowing capacity limit was
reduced to $60,000. The credit agreements were further extended by Chase to the
earlier of the closing of a co-purchase arrangement or June 28, 2001. An
extension fee of $600 was paid to Chase on December 26, 2000.

On May 18, 2001, the Company signed an agreement with BMO Nesbitt Burns Corp for
it to act as a 50 percent co-purchaser on the $80,000 facility with Chase. The
Company also simultaneously closed the amended financing agreement and paid fees
of approximately $600. The credit agreement was renewed for a new 364-days
renewable term and the overall facility reverted to the original amount of
$80,000. There were no other material changes to the terms of the facility. In
the event that the syndications are not renewed, an alternative asset backed
financing vehicle may be established or the outstanding borrowings under the
securitization may be converted to a term loan. The Company believes that the
revolving nature of the securitization facility, the ability to increase
capacity for growth and the current favorable interest rate environment make
this an attractive financing vehicle. It is the Company's present intention to
renew the securitization in May 2002 and establishing another liquidity facility
to support it. Management is not aware of any matters or issues that would
preclude renewal, should we elect to do so. In the event that the syndications
are not renewed, an alternative asset backed financing vehicle may be
established or the outstanding borrowings under the securitization may be
converted to a term loan.

We previously financed rights to receive under a fixed rate revolving
securitization originated in 1996 (the 1996 facility). Under this facility,
$33,000 of fixed rate securities were issued in a previous private placement to
various third party investors. The private placement certificates had a
five-year term before amortization of principal and had an interest rate of
7.4%.

The early extinguishment of the 1996 facility and payoff of the related
non-recourse notes in December 1999 resulted in an extraordinary charge of
$1,623 or $0.12 per share consisting of the following:

Write-off of related unamortized financing costs              $          540
Termination payment to noteholder
     and non-recourse partners                                         1,083
                                                              --------------
Extraordinary charge before income tax benefit                         1,623
Income tax benefit                                                      (412)
Related increase in income tax valuation allowance                       412
                                                              --------------
Net extraordinary charge                                      $        1,623
                                                              ==============

Rights to Receive

Compared to September 30, 2001, our inventory of Rights to receive, net of
allowance, decreased by $1,316 to a total of $67,466 at December 31, 2001.


                                       25

<PAGE>

                          Analysis of Rights to Receive

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
                                                        December
                                                           31,          September 30,
-------------------------------------------------------------------------------------------
                                                          2001     2001      2000     1999
                                                          ----     ----      ----     ----
-------------------------------------------------------------------------------------------
<S>                                                    <C>      <C>       <C>      <C>
Rights to receive, beginning of year                   $68,782  $68,374   $76,454  $42,347
-------------------------------------------------------------------------------------------
Acquisition of Registered Card
 Rights to receive in DALC transaction, net                 --       --        --   40,782
-------------------------------------------------------------------------------------------
Purchase of Rights to receive                           27,138  103,009    95,564   60,053
-------------------------------------------------------------------------------------------
Charge-offs of Rights to receive                       (3,803)  (8,986)   (9,518)  (3,871)
                                                       -------  -------   -------  -------
                                                        92,117  162,397   162,500  139,311
                                                        ------  -------   -------
-------------------------------------------------------------------------------------------
Cost of Rights to receive, included in cost of sales    24,651   93,615    94,126   62,857
                                                        ------   ------    ------   ------
-------------------------------------------------------------------------------------------
Rights to receive, end of year                         $67,466  $68,782   $68,374  $76,454
                                                       =======  =======   =======  =======
-------------------------------------------------------------------------------------------
</TABLE>

We believe that continued increase in the number of restaurants that participate
in the registered card dining programs is essential to attract and retain
members. We strive to constantly manage the dynamics of each market by balancing
the Rights to receive acquired to the member demand. This balance is critical to
achieving the participating restaurants objectives of incremental business and
yield management and the members' desire for an adequate amount of desirable
dining establishments. Management believes that the purchase of Rights to
receive can be funded generally from cash generated from operations, and from
funds made available through the securitization. Also, new programs such as
revenue management do not require any cash outlay.

Rights Offering

On November 9, 1999, we completed a Rights Offering to existing shareholders
resulting in the issuance of 4,149,378 convertible, redeemable preferred shares.
The preferred shares have a dividend rate of 12%, of which 6% is payable in
cash, quarterly in arrears, and the remaining 6% accrues unless otherwise paid
currently at the Company's discretion, until conversion by the holder. During
the three months ended December 31, 2001, we declared dividends in the amount of
$297 while during the year ended September 30, 2001 and 2000, we declared
dividends in the amount of $1,204 and $1,079, respectively. Each preferred share
may be converted into common stock at the option of the holder at any time. The
initial rate of conversion was one to one. Subsequent conversion rates are
higher to the extent of the deferred dividend accruing at 6% and any unpaid cash
dividends. If not previously converted, we may commence redemption of the
preferred shares on the third anniversary of the rights offering. On July 27,
2001, 13,108 shares of preferred stock were converted to 14,405 shares of common
stock. At December 31, 2001, the conversion rate of the preferred shares was one
preferred share for 1.12915 common shares.

The proceeds from the stock issuance of $10,000 were used to retire the $10,000
bridge loan obtained from GAMI Investment Inc., an affiliate of our largest
shareholder, Samstock, L.L.C. Pursuant to its subscription privileges and as a
standby purchaser for any unsubscribed shares, Equity Group Investments LLC
("EGI"), an affiliate of Samstock, L.L.C, acquired 2.84 million of the preferred
shares. The additional investment provided EGI with the right to designate an
additional member to the Board of Directors. The size of the Board was increased
by one as EGI chose to exercise that right.

Private Placement

We rolled out our new Internet dining venture nationally during the second half
of fiscal 2000. Execution of the e-commerce initiative was initially executed
through iDine.com, a wholly owned subsidiary. The on-line product allows
restaurateurs to create special incentives and promotions through the iDine
website on specific days of the week and/or times of the day in order to drive
incremental traffic when they need it most. Consumers have their choice of
savings benefits in points or cash and may convert the points into either
complimentary dining or frequent flyer miles. The website may also allow for
on-line reservations, features national restaurant listings and access to
reviews. The on-line initiative has broadened the amount and type of


                                       26

<PAGE>

savings and rewards offered to consumers as well as expanded the participating
restaurant base by providing restaurant operators with a full suite of yield
management products. We also have used a template of the website to host our
various partners dining program offering. This is emerging as a critical
strategy for us as members enrolling through the websites tend to be more
engaged and active in the program.

Development of the e-commerce product was financed by corporate capital and
through a $10,000 private placement. In the first tranche of the private
placement which closed on May 1, 2000, we issued 904,303 shares of our common
stock at $4.5625 and warrants to purchase an additional 1,808,606 shares of our
common stock, half of which have an exercise price of $5.93 and the other half
of $7.30. The warrants will expire on April 28, 2005. We received proceeds from
the share issuance in the amount of $4,126. The second tranche has the same
price per share of common stock and exercise prices for the warrants as the
first tranche. The second tranche which closed on August 21, 2000, consisted of
the sale of an aggregate of 1,287,480 common shares, accompanied by 2,574,960
warrants. We received proceeds from this share issuance in the amount of $5,874.
Funds obtained from the private placement were utilized for development of the
e-commerce venture.

General

Capital expenditures for the three months ended December 31, 2001 and for the
years ended September 30, 2001, 2000 and 1999 were $752, $4,188, $5,036 and
$2,106, respectively. Management believes that cash to be used in investing
activities associated with capital expenditures in the year ended December 30,
2002 will be approximately $4,000. Capital expenditure decreased $848 in year
ended September 30, 2001 compared to prior year. The main reason for the
decrease in capital expenditure was that during the prior year we launched the
e-commerce initiative and expenditures consisted mainly of website development,
computer hardware and software technology necessary to support the operation of
the dining programs, the Member Service Center and the integration of the
registered card platform. Although we continue to have expenditures pertaining
to the website development, these cost have been reduced in the current year. We
believe that cash on hand at December 31, 2001, together with cash generated
from operations and available under the securitization facility will satisfy our
normal operating capital needs during the 2002 calendar year.

SFAS No. 109 requires that deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the deferred
tax asset will not be realized. A valuation allowance was previously provided
for the net deferred tax assets as of September 30, 2000, due to our recurring
losses. The valuation allowance at December 31, 2001, September 30, 2001 and
2000 was $8,757, $9,217 and $9,260, respectively. The net deferred tax asset
relates primarily to net operating loss carryforwards which expire through
December 31, 2018 and amount to $11,387 at December 31, 2001.

Operating activities during the three months ended December 31, 2001 resulted in
net cash provided of $5,558. However, further expansion into new markets and
planned increases in existing markets could reverse this trend depending on the
rate of growth management deems appropriate. As described in the above
paragraph, funds generated from operations, as well as capacity under the
securitization, should be sufficient to fund such growth over the next twelve
months.

Cash provided from investing activities for the three months ended December 31,
2001 was $1,643 compared to cash used during the years ended September 30, 2001,
2000 and 1999 of $11,309, $8,980 and $38,148. Cash provided from investments
during the three-month period was mainly from short term investments which
matured towards the end of 2001.

Cash flows used by financing activities were $510 and $9,951 for the three
months ended December 31, 2001 and the year ended September 30, 2001,
respectively, compared with cash flows provided by financing activities of
$9,457 in 2000 and $39,098 in 1999. During the three months ended December 31,
2001, the principal use of cash flow was $300 paid as preferred dividends and
$213 used to purchase shares of our common stock.


                                       27

<PAGE>

At December 31, 2001, we had no off-balance sheet financing. Also, all special
purpose entities have been consolidated in the consolidated financial statements
provided under Part II, Item 8 of the Form 10-K. The following is a table
detailing our contractual obligations and commitments at December 31, 2001:

<TABLE>
<CAPTION>
                                                                          Payments by Due Periods
                                                     ------------------------------------------------------------------
                                                                   Less than 1                            Over 5 years
Contractual Obligations and Commitments                 Total          year       1-3 years   4-5 years
-----------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>             <C>         <C>           <C>
Revolving securitization (renewed annually)              $ 55,500      $ 55,500        $  --       $  --         $  --
Information technology service agreement                    7,050         2,850        4,200          --            --
Leases                                                      2,967         1,099        1,519         203           146
Standby letter of credit                                       90            90           --          --            --
                                                         --------      --------      -------       -----         -----
                                              Total      $ 65,607      $ 59,539      $ 5,719       $ 203         $ 146
                                                         ========      ========      =======       =====         =====
</TABLE>

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

We are exposed to various types of market risk, including changes in interest
rates. Market risk is the potential loss arising from adverse changes in the
market rates and prices, such as interest rates. Our exposure to market risk for
changes in interest rates is limited to the exposure related to our debt
instruments used to finance the purchase of Rights to receive and short term
investments which are tied to market rates. On December 30, 1999, we entered
into the $80,000 revolving securitization of the combined Rights to receive of
both the private label and the registered card dining programs. The
securitization was privately placed through an asset backed commercial paper
conduit. The interest rate applicable to this facility is the rate equivalent to
the rate (or if more than one rate, the weighted average of the rates) at which
commercial paper ("CP") having a term equal to the related CP tranche period
that may be sold by any placement agent or commercial paper dealer selected by
the conduit on the first day of such CP tranche period, plus the amount of any
placement agent or commercial paper dealer fees and commissions incurred or to
be incurred in connection with such sale. As of December 31, 2001, we had
$55,500 million outstanding under this securitization. The commercial paper and
the interest payment are subject to interest rate risk. If market interest rates
were to increase immediately and uniformly by 100 basis points at December 31,
2001, the interest payments would increase by approximately $555 per annum. We
do not plan to use derivative financial instruments in our investment portfolio.
Our short term investments are made according to a policy to ensure the safety
and preservation of our invested principal funds by limiting default risks,
market risk and reinvestment risk. We had investments in equity securities at
December 31, September 30, 2001 and September 30, 2000 of $147, $152 and $1,246,
respectively, as well as short-term investments in corporate and government
bonds of $1,001, $3,177 and $0, respectively.


                                       28

<PAGE>

                          Item 8. Financial Statements
                          ----------------------------

                          INDEX TO FINANCIAL STATEMENTS
                          -----------------------------

Independent Auditors' Report                                              F-1

Financial Statements:
    Consolidated Balance Sheets at December 31, 2001,
     September 30, 2001 and 2000                                          F-2

    Consolidated Statements of Operations and Comprehensive Income/
    (Loss) for the three months ended December 31, 2001 and 2000
    (unaudited) and the years ended September 30, 2001, 2000 and 1999     F-3,4

    Consolidated Statements of Shareholders' Equity for
     the three months ended December 31, 2001 and the
     years ended September 30, 2001, 2000 and 1999                        F-5

    Consolidated Statements of Cash Flows for the three months ended
    December 31, 2001 and 2000 (unaudited) and the years ended
    September 30, 2001, 2000 and 1999                                     F-6,7

    Notes to Consolidated Financial Statements                            F-8-32

    Schedule II - Valuation and Qualifying Accounts                       F-33

                                       29

<PAGE>


                           iDINE REWARDS NETWORK INC.
                       (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                        Consolidated Financial Statements

                December 31, 2001 and September 30, 2001 and 2000

                   (With Independent Auditors' Report Thereon)


<PAGE>


                          Independent Auditors' Report

The Board of Directors and
  Shareholders

 iDine Rewards Network Inc. (formerly Transmedia Network Inc.):


We have audited the accompanying consolidated balance sheets of iDine Rewards
Network Inc. (formerly Transmedia Network Inc.) (the "Company") as of December
31, 2001, September 30, 2001 and 2000, and the related consolidated statements
of operations and comprehensive income (loss), shareholders' equity and cash
flows for the three-months ended December 31, 2001, and each of the years in the
three-year period ended September 30, 2001. In connection with our audits of the
consolidated financial statements, we have also audited the financial statement
schedule for the three-months ended December 31, 2001, and each of the years in
the three-year period ended September 30, 2001 as listed in item 14(a)2 of the
Company's 2001 Annual Report on Form 10-K. These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of iDine
Rewards Network Inc. (formerly Transmedia Network Inc.) as of December 31, 2001,
September 30, 2001 and 2000, and the results of their operations and their cash
flows for the three-months ended December 31, 2001, and each of the years in the
three-year period ended September 30, 2001, in conformity with generally
accepted accounting principles in the United States of America. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

/s/ KPMG LLP

Fort Lauderdale, Florida
February 6, 2002, except as to note 20, which is
 as of March 7, 2002



<PAGE>

<TABLE>
<CAPTION>

                                     iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                                           AND SUBSIDIARIES
                                                      Consolidated Balance Sheets
                                                 (in thousands, except per share data)

                                                                            December 31,    September 30,   September 30,
                               Assets                                         2001             2001             2000
                               ------                                         ----             -----           ----
<S>                                                                            <C>              <C>            <C>
Current assets:
     Cash and cash equivalents                                          $      13,957     $      7,266    $      19,818
     Short term investments                                                     1,001            3,177                -
     Accounts receivable, net                                                   7,027            8,155            9,135
     Rights-to-receive, net                                                    67,466           68,782           68,374
     Prepaid expenses and other current assets                                  1,022            1,059            2,883
                                                                            ---------        ---------        ---------
                   Total current assets                                        90,473           88,439          100,210

Securities available for sale, at fair value                                      147              152            1,246
Property and equipment, net                                                     8,479            8,785            8,484
Other assets                                                                      620            1,121            1,192
Excess of cost over net assets acquired                                         9,671            9,823           10,449
                                                                            ---------        ---------        ---------

                   Total assets                                               109,390     $    108,320     $    121,581
                                                                            =========         ========         ========
                Liabilities and Shareholders' Equity
                ------------------------------------
Current liabilities:

     Secured non-recourse revolving debt                                       55,500           55,500           59,625
     Accounts payable - rights-to-receive                                      10,179            8,772            7,443
     Accounts payable - trade                                                   7,161            7,419           10,317
     Accrued expenses and other                                                 2,605            3,446            2,601
     Deferred membership fee income                                             2,476            2,690            3,008
                                                                            ---------        ---------        ---------
                   Total current liabilities                                   77,921           77,827           82,994

Other long-term liabilities                                                     1,080              664            4,581
                                                                            ---------        ---------        ---------

                   Total liabilities                                           79,001           78,491           87,575
                                                                            ---------        ---------        ---------

Guaranteed value of puts                                                           --               --            3,200
Shareholders' equity :
     Preferred stock, par value $0.10 per share (1,000 shares
        authorized; none issued and outstanding)                                   --               --               --
     Preferred stock - Series A, senior convertible redeemable, par
        value $0.10 per share; authorized 10,000 shares; issued and
        outstanding 4,071, 4,136 and 4,149 shares, respectively
                                                                                  414              414              415
     Common stock, par value $0.02 per share; authorized 70,000 shares; issued
        and outstanding 15,781, 15,805 and 16,200
        shares, respectively                                                      316              316              316
     Additional paid-in capital                                                43,150           43,150           43,129
     Cumulative other comprehensive income (loss)                                (265)            (250)             833
     Retained deficit                                                         (12,968)         (13,756)         (13,887)
     Treasury stock, at cost (81, 16 and 0 shares, respectively)                 (258)             (45)              --
                                                                            ---------        ---------        ---------

                   Total shareholders' equity                                  30,389           29,829           30,806
                                                                            ---------        ---------        ---------

                   Total liabilities and shareholders' equity            $    109,390     $    108,320     $    121,581
                                                                            =========        =========        =========
See accompanying notes to consolidated financial statements.

</TABLE>


                                       F-2

<PAGE>

<TABLE>
<CAPTION>

                                     iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                                           AND SUBSIDIARIES

                                 Consolidated Statements of Operations and Comprehensive Income (Loss)
                                                (in thousands, except income per share)

                                                                  Three months
                                                                ended December 31,          Years ended September 30,
                                                                2001         2000          2001       2000         1999
                                                             ---------    ---------    ---------    ---------    ---------
                                                                         (unaudited)
Operating revenue:
<S>                                                          <C>          <C>          <C>          <C>          <C>
     Registered card sales                                   $  50,492    $  39,643    $ 182,714    $ 103,950    $  25,942
     Private label sales                                           137        4,338        7,323       76,677       94,530
                                                             ---------    ---------    ---------    ---------    ---------

     Gross dining sales                                         50,629       43,981      190,037      180,627      120,472

     Cost of sales                                              27,834       24,415      103,832      105,239       70,110
     Member rewards and savings                                 10,633        9,731       40,804       39,032       26,480
                                                             ---------    ---------    ---------    ---------    ---------

     Net revenue from dining sales                              12,162        9,835       45,401       36,356       23,882

     Membership and renewal fee income                           1,563        1,727        7,009        8,444        8,281
     Other operating revenue                                        69          188          776        1,558        2,625
                                                             ---------    ---------    ---------    ---------    ---------

           Total operating revenues                             13,794       11,750       53,186       46,358       34,788
                                                             ---------    ---------    ---------    ---------    ---------

Operating expenses:
     Selling, general and administrative expenses                5,613        5,501       21,556       22,431       18,430
     Salaries and benefits                                       3,862        3,472       16,803       12,683        9,825
     Sales commission and expenses                               1,383        1,352        5,512        4,842        3,245
     Member and merchant marketing expenses                      1,251          976        3,579        6,875        6,447
     Settlement of licensee litigation                              --           --           --           --        2,835
                                                             ---------    ---------    ---------    ---------    ---------

           Total operating expenses                             12,109       11,301       47,450       46,831       40,782
                                                             ---------    ---------    ---------    ---------    ---------

                   Operating income (loss)                       1,685          449        5,736         (473)      (5,994)

Other income (expense):
     Realized gains on sale of securities available for
        sale                                                        --           --           --           40        1,149
     Interest and other income                                     152          248          747          575          468
     Interest expense and financing cost                          (681)      (1,590)      (5,064)      (6,297)      (4,021)
                                                             ---------    ---------    ---------    ---------    ---------

                   Income (loss) before income tax
                        provision and extraordinary item         1,156         (893)       1,419       (6,155)      (8,398)

Income tax provision                                                71           --           85           --        2,000
                                                             ---------    ---------    ---------    ---------    ---------


                   Income (loss) before extraordinary item   $   1,085    $    (893)   $   1,334    $  (6,155)   $ (10,398)
                                                             ---------    ---------    ---------    ---------    ---------


                                                                                                                Continued
</TABLE>



                                       F-3

<PAGE>
<TABLE>
<CAPTION>

                                     iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                                           AND SUBSIDIARIES

                                Consolidated Statements of Operations and Comprehensive Loss, Continued
                                                (in thousands, except income per share)

                                                              Three months
                                                           ended December 31,        Years ended September 30,
                                                           2001        2000        2001        2000        1999
                                                         --------    --------    --------    --------    --------
                                                                      (unaudited)
<S>                                                         <C>          <C>        <C>         <C>        <C>
Extraordinary item, loss on early extinguishment of
         debt, net of tax                                    --          --          --        (1,623)       --
                                                         --------    --------    --------    --------    --------
                   Net  income (loss)                       1,085        (893)      1,334      (7,778)    (10,398)
                                                         --------    --------    --------    --------    --------
Other comprehensive income (loss)
     Unrealized holding gain (loss) on securities
           available for sale                                 (15)       (624)     (1,083)        636          78
     Beginning unrealized loss for all securities sold       --          --          --           (21)       (562)
     Tax effect of unrealized gain                           --           237        --          --            90
                                                         --------    --------    --------    --------    --------

                   Comprehensive income (loss)           $  1,070    $  1,280    $    251    $ (7,163)   $(10,792)
                                                         ========    ========    ========    ========    ========
Net  income (loss) per common and common
    equivalent share:
    Basic and diluted:
          Income (loss) before extraordinary item            0.05       (0.07)       0.01        (.51)       (.80)
          Extraordinary item loss on early
              extinguishment of debt,                        --          --          --          (.12)       --

          Net income (loss)                              $   0.05    $  (0.07)   $   0.01    $   (.63)   $   (.80)
                                                         ========    ========    ========    ========    ========


Weighted average number of common and common
     equivalent shares outstanding:
          Basic                                            15,781      16,177      15,983      14,149      13,043
          Diluted                                          16,089      16,177      16,281      14,149      13,043



</TABLE>





See accompanying notes to consolidated financial statements.


                                       F-4

<PAGE>



          iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                 Consolidated Statements of Shareholders' Equity
                                 (in thousands)
<TABLE>
<CAPTION>
                                               Preferred Stock            Common stock                             Cumulative
                                            ----------------------   ------------------------     Additional          other
                                              Number                   Number                      paid-in        comprehensive
                                             of shares   Amount       of shares    Amount          capital            income
                                            ----------------------   ------------------------   -----------------------------------
<S>                                             <C>          <C>          <C>           <C>            <C>               <C>
Balance, September 30, 1999                          --      $ --         13,376        $264           22,661            $ 218
     Net loss                                        --        --             --          --               --               --
     Issuance of common stock                        --        --          2,824          56           12,044               --
     Issuance of preferred stock                  4,149       415             --          --            9,284               --
     Net put options activity                        --        --             --          (4)            (860)              --
     Preferred dividend                              --        --             --          --               --               --
     Cumulative other comprehensive
       income, net                                   --        --             --          --               --              615
                                            ----------------------   ------------------------   -----------------------------------

Balance, September 30, 2000                       4,149       415         16,200         316           43,129              833
     Net income                                      --        --             --          --               --               --
     Stock options exercised                         --        --              7          --               17               --
     Conversion of preferred stock                 (13)       (1)             14          --                4
     Preferred dividend                              --        --             --          --               --               --
     Redemption of put options                       --        --           (400)         --               --               --
     Cumulative other comprehensive loss,
        net                                          --        --             --          --               --           (1,083)
     Treasury stock                                  --        --             --          --               --               --
                                            ----------------------   ------------------------   -----------------------------------
Balance, September 30, 2001                       4,136       414         15,821         316           43,150             (250)
     Net income                                      --        --             --          --               --               --
     Preferred dividend                              --        --             --          --               --               --
     Cumulative other comprehensive loss,
        net                                          --        --             --          --               --              (15)
     Treasury stock                                  --        --             --          --               --               --
                                            ----------------------   ------------------------   -----------------------------------
Balance, December 31, 2001                        4,136     $ 414         15,821       $ 316          $43,150            $(265)
                                            ======================   ========================   ===================================
</TABLE>

<TABLE>
<CAPTION>


                                                                      Treasury Stock
                                                     Retained     ---------------------------
                                                     (deficit)      Number
                                                     earnings     of shares      Amount        Total
                                                   ---------------------------------------------------
<S>                                                     <C>             <C>        <C>          <C>
Balance, September 30, 1999                         $ (5,030)           --          $ --     $ 18,113
     Net loss                                         (7,778)           --            --       (7,778)
     Issuance of common stock                             --            --            --       12,100
     Issuance of preferred stock                          --            --            --        9,699


     Net put options activity                             --            --            --         (864)
     Preferred dividend                               (1,079)           --            --       (1,079)
     Cumulative other comprehensive
       income, net                                        --            --            --          615
                                                   ---------------------------------------------------

Balance, September 30, 2000                          (13,887)           --            --       30,806
     Net income                                        1,334            --            --        1,334
     Stock options exercised                              --            --            --           17
     Conversion of preferred stock                                      --            --            4
     Preferred dividend                               (1,204)           --            --       (1,204)
     Redemption of put options                            --            --            --           --
     Cumulative other comprehensive loss,
        net                                               --            --            --       (1,083)
     Treasury stock                                       --            16           (45)         (45)
                                                   ---------------------------------------------------

Balance, September 30, 2001                          (13,756)           16           (45)      29,829
     Net income                                        1,085            --            --        1,085
     Preferred dividend                                 (297)           --            --         (297)
     Cumulative other comprehensive loss,
        net                                               --            --            --          (15)
     Treasury stock                                       --            65          (213)        (213)
                                                   ---------------------------------------------------
Balance, December 31, 2001                          $(12,968)           81        $(258)     $ 30,389
                                                   ===================================================

</TABLE>

See accompanying notes to consolidated financial statements.


                                       F-5

<PAGE>
<TABLE>
<CAPTION>


                                     iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                                           AND SUBSIDIARIES
                                                 Consolidated Statements of Cash Flows
                                                            (in thousands)

                                                                       Three months
                                                                    ended December 31,         Years ended September 30,
                                                                   --------------------    --------------------------------
                                                                      2001      2000          2001      2000          1999
                                                                   --------    --------    --------    --------    --------
                                                                             (unaudited)
 Cash flows from operating activities:
<S>                                                               <C>         <C>         <C>         <C>         <C>
    Net income (loss)                                             $  1,085    $   (893)   $  1,334    $ (7,778)   $(10,398)
     Adjustments to reconcile net income (loss) to net cash
        provided by operating activities:
         Depreciation and amortization                                1,212       1,171       4,601       4,067       3,444
         Amortization of deferred financing cost                        170         333       1,268       1,113         354
         Provision for losses on rights-to-receive                    3,016       1,943       8,586       7,391       4,606
         Gain on sale of investments                                     --          --          --         (40)     (1,149)
         Loss on disposal of fixed assets                                --          --          --           8          --
         Deferred income taxes                                           --          --          --          --       2,000

         Changes in assets and liabilities:
           Accounts receivable                                        1,128        (143)     (1,578)     (1,029)     (5,545)
           Rights-to-receive                                           (293)     (1,861)     (5,161)      3,849       4,706
           Prepaid expenses and other current assets                    142         278         195       2,870      (3,766)
           Other assets                                                 332        (552)     (1,206)      1,490      (1,411)
           Accounts payable                                            (262)        543         676       1,158       5,022
           Income taxes receivable (payable)                             83         (17)         66         (37)      1,259
           Accrued expenses and other                                  (841)       (471)        245      (1,821)      2,982
           Deferred membership fee income                              (214)        453        (318)       (843)      1,257
                                                                   --------    --------    --------    --------    --------
            Net cash provided by operating activities                 5,558         784       8,708      10,398       3,361
                                                                   --------    --------    --------    --------    --------

 Cash flow from investing activities:
      Termination of exclusivity agreement                               --      (3,800)     (3,800)         --          --
      Additions to property and equipment                              (752)       (833)     (4,188)     (5,036)     (2,106)
      Increase (decrease)  in short term investments                  2,176          --      (3,177)         --          --
      Acquisition of Dining a la Card                                    --          --          --          --     (36,453)
      Acquisition of franchises                                          --          --          --      (5,401)       (648)
      Proceeds from sale of fixed assets                                 --          --          --          12          --
      Proceeds from sale of securities available for sale                --          --          --          40       1,149
      (Increase) decrease in restricted deposits and investments        219         (15)       (144)      1,405         (90)
                                                                   --------    --------    --------    --------    --------
            Net cash provided by (used in) investing activities       1,643      (4,648)    (11,309)     (8,980)    (38,148)
                                                                   --------    --------    --------    --------    --------

 Cash flows from financing activities:
      Net proceeds from (repayment of) revolving securitization          --      (3,183)     (4,125)     58,555          --
      Repayment of fixed rate securitization facility                    --          --          --     (33,000)         --
      Redemption of put options                                          --          --      (3,200)         --          --
      Retirement of convertible notes                                    --          --      (2,000)         --          --
      Dividends paid                                                   (297)       (301)       (602)       (389)         --
      Purchase of common stock                                         (213)         --         (45)         --          --
      Conversion of warrants and options for common stock, net           --          --          21          --          --
      Proceeds from (repayment of) short term borrowings - bank          --          --          --     (29,000)     29,000
      Proceeds from (repayment of) term loan - affiliate                 --          --          --     (10,000)     10,000
      Net proceeds from preferred stock issuance                         --          --          --       9,700          --
      Net proceeds from issuance of common stock                         --          --          --       9,865         306
      Decrease (increase) in restricted cash                             --          --          --       3,726        (208)
                                                                   --------    --------    --------    --------    --------
           Net cash provided by (used in) financing activities    $    (510)  $  (3,484)   $ (9,951)   $  9,457    $ 39,098
                                                                   --------    --------    --------    --------    --------
                                                                                                                      Continued
</TABLE>


                                       F-6

<PAGE>

          iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES
                Consolidated Statements of Cash Flows, Continued

<TABLE>
<CAPTION>

                                                                       Three months
                                                                    ended December 31,         Years ended September 30,
                                                                   --------------------    --------------------------------
                                                                      2001      2000          2001      2000          1999
                                                                   --------    --------    --------    --------    --------
                                                                           (unaudited)

<S>                                                               <C>        <C>          <C>          <C>         <C>
                     Net increase (decrease) in cash              $ 6,691    $ (7,348)    $ (12,552)   $ 10,875    $ (4,311)
Cash and cash equivalents:
     Beginning of  the period                                       7,266      19,818        19,818       8,943       4,632
                                                                    -----      ------      --------    --------      ------
     End of year of the period                                    $13,957    $ 12,470     $   7,266    $ 19,818    $  8,943
                                                                   ======     =======     =========     =======      ======
Supplemental disclosures of cash flow information:
     Cash paid (received) during the year for:
        Interest                                                  $   353    $  1,110     $   3,235    $  3,916    $  2,873
                                                                   ======     =======     =========     =======      ======
        Income taxes                                              $    75    $     17     $      32    $     37    $ (1,259)
                                                                   ======     =======     =========     =======      ======
        Dividends                                                 $   150    $    602     $     602    $     38    $     --
                                                                   ======     =======     =========     =======      ======
</TABLE>

Supplemental schedule of noncash investing and financing activities:

    At December 31, 2001, September 30, 2001 and 2000 the Company adjusted its
        available for sale investment portfolio to fair value resulting in a net
        increase (decrease) to shareholders' equity of ($15), ($1,083) and $615,
        respectively, net of deferred income taxes.

    There was $1,287, $1,137 and $535 dividend payable outstanding as of
        December 31, 2001, September 30, 2001 and 2000, respectively. There was
        no dividend payable outstanding as of September 30, 1999. The dividend
        payable represents the non-cash accumulations that will be recognized
        upon conversion of the preferred stock.

    The acquisition of the Houston franchisee was recorded during the second
        quarter of fiscal year 1999, the acquisition of the San Antonio/Austin
        franchisee was recorded during the first quarter of fiscal year 2000,
        the acquisition of the New Jersey franchisee was recorded during the
        second quarter of fiscal year 2000, the acquisition of the Washington,
        D.C. franchisee was recorded during the third quarter of fiscal year
        2000, and the acquisition of the Virginia franchisee was recorded during
        the third quarter of fiscal year 2000 as follows (see Note 7):
<TABLE>
<CAPTION>

                                       San Antonio/                            Washington
                                         Austin            New Jersey         DC/Virginia        Houston          Total
                                     ---------------- ---------------- ------------------- -------------- --------------
<S>                                             <C>           <C>                 <C>               <C>         <C>
  Fair value of assets acquired:
         Rights-to-receive                      $200          $ 1,344             $ 1,661           $127        $ 3,332
         Other assets                              5               22                  33             13             73
         Excess of cost over net
           assets acquired                       788            2,002               3,750            536          7,076
                                     ---------------- ---------------- ------------------- -------------- --------------
                                                 993            3,368               5,444            676         10,481
                                     ---------------- ---------------- ------------------- -------------- --------------
  Less:  Cash Paid                               950            3,000               1,451            648          6,049
         Common shares issued                     --               --               1,500             --          1,500
         Note payable                             --               --               2,000             --          2,000
                                     ---------------- ---------------- ------------------- -------------- --------------
         Liabilities assumed                    $ 43          $   368             $   493           $ 28        $   932
                                     ---------------- ---------------- ------------------- -------------- --------------
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       F-7

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

(1) Description of Business and Summary of Significant Accounting Policies

         (a) Description of Business

             Effective February 1, 2002, Transmedia Network Inc. changed its
             corporate name to iDine Rewards Network Inc. The Company operates
             in one business segment and owns and markets dining rewards
             programs which offer savings and benefits to our members
             principally for dining and, to a lesser extent lodging and travel.
             Our primary business is the administration of dining rewards
             programs. We accomplish this principally through the acquisition
             of, on a wholesale or discounted basis, the rights to receive food
             and beverage credits at full retail value from restaurants that
             wish to participate in the program. Our members are provided
             incentives in the form of rewards or savings to then dine in the
             restaurant and liquidate the food and beverage credits on our
             behalf. These rights to receive are typically purchased from the
             restaurants by the Company for cash but may also be acquired in
             exchange for services. In addition to the purchase of rights to
             receive, the Company also provides restaurant operators with yield
             management tools such as variable promotions, dining incentives and
             off peak pricing to fill empty seats and generate incremental
             business.

             Consumers join the dining rewards program either individually or
             through the Company's various affiliations with major airlines,
             large banks and credit card issuers, and other affinity partners.
             Access to the savings and benefits, typically cash or frequent
             flyer miles, is accomplished through registration of the consumer's
             valid major credit cards with the Company. Membership in the dining
             programs that provide for cash credits require an annual fee.
             Rewards to members in other alternate currencies, such as airline
             frequent flyer miles, do not require an annual fee.

             We estimate that our account base and network of participating
             restaurants is approximately 7.8 million and 7.7 thousand
             respectively, at December 31, 2001. We operate in seventy major
             market areas.

             The Company's corporate structure consists of four wholly-owned
             subsidiaries: iDine Restaurant Group Inc. ("IRG") which functions
             as the sales organization and is responsible for merchant
             acquisition and relationship management; Transmedia Service Company
             Inc. ("TSC") which is responsible for all member-related facets of
             the business, including partner relationships, directory and
             newsletter publications, the member call center, and support
             services to IRG; TMNI International Incorporated, which is
             responsible for all foreign licensing; and iDine.com, Inc.,
             initially established to provide restaurant operators with the
             capability of using our e-commerce services to access revenue
             management tools such as variable promotions, dining incentives and
             off-peak pricing products. The entire operations of iDine.com were
             folded into IRG and TSC in fiscal 2001, to ensure a more efficient
             distribution of the revenue management program. Effective January
             13, 2002, iDine.com merged with and into Transmedia Network Inc.
             which simultaneously filed a certificate of ownership changing its
             name to iDine Rewards Network Inc.


                                       F-8

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

             RTR Funding LLC was established as a special purpose corporation as
             part of the current securitization discussed in Note 2 and is a
             wholly-owned subsidiary of Transmedia Service Company, Inc. The
             accompanying consolidated financial statements include the accounts
             of the Company and its subsidiaries. All intercompany accounts and
             transactions have been eliminated in consolidation.

             On November 13, 2001, Board of Directors approved a change of the
             Company's name to iDine Rewards Network Inc. as well as a change of
             its fiscal year-end from September 30 to December 31, effective
             starting January 1, 2002. The three-month transition period from
             October 1, 2001 through December 31, 2001 precedes the start of the
             new fiscal year and is represented in the Form 10-K Transition
             Report. Reference to fiscal 2001, 2000 and 1999 relate to the years
             ended September 30, 2001, 2000 and 1999. The unaudited financial
             information for the three months ended December 31, 2000 is
             presented for comparative purposes.

         (b) Cash and Cash Equivalents

             Cash and cash equivalents are financial instruments with original
             maturities, at the date of purchase, of three months or less.

         (c) Rights to receive

             Rights to receive are composed primarily of food and beverage
             credits acquired from restaurants on a wholesale basis, typically
             for cash. The food and beverage credits acquired represent the
             Company's right to receive future revenue and cash flows from the
             restaurants when our members dine there. Rights to receive are
             stated at the gross amount of the commitment to the establishment.
             Accounts payable-rights to receive represent the unfunded portion
             of the total commitments. The carrying value of the rights to
             receive is based on the actual cash advance amount and is recorded
             at cost, determined by the first-in, first-out method. The Company
             reviews the realizability of the Rights to receive on a periodic
             basis and provides for anticipated losses on rights to receive from
             restaurants that have ceased operations or whose credits are not
             being utilized by members. These losses are offset by recoveries
             from restaurants previously written off.

         (d) Short Term Investments

             The Company classifies all of its short-term investments as
             available for sale securities. Such short term investments consist
             primarily of United States government and federal agency securities
             which are stated at fair value with net unrealized gains and losses
             on such securities reflected, net of related deferred income tax,
             in a separate component of shareholders' equity [cumulative other
             comprehensive income (loss)]. Realized gains and losses on
             short-term investments are included in earnings and are derived
             using the specific identification method for determining the cost
             of securities. These investments, at the date of purchase, have a
             maturity greater than three months but less than a year.


                                       F-9

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)


         (e) Securities Available for Sale

             All of the Company's investments are available to be sold in
             response to the Company's liquidity needs and asset-liability
             management strategies, among other reasons. Investments
             available-for-sale on the balance sheet are stated at fair market
             value. Unrealized gains and losses are excluded from earnings and
             are reported in a separate component of shareholders' equity
             [cumulative other comprehensive income (loss)], net of related
             deferred income taxes.

             A decline in the fair market value of an available-for-sale
             security below cost that is deemed other than temporary results in
             a charge to income, resulting in the establishment of a new cost
             basis for the security. All declines in fair market values of the
             Company's investment securities in the transition period ended
             December 31, 2001, fiscal 2001 and 2000 were deemed to be
             temporary.

             Dividends are recognized when earned. Realized gains and losses are
             included in earnings and are derived using the
             specific-identification method for determining the cost of
             securities sold.

         (f) Property and Equipment

             Property and equipment are stated at cost less accumulated
             depreciation. Depreciation on property and equipment is calculated
             on the straight-line method over an estimated useful life of three
             to five years. Amortization of leasehold improvements is calculated
             over the shorter of the lease term or estimated useful life of the
             asset.

         (g) Software Development Costs

             The Company has developed and/or purchased certain website software
             applications and hardware that give rise to the Company's
             e-commerce services. In accordance with Statement of Position 98-1
             ("SOP 98-1"), "Accounting for the Costs of Computer Software
             Developed or Obtained for Internal Use." , the Company has
             capitalized certain internal use software and website development
             costs totaling $71, $1,274 and $1,476 during the three-month period
             ended December 31, 2001 and the years ended September 30, 2001 and
             2000, respectively. The amortization of these costs is calculated
             on a straight-line basis over a three-year life. During the
             three-month period ended December 31, 2001 and the years ended
             September 30, 2001 and 2000, the amortization of these capitalized
             costs totaled $232, $704, and $176, respectively. Amortization
             starts when the product is available for general release to
             members. All other website construction and expansion expenditures
             are charged to expense in the period incurred.

         (h) Excess of Cost Over Net Assets Acquired

             Excess of cost over net assets acquired has resulted primarily from
             the acquisition of franchise territories (see note 7) and is
             amortized on a straight-line basis over the expected periods to be
             benefited, generally 20 years. The Company's accounting policy
             regarding


                                       F-10

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

             the assessment of the recoverability of goodwill is to review the
             carrying value if the facts and circumstances suggest that they may
             be impaired. The Company assesses the recoverability of goodwill by
             determining whether the amortization of the goodwill balance over
             its remaining life can be recovered through estimated undiscounted
             future operating cash flows of the acquired operation. The amount
             of goodwill impairment, if any, is measured based on projected
             discounted future operating cash flows using a discount rate
             reflecting the Company's average cost of funds. The assessment of
             the recoverability of goodwill will be impacted if estimated future
             operating cash flows are not achieved. See footnote 1(s) for a
             discussion of new pronouncements that will affect this policy in
             the future.

         (i) Revenue Recognition

             The Company recognizes gross dining sales as revenue when our
             members dine in one of our participating restaurants. Revenue is
             recognized if the member dining transaction qualifies in accordance
             with the rules of the particular dining program. The amount of
             revenue recognized is that portion of the total spending by the
             member that the Company is entitled to receive in cash, in
             accordance with the terms of the contract with the restaurant. For
             the typical cash advance based contract where we have acquired or
             prepaid for food and beverage credits on a wholesale basis, we
             often leave some portion of the member's dining spend with the
             merchant to provide liquidity for payment of sales tax and tips.
             For example, if the total dining spend by the member is one hundred
             dollars at our participating restaurants, as evidenced by the full
             amount of the credit card transaction, and our contract provides
             for us to leave behind 20%, the amount of gross dining sales
             recognized is eighty dollars representing what we will actually
             realize in cash. Similarly, for members' dining transactions at
             restaurants in the revenue management program where we have not
             advanced cash and the rewards or savings may vary by the time of
             day or day of the week, revenue is only recognized to that extent
             that we are contractually entitled to receive cash for a portion of
             the member's spend. The same one hundred dollar transaction
             referred to above in a revenue management restaurant may only yield
             thirty dollars in cash to be realized, however, there was no cash
             advanced, the transaction has less risk and there is no cost of the
             rights to receive sold.

             The Registered Card Program, obtained through the acquisition of
             Dining A La Card (the "Registered Card Program") in June 1999, and
             subsequently enhanced by us, has replaced the Company's legacy
             private label charge card program. Members enrolled in the program
             simply register a valid major credit card with us and then present
             their registered credit card while dining at a participating
             restaurant. Based on our agreements with various credit card
             processors and presenters throughout the country, we aggregate data
             for all our participating merchants. The data is compared to our
             current registered card file to determine if an enrolled account
             with the Company was also a customer of the participating merchant.
             These matched transactions are qualified via business rules as to
             whether they are eligible for a reward or savings. Once the
             transaction has been qualified, the portion of the transaction that
             the Company will receive in cash is recognized as a sale. These
             qualified transactions are then used to provide member savings or
             alternate currency


                                       F-11

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

             benefits, as well as to invoice and collect from merchants,
             principally via an electronic debit to their bank account.

             The Transmedia Card, the Company's proprietary private label charge
             card was substantially phased out during fiscal 2001. The
             Transmedia Card had been selectively issued to credit worthy
             applicants who linked it to their current, valid MasterCard, Visa,
             Discover or American Express credit card. When cardmembers
             presented the Transmedia Card, they would sign for the goods or
             services rendered, as well as for the taxes and tips, as they would
             with any other charge card. The Company, upon obtaining the receipt
             (directly or via electronic point of sale transmission) from the
             appropriate establishment, recognized the sale and, gave the
             establishment credit against rights to receive which are owned by
             the Company. Simultaneously, the Company (i) processed the receipt
             through the cardmember's electronically linked MasterCard, Visa,
             Discover or American Express card account, which remitted to the
             Company the full amount of the bill, and (ii) credited the
             cardmember's account for the appropriate discount. Taxes and tips
             were then remitted back to the various establishments.

             Initial membership and renewal fees are billed in advance and
             recognized on a straight-line basis over twelve months, which
             represents the membership period. Membership fees are cancelable
             and are refunded to members, if requested, on a prorata basis based
             on the remaining portion of the membership period.

         (j) Other Operating Revenue

             Other operating revenue consists of continuing franchise fee
             revenue, commission income and processing income. Continuing
             franchise fee revenue represents royalties calculated as a
             percentage of the franchisees' sales and is recognized when earned.
             Initial franchise fees and license fees are recognized when
             material services or conditions relating to the sale of the
             franchise have been substantially performed. As of June 2000, all
             franchises were repurchased by the Company and no further franchise
             fee revenue has been recorded.

             Commission income represents income earned on discounted travel
             services provided by third parties to the Company's members.

             Processing income represents the net fees charged to restaurants
             when the Company serves as merchant of record for processing all
             other non-Company point of sale transactions.

         (k) Deferred Acquisition Costs

             Certain costs of acquiring members are deferred and amortized, on a
             straight-line basis over the membership period, usually twelve
             months. The acquisition costs capitalized as assets by the Company
             represent initial fee-paying member acquisition costs resulting
             from direct-response campaign costs that are recorded as incurred.
             Campaign costs include incremental direct costs of direct-response
             advertising, such as printing of brochures, campaign applications
             and mailing. Such costs are deferred only to the extent of initial
             membership fees generated by the campaign.


                                       F-12

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

             Acquisition expenses represent the cost of acquiring members and
             restaurants and consist primarily of direct-response advertising
             costs incurred in excess of fees received and amortization of
             previously deferred costs and costs associated with soliciting
             no-fee members.

             In recent years, the Company has moved away from marketing of the
             fee based product to individual consumers and thus the amount of
             acquisition costs deferred has been negligible.

         (l) Cost of Sales and Member Rewards and Savings

             Cost of sales is composed of the cost of rights to receive sold,
             related processing fees and provision for rights to receive losses.
             The cost of rights to receive sold is determined on a specific
             identification basis, by merchant, according to the contractual
             funding ratio used when the food and beverage credits were
             acquired. The typical ratio utilized is two dollars of food and
             beverage credits received for one dollar of cash advanced.

             Member rewards and savings represent the cost of the specific
             reward or savings earned by members whenever they use the program.

             Certain companies now participate in the recently developed
             corporate expense reduction program. The companies register their
             employees' corporate cards with us on a no fee basis, however
             savings are not provided until the employee reaches a certain level
             of qualified annual spend. After reaching such level, the
             participating company receives a monthly check for the aggregate
             savings earned by their employees when dining out at participating
             restaurants. Rewards associated with this program, and others like
             it, are charged to income during the period incurred. The foregone
             savings prior to achieving the qualified annual spend levels are
             deferred and spread over the contract year on an effective rate
             basis, resulting in a reduction in the overall member rewards and
             savings expense.

         (m) Income Taxes

             Income taxes are accounted for using the asset and liability
             method. Deferred tax assets and liabilities are recognized for the
             estimated future tax consequences attributable to differences
             between the financial statement carrying amounts of existing assets
             and liabilities and their respective tax bases and operating loss
             and tax credit carryforwards. Deferred tax assets and liabilities
             are measured using enacted tax rates expected to apply in the year
             in which those temporary differences are expected to be recovered
             or rates settled. The effect on deferred tax assets and liabilities
             of a change in tax rates is recognized in income in the period that
             includes the enactment date. A valuation allowance is established
             when necessary to reduce deferred tax assets to the amounts
             expected to be realized.

         (n) Stock Based Compensation

             Statement of Financial Accounting Standards (SFAS) No. 123,
             Accounting for Stock-Based Compensation, establishes a fair-value
             method of accounting for stock options and similar


                                       F-13

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

             equity instruments. The fair-value method requires compensation
             costs to be measured at the grant date based on the value of the
             award and recognized over the service period. SFAS No. 123 allows
             companies to either account for stock-based compensation to
             employees under the provisions of SFAS No. 123, or under the
             intrinsic-value based method of accounting prescribed by the
             Accounting Principles Board (APB) Opinion No 25 and its related
             interpretative releases. The Company has elected to account for the
             stock-based compensation to employees in accordance with the
             provisions of APB Opinion No. 25, and provide the pro forma
             disclosures required under SFAS No. 123.

         (o) Impairment of Long-Lived Assets and Long-Lived Assets to be
             Disposed Of

             The Company reviews, as circumstances dictate, the carrying amount
             of our long-lived assets. The purpose of these reviews is to
             determine whether the carrying amounts are recoverable.
             Recoverability of assets to be held and used is determined by
             comparing the projected undiscounted net cash flows of the
             long-lived assets against their respective carrying amounts. The
             amount of impairment, if any, is measured based on the excess of
             the carrying value over the fair value. Assets to be disposed of
             are reported at the lower of the stated amount or fair value less
             costs of disposal.

         (p) Segment Information

             SFAS No. 131, Disclosures about Segments of an Enterprise and
             Related Information establishes standards for the manner in which
             public companies report information about operating segments in
             annual and interim financial statements. It also establishes
             standards for related disclosures about products and services,
             geographic areas, and major customers. The method for determining
             what information to report is based on the way management organizes
             the operating segments within the Company for making operating
             decisions and assessing financial performance. The Company's chief
             operating decision-maker is considered to be the chief executive
             officer (CEO). The CEO reviews financial information presented on a
             consolidated basis for purposes of making operating decisions and
             assessing financial performance. The consolidated financial
             information is identical to the information presented in the
             accompanying consolidated statements of operations. Therefore, the
             Company has determined that it operates in a single operating
             segment, specifically, the providing of rewards to its members.

         (q) Basic and Diluted Net Income (Loss) per Share

             Basic and diluted net income (loss) per share was computed by
             dividing net income (loss) applicable to common stockholders by the
             weighted-average number of shares of common stock outstanding for
             each period presented. Potentially dilutive securities were
             considered for the three-month periods ended December 31, 2001 and
             2000, and each of the years in the three-year period ended
             September 30, 2001 to the extent dilutive.

             For periods with potentially dilutive securities, incremental
             shares and adjustments to net income are determined using the "if
             converted" and treasury stock method as follows:


                                       F-14

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

             <TABLE>
             <CAPTION>

                                                                         Three months
                                                                             ended           Year ended
                                                                          December 31,      September 30,
                                                                             2001                2001
                                                                             ----                ----
             <S>                                                          <C>                <C>
             Net income as reported                                       $ 1,085            $  1,334
             Less: Preferred stock dividends                                 (297)             (1,203)
                                                                          -------             -------
             Net income available to common stockholders                      788                 131
                                                                          =======             =======


             Weighted average shares outstanding                           15,781              15,983
             Common stock equivalents
                  Stock options                                               130                 130
                  Warrants                                                    178                 168
                                                                           ------              ------
                                                                           16,089              16,281
                                                                           ======              ======
             Basic net income per share                                    $ 0.05              $ 0.01
                                                                           ======              ======
             Diluted net income per share                                  $ 0.05              $ 0.01
                                                                           ======              ======

             </TABLE>

         (r) Comprehensive Income and Loss

             Comprehensive income and loss presents a measure of all changes in
             shareholders' equity except for changes in equity resulting from
             transactions with shareholders in their capacity as shareholders.
             The Company's other comprehensive loss presently consists of net
             unrealized holding (losses) gains on investments available for
             sale.

         (s) Recent Accounting Pronouncements

             In July 2001, the Financial Accounting Standards Board issued
             Statement of Financial Accounting Standards No. 141 "Business
             Combinations" ("SFAS 141") and Statement of Financial Accounting
             Standards No. 142 "Goodwill and Other Intangible Assets" ("SFAS
             142"). SFAS 141 requires that the purchase method of accounting be
             used for all business combinations initiated after June 30, 2001 as
             well as all purchase method business combinations completed after
             June 30, 2001. SFAS 142 will require that goodwill and intangible
             assets with indefinite useful lives no longer be amortized, but
             instead tested for impairment at least annually. SFAS No. 142 is
             effective for fiscal years beginning after December 15, 2001, and
             the Company has elected to adopt this standard as of the beginning
             of its fiscal year January 1, 2002.

             Application of the non amortization provision is expected to result
             in an increase in net income of $607 ($0.04 per share) per year.
             The Company will perform the required impairment tests at least
             annually and at this time does not anticipate any charge to
             earnings due to impairment of goodwill.

             Furthermore, any goodwill and intangible assets determined to have
             indefinite useful lives that are acquired in a purchase business
             combination completed after June 30, 2001 will not be amortized.
             There has been no such acquisitions as of December 31, 2001.
             Goodwill and


                                       F-15

<PAGE>

          iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                 (in thousands, except share and per share data)

             intangible assets acquired in business combinations completed
             before July 1, 2001 will continue to be amortized until the
             adoption of SFAS 142. SFAS 141 will require upon adoption of SFAS
             142 that goodwill acquired in a prior purchase business combination
             be evaluated and any necessary reclassifications be made in order
             to conform to the new criteria in SFAS 141 for recognition apart
             from goodwill. Any impairment loss will be measured as of the date
             of the adoption and recognized as a cumulative effect of a change
             in accounting principles in the first interim period. SFAS 141 is
             effective immediately, except with regard to business combinations
             initiated prior to July 1, 2001 and SFAS 142 is effective January
             1, 2002.

             In June 2001, the Financial Accounting Standards Board ("FASB")
             issued SFAS 143, "Accounting for Asset Retirement Obligations."
             This statement addresses the diverse accounting practices for
             obligations associated with the retirement of tangible long-lived
             assets and the associated asset retirement costs. We plan to adopt
             this standard on June 1, 2002. We do not expect the adoption of
             this standard to have a material effect on the Company's
             consolidated financial statements.

             In August 2001, FASB issued SFAS No. 144, "Accounting for the
             Impairment or Disposal of Long-Lived Assets." This Statement
             establishes a single accounting model for the impairment or
             disposal of long-lived assets. As required by SFAS No. 144, the
             Company will adopt this new accounting standard on July 1, 2002.
             The Company believes the adoption of SFAS No. 144 will not have a
             material impact on its financial statements.

         (t) Reclassification

             Certain prior year amounts have been reclassified to conform to the
             2001 presentation.

         (u) Use of Estimates

             Management of the Company has made a number of estimates and
             assumptions relating to the reporting of assets and liabilities and
             the disclosure of contingent assets and liabilities to prepare
             these financial statements in conformity with generally accepted
             accounting principles. Actual results could differ from those
             estimates. The principal estimates used by the Company relate to
             the provision for rights to receive losses and the valuation
             allowance for net deferred tax assets. Additionally, the Company
             uses estimates to determine the effective cost of rebates in the
             corporate expense reduction program and in the valuation of long
             lived assets.

(2) Securitization of Rights to Receive

    On December 30, 1999, the Company entered into an $80,000 revolving
    securitization of the combined rights to receive of both the private label
    and the registered card dining programs. The new securitization was
    privately placed through an asset backed commercial paper conduit. The
    proceeds drawn down at closing, approximately $65,000 based on a borrowing
    base formula, were utilized to terminate and payoff $33,000 in non-recourse
    notes from a previous securitization and $27,000 then outstanding under a
    bridge loan used in the acquisition of Dining A La Card


                                       F-16

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

    ("DALC") (see note 3 for additional information). Additionally, the Company
    was required to pay a termination payment of approximately $1,100 to the
    noteholders and non-recourse partners in the prior securitization.

    Borrowing capacity under the facility is recalculated weekly based on a
    formula driven advance rate applied to the current balance of Rights to
    receive that are eligible to be securitized. The advance rate is determined
    based on recent sales trends and months on hand of rights to receive.
    Available capacity was $58,300 at December 31, 2001 and the outstanding
    borrowing was $55,500. The facility provides various restrictive covenants
    regarding collateral eligibility, concentration limitations and also
    requires the Company to maintain net worth of at least $24,000. At December
    31, 2001, September 30, 2001 and 2000 the company was in compliance with the
    covenants.

    The interest rate applicable to the facility is the rate equivalent to the
    rate (or if more than one rate, the weighted average of the rates) at which
    commercial paper ("CP") having a term equal to the related CP tranche period
    that may be sold by any placement agent or commercial paper dealer selected
    by the conduit on the first day of such CP tranche period, plus the amount
    of any placement agent or commercial paper dealer fees and commissions
    incurred or to be incurred in connection with such sale. For the three-month
    period ended December 31, 2001, the effective interest rate for the facility
    was 4.8% per annum. For the years ended September 30, 2001 and 2000, the
    effective interest rate for the facility was 8.6% and 8.9% per annum,
    respectively.

    The conduit requires that a liquidity facility be provided by an A1/P1 rated
    financial institution in the amount equal to 102% of the securitization
    amount. This liquidity facility must be renewed annually. The Company's
    primary bank, the Chase Manhattan Bank, now J.P. Morgan Chase ("Chase"),
    held the original securitization facility and also provided the liquidity
    facility in the initial year. In the fall of 2000, Chase indicated a desire
    to syndicate all or a portion of the liquidity facility, or alternatively,
    bring in a co-purchaser conduit for a percentage of the securitization. On
    December 27, 2000, the credit agreements were amended to provide an
    extension of the initial term for 90 days to March 28, 2001 to complete the
    syndication and borrowing capacity was reduced to $60,000. The credit
    agreements were further extended by Chase to the earlier of the closing of a
    co-purchase arrangement or June 28, 2001. An extension fee of $600 was paid
    to Chase on December 26, 2000.

    On May 18, 2001, the Company signed an agreement with BMO Nesbitt Burns Corp
    for it to act as a 50 percent co-purchaser on the $80,000 facility with
    Chase. The Company also simultaneously closed the amended financing
    agreement and paid additional fees of approximately $600. The credit
    agreement was renewed for a new 364-days renewable term and the overall
    facility reverted to the original amount of $80,000. There were no other
    material changes to the terms of the facility. It is management's intention
    at this time to renew the facility in May 2002. In the event that the
    syndications are not renewed, an alternative asset backed financing vehicle
    may be established or the outstanding borrowings under the securitization
    may be converted to a term loan.

    The Company previously financed its rights to receive under a revolving
    securitization originated in 1996 (the 1996 facility). Under this facility,
    $33,000 of fixed rate securities was issued in a


                                       F-17

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

    previous private placement to various third party investors. The private
    placement certificates had a five-year term before amortization of principal
    and had an interest rate of 7.4%.

    The early extinguishment of the 1996 facility in December 1999 and payoff of
    the related non-recourse notes resulted in an extraordinary charge of $1,623
    or $0.12 per share consisting of the following:


    Write-off of related unamortized financing costs      $     540
    Termination payment to noteholders
         and non-recourse partners                            1,083
                                                          ---------
    Extraordinary charge before income tax benefit            1,623
    Income tax benefit                                         (412)
    Related increase in income tax valuation allowance          412
                                                          ---------
    Net extraordinary charge                              $   1,623
                                                          =========

(3) Acquisition of Dining A La Card

    On June 30, 1999, the Company concluded the acquisition from SignatureCard,
    Inc. ("SignatureCard"), a subsidiary of Montgomery Ward & Co., Incorporated,
    of assets related to a membership discount dining program that SignatureCard
    operated under the Dining A La Card trade name and service mark. The assets
    acquired included various intellectual property rights and computer
    software, membership and merchant data, rights to receive, and, most
    significantly, a registered card platform.

    The acquisition was accounted for under the purchase method, and
    accordingly, the results of operations of the acquired company have been
    included in the consolidated results of the Company since the effective date
    of acquisition. The purchase price of $40,783 was allocated, in its
    entirety, to the rights to receive acquired. As consideration for the
    assets, the Company (1) paid SignatureCard $35,000 in cash at closing, (2)
    issued to SignatureCard 400,000 shares of the Company's common stock and (3)
    issued to SignatureCard a three-year option to purchase an additional
    400,000 shares of the Company's common stock at a price of $4.00 per share.
    The options, included in the cost of the acquired assets, were valued using
    the Black-Scholes model and assigned a value of $697. The shares issued were
    valued at $4.32 per share using an average price over the measurement
    period. Commencing December 31, 1999, SignatureCard, at any time prior to
    June 30, 2002, could require the Company to repurchase all or part of the
    400,000 shares issued at the closing at a price of $8.00 per share. The
    guaranteed value of the puts recorded was $3,200. In addition, during the
    two-year period following the closing, the Company agreed to share with
    SignatureCard certain amounts recovered from rights to receive acquired, but
    not funded at closing.

    Additionally, in connection with the acquisition of Dining A La Card, the
    Company entered into a Services Collaboration Agreement with SignatureCard.
    Under this agreement, SignatureCard was to continue to provide dining
    members from its airline frequent flyer partner programs and other marketing
    programs. It would also share, for 12.5 years, certain profits the Company
    derives from SignatureCard-generated members as well as a portion of the
    membership fee revenues generated


                                       F-18

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

    from fee paying members acquired in this transaction or subsequently through
    SignatureCard's efforts.

    On December 28, 2000, the Company executed a Payment and Termination of
    Exclusivity Agreement (the "Agreement") with GE Financial Assurance
    ("GEFA"), the successor parent of SignatureCard, to extinguish all
    obligations associated with the DALC acquisition. The Agreement also
    eliminated SignatureCard's exclusivity rights in dealing with the airline
    frequent flyer member files, and fully resolved and terminated the joint
    marketing and revenue sharing relationship. In consideration for the above,
    the Company paid GEFA $3,800 in cash and honored GEFA's right to put 400,000
    shares held by it as part of the acquisition consideration, at a value of $8
    per share. This put right was exercised and the Company paid GEFA two equal
    installments on January 17 and on February 13, 2001. The Company also
    cancelled 160,000 options of the original 400,000 issued as part of the
    original DALC purchase price, leaving SignatureCard with 240,000 options
    which must be exercised by June 30, 2002 at a strike price of $4.00.

    To finance the original acquisition of DALC, the Company obtained a $35,000
    senior secured revolving bridge loan facility from The Chase Manhattan Bank
    (from which $29,000 was drawn down at closing) and a $10,000 term loan from
    GAMI Investments, Inc., an affiliate of Equity Group Investments ("EGI")
    (which was drawn down in full).

    The Chase facility was paid off on December 30, 1999 with the proceeds of
    the $80,000 securitization (Note 2). Financing fees of $1,100 were also
    paid.

    The GAMI facility was a term loan made through an affiliate of EGI in the
    amount of $10,000 and was unsecured and subordinated to the Chase facility.
    Interest accrued on the principal amount outstanding was at the prime rate
    (as announced from time to time by Chase) plus 4%, payable monthly in
    arrears.

    The agreement with GAMI required the Company to conduct a rights offering of
    rights to purchase a new series of preferred stock to be offered to each
    existing stockholder of record on a pro rata basis. The proceeds of the
    rights offering were earmarked to repay all outstanding amounts under this
    loan.

    In connection with the rights offering, EGI, through its affiliate and the
    Company's largest stockholder, Samstock L.L.C., agreed to act as a standby
    purchaser whereby, after exercising its initial rights and any additional
    subscription privileges, would purchase any shares not otherwise subscribed
    for by other stockholders. The rights offering closed on November 9, 1999,
    and $10,000 of convertible preferred stock was issued (see Note 8). The
    proceeds were used to retire the GAMI obligation.

    The terms of this loan also required the Company to pay GAMI, at closing, a
    cash fee of $500, which was reimbursable to the Company upon the
    consummation of the rights offering and the issuance to Samstock L.L.C. of
    warrants to purchase one million shares of the Company's common stock in
    consideration of providing the loan and if it acted as a standby purchaser
    in connection with the rights offering.


                                       F-19

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

    In connection with this acquisition, the Company paid a fee for transaction
    advisory services to EGI, which is included in the cost of the acquired
    assets, of $386.

(4) Company's Move to American Stock Exchange

    On August 5, 1999, the New York Stock Exchange ("NYSE") notified the Company
    of the pending adoption of amendments to its continued listing criteria and
    of the Company's noncompliance with the new standards which required, in
    part, that both market capitalization and stockholders' equity be at least
    $50,000. In accordance with the requirements of the notification, the
    Company submitted to the NYSE its 18-month plan to come into compliance with
    the new criteria. On September 16, 1999, the NYSE advised the Company that
    its plan had been accepted and that its shares would continue to be listed
    on the Exchange.

    On April 5, 2001, the New York Stock Exchange advised the Company that while
    the Company was in compliance with the required market capitalization
    threshold it would move to de-list Transmedia Network Inc. due to its
    inability to meet the minimum stockholders' equity requirement of $50
    million by the end of the prescribed period. The Company immediately made an
    application to the American Stock Exchange ("AMEX") and effective April 16,
    2001, the common stock of Transmedia Network Inc. began trading on the AMEX
    under the ticker symbol "TMN". Subsequently, the Company changed its name
    and began to use IRN as its ticker symbol. The Company's Series A Senior
    Convertible Redeemable Preferred Stock has been trading on the OTC bulletin
    board under the symbol "TMNwp" (see note 20). During the transition period
    between the announcement by the NYSE and the switch to the AMEX, the
    Company's common stock continued to be traded on the NYSE so that no trading
    days were lost for the Company's common stock.

    Effective February 1, 2002, the Company changed its corporate name to iDine
    Rewards Network Inc. and the Common Stock of iDine Rewards Network Inc.
    began trading on the AMEX and on the Philadelphia Stock Exchange under the
    ticker symbol "IRN". The Company's Series A Senior Convertible Redeemable
    Preferred Stock also trades on the Philadelphia Stock Exchange under the new
    ticker symbol IRN Pr A as well as on the OTC bulletin board under the symbol
    "IRNwp".

(5) Internet Dining Venture

    The Company launched a new Internet dining venture in April 2000. Execution
    of the e-commerce initiative was initially executed through iDine.com, a
    newly formed wholly-owned subsidiary. The on-line product allows
    restaurateurs to create special variable incentives and promotions through
    the iDine website on specific days of the week and/or times of the day in
    order to drive incremental traffic when they need it most. Consumers have
    their choice of savings rewards in points or cash and may convert the points
    into either complimentary dining or frequent flyer miles. The website also
    allows for on-line reservations, national restaurant listings and access to
    reviews and maps. The on-line initiative was intended to broaden the amount
    and type of savings and rewards offered to consumers as well as to expand
    the participating restaurant base by providing restaurant operators with a
    full suite of yield management products. The operations of iDine.com were
    folded into IRG and TSC in its entirety in fiscal 2001 to ensure a more
    efficient distribution of the revenue management program.


                                       F-20

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

    The development of the e-commerce product was financed by corporate capital
    and through a $10,000 private placement. In the first tranche of the private
    placement which closed on May 1, 2000, the Company issued 904,303 shares of
    its common stock at $4.5625 per share and warrants to purchase an additional
    1,808,606 shares of its common stock, half of which have a per share
    exercise price of $5.93 and the other half of $7.30. The warrants will
    expire on April 28, 2005. The Company received proceeds from the share
    issuance in the amount of $4,126. The second tranche has the same price per
    share of common stock and exercise prices for the warrants as the first
    tranche. The second tranche, which closed on August 21, 2000, consisted of
    the sale of an aggregate of 1,287,480 common shares, accompanied by
    2,574,960 warrants. The Company received proceeds from this share issuance
    in the amount of $5,874. Funds obtained from the private placement were
    utilized for development of the e-commerce venture.

(6) Conversion to Registered Card and Rebranding

    Effective August 1, 2000, the Company completed its efforts to convert its
    entire restaurant portfolio and membership base to the registered card
    program. The registered card platform was acquired through the acquisition
    of Dining a La Card and subsequently enhanced by the Company, and allows
    members to register a valid credit card with the Company and then present
    the registered credit card when dining at participating restaurants in order
    to access their rewards and benefits in a discrete manner. This is in
    contrast to the Company's traditional methodology whereby a separate private
    label charge card, the Transmedia Card, was selectively issued to members
    who then used it to obtain a discount at participating restaurants. The
    private label program has been substantially phased out.

    In connection with the conversion and the launch of the on-line business,
    the Company decided to universally brand its dining programs under the iDine
    name. iDine Prime resembles the traditional fee-based, cash reward dining
    program that gives members unrestricted access to the entire restaurant
    portfolio. The iDine no-fee program provides varying levels of benefits,
    services and rewards and uses alternative currencies for awarding benefits
    such as airline miles, dining points, etc. Included in both the iDine Prime
    and iDine programs is the on-line offering of variable incentives and
    promotions at selected restaurants as discussed in Note 5 above.

(7) Franchise and License Agreements

    The Company, as franchiser, had previously entered into various ten-year
    franchising agreements to assist in its national expansion through the years
    1990 to 1995. In accordance with these agreements, franchisees were granted
    a territory with a defined minimum of full-service restaurants that accept
    certain major credit cards. The Company provided marketing, advertising,
    training and other administrative support. The franchisees were responsible
    for soliciting restaurants and cardholders, advancing consideration to the
    restaurants to obtain rights to receive food and beverage credits, and
    maintaining adequate insurance. In consideration for granting the
    franchises, the franchisees paid the Company initial franchise fees and an
    initial fee to the Company's advertising and development fund.


                                       F-21

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

    The Company ceased franchising in 1995, and in 1997, its Board of Directors
    authorized a systematic reacquisition of the franchise territories.

    On December 16, 1999, the Company acquired all the rights to receive, and
    the right to conduct business in the San Antonio and Austin sales
    territories from its franchisee, TRC. The purchase price was $950 of which
    $788 represents the cost of the franchises which has been recorded as the
    excess of cost over net assets acquired is being amortized on a
    straight-line basis over twenty years. With the acquisition of these sales
    territories, the Company completed the reacquisition of all of the sales
    territories of TRC, and the right to conduct business in Texas and settled
    any and all obligations under the franchise agreement, as amended.

    On March 31, 2000, the Company acquired all the outstanding shares of its
    New Jersey franchisee, 47K Corp, for $3,000 payable in three installments.
    The purchase method of accounting for business combinations was used. The
    operating results of the acquired company have been included in the
    consolidated results of the Company since the date of acquisition. The fair
    market value of the assets acquired was $3,368 and liabilities assumed
    totaled $368. The excess of cost over net assets acquired is being amortized
    on a straight-line basis over twenty years. Assets acquired included Rights
    to receive and other miscellaneous items. The first payment of $1,700 was
    made at closing on March 31, 2000; the second payment of $1,050 was paid on
    July 31, 2000; and the final payment was paid on March 31, 2001.

    On June 29, 2000, the Company acquired the net assets of its Washington,
    D.C. franchisee, Potomac Dining Ltd. ("Potomac"), for $4,926. The
    acquisition, accounted for under the purchase method of accounting for
    business combinations, was composed of a cash payment of $1,426, two
    subordinated convertible promissory notes totaling $2,000, and the issuance
    of 352,423 shares of the Company's common stock valued at $1,500.
    Accordingly, the operating results have been included in the Company's
    consolidated financial statements since the date of acquisition. The fair
    market value of the assets acquired, was $5,419 and liabilities assumed
    totaled $493. The excess of cost over net assets acquired is being amortized
    on a straight-line basis over twenty years. Assets acquired included Rights
    to receive and other miscellaneous items. The terms of the two $1,000
    convertible notes are as follows: (1) maturity date of June 30, 2002 and
    2003, respectively; (2) interest accrues on unpaid principal amount of the
    notes at a rate equal to the prime rate plus 1%; and (3) notes may be
    converted to common shares by noteholder upon ten business days prior
    written notice to the Company (not less than $225 in principal per each
    election to convert). On July 20, 2001, the Company gave the required 15-day
    notice to the noteholders advising them of its intention to prepay the
    notes. The principal of $2,000 and accrued interest of $15 were paid on
    August 6, 2001. Potomac did not elect to convert any portion of the
    principal into common stock.

    On June 30, 2000, the Company acquired all the assets of its Virginia
    franchisee, Stoney Creek Dining, Inc., for a termination cash payment of
    $25, which was paid on July 7, 2000.

    In addition to acquiring all former franchises, on April 11, 2000, the
    Company terminated, by mutual consent, the license agreements with
    Transmedia Asia Pacific, Inc. and Transmedia Europe, Inc. to operate the
    Transmedia dining card program in their respective territories. As a result
    of these negotiations, the Company forgave a $500 note and all accrued
    interest due from Transmedia Asia Pacific, Inc., and Transmedia Europe, Inc.
    Due to the uncertainty surrounding


                                       F-22

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

    the resolution of this matter, the Company had previously provided a reserve
    for the face value of the note and related accrued interest. Following a
    brief transition period, Transmedia Asia Pacific, Inc. and Transmedia
    Europe, Inc. ceased using the Transmedia brand name for their discount
    programs.

(8) Rights Offering

    On November 9, 1999, the Company completed a Rights Offering to existing
    shareholders resulting in the issuance of 4,149,378 convertible, redeemable
    preferred shares. The preferred shares have a dividend rate of 12%, of which
    6% is payable in cash, quarterly in arrears, and the remaining 6% accrues
    unless otherwise paid currently at the Company's discretion, until
    conversion by the holder. During the three-month transition period ended
    December 31, 2001 and the years ended September 30, 2001 and 2000, the
    Company declared dividends in the amount of $297, $1,204 and $1,079,
    respectively. Each preferred share may be converted into common stock at the
    option of the holder at any time. The initial rate of conversion was one to
    one. Subsequent conversion rates are higher to the extent of the deferred
    dividend accruing at 6% and any unpaid cash dividends. If not previously
    converted, the Company may commence redemption of the preferred shares on
    the third anniversary of the rights offering. On July 27, 2001, 13,108
    shares of preferred stock were converted to 14,405 shares of common stock.
    At December 31, 2001, the conversion rate of the preferred shares was one
    preferred share for 1.12915 common shares.

    The proceeds from the stock issuance of $10,000 were used to retire a
    $10,000 term loan, obtained from an affiliate of the Company's largest
    investor, used primarily for the DALC acquisition. Pursuant to its
    subscription privileges and as a standby purchaser for any unsubscribed
    shares, Equity Group Investments, Inc. ("EGI"), an affiliate of the
    Company's largest investor, acquired 2.84 million of the preferred shares.
    The additional investment provided EGI with the right to designate an
    additional member to the Board of Directors.

(9) Investments by Equity Group Investments, Inc.

    On March 3, 1998, the Company sold 2.5 million new-issued common shares and
    non-transferable warrants to purchase an additional 1.2 million common
    shares for a total of $10,625 to affiliates of EGI, a privately held
    investment company. Net proceeds amounted to $9,825 after transaction costs.
    The non-transferable warrants have a term of five years; one third of the
    warrants are exercisable at $6.00 per share, another third are exercisable
    at $7.00 per share and the final third are exercisable at $8.00 per share.
    As part of this strategic investment, EGI nominated and the stockholders
    elected two candidates to the Board of Directors who joined three of the
    Company's existing directors and two new independent directors.

    As more fully described in Notes 3 and 8, EGI invested an additional $6,846
    in November 1999, as a result of a Standby Purchase Agreement which they
    provided to support the Company's $10,000 rights offering and eventual
    issuance of convertible preferred stock. As consideration for the standby
    note agreement, EGI received one million warrants, exercisable over a
    five-year period, at a price of $2.48 in connection with a private
    placement. As of December 31, 2001, no warrants have been exercised.


                                       F-23

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

    As more fully described in Note 5, EGI also invested an additional $1,850 in
    August 2000.

(10) Securities Available for Sale

    Securities available for sale consist of marketable equitable securities
    that are recorded at fair value and have an aggregate cost basis of $280 at
    December 31, 2001, September 30, 2001, 2000 and 1999. Gross unrealized gains
    were $39, $47, $966, and $545 and gross unrealized losses were $172, $175,
    $0 , and $194 as of December 31, 2001, September 30, 2001, 2000 and 1999,
    respectively. Realized gains were $0, $0, $40 and $1,149 for the three
    months ended December 31, 2001 and for the years ended September 30, 2001,
    2000 and 1999, respectively. Deferred income taxes associated with the net
    unrealized gains were $0, $0, $367, and $134 at December 31, 2001 and
    September 30, 2001, 2000 and 1999, respectively.

(11) Property and Equipment

    Property and equipment consist of the following:

                                          December 31,          September 30,
                                       -----------------------------------------
                                           2001            2001         2000
                                           ----            ----         ----

     Furniture and fixtures                 452             481          612
     Office equipment                    13,681          13,277       13,838
     Website hardware and software
          applications                    2,821           2,749        1,476
     Leased equipment                       244             174          174
     Leasehold improvements                 468             443          227
                                       --------        --------     --------
                                         17,666          17,124       16,327
     Less accumulated depreciation and
          amortization                   (9,187)         (8,339)      (7,843)
                                       --------        --------     --------

     Total property and equipment         8,479           8,785        8,484
                                       ========        ========     ========

    Depreciation and amortization expense was $1,212, $4,514, $3,445 and $2,859,
    for the three months ended December 31, 2001 and the years ended September
    30, 2001, 2000 and 1999 respectively.

(12) Fair Values of Financial Instruments

    The fair value of a financial instrument is the amount at which the
    instrument could be exchanged in a current transaction between willing
    parties. The fair value of cash and cash equivalents, restricted cash,
    accounts receivable, accounts payable, accrued expenses and notes payable
    approximate the carrying amounts at December 31, 2001, September 30, 2001
    and 2000 due to the short maturity of these instruments. The fair value of
    the rights to receive approximates the carrying value due to their
    short-term nature. The fair value of the securities available for sale and
    short-term investments are based upon quoted market prices for these or
    similar instruments.


                                       F-24

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

(13) Stock Option and Warrant Summary

    Stock Option Plans

    In March 1996, the 1996 Long-Term Incentive Plan (the "1996 Plan") was
    approved for adoption by the Company's stockholders as a successor plan to
    the 1987 Stock Option and Rights Plan. The 1996 Plan was amended August 5,
    1998 to allow for non-employee directors to choose to take directors fees in
    either cash or a current or deferred stock award. In addition, the amount of
    shares available for grant under the 1996 Plan was increased to 1,505,966.
    On March 1, 2000 the Plan was amended again to increase the number of shares
    of common stock available for grant under the Plan to 2,505,966. Under the
    1996 Plan, the Company may grant awards, which may include stock options,
    stock appreciation rights, restricted stock, deferred stock, stock granted
    as a bonus or in lieu of other awards, dividend equivalents and other stock
    based awards to directors, officers and other key employees and consultants
    of the Company. Stock options granted under the 1996 Plan may not include
    more than 505,966 incentive stock options for federal income tax purposes.
    The exercise price under an incentive stock option to a person owning stock
    representing more than 10 percent of the common stock must equal at least
    110 percent of the fair market value at the date of grant. Options are
    exercisable beginning not less than one year after date of grant. All
    options expire either five or ten years from the date of grant and each
    becomes exercisable in installments of 25 percent of the underlying shares
    for each year the option is outstanding, commencing on the first anniversary
    of the date of grant.

    At December 31, 2001 and September 30, 2001, 2000 and 1999 there were
    54,791, 95,116, 614,616 and 443,716 shares available for grant under the
    1996 Stock Plan, respectively. The per share weighted average fair value of
    stock options granted during the three months ended December 31, 2001 and
    2000 (unaudited) as well as the years ended September 30, 2001, 2000 and
    1999 was approximately $2.78, $2.02, $2.05, $2.71 and $2.70, respectively,
    on the date of grant using the Black-Scholes option-pricing model with the
    following assumptions: 2001 no dividend yield, risk-free interest rate of
    4.47%, volatility of 0.6745, and expected lives ranging from five to ten
    years; 2000 no dividend yield, risk-free interest rate or 6.75%, volatility
    of 0.7553, and expected lives ranging from five to ten years and 1999 no
    dividend yield, risk-free interest rate or 6.25%, volatility of 1.0774 and
    expected lives ranging from five to ten years.

                                       F-25

<PAGE>

         iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)




The Company has elected to continue to comply with APB No. 25 to account for
stock options and accordingly, no compensation expense has been recognized in
the financial statements. Had the Company determined compensation expense based
on the fair value at the grant date for its stock options under SFAS No. 123,
the Company's net income would have been reduced to the pro forma amounts
indicated below:
<TABLE>
<CAPTION>

                                                     Three month Ended
                                                        December 31,                Years ended September 30,
                                                -------------------------     -------------------------------------
                                                                 2000
                                                        2001  (unaudited)            2001          2000       1999
                                                ----------- --------------     ------------ ------------- ----------
<S>                                                    <C>          <C>              <C>          <C>       <C>
        Net income (loss)
        As reported                                   $1,085       $  (893)          $ 1,334      $(7,778)  $(10,398)
        Pro forma                                        694        (1,478)            (786)       (8,761)   (12,581)

        Net income per Common and Common
        Equivalent Share
        As reported                                     0.05         (0.07)             0.01        (0.63)     (0.80)
        Pro forma                                       0.02         (0.11)           (0.05)        (0.70)     (0.96)
</TABLE>

         Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>

                                               Incentive Stock Options         Nonqualified Options
                                               ------------------------      -----------------------
                                                             Weighted                     Weighted
                                                             Average                      Average
                                                             Exercise                     Exercise
                                                 Shares      Price            Shares      Price
                                                 ----------- -------------    ----------- ------------
<S>                                                   <C>              <C>         <C>             <C>
        Balance at September 30, 1998                 771,668          6.57        135,000         4.83
        Granted                                       570,000          2.49             --           --
        Exercised                                          --            --             --           --
        Cancellations                                 (80,575)        12.52      (135,000)         4.83
                                                  ----------- -------------    ----------- ------------
        Balance at September 30, 1999               1,261,093          4.34             --           --
                                                  ----------- -------------    ----------- ------------
        Granted                                       971,600          3.89             --           --
        Exercised                                          --            --             --           --
        Cancellations                                (155,000)         4.01             --           --
                                                  ----------- -------------    ----------- ------------
        Balance at September 30, 2000               2,077,693          4.16             --           --
                                                  ----------- -------------    ----------- ------------
        Granted                                       691,500          2.59        150,000         3.00
        Exercised                                      (5,875)         2.88             --           --
        Cancellations                                (187,750)         4.13             --           --
                                                  ----------- -------------    ----------- ------------
        Balance at September 30, 2001               2,575,568          3.75        150,000         3.00
                                                  ----------- -------------    ----------- ------------
        Granted                                        45,000          3.60             --           --
        Exercised                                          --            --             --           --
        Cancellations                                 (4,675)          2.78             --           --
                                                  ----------- -------------    ----------- ------------
        Balance at December 31, 2001                2,615,893          3.75        150,000         3.00
                                                  =========== =============    =========== ============
</TABLE>

Nonqualified options were issued to members of the board of directors.





                                       F-26

<PAGE>

          iDINE REWARDS NETWORK INC. (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                 (in thousands, except share and per share data)

    The following table summarizes information about stock options outstanding
    and exercisable at December 31, 2001:
<TABLE>
<CAPTION>

                                          Options Outstanding                      Options Exercisable
    -------------------------------------------------------------------------------------------------------
          Range Of            Number           Remaining        Average                           Average
      Exercise Prices       Outstanding       Contractual      Exercise          Number          Exercise
                                              Life (Years)       Price        Exercisable          Price
    ------------------------------------------------------------------------------------------------------
    <S>                           <C>           <C>              <C>             <C>                <C>
    $ 2.00 to $ 2.38              360,000       6.85             2.11            267,500            2.11
    $ 2.50                        561,250       8.84             2.50            128,750            2.50
    $ 2.56 to $ 3.75              507,500       8.56             2.93            116,125            2.86
    $ 4.06 to $ 4.25              673,600       8.47             4.25            172,150            4.24
    $ 4.38 to $ 5.88              567,668       5.16             4.96            518,543            5.00
    $ 7.44 to $15.00               95,875       2.46             9.66            95,875             9.66
                        ----------------------------------------------------------------------------------

                 Total          2,765,893       7.46             3.72           1,298,943           4.17
                        ==================================================================================
</TABLE>


    At December 31, 2001, September 30, 2001, 2000 and 1999, the number of
    options exercisable were 1,298,943, 1,159,243, 1,105,343 and 901,593,
    respectively, and the weighted-average exercise price of those options was
    $4.17, $4.34, $4.77, and $5.30, respectively.

    Warrants

    A summary of warrants outstanding at December 31, 2001, is as follows:

<TABLE>
<CAPTION>
                                                                            Warrant
                                                           Warrant           Price             Expiration
                                                            Shares         Per Share              Date
                                                         ---------------------------------------------------
<S>                                                      <C>           <C>                 <C>
 Balance at September 30, 1998                              1,200,000    $ 6.00 - $8.00       March 3, 2003
      Warrants issued                                              --
                                                         ------------
 Balance at September 30, 1999                              1,200,000
                                                         ------------
      Warrants issued with Rights Offering (Note 9)         1,000,000        $2.48          November 9, 2004
      Warrants issued with Private Placement (Note 5)       1,808,606    $ 5.93 - $7.30      April 28, 2005
      Warrants issued with Private Placement (Note 5)       2,574,960    $ 5.93 - $7.30      April 28, 2005
                                                         ------------
 Balance at September 30, 2000                              6,583,566
                                                         ------------
      Warrants issued                                              --
                                                         ------------
 Balance at September 30, 2001                              6,583,566
                                                         ------------
      Warrants issued                                              --
                                                         ------------
 Balance at December 30, 2001                               6,583,566
                                                         ============

</TABLE>

As of December 31, 2001 all of the warrants are vested. No warrants have been
exercised as of December 31, 2001.


                                       F-27

<PAGE>

          iDINE REWARDS NETWORK INC (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)


(14) Income Taxes

    Income tax provision (benefit) for the three months ended December 31, 2001
    and the years ended September 30, 2001, 2000 and 1999 is as follows:

    <TABLE>
    <CAPTION>
                                  Three months ended
                                      December 31,                 Year ended September 30,
    Total Provision                     2001               2001            2000              1999
                                        ----               ----            ----              ----
                                 -----------------   ----------------------------------------------
    <S>                           <C>                 <C>               <C>               <C>
    Current
         U.S. federal                   $  33              $  68           $ --            $   --
         State and local                   38                 17             --                --
                                 -----------------   ----------------------------------------------
         Total Current                     71                 85             --                --
                                 -----------------   ----------------------------------------------
    Deferred
         U.S. federal                      --                 --             --             1,240
         State and local                   --                 --             --               760
                                 -----------------   ----------------------------------------------
         Total Deferred                    --                 --             --           $ 2,000
                                 -----------------   ----------------------------------------------
                                           --
                                 -----------------   ----------------------------------------------
         Total Provision                $  71              $  85           $ --           $ 2,000
                                 =================   ==============================================
    </TABLE>
    Income tax expense on income from continuing operations is different than
    the amount computed by applying the statutory federal income tax rate of 34%
    to income from continuing operations before income taxes because of the
    following:

    <TABLE>
    <CAPTION>
                                   Three months ended
                                      December 31,                 Year ended September 30,
                                           2001               2001              2000           1999
                                           ----      ----------------------------------------------
     <S>                                <C>                <C>              <C>           <C>
     Federal tax rate                   $   394              $ 483          $(2,643)       $(2,855)
     State and local taxes,
          net of federal
          income tax benefit                 74                 11             (307)          (336)
     Valuation allowance change            (466)              (456)           3,087          5,033
     Other                                   69                 47             (137)           158
                                        -------             ------          -------        -------
     Total                              $    71              $  85          $    --        $ 2,000
                                        =======             ======          =======        =======

     </TABLE>


                                       F-28

<PAGE>

          iDINE REWARDS NETWORK INC (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

    The tax effects of the temporary differences that give rise to significant
    portions of the deferred tax assets and liabilities at December 31, 2001,
    September 30, 2001 and 2000 are as follows:

    <TABLE>
    <CAPTION>

                                                                  December 31,     September 30,     September 30,
                                                                      2001              2001             2000
                                                                      ----              ----             ----
    <S>                                                           <C>               <C>              <C>
    Deferred tax assets:
         Reserve for rights to receive losses                     $  3,361          $  3,676         $  2,999
         Net operating loss carryforward                             4,558             4,771            7,016
         Intangible assets                                             737               628              730
         Unrealized loss on securities available for sale               52                45               --
         Alternative minimum tax                                       146               133               65
         Other                                                         334               197              259
                                                                  --------          --------         --------
               Gross deferred tax assets                             9,188             9,450           11,069
                     Less valuation allowance                       (8,757)           (9,217)          (9,260)
                                                                  --------          --------         --------
               Deferred tax assets                                     431               233            1,809
                                                                  --------          --------         --------
    Deferred tax liabilities:
         Unrealized gain on securities available for sale               --                --              367
         Deferred acquisition costs                                     --                --            1,082
         Property and equipment                                        431               233              360
                                                                  --------          --------         --------
               Deferred tax liabilities                                431               233            1,809
                                                                  --------          --------         --------
                        Net deferred tax asset                      $   --            $   --           $   --
                                                                  ========          ========         ========

    </TABLE>

    SFAS No. 109 requires that deferred tax assets be reduced by a valuation
    allowance if it is more likely than not that some portion or all of the
    deferred tax asset may not be realized. A valuation allowance was recorded
    for the full amount of the net deferred tax assets as of December 31, 2001,
    September 30, 2001 and 2000, due to the Company's recent history of losses.
    The valuation allowance at December 31, 2001, September 30, 2001 and 2000
    was $8,757, $9,217, 9,260, respectively. Of the net decrease in the
    valuation allowance for the three months ended December 31, 2001, an
    increase of $7, which was attributed to unrealized gains, was allocated to
    shareholders equity. Of the net decrease in the valuation allowance for year
    ended September 30, 2001, an increase of $413, which was attributed to
    unrealized gains, was allocated to shareholders equity. Of the net decrease
    in the valuation allowance for year ended September 30, 2000, a decrease of
    $233, which was attributed to unrealized gains, was allocated to
    shareholders equity.

    A net operating loss carryforward of $11,387 was available at December 31,
    2001. The loss will expire in various years through the year ending December
    31, 2018.


                                       F-29

<PAGE>

          iDINE REWARDS NETWORK INC (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

 (15) Leases

    The Company leases certain equipment and office space under long-term lease
    agreements. Future minimum lease payments under noncancelable leases as of
    December 31, 2001 are as follows:

                         Year ended December 31,                       Amount
                                                                       ------
                                     2002                            $  1,099
                                     2003                               1,032
                                     2004                                 487
                                     2005                                 203
                                  Thereafter                              146
                                                                     --------
                         Total minimum lease payments                $  2,967
                                                                     ========

    Rent expense charged to operations was $250, $1,101, $1,028, and $794 for
    the three months ended December 31, 2001 and the years ended September 30,
    2001, 2000 and 1999, respectively.

(16) Related Party Transactions

    The Company has a management agreement with EGI, an affiliate of Samstock,
    its largest stockholder, in which EGI provides investment advisory and other
    managerial services to the Company. The Company paid approximately $63,
    $250, $642 and $250 to EGI for these services during the three months ended
    December 31, 2001 and the years ended September 30, 2001, 2000 and 1999.

(17) Business and Credit Concentrations

    At December 31, 2001 members enrolled through the airline programs accounted
    for approximately 74% of total enrolled accounts and 47% of registered card
    sales during the three months ended December 31, 2001 compared to 74% of
    total enrolled accounts at September 30, 2001 and 46% of registered card
    sales during fiscal 2001, and 68% of total enrolled accounts at September
    30, 2000 and 40% of registered card sales during fiscal 2000.

(18) Litigation

    The Company is involved in various legal proceedings. While it is not
    currently possible to predict or determine the outcome of these proceedings,
    it is the opinion of management that the outcomes will not have a material
    adverse effect on the Company's financial position or liquidity.


                                       F-30

<PAGE>

          iDINE REWARDS NETWORK INC (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                (in thousands, except share and per share data)

(19) Commitment

    On November 16, 2001, the Company extended its relationship with Frank Felix
    & Associates, LTD ("FFA") by entering into a three-year agreement. FFA will
    continue to consult and provide information technology services and provide
    a backup servicing facility for the Company. FFA's fees are limited
    according to the fixed charges described below:

                         Year ended December 31,                     Amount
                                                                     ------
                                   2002                           $   2,850
                                   2003                               2,400
                                   2004                               1,800
                                                                  ---------
                         Total commitment                         $   7,050
                                                                  =========

    For the three months ended December 31, 2001, the Company paid $825 to FFA
    for consulting and information technology services.

(20) Subsequent Event

    On March 7, 2002, at the Company's Annual Meeting of Shareholders, the 1996
    Long-Term Incentive Plan was amended to increase the number of shares of
    common stock that may be subjected to outstanding awards at any point in
    time under the 1996 Plan by 1,000,000 shares to an aggregate of 3,505,966.


                                       F-31

<PAGE>

          iDINE REWARDS NETWORK INC (formerly TRANSMEDIA NETWORK INC.)
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                 (in thousands, except share and per share data)

(21) Selected Quarterly Financial Data (Unaudited)

         (a) Selected quarterly financial data is as follows:

<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED                                     YEAR ENDED
                              ------------------------------------------------------------------------    ---------------------
                              December 31,  September 30,    June 30,      March 31,      December 31,
                                  2001           2001          2001           2001            2000         September 30, 2001
                                  ----           ----          ----           ----            ----
------------------------------------------------------------------------------------------------------
   <S>                           <C>            <C>           <C>             <C>            <C>                <C>
   Gross dining sales:        $ 50,629         47,584        49,435         49,037          43,981             190,037
   Operating revenue:           13,794         13,759        14,011         13,666          11,750              53,186
   Operating income (loss):      1,685          1,705         1,796          1,786             449               5,736
   Net income (loss):            1,085            944           826            457            (893)              1,334
   Basic and Diluted
       earnings per share         0.05           0.04          0.03           0.01           (0.07)               0.01


                                             September 30,    June 30,      March 31,     December 31,
                                                 2000           2000          2000            1999         September 30, 2000
                                                 ----           ----          ----            ----
                             -------------------------------------------------------------------------

   Gross dining sales:                       $ 46,772        43,289         45,183          45,383             180,627
   Operating revenue:                          11,651        11,583         11,778          11,346              46,358
   Operating income (loss):                      (933)       (2,737)         1,851           1,346                (473)
   Net Income:                                 (2,357)       (4,117)           437          (1,741)             (7,778)
   Basic and diluted
       earnings per  share:                     (0.19)        (0.31)          0.01           (0.14)              (0.63)
</TABLE>


                                       F-32

<PAGE>

             iDINE REWARDS NETWORK f/k/a TRANSMEDIA NETWORK INC.
                 Schedule II - Valuation and Qualifying Accounts
                                 (in thousands)

<TABLE>
<CAPTION>


                                         Balance     Charged
                                        beginning      to                         Other       Balance, end
                                         of year     expenses     Write-offs   Adjustments      of year
                                        ---------    --------     ----------   -----------    ------------
   <S>                                   <C>          <C>         <C>           <C>            <C>
   Accounts receivable
   -------------------
   Allowance for doubtful
      member accounts:

      Three-month transition period
         ended December 31, 2001        $      15          --            (15)           --              --
                                        =========    ========     ==========   ===========    ============
      Year ended September 30, 2001     $      15         124           (124)           --              15
                                        =========    ========     ==========   ===========    ============
      Year ended September 30, 2000     $      15         338           (338)           --              15
                                        =========    ========     ==========   ===========    ============
      Year ended September 30, 1999     $      15         514           (514)           --              15
                                        =========    ========     ==========   ===========    ============
   Rights to receive
   ----------------
   Allowance for doubtful
      member accounts:

      Three-month transition period
         ended December 31, 2001        $  10,114       3,016         (3,802)           --           9,328
                                        =========    ========     ==========   ===========    ============
      Year ended September 30, 2001     $  12,745       8,586         (8,986)       (2,231)(1)      10,114
                                        =========    ========     ==========   ===========    ============
      Year ended September 30, 2000     $  14,872       7,391         (9,518)           --          12,745
                                        =========    ========     ==========   ===========    ============
      Year ended September 30, 1999     $   1,037       4,088         (2,772)       12,519(2)       14,872
                                        =========    ========     ==========   ===========    ============

</TABLE>

Notes:
------

(1)  Relates primarily to the termination of exclusivity agreement with GEFA
(2)  Acquisition of Dining A La Card

                                       F-33

<PAGE>

Item 9. Changes and Disagreements with Accountants on Accounting and Financial
--------------------------------------------------------------------------------
Disclosure
----------

None.

PART III
--------

Item 10. Directors and Executive Officers of the Registrant
-----------------------------------------------------------

THE COMPANY'S DIRECTORS ARE AS FOLLOWS:

Sheli Z. Rosenberg has been a trustee of Equity Office Properties Trust since
1997, a REIT that owns and operates commercial real estate properties. Since May
2000, Ms. Rosenberg has been the Vice Chairperson of Equity Group Investments,
L.L.C. From January 1999 until May 2000, Ms. Rosenberg was Chief Executive
Officer and President of Equity Group Investments, L.L.C., an owner and
financier of real estate and corporate investments. Ms. Rosenberg was Chief
Executive Officer and President of Equity Group Investments, Inc., from 1994
through 1998. From 1980 until 1997, Ms. Rosenberg was a principal of the law
firm of Rosenberg & Liebentritt, P.C. Since 1993, Ms. Rosenberg has been a
trustee of Equity Residential Properties Trust, a REIT that owns and operates
multifamily residential properties. Since 1993, Ms. Rosenberg has been a
director of Manufactured Home Communities, Inc., a REIT engaged in the ownership
and management of manufactured home communities. Since 2000, Ms. Rosenberg has
been a director of Dynegy Inc., an owner and trader of utility resources. Since
1997, Ms. Rosenberg has been a director of CVS Corporation, a drugstore chain.
Since 1997, Ms. Rosenberg has been a member of the board of Capital Trust, Inc.,
a specialized finance company. Since 2001, Ms. Rosenberg has been a director of
Ventas, Inc., an owner of real estate in the health care sector. Ms. Rosenberg
chairs the Governance Committee of Equity Office Properties Trust, a REIT that
owns and operates office properties. Ms. Rosenberg also currently chairs the
compensation committees of Equity Residential, Dynegy, Ventas, and Capital
Trust.

Raymond A. Gross is the Chief Executive Officer and a director of Security
Associate International, Inc. From March 2000 to June of 2001 Mr. Gross was
Chief Executive Officer and a director of Davel Communications, Inc. Prior to
that time Mr. Gross was President of OneSource, a subsidiary of Carlisle
Holdings, Inc. In 1993 Mr. Gross became President, Chief Executive Officer and
director of Alert Centre, Inc, which was subsequently sold to ADT where he
remained as the Company's Senior Vice President. From 1984 to 1993, Mr. Gross
held executive positions with national firms in the telecommunications and
computer services industries. He holds a B.S. in Accounting from Rider
University in Lawrenceville, New Jersey.

Gene M. Henderson was elected President and Chief Executive Officer of the
Company in October, 1998. From March 1997 until June 1998, Mr. Henderson was
President and Chief Executive Officer of DIMAC Marketing, a full service direct
marketing company based in St. Louis. From 1977 until March 1997, Mr. Henderson
was employed in various capacities by Epsilon Data Management, a database
marketing firm based in Burlington, Massachusetts. From 1990 until 1998, Epsilon
was a wholly-owned subsidiary of the American Express Company. Among his
positions at Epsilon, Mr. Henderson served as Chief Operating Officer and prior
to that as President of the division of Epsilon that provides services to
membership and fundraising organizations. Mr. Henderson has an undergraduate
degree from Coe College and a MBA from the University of Chicago.

F. Philip Handy is Chairman and President of Winter Park Capital Company, a
private investment firm he founded in 1980. Since October 2001, he also serves
as Chief Executive Officer of Strategic Industries, a private global
manufacturing company owned principally by Citigroup Venture Capital. From 1996
through 1999, he was a Managing Director of Equity Group Investments, Inc., an
owner and financier of real estate and corporate investments. Mr. Handy
currently serves as a director of each of Anixter International, Inc., a
provider of integrated network and cabling solutions and Wink Communications
Group Inc., a provider of interactive enhancements to television programs and
commercials.

                                       30

<PAGE>

Herbert M. Gardner has been a Senior Vice President of Janney Montgomery Scott
LLC, an investment banking firm, for more than five years. He was a director of
two predecessors of the Company from 1983 through 1987. Mr. Gardner is a
director of Nu Horizons Electronics Corp., an electronics components
distributor. He is Chairman of the Board of Supreme Industries, Inc., a
manufacturer of specialized truck bodies and shuttle buses. He is also a
director of TGC Industries, Inc., a company in the geophysical services industry
and a director of Hirsch International Corp., an importer of computerized
embroidery machines and a developer of embroidery machine application software.
Mr. Gardner is a director of Co-Active Marketing Group, Inc., a marketing and
sales promotion company, and director of Rumson-Fair Haven Bank and Trust
Company, a New Jersey state independent commercial bank and trust company.

William A. Lederer is the Chairman, Chief Executive Officer and Chief Investment
Officer of Minotaur Capital Management, Inc., an investment firm, which he
founded in 1987. Mr. Lederer also founded Art.com, an internet company focused
on the delivery of online art, custom framing and art-related products, and
managed it from its inception through its sale to Getty Images, Inc. in 1999.
Prior to founding Minotaur, Mr. Lederer was the Vice President of Research at
Sound Shore Management Inc., an institutional investment advisor. He currently
also serves as a director of the Illinois Coalition, a non-profit partisan,
private/public partnership of the top leaders from business, labor, government,
education and research, the Ravinia Festival, a pre-eminent international
festival of the performing arts, Roosevelt University, and XOR, Inc, a managed
services provider of solutions for electronic business.

John A. Ward, III formerly served as Chairman and Chief Executive Officer of
American Express Bank and head of the Travelers Cheque Group. Mr. Ward joined
American Express following a 27-year career at Chase Manhattan Bank, during
which he held various senior posts in the United States, Europe and Japan. His
previous position was that of Chief Executive Officer of Chase BankCard
Services, which he held from 1993 until 1995.

George S. Wiedemann is the Chairman of the Board and Chief Executive Officer of
Responsys Inc., a provider of on-line direct marketing technology. Prior to
that, Mr. Wiedemann was Chairman of the Board and Chief Executive Officer of
GreyDirect Marketing Group, Inc., a direct marketing agency he founded in 1979,
that specializes in multimedia direct response advertising. He also co-founded
and has served as Chairman and Chief Executive Officer of Grey Interactive and
Grey Direct e.Marketing in 1993 and 1995, respectively. Mr. Wiedemann was
elected to the Direct Marketing Association Board of Directors in 1990, and in
1999 served as Chairman of that Board.

Lester Wunderman is founder and Chief Executive Officer of Wunderman, L.L.C., a
marketing consulting company. From 1988 through 1998, he was Chairman of the
Board of Wunderman Cato Johnson, a direct marketing advertising agency which he
founded in 1958, and a director of Dentsu Wunderman Direct, an affiliated
company in Japan. From 1958 until 1988 he served as President of Wunderman Cato
Johnson. He is Chairman/Director of i-Behavior Inc., an electronic commerce
direct marketing database services company. Mr. Wunderman also serves on the
Board of Directors of the Children's Television Workshop. He was formerly a
director of The Advertising Council and of Direct Marketing Association. He was
Secretary-Treasurer of the American Association of Advertising Agencies and a
member of its Operations Committee and Board of Directors.

THE COMPANY'S EXECUTIVE OFFICERS ARE AS FOLLOWS:

Name                   Position                                             Age
----                   --------                                             ---

Gene M. Henderson      Director, President and Chief Executive Officer      54
Stephen E. Lerch       Executive Vice President and                         47
                       Chief Financial Officer

Keith E. Kiper         Vice President, General Counsel and Secretary        42
Gregory J. Robitaille  Executive Vice President                             38


                                       31

<PAGE>

Gerald J. Hughes       Senior Vice President                                35

Gene M. Henderson, President and Chief Executive Officer - Mr. Henderson became
President and Chief Executive Officer in October, 1998. From March 1997 to June
1998, Mr. Henderson was President and CEO of DIMAC Marketing in St. Louis. From
1977 to 1997, Mr. Henderson was employed at Epsilon Data Management of
Burlington, Massachusetts, ultimately becoming its Chief Operating Officer. From
1990 to 1998, Epsilon was a wholly owned subsidiary of American Express Company.
Mr. Henderson has a MBA from the University of Chicago.

Stephen E. Lerch was elected Executive Vice President and Chief Financial
Officer of the Company, as well as Vice President of TMNI International
Incorporated, Transmedia Restaurant Company Inc. and Transmedia Service Company
Inc, subsidiaries, in 1997. Previously, Mr. Lerch was a Partner at Coopers and
Lybrand LLP (now PriceWaterhouseCoopers), where he worked from 1978 to 1997. Mr.
Lerch is a graduate of the University of Notre Dame.

Keith E. Kiper was elected Secretary in 2001. He joined the Company in 2000 as
Vice President and Corporate Counsel. He is a graduate of the University of
Tulsa College of Law. Mr. Kiper was previously in private practice in Boston,
Massachusetts.

Gregory J. Robitaille became Executive Vice President of Corporate Development
in February 2001. From April 2000 to January 2001 Mr. Robitaille managed iDine's
revenue management and web site projects. From September 1995 to March 2000 Mr.
Robitaille was managing director for Equity Group Investments in the Corporate
Investments Department. From 1991 to 1995 Mr. Robitaille worked for Dain
Rauscher Corporation in Dallas, Texas. From 1985 to 1991 Mr. Robitaille was
employed by The Bank of New York in New York City. Mr. Robitaille received a BA
from Hamilton College and a MBA from Columbia University.

Gerald J. Hughes became Senior Vice President of Business Development in
November 2000, immediately prior to which he served as Vice President of
Business Development for the Company's iDine.com, Inc. subsidiary. From 1996
through 1999, Mr. Hughes was a management consultant with Deloitte Consulting.
Previously he worked as a commercial lending officer for Bank of Montreal and
Union Bank of Switzerland. Mr. Hughes holds an A.B. from Dartmouth College and
an M.B.A. from the University of Chicago.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

The Company believes that, during the three-month transitional period ended
December 31, 2001, all filing requirements under Section 16(a) of the Securities
Exchange Act of 1934 applicable to its officers, directors, and greater than ten
percent stockholders were complied with on a timely basis.

Item 11. Executive Compensation and Related Information
-------------------------------------------------------

Summary Compensation Table

The following table sets forth certain information concerning compensation paid
for the three-month transition period ended December 31, 2001 and for each of
the last three years ended September 30, 2001, 2000 and 1999, respectively, to
(i) each person that served as the Company's Chief Executive Officer during the
three months ended December 2001 and (ii) the four most highly compensated
executive officers of the Company (the "Named Executive Officers"):


                                       32

<PAGE>
<TABLE>
<CAPTION>
                                                                                                  Long-Term
                                                                                                 Compensation
                                                                                                    Awards
                                                                                                 ------------
                                                                Annual Compensation               Securities
                                                    -----------------------------------------     Underlying         All Other
                                                    Salary         Bonus         Other Annual    Options/Sars       Compensation
Name and Principal Position          Year             ($)           ($)          Compensation         (#)                ($)
---------------------------          ----           ------         -----         -------------   ------------       ------------
<S>                                  <C>           <C>           <C>                 <C>           <C>             <C>
                                     Transition
Gene M. Henderson (1)                Period        $100,962      $    --             $ --               --          $  3,000 (3)
President and Chief                  2001           365,385       362,406              --               --            12,000(3)
Executive Officer                    2000           350,000            --              --          250,000(2)         12,000(3)
                                     1999           320,685       175,000              --          390,000(4)         64,816(5)

                                     Transition
Stephen E. Lerch (1)                 Period          67,308            --              --               --             3,000(3)
Executive Vice President             2001           240,192       115,927              --           50,000            12,000(3)
and Chief Financial Officer          2000           222,500        45,000              --          125,000(6)         12,000(3)
                                     1999           200,000            --              --               --            37,000(7)

                                     Transition
Gregory J. Robitaille (1)            Period          58,692            --              --               --                --
Executive Vice President             2001           215,077        90,900              --          300,000                --
                                     2000            68,654            --              --               --                --
                                     1999                --            --              --               --                --

                                     Transition
Gerald J. Hughes (1)                 Period          56,538            --              --               --            10,923 (8)
Senior Vice President                2001           205,385        95,485              --          200,000                --
                                     2000            63,750            --              --               --                --
                                     1999                --            --              --               --                --

                                     Transition
Keith E. Kiper (1)                   Period          43,269                            --               --             3,000(3)
Vice President, General              2001           146,031        58,650              --               --            41,590(9)
Counsel and Secretary                2000            37,692                            --           20,000             3,000(3)
                                     1999                --            --              --               --                --
</TABLE>
--------------------------------------------------------------------------------
(1) See "Employment Contracts, Termination of Employment and Change-in-Control
    Arrangements" for a summary of the terms of employment arrangements with the
    Company.

(2) Represents options to purchase 250,000 shares at an exercise price of $4.25
    per share, which were granted under the 1996 Plan and expire in June 2010.

(3) Represents $1,000 per month car allowance.

(4) Includes (i) options to purchase 250,000 shares at an exercise price of
    $2.00 per share, which were granted under the 1996 plan and expire in
    October 2008, (ii) options to purchase 100,000 shares at an exercise price
    of $2.375 per share, which were granted under the 1996 Plan and expire in
    October 2008 and (iii) 40,000 shares of restricted stock granted under the
    1996 Plan which fully vested in July 2001.

(5) Includes (i) $53,816 in moving expenses and (ii) an $1,000 per month car
    allowance.

(6) Includes (i) options to purchase 50,000 shares at an exercise price of
    $2.5625 per share, which were granted under the 1996 Plan and expire in
    January 2010 and (ii) options to purchase 75,000 shares at an exercise price
    of $4.25 per share, which were granted under the 1996 Plan and expire in
    June 2010.

(7) Includes (i) $25,000 in moving expenses and (ii) a $1,000 per month car
    allowance.

(8) Includes (i) $7,923 of moving expenses and (ii) a $1,000 per month car
    allowance.

(9) Includes (i) $29,590 of moving expenses and (ii) a $1,000 per month car
    allowance.


                                       33

<PAGE>

Options Granted

No employee stock options or stock appreciation rights were awarded to the named
executive officers of the Company during three-month transition period ended
December 31, 2001.

            Aggregated Option Exercises in the Transition Period and
                        December 31, 2001 Option Values

The following table provides information, with respect to the Named Executive
Officers, concerning options held as of December 31, 2001.

<TABLE>
<CAPTION>
                                                            Number of
                                                      Securities Underlying                    Value of Unexercised
                           Shares                       Unexercised Options                  In-The-Money Options at
                          Acquired      Value      Held at December 31, 2001 (#)             December 31, 2001 ($) (1)
                         on Exercise   Realized  ---------------------------------      ---------------------------------
Name                         (#)         ($)       Exercisable     Unexercisable          Exercisable     Unexercisable
-------------------------------------------------------------------------------------------------------------------------
<S>                      <C>           <C>           <C>             <C>                    <C>             <C>
Gene M. Henderson            --           --         325,000         275,000                595,000         215,000
Stephen E. Lerch             --           --          80,000         150,000                 24,219         165,156
Gregory J. Robitaille        --           --          75,000         225,000                134,063         402,188
Gerald J. Hughes             --           --          50,000         150,000                 92,500         277,500
Keith E. Kiper               --           --           5,000          15,000                    250             750
</TABLE>

(1) The value of "in-the-money" stock options represents the positive spread
between the exercise price of options and the fair market value of the
underlying shares on December 31, 2001, which was $4.35.

               Employment Contracts, Termination of Employment and
                         Change-in-Control Arrangements

The following is a summary of the employment arrangements with the executive
officers named above:

Gene M. Henderson. In October 1998, the Board elected Mr. Henderson President
and Chief Executive Officer of the Company. The terms of his employment include:
(i) a base salary of $375,000 per year (subject to adjustment annually in
October of each year, and a bonus of up to 100% of his base salary; (ii) the
granting in 1998 of ten-year options to purchase 250,000 shares of common stock
at an exercise price of $2.00, and (iii) the granting in 1998 of ten-year
options to purchase an additional 100,000 shares of common stock at an exercise
price of $2.375. All the options vest ratably over four years following their
date of grant. The vesting schedule of the options may be accelerated, however,
if the Company's stock price achieves certain closing price levels for 20
consecutive trading days as follows: (a) 50% of the options vest if the stock
price is at or above $12.00 per share; (b) an additional 25% of the options vest
if the stock price is at or above $16.00 per share; and (c) 100% of the options
vest if the stock price is at or above $20.00 per share. The terms of Mr.
Henderson's employment restrict him from competing against the Company for a
one-year period following the termination of his employment with the Company and
also provide that Mr. Henderson will be entitled to receive a lump sum payment
equal to 18 months base salary from the employment termination date plus the
greater of his guaranteed bonus for that year (if any) or the pro rata bonus of
the maximum bonus for that year payable upon the occurrence of a
"Change-in-Control" (as defined in the 1996 Plan). In addition, upon a
Change-in-Control, all of Mr. Henderson's stock options will vest as provided in
the 1996 Plan.

Stephen E. Lerch. Effective January 1, 2001, Mr. Lerch received a base salary of
$250,000. The terms of his employment also provide that Mr. Lerch will be
entitled to receive a lump sum payment of $500,000 in the event of a
"change-of-control" of the Company in which he was not offered a comparable
position of comparable salary. The terms of his engagement letter do not define
a "change-of-control."

Gregory J. Robitaille. Under the terms of his employment, he receives a base
salary of $218,000. Mr. Robitaille's employment agreement provides that for a
one-year period following the termination of his employment for other than
cause, upon the occurrence of a "Change-in-Control" (as defined in the 1996
Plan)


                                       34

<PAGE>

or diminution in his duties, he will be entitled to receive a lump sum payment
equal to 12 months base salary from the employment termination date plus the
greater of his guaranteed bonus for that year (if any) or the pro rata bonus of
the maximum bonus for that year. He was also granted in 2001, ten-year options
to purchase 250,000 shares of common stock at an exercise price of $2.50. All
the options vest ratably over four years following their date of grant.

Gerald J. Hughes. Under the terms of his employment, he receives a base salary
of $210,000 and was granted in 2001, ten-year options to purchase 200,000 shares
of common stock at an exercise price of $2.50. All the options vest ratably over
four years following their date of grant.

Keith E. Kiper. On April 25, 2000, joined the Company as Vice President and
Corporate Counsel. On March 1, 2001, Mr. Kiper was elected Secretary of the
Company. Under the terms of his employment, he receives the following: (i) a
base salary of $180,000; (ii) options to purchase 10,000 shares of common stock
at an exercise price of $4.375; (iii) options to purchase 10,000 shares of
common stock at an exercise price of $4.25; and (iv) upon the occurrence of a
"Change-in-Control" (as defined in the 1996 Plan), Mr. Kiper will be entitled to
receive a lump sum payment equal to 12 months base salary from the employment
termination date plus the greater of his guaranteed bonus for that year (if any)
or the pro rata bonus of the maximum bonus for that year payable. In addition,
upon a Change-in-Control, all of Mr. Kiper's stock options will vest as provided
in the 1996 Plan.

Compensation of Directors

For 2001, The Company paid each director, who was not a full-time employee, an
annual stipend of $18,000 in quarterly installments in arrears on January 1,
April 1, July 1 and October 1. Full-time employees of the Company who also
served as directors did not receive compensation for attending board meetings.
The 1996 Plan allows non-employee directors to elect to take their directors'
fees in either cash or as deferred stock awards. The Company also paid each
member of the Audit Committee and Compensation Committee an attendance fee of
$1,000 for each meeting of the respective committee attended by such member. The
Chairperson of the Board of Directors received options to purchase 150,000
shares of common stock at an exercise price of $3.00 per share. These options
vest ratably over a three-year period, at the end of each year. For the year
ending December 31, 2002, the compensation for each director, who is not a
full-time employee, will be raised to an annual stipend of $30,000 and paid in
quarterly installments in arrears on January 1, April 1, July 1 and October 1 of
each year. The 1996 Plan allows non-employee directors to elect to take their
directors' fees in either cash or as deferred stock awards. On the day after
each of the Company's annual meetings, each person who is a non-employee
director on any such day will automatically receive a non-qualified stock option
under the 1996 Plan relating to the purchase of 10,000 shares of common stock at
the market price at the close of the next trading day after the annual meeting.

Compensation Committee Interlocks and Insider Participation in Compensation
Decisions

No interlocking relationship exists between any member of the Company's Board of
Directors or Compensation Committee and any member of the Board of Directors or
compensation committee of any other company. Furthermore, no member of the
Compensation Committee is an officer or former officer of the Company.

Since 1997, the Company has retained the services of Equity Group Corporate
Investments to perform financial consulting and investment advisory services for
it. Sheli Z. Rosenberg, who became a director in November, 2000, is Vice
Chairperson of Equity Group Corporate Investments. The Company believes that
such services have been on terms no less favorable to the Company than could
have been obtained from other independent parties. During the year ended
September 30, 2001, the Company paid fees and expenses to Equity Group Corporate
Investments in the amount of $250,000 and anticipates paying fees in the amount
of $250,000 over the next year, $62,500 of which was paid during the three-month
transition period ended December 31, 2001.


                                       35

<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

Except as otherwise specified, the following table sets forth certain
information, as of March 7, 2002, regarding ownership of the Company's voting
stock by each person who is known by the Company to own beneficially more than
5% of its voting stock. Except as otherwise specified, the named beneficial
owner has sole voting and investment power with respect to the shares
beneficially owned by him.

<TABLE>
<CAPTION>
                                                           Amount of
                                          Amount of        Series A           Options and                              Percent of
                                        Common Stock     Preferred Stock        Warrants                                 Total
                                        Beneficially      Beneficially     Exercisable Within      Total Voting          Voting
Name and Address                            Owned           Owned(1)            60 Days                Stock             Stock
----------------                            -----           --------            -------                -----             -----
<S>                                       <C>              <C>                <C>                 <C>         <C>        <C>
Samstock, L.L.C. .......................  2,322,952        2,692,748          2,966,618(2)        9,269,424(3)(4)        40.3%
Halmostock Limited Partnership              438,305          206,204            192,858(5)
  (see footnote 4 for addresses)

Minotaur Partners II, L.P. .............  1,194,521               --          2,389,042           3,583,563(6)           20.2%
ValueVision International Inc.              219,178               --            438,356             657,534(6)
Dominic Mangone                             119,589               --            239,178             358,767(6)
Raymond Bank                                 10,959               --             21,918              32,877(6)
   (See footnote 7 for addresses)
</TABLE>

Except as otherwise specified, the following table sets forth certain
information regarding beneficial ownership of the Company's voting stock (common
stock, par value $.02 per share and Series A convertible preferred stock, par
value $.10 per share together), as of March 7, 2002, by directors of the
Company, the named executive officers named in the "Summary Compensation Table"
and the executive officers and directors as a group, and includes options and
warrants to purchase shares of common stock which will become exercisable within
60 days of March 7, 2002. Except as otherwise indicated, each such stockholder
has sole voting and investment power with respect to the shares beneficially
owned by such stockholder.

<TABLE>
<CAPTION>
                                                                           Common Stock
                                                           Amount of       Options and
                                          Amount of         Series A         Warrants                           Percent of
                                        Common Stock     Preferred Stock    Exercisable                           Total
                                        Beneficially      Beneficially        Within         Total Voting         Voting
Name and Address                            Owned           Owned(1)          60 Days            Stock            Stock
----------------                            -----           --------          -------            -----            -----
<S>                                         <C>             <C>              <C>             <C>                  <C>
Sheli Z. Rosenberg ....................     70,588           --               50,000          120,588(7)           *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
North Miami, Florida  33181

Gene M. Henderson .....................    244,795            46,613         440,610          732,018(8)          3.6%
c/o Transmedia Network Inc.
290 Park Ave. South
New York, New York 10010

Herbert M. Gardner ....................    309,743            91,486         111,663          526,682(9)          2.6%
c/o Transmedia Network Inc.
290 Park Ave. South
New York, New York 10010
</TABLE>


                                       36

<PAGE>

<TABLE>
<CAPTION>
                                                                           Common Stock
                                                           Amount of       Options and
                                          Amount of         Series A         Warrants                           Percent of
                                        Common Stock     Preferred Stock    Exercisable                           Total
                                        Beneficially      Beneficially        Within         Total Voting         Voting
Name and Address                            Owned           Owned(1)          60 Days            Stock            Stock
----------------                            -----           --------          -------            -----            -----
<S>                                         <C>             <C>              <C>             <C>                  <C>
Raymond A. Gross ......................         --                --              --               --              *
c/o iDine Rewards Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181

F. Philip Handy .......................    154,700            48,073         104,843          321,406(10)         1.6%
c/o iDine Rewards Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181

William A. Lederer ....................  1,202,521                --       2,399,042        3,601,563(11)        16.2%
620 Lake Road
Lake Forest, IL 60045

Stephen E. Lerch ......................         --                --         105,000          105,000(12)           *
c/o iDine Rewards Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181

John A. Ward, III .....................     38,266                95          41,849           80,222(13)           *
c/o iDine Rewards Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181

George S. Wiedemann ...................     15,959             5,622          84,808          120,179(14)           *
c/o iDine Rewards Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181

Lester Wunderman ......................     26,000                --          87,164          126,954(15)           *
c/o iDine Rewards Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181

Gregory J. Robitaille .................     40,036             7,009         200,610          247,655(16)         1.2%
c/o iDine Rewards Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181

Gerald J. Hughes ......................      5,500             1,000         100,000          106,500(17)           *
c/o iDine Rewards Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181

Keith E. Kiper ........................      5,000                             7,500           12,500(18)           *
c/o iDine Rewards Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181
</TABLE>


                                       37

<PAGE>

<TABLE>
<CAPTION>
                                                                           Common Stock
                                                           Amount of       Options and
                                          Amount of         Series A         Warrants                           Percent of
                                        Common Stock     Preferred Stock    Exercisable                           Total
                                        Beneficially      Beneficially        Within         Total Voting         Voting
Name and Address                            Owned           Owned(1)          60 Days            Stock            Stock
----------------                            -----           --------          -------            -----            -----
<S>                                         <C>             <C>              <C>             <C>                  <C>
All directors and executive officers
as a group (14 persons) ..............   2,220,688        227,051          3,994,319           6,501,277          27.3%
</TABLE>
-------------------
* Represents less than 1%.

(1)   As of March 7, 2002, each share of Series A convertible preferred stock is
      convertible into 1.12915 shares of common stock at the option of the
      holder.

(2)   Includes 347,768 of the 3,040,516 shares of common stock issuable upon the
      conversion of the 2,692,748 shares of Series A convertible preferred stock
      held by Samstock, L.L.C. (representing the additional voting power
      Samstock, L.L.C. would gain upon conversion of it shares of Series A
      convertible preferred stock due to the conversion rate of 1.12915 shares
      of common stock per each share of Series A convertible preferred stock
      converted).

(3)   Includes 449,739 shares of common stock which are owned by certain
      stockholders, but which are subject to the voting and disposition
      restrictions contained in the Amended and Restated Agreement Among
      Stockholders, dated as of March 3, 1998, among Samstock, L.L.C. and
      certain stockholders, pursuant to which such stockholders beneficially
      owned shares of common stock are subject to shared voting and disposition
      power with Samstock, L.L.C., which is an affiliate of Equity Group
      Corporate Investments of which Sheli Z. Rosenberg is Vice Chairperson. See
      "Certain Relationships and Related Transactions".

(4)   Based in part: (i) upon information set forth in Amendment No. 5 to the
      Schedule 13D filed on December 22, 2000 by Samstock, L.L.C., (ii) other
      information available to the Company and (iii) pursuant to a Stockholders'
      Agreement (the "Stockholders' Agreement"), dated as of March 3, 1998,
      among the referenced entities. According to the Stockholders' Agreement,
      each entity appointed Samstock, L.L.C. its true and lawful attorney and
      proxy, during the period of such Stockholders' Agreement, to appear for,
      represent, and vote the shares of common stock held by each stockholder,
      as defined in the Stockholders' Agreement. See "Certain Relationships and
      Related Transactions". The addresses for these entities are as follows:
      Samstock, L.L.C. at Two North Riverside Plaza, Chicago, Illinois 60606 and
      Halmostock Limited Partnership at 21 W. Las Olas Boulevard, Fort
      Lauderdale, Florida 33301.

(5)   Includes 26,631 of the 232,835 shares of common stock issuable upon the
      conversion of the 206,204 shares of Series A convertible preferred stock
      held by Halmostock Limited Partnership (representing the additional voting
      power Halmostock Limited Partnership would gain upon conversion of it
      shares of Series A convertible preferred stock due to the conversion rate
      of 1.12915 shares of common stock per each share of Series A convertible
      preferred stock converted) and (ii) warrants to purchase 166,227 shares of
      common stock, which are exercisable in equal parts at $6.00 per share,
      $7.00 per share and $8.00 per share and expire in March 2003.

(6)   Based in part (i) upon information set forth in Amendment No. 1 to the
      Schedule 13D filed on August 24, 2000 and (ii) pursuant to a Stock
      Purchase and Sale Agreement, dated as of April 28, 2000. See "Certain
      Relationships and Related Transactions". The addresses for these entities
      are as follows: Minotaur Partners II, L.P. at 620 Lake Road, Lake Forest,
      Illinois 60045; ValueVision International Inc. at 6740 Shady Oak Road,
      Eden Prairie, Minnesota 55344; Dominic Mangone at 6N 271 James Court,
      Medinah, Illinois 60157; and Raymond Bank at P.O. Box #106, Butler,
      Maryland 21023.

(7)   Includes for Ms. Rosenberg 70,588 Shares of common stock beneficially
      owned by Ms. Rosenberg, (ii) options to purchase 50,000 shares of common
      stock at a price of $3.00 per share.

(8)   Includes for Mr. Henderson (i) 244,795 shares of common stock beneficially
      owned by Mr. Henderson, (ii) 46,613 shares of Series A convertible
      preferred stock beneficially owned by Mr. Henderson, (iii) options to
      purchase 325,000 shares of common stock, (iv) 109,590 Shares of common
      Stock which may be acquired upon exercise of outstanding warrants at
      exercise prices in equal parts at $5.93125 per share and $7.30 per share
      which expire in April 2005 and (v) 6,020 of the 52,633 shares of common
      stock issuable upon the conversion of the 46,613 shares of Series A
      convertible preferred stock held by Mr. Henderson (representing the
      additional voting power Mr. Henderson would gain upon conversion of his
      shares of Series A convertible preferred stock due to the conversion rate
      of 1.12915 shares of common stock per each share of Series A convertible
      preferred stock converted).

                                       38

<PAGE>

(9)   Includes for Mr. Gardner (i) 309,743 shares of Common stock beneficially
      owned by Mr. Gardner, (ii) 91,486 shares of Series A convertible preferred
      stock beneficially owned by Mr. Gardner, (iii) options to purchase 50,000
      shares of common stock, (iv) 30,684 shares of Common stock which may be
      acquired upon exercise of outstanding warrants at exercise prices in equal
      parts at $5.93125 per share and $7.30 per share, (v) 11,815 of the 103,301
      shares of common stock issuable upon the conversion of the 91,486 shares
      of Series A convertible preferred stock held by Mr. Gardner (representing
      the additional voting power Mr. Gardner would gain upon conversion of his
      shares of Series A convertible preferred stock due to the conversion rate
      of 1.12915 shares of common stock per each share of Series A convertible
      preferred stock converted), and (vi) 13,945 shares of common stock that
      Mr. Gardner may elect to take as a deferred stock award under the 1996
      Plan in lieu of his annual director's fees. Does not include an aggregate
      of 18,174 shares of stock and warrants to purchase common stock held by
      Mr. Gardner's wife.

(10)  Includes for Mr. Handy (i) 154,700 shares of common stock beneficially
      owned by Mr. Handy, (ii) 48,073 shares of Series A convertible preferred
      stock beneficially owned by Mr. Handy, (iii) options to purchase 23,000
      shares of common stock, (iv) warrants to purchase 56,470 shares of common
      stock, which are exercisable in equal parts at $6.00 per share, $7.00 per
      share and $8.00 per share and expire in March 2003, (v) 6,209 of the
      54,283 shares of common stock issuable upon the conversion of the 48,073
      shares of Series A convertible preferred stock held by Mr. Handy
      (representing the additional voting power Mr. Handy would gain upon
      conversion of his shares of Series A convertible preferred stock due to
      the conversion rate of 1.12915 shares of common stock per each share of
      Series A convertible preferred stock converted), and (vi) 19,164 shares of
      common stock that Mr. Handy may elect to take as a deferred stock award
      under the 1996 Plan in lieu of his annual director's fees. Does not
      include 117,647 shares of common stock, 36,559 shares of Series A
      convertible preferred stock and warrants to purchase 56,470 shares of
      common stock, which are exercisable in equal parts at $6.00 per share,
      $7.00 per share and $8.00 per share and expire in March 2003, all of which
      are held indirectly in Trust.

(11)  Includes for Mr. Lederer (i) 1,202,521 shares of common stock beneficially
      owned by Minotaur Partners II, L.P. and (ii) options to purchase 10,000
      shares of common stock, and (iii) 2,389,042 shares of common stock which
      may be acquired upon exercise of outstanding warrants beneficially owned
      by Minotaur Partners II, L.P. at exercise prices in equal parts of
      $5.93125 and $7.30 per share, which warrants expire in April 2005. Mr.
      Lederer may be deemed to be beneficial owner of the shares and warrants
      beneficially owned by Minotaur Partners II, L.P. because he is a
      stockholder, director and principal of the manager of the general partner
      of Minotaur Partners II, L.P., a member of the general partner of Minotaur
      Partners II, L.P., a Chairman, Chief Executive Officer and Chief
      Investment Officer of Minotaur Capital Management, Inc., which is a
      limited partner of Minotaur Partners II, L.P. Mr. Lederer disclaims
      beneficial ownership of any such shares except to the extent of his
      pecuniary interest therein.

(12)  Includes for Mr. Lerch options to purchase 105,000 shares of common stock.

(13)  Includes for Mr. Ward (i) 38,266 shares of common stock owned by Mr. Ward,
      (ii) 21,918 shares of common stock which may be acquired upon exercise of
      outstanding warrants at exercise prices in equal parts at $5.93125 per
      share and $7.30 per share, which warrants expire in April 2005, (iii) 12
      of the 107 shares of common stock issuable upon the conversion of the 95
      shares of Series A convertible preferred stock held by Mr. Ward
      (representing the additional voting power Mr. Ward would gain upon
      conversion of his shares of Series A convertible preferred stock due to
      the conversion rate of 1.12915 shares of common stock per each share of
      Series A convertible preferred stock converted), and (iv) 9,431 shares of
      common stock that Mr. Ward may elect to take as a deferred stock award
      under the 1996 Plan in lieu of his annual director's fees, and (iv)
      options to purchase 10,500 shares of common stock.

(14)  Includes for Mr. Wiedemann (i) 15,959 shares of common stock owned by Mr.
      Wiedemann, (ii) 5,622 shares of Series A convertible preferred stock
      beneficially owned by Mr. Wiedemann, (iii) options to purchase 43,000
      shares of common stock, (iv) 21,918 shares of common stock which may be
      acquired upon exercise of outstanding warrants at exercise prices in equal
      parts at $5.93125 per share and $7.30 per share, which warrants expire in
      April 2005, (v) 726 of the 6,348 shares of common stock issuable upon the
      conversion of the 5,622 shares of Series A convertible preferred stock
      held by Mr. Wiedemann (representing the additional voting power Mr.
      Wiedemann would gain upon conversion of his shares of Series A convertible
      preferred stock due to the conversion rate of 1.12915 shares of common
      stock per each share of Series A convertible preferred stock converted),
      and (vi) 19,164 shares of common stock that Mr. Wiedemann may elect to
      take as a deferred stock award under the 1996 Plan in lieu of his annual
      director's fees.

(15)  Includes for Mr. Wunderman (i) 26,000 shares of common stock owned by Mr.
      Wunderman, (ii) options to purchase 68,000 shares of common stock and
      (iii) 19,164 shares of common stock that Mr. Wunderman may elect to take
      as a deferred stock award under the 1996 Plan in lieu of his annual
      director's fees.

(16)  Includes for Mr. Robitaille (i) 40,036 shares of common stock owned by Mr.
      Robitaille, (ii) 43,836 shares of common stock which may be acquired upon
      exercise of outstanding warrants at exercise prices in equal parts at
      $5.93125 per share and $7.30 per share, which warrants expire in April
      2005, (iii) warrants to purchase 6,774 shares of common stock, which


                                       39

<PAGE>

      are exercisable in equal parts at $6.00 per share, $7.00 per share and
      $8.00 per share and expire in March 2003, (iv) 905 of the 7,914 shares of
      common stock issuable upon the conversion of the 7,009 shares of Series A
      convertible preferred stock held by Mr. Robitaille (representing the
      additional voting power Mr. Robitaille would gain upon conversion of his
      shares of Series A convertible preferred stock due to the conversion rate
      of 1.12915 shares of common stock per each share of Series A convertible
      preferred stock converted), and (v) options to purchase 150,000 shares of
      common stock.

(17)  Includes for Mr. Hughes (i) 5,500 shares of common stock owned by Mr.
      Hughes, (ii) 129 of the 1,129 shares of common stock issuable upon the
      conversion of the 1,000 shares of Series A convertible preferred stock
      held by Mr. Hughes (representing the additional voting power Mr. Hughes
      would gain upon conversion of his shares of Series A convertible preferred
      stock due to the conversion rate of 1.12915 shares of common stock per
      each share of Series A convertible preferred stock converted), and (iii)
      options to purchase 100,000 shares of common stock.

(18)  Includes for Mr. Kiper (i) 7,500 shares of common stock owned by Mr.
      Kiper, (ii) options to purchase 5,000 shares of common stock. Does not
      include an aggregate of 3,000 shares of stock held by Mr. Kiper's wife in
      a 401(k) account.

Item 13. Certain Relationships and Related Transactions
-------------------------------------------------------

Financial Advisors

See "Compensation Committee Interlocks and Insider Participation in Compensation
Decisions" under Item 11.

Agreements

The Company and certain of its stockholders are parties to several agreements
which affect the voting and disposition of the Company's voting securities. The
principal terms of these agreements are as follows:

Until Samstock, L.L.C., Halmostock Limited Partnership and their affiliates
beneficially own less than an aggregate 15% of the combined voting power of the
Company's outstanding voting securities, Samstock, L.L.C. will be entitled to
designate two representatives, reasonably acceptable to the independent
directors of the Company, to serve on the Board of Directors or one such
representative, in the event that Samstock, L.L.C., Halmostock Limited
Partnership and their affiliates collectively beneficially own less than 15%,
but at least 5%, of the combined voting power of the Company's outstanding
voting securities. These arrangements will terminate if Samstock, L.L.C.,
Halmostock Limited Partnership and their affiliates collectively cease to own
voting securities of the Company representing an aggregate of 5% of the combined
voting power of the Company. Two representatives designated by Samstock, L.L.C.
and Halmostock Limited Partnership are Sheli Z. Rosenberg and Raymond A. Gross.

Samstock, L.L.C. has the right to designate, without the consent or approval of
the independent directors of the Company, one additional representative to serve
on the Board of Directors for a period of three years or, if earlier, until such
time as Samstock, L.L.C., Halmostock Limited Partnership and their affiliates
beneficially own less than an aggregate 15% of the combined voting power of the
Company's outstanding voting securities.Samstock, L.L.C. and Halmostock Limited
Partnership agreed that, except for certain exceptions, Samstock, L.L.C. and
Halmostock Limited Partnership would vote their securities with respect to the
election or removal of directors of the Company either: (a) in accordance with
the recommendations of a majority of the disinterested directors of the Company
or (b) in the same proportions as the owners of record of the Company's shares
of common stock, other than those beneficially owned by Samstock, L.L.C. and
Halmostock Limited Partnership, vote their shares of common stock; provided that
Samstock, L.L.C., Halmostock Limited Partnership and their affiliates may vote
in favor of the election or retention of the one or two directors designated by
Samstock, L.L.C. as described in the preceding paragraph.

Certain stockholders, who together are the beneficial owners of 449,739 shares,
or 2.3% of the outstanding shares of common stock of the Company, and Halmostock
Limited Partnership, who together with Samstock, L.L.C. is the beneficial owner
of 9,269,424 shares, or 40.3% of the outstanding shares of voting securities of
the


                                       40

<PAGE>

Company, have agreed to grant Samstock, L.L.C. (a) a proxy to vote all of their
shares, (b) the right of first refusal on all public and private sales of their
shares, and (c) certain rights to require them to sell all of their share
holdings in the event Samstock, L.L.C. sells its shares; provided, however, that
                                                         --------  -------
Halmostock Limited Partnership will not be required to sell 92,000 shares of
common stock at a share price of $7.11 or less. This arrangement will terminate
if Samstock, L.L.C. and their affiliates cease to own voting securities
representing at least 5% of the combined voting power of the Company.

Minotaur Partners II, L.P., ValueVision International Inc., Dominic Mangone and
Raymond Bank, who together beneficially own 4,632,741 shares of Voting
Securities, or 20.2% of the outstanding shares of the voting securities of the
Company, agreed that they will not take any of the following actions prior to
August 23, 2005 without the approval of a majority of the Company's
disinterested directors, subject to specified limited exceptions: (a) increase
their ownership of voting securities beyond the combined voting power of all
voting securities represented by the shares and the warrants they each
beneficially own, respectively; provided, however, that the foregoing limit
                                --------  -------
shall not prohibit certain purchases of voting securities directly from the
Company and certain repurchases of voting securities by the Company; (b) solicit
proxies or assist any other person or otherwise become a "participant" in the
"solicitation" of proxies in opposition to the recommendation of a majority of
disinterested directors; (c) form, join or participate in any other way in a
partnership, pooling agreement, syndicate, voting trust or other "group," or
enter into any agreement or arrangement or otherwise act in concert with any
other person, for the purpose of acquiring, holding, voting or disposing of
voting securities of the Company; (d) assist, encourage or induce any person to
bid for or acquire outstanding voting securities of the Company unless the
completion of the transaction requires the approval of the Board of Directors
and the Company obtains a suitable confidentiality and standstill agreement from
the party; or (e) take any action to seek to circumvent any of the foregoing
limitations.

Until Minotaur Partners II, L.P., ValueVision International Inc., Dominic
Mangone and Raymond Bank cease to beneficially own more than 5% of the voting
securities of the Company, Minotaur Partners II, L.P. shall have the right to
designate one representative for nomination to the Company's Board of Directors,
provided that such designee is reasonably acceptable to the independent
directors of the Company. The current designee of Minotaur Partners II, L.P. to
the Company's Board of Directors is William A. Lederer.

Minotaur Partners II, L.P., ValueVision International Inc., Dominic Mangone and
Raymond Bank have also agreed that, so long as Samstock, L.L.C. is entitled to
designate one or two directors to the Company's Board of directors, each would
vote all of its shares of Company voting securities in favor of Samstock,
L.L.C.'s designee or designees. In addition, Samstock, L.L.C. agreed that, so
long as Minotaur Partners II, L.P. is entitled to designate a director to the
Company's Board of Directors, Samstock, L.L.C. would vote all of its voting
securities in favor of Minotaur Partners II, L.P. designee. These stockholders
agreed that, except for certain exceptions, they would vote their shares with
respect to the election or removal of directors of the Company in accordance
with the recommendations of a majority of the disinterested directors of the
Company, provided that they may vote in favor of the election or retention of
the director designated by Minotaur Partners II, L.P. Minotaur Partners II,
L.P., ValueVision International Inc., Dominic Mangone, Raymond Bank and certain
other stockholders have "co-sale" rights if Samstock, L.L.C. sells more than 10%
of the shares of Company common stock held by it. In such an event, these
stockholders can require that their shares also be purchased on the same terms
and conditions.

Minotaur Partners II, L.P., ValueVision International Inc., Dominic Mangone,
Raymond Bank and certain other stockholders are also subject to "drag-along"
provisions if Samstock, L.L.C. sells all of its shares of common stock. In such
event, Samstock, L.L.C. can require these stockholders to sell their shares on
the same terms and conditions. However, Samstock, L.L.C. cannot require them to
sell their shares prior to April 28, 2001, if the sale would result in an
internal rate of return to these stockholders on their investment of less than
25%.

The Company has granted registration rights with respect to the shares of common
stock that these stockholders purchased from the Company and the shares of
common stock issuable upon exercise of warrants.


                                       41

<PAGE>

Consulting Agreements

None.

PART IV
-------

Item 14. Exhibits, Financial Statements Schedules, and Reports on Form 8-K
--------------------------------------------------------------------------

    The following documents are being filed as part of this Report:

    (a)(1)   Financial Statements:
               iDine Rewards Network Inc. formerly Transmedia Network Inc.
               See "Index to Financial Statements" contained in Part II, Item 8.

    (a)(2)   Financial Statement Schedules

    Schedule II - Valuation and Qualifying Accounts

    (a)(3)   The following exhibits are filed as part of this report as
             required by item 601 of Regulation S-K. The Exhibits
             designated with an asterisk are management contracts and
                compensatory plans and arrangements required to be filed as
                Exhibits to this report.

Designation                         Description
-----------                         -----------

3.1      Certificate of Incorporation of iDine Rewards Network Inc., as amended
         filed as an exhibit to this filing.

3.2      Cetificate of Designations relating to the Series A Convertible
         Redeemable Preferred Stock, as filed with the Delaware Secretary of
         State on November 9, 1999. Filed as Exhibit 3.5 to iDine's Registration
         Statement on Form S-2 (registration no. 333-84947), and incorporated by
         reference thereto)

3.3      By-Laws of iDine Rewards Network Inc., as amended and restated as of
         March 3, 1998. (Filed as Exhibit 3.2 to iDine's Current Report on Form
         8-K filed on March 17, 1998)

4.1      First Amended and Restated Receivables Purchase Agreement, dated as of
         May 17, 2001, among Transmedia Network Inc., iDine Restaurant Group
         Inc., Transmedia Service Company Inc., and RTR Funding LLC, as
         purchaser. (Filed as Exhibit 4.1 to Transmedia's Annual Report on Form
         10-K for the fiscal year ended September 30, 2001 and incorporated by
         reference thereto)

4.2      Form of Series A Convertible Redeemable Preferred Stock certificate.
         (Filed as Exhibit 4.1 to Transmedia's Registration Statement on Form
         S-2 (registration no. 333-84947), and incorporated by reference
         thereto)

4.3      Form of Rights Agreement between Transmedia Network Inc. and American
         Stock Transfer & Trust Company, as subscription agent. (Filed as
         Exhibit 4.2 to Transmedia's Registration Statement on Form S-2
         (registration no. 333-84947), and incorporated by reference thereto)

4.4      Second Amended and Restated Investment Agreement, dated as of June 30,
         1999, among Transmedia Network Inc., Samstock, L.L.C., EGI-Transmedia
         Investors, L.L.C., and, with respect to Section 5 of the Agreement
         only, Robert M. Steiner, as trustee under declaration of trust dated
         March 9, 1983, as amended, establishing the Robert M. Steiner Revocable
         Trust. (Filed as Exhibit 4.3 to Transmedia's Registration Statement on
         Form S-2 (registration no. 333-84947), and incorporated by reference
         thereto)


                                       42

<PAGE>

4.5      Investment Agreement, dated as of April 28, 2000, by and among
         Transmedia Network Inc., Minotaur Partners II, L.P., Value Vision
         International Inc., Dominic Mangone and Raymond Bank. (Filed as Exhibit
         4.5 to Transmedia's Annual Report on Form 10-K for the fiscal year
         ended September 30, 2000 and incorporated by reference thereto)

4.6      Co-Sale and Voting Agreement, dated as of April 28, 2000, by and among
         Transmedia Network Inc., Samstock, L.L.C., Minotaur Partners II, L.P.,
         Value Vision International Inc., Dominic Mangone and Raymond Bank.
         (Filed as Exhibit 4.6 to Transmedia's Annual Report on Form 10-K for
         the fiscal year ended September 30, 2000 and incorporated by reference
         thereto)

4.7      Investment Agreement, dated as of April 28, 2000, by and among
         Transmedia Network Inc., Gene M. Henderson, Herbert M. Gardner, James
         M. Callaghan, Gregory J. Robitaille, John A. Ward III, George S.
         Weidemann, Christine M. Donohoo, Frank F. Schmeyer, Elliot Merberg,
         Gerald Fleischman, Samstock, L.L.C. and Thomas J. Litle. (Filed as
         Exhibit 4.7 to Transmedia's Annual Report on Form 10-K for the fiscal
         year ended September 30, 2001 and incorporated by reference thereto)

4.8      Co-Sale and Voting Agreement, dated as of April 28, 2000, by and among
         Transmedia Network Inc., Gene M. Henderson, Herbert M. Gardner, James
         M. Callaghan, Gregory J. Robitaille, John A. Ward III, George S.
         Weidemann, Christine M. Donohoo, Frank F. Schmeyer, Elliot Merberg,
         Gerald Fleischman, Samstock, L.L.C. and Thomas J. Litle. (Filed as
         Exhibit 4.8 to Transmedia's Annual Report on Form 10-K for the fiscal
         year ended September 30, 2000 and incorporated by reference thereto)

10.1     Purchase Agreement, dated as of June 29, 2000, by and among Transmedia
         Network Inc., Spectrum Partners, Inc., Potomac Dining Limited
         Partnership, Gustavo L. Bessalel, Thomas E. Gorman and Francis Rothgeb.
         (Filed as Exhibit 4.11 to the registration statement on Form S-3
         (registration no. 333-49366), and incorporated by reference thereto)

10.2     Stock Purchase and Sale Agreement, dated as of April 28, 2000, by and
         among Minotaur Partners II, L.P., Value Vision International Inc.,
         Dominic Mangone and Raymond Bank. (Filed as Exhibit 4.14 to the
         registration statement on Form S-3 (registration no. 333-49366), and
         incorporated by reference thereto)

10.3     Form of Warrant to Purchase Shares of Common stock of Transmedia
         Network Inc. (Filed as Exhibit 4.15 to the registration statement on
         Form S-3 (registration no. 333-49366), and incorporated by reference
         thereto)

10.4     Stock Purchase and Sale Agreement, dated as of April 28, 2000, by and
         among Gene M. Henderson, Herbert M. Gardner, James M. Callaghan,
         Gregory J. Robitaille, John A. Ward III, George S. Weidemann, Christine
         M. Donohoo, Frank F. Schmeyer, Elliot Merberg, Gerald Fleischman,
         Samstock, L.L.C. and Thomas J. Litle. (Filed as Exhibit 4.16 to the
         registration statement on Form S-3 (registration no. 333-49366), and
         incorporated by reference thereto)

10.5     Form of Warrant to Purchase Shares of common stock of Transmedia
         Network Inc. (Filed as Exhibit 4.17 to the registration statement on
         Form S-3 (registration no. 333-49366), and incorporated by reference
         thereto)

10.6     Asset Purchase Agreement, dated as of March 17, 1999, between
         Transmedia Network Inc. and SignatureCard, Inc., as amended by
         Amendment No. 1 thereto dated as of April 15, 1999 and Amendment No. 2
         thereto dated as of May 31, 1999. (Filed as Exhibit 10.1 to
         Transmedia's Current Report on Form 8-K filed on July 14, 1999, and
         incorporated by reference thereto thereto)


                                       43

<PAGE>

10.7     Option Agreement, dated as of June 30, 1999, between Transmedia Network
         Inc. and SignatureCard, Inc. (Filed as Exhibit 10.2 to Transmedia's
         Current Report on Form 8-K filed on July 14, 1999, and incorporated by
         reference thereto)

10.8     Services Collaboration Agreement, dated as of June 30, 1999, between
         Transmedia Network Inc. and SignatureCard, Inc. (Filed as Exhibit 10.3
         to Transmedia's Current Report on Form 8-K filed on July 14, 1999, and
         incorporated by reference thereto)

10.9     Credit Agreement, dated as of June 30, 1999, between Transmedia Network
         Inc. and The Chase Manhattan Bank. (Filed as Exhibit 10.4 to
         Transmedia's Current Report on Form 8-K filed on July 14, 1999, and
         incorporated by reference thereto)

10.10    Security Agreement, dated as of June 30, 1999, between Transmedia
         Network Inc. and The Chase Manhattan Bank. (Filed as Exhibit 10.5 to
         Transmedia's Current Report on Form 8-K filed on July 14, 1999, and
         incorporated by reference thereto)

10.11    Pledge Agreement, dated as of June 30, 1999, between Transmedia Network
         Inc. and The Chase Manhattan Bank. (Filed as Exhibit 10.6 to
         Transmedia's Current Report on Form 8-K filed on July 14, 1999, and
         incorporated by reference thereto)

10.12    Credit Agreement, dated as of June 30, 1999, between GAMI Investments,
         Inc., Transmedia Network Inc., Transmedia Restaurant Company Inc.,
         Transmedia Service Company Inc. and TMNI International Incorporated.
         (Filed as Exhibit 10.7 to Transmedia's Current Report on Form 8-K filed
         on July 14, 1999, and incorporated by reference thereto)

10.13*   1987 Stock Option and Rights Plan, as amended. (Filed as Exhibit 10.2
         to Transmedia's Annual Report on Form 10-K for the fiscal year ended
         September 30, 1994 and incorporated by reference thereto)

10.14*   Form of Stock Option Agreement (as modified) between iDine Rewards
         Network Inc. and certain Directors. (Filed as Exhibit 10.3 to
         Transmedia's Annual Report on Form 10-K/A-2 for the fiscal year ended
         September 30, 1997 and incorporated by reference thereto)

10.15    Stock Purchase and Sale Agreement, dated as of November 6, 1997, among
         Transmedia Network Inc., Samstock, L.L.C. Transmedia Investors L.L.C.
         (Filed as Exhibit 10.1 to Transmedia's Current Report on Form 8-K dated
         as of November 6, 1997, and incorporated by reference thereto)

10.16    Form of Warrant to purchase common stock of Transmedia Network Inc.
         (Filed as Exhibit 10.2 to Transmedia's Current Report on Form 8-K dated
         as of March 17, 1998 and incorporated by reference thereto)

10.17    Amended and Restated Agreement Among Stockholders Agreement, dated as
         of March 3, 1998, among Transmedia Network Inc., Samstock, L.L.C.,
         EGI-Transmedia Investors L.L.C., Melvin Chasen, Iris Chasen and
         Halmstock Limited Partnership. (Filed as Exhibit 10.5 to Transmedia's
         Current Report on Form 8-K filed on March 17, 1998 and incorporated by
         reference thereto)

10.18    Stockholders Agreement, dated as of March 3, 1998, Transmedia Network
         Inc., EGI-Transmedia Investors, L.L.C., Samstock, L.L.C. and Melvin
         Chasen and Halmstock Limited Partnership. (Filed as Exhibit 10.6 to
         Transmedia's Current Report on Form 8-K filed on March 17, 1998 and
         incorporated by reference thereto)

10.19*   Letter of Agreement, dated January 29, 1997, between Transmedia Network
         Inc. and Stephen E. Lerch. (Filed as Exhibit 10.28 to Transmedia's
         Annual Report on Form 10-K/A-2 for the fiscal year ended September 30,
         1997, and incorporated by reference thereto)


                                       44

<PAGE>

10.20    Transmedia Network Inc. 1996 Long-Term Incentive Plan (including
         amendments through March 8, 2002).

10.21*   Employment Agreement, dated as of October 14, 1998, between Transmedia
         Network Inc. and Gene M. Henderson. (Filed as Exhibit 10.30 to
         Transmedia's Registration Statement on Form S-2 registration no.
         333-84947), and incorporated by reference thereto)

10.22*   Employment Agreement, dated as of February 1, 2001, between Transmedia
         Network Inc. and Gregory J. Robitaille filed with this Form 10-KT.

10.23*   Employment Agreement, dated as of March 27, 2000, between Transmedia
         Network Inc. and Keith E. Kiper filed with this Form 10-KT.

10.24    Standby Purchase Agreement, dated as of June 30, 1999, between
         Transmedia Network Inc. and Samstock, L.L.C. including Standby
         Agreement Warrant. Filed as Exhibit 1.1 to Transmedia's Registration
         Statement. (Filed as Exhibit 1.1 to Transmedia's Registration Statement
         on Form S-2 (registration no. 333-84947), and incorporated by reference
         thereto)

10.25    Consulting Agreement, dated as of November 16, 2001, by and amongst
         Transmedia Network Inc., Transmedia Service Company Inc., and
         Frank Felix Associates, LTD., Frank Schmeyer. (Filed as Exhibit
         10.34 to Transmedia's Annual Report on Form 10-K for the fiscal year
         ended September 30, 2001, and incorporated by reference thereto)

10.26    Payment and Termination of Exclusivity Agreement, dated December 29,
         2001, by and among Transmedia Network Inc., and SignatureCard, Inc.,
         and G E Financial Assurance, Inc. (Filed as Exhibit 10.35 to
         Transmedia's Annual Report on Form 10-K for the fiscal year ended
         September 30, 2001, and incorporated by reference thereto)

12       Statement regarding calculation of earnings to fixed charges.

21       Subsidiaries of iDine Rewards Network Inc.

23.1     Consent of KPMG LLP

24       Power of Attorney (included in the signature page hereto).

     B. Reports on Form 8-K

        On November 26, 2001, the Company filed a Form 8-K announcing a change
        in its fiscal year-end from September 30 to December 31, effective
        starting January 1, 2002.

     C. Exhibits:
         See paragraph (a) (3) above for items filed as exhibits to this Annual
         Report on Form 10-K as required by Item 601 of Regulation S-K.

     D. Financial Statement Schedules:

         See paragraphs (a) (1) and (a) (2) above for financial statement
         schedules and supplemental financial statements filed as part of this
         Form 10-K.


                                       45

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 1/st/ day of April
2002.

                                iDINE REWARDS NETWORK INC.
                                By:    /s/Gene M. Henderson
                                       ----------------------------
                                Name:   Gene M. Henderson
                                Title:  President and Chief Executive Officer


                                Power Of Attorney
                                -----------------
Each person whose signature appears below hereby authorizes and constitutes Gene
M. Henderson and Stephen E. Lerch, and each of them singly, his true and lawful
attorney-in-fact with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities to sign
and file any and all amendments to this report with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, and he or she as the case may be hereby ratifies and confirms all
that said attorney-in-fact or any of them, or their substitutes, may lawfully do
or cause to be done virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Form
10-K has been signed below by the following persons on behalf of the Registrant,
iDine Rewards Network Inc., in the capacities and on the dates indicated.

                                  Capacity In
     Signature                   Which Signed                   Date
     ---------                   ------------                   ----

/s/ Sheli Z. Rosenberg     Chairperson of the Board          March 27, 2002
----------------------
   Sheli Z. Rosenberg

/s/ Gene M. Henderson      Director,President and            March 27, 2002
----------------------     Chief Executive Officer
   Gene M. Henderson       (Principal Executive Officer)


/s/ Stephen E. Lerch       Executive Vice President          March 27, 2002
----------------------     and Chief Financial Officer
   Stephen E. Lerch        (Principal Financial and
                           Accounting Officer)


/s/ Herbert M. Gardner     Director                          March 27, 2002
----------------------
   Herbert M. Gardner

/s/ John A. Ward III       Director                          March 27, 2002
----------------------
   John A. Ward III

/s/ Raymond Gross          Director                          March 26, 2002
----------------------
   Raymond A. Gross

/s/ F. Philip Handy        Director                          March 27, 2002
----------------------
   F. Philip Handy

/s/ Lester Wunderman       Director                          March 27, 2002
----------------------
   Lester Wunderman

/s/ George S. Wiedemann    Director                          March 27, 2002
-----------------------
   George S. Wiedemann

                                       46

<PAGE>

/s/ William A Lederer      Director                          March 27, 2002
----------------------
   William A Lederer

                                       47