---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

---

FORM 10-QSB/A

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the period ended September 30, 2000

or

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
|--- | --------------------------------------------------------------------------------

Commission file number0-25366

---

AUSTINS STEAKS & SALOON, INC.(Exact name of small business issuer as specified in its charter)

Delaware(State or other jurisdiction of
Incorporation or organization)

86-0723400(IRS Employer Identification No.)


317 Kimball Avenue, NW
Roanoke, VA 24016(Address of principal executive office)

(540) 345-3195(Issuer's telephone number)

---

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

As
of June 15, 2001, there were 12,079,900 shares of the issuer's common stock outstanding.

THIRD
QUARTER REPORT OF FORM 10-QSB/A

---

---

---

AUSTINS STEAKS & SALOON, INC.  Form 10-QSB/A Index  Nine Months Ended September 30, 2000

|PART I.  FINANCIAL INFORMATION |  |                                                                                               
|------------------------------ |  | ----------------------------------------------------------------------------------------------
|                               |  | Item 1.                                                                                       
|                               |  | Consolidated Balance SheetsSeptember 30, 2000 and December 31, 1999                          
|                               |  | Consolidated Statements of OperationsThree and Nine Months Ended September 30, 2000 and 1999 
|                               |  | Consolidated Statement of Changes in Stockholders' EquityNine Months Ended September 30, 2000
|                               |  | Consolidated Statements of Cash FlowsNine Months Ended September 30, 2000 and 1999           
|                               |  | Notes to Consolidated Financial Statements                                                    
|                               |  | Item 2.                                                                                       
|PART II.  OTHER INFORMATION    |  |                                                                                               
|                               |  | Item 1.                                                                                       
|                               |  | Item 2.                                                                                       
|                               |  | Item 3.                                                                                       
|                               |  | Item 4.                                                                                       
|                               |  | Item 5.                                                                                       
|                               |  | Item 6.                                                                                       

---



PART 1.  FINANCIAL INFORMATION

Item 1.  Financial Statements

AUSTINS STEAKS & SALOON, INC.Consolidated Balance Sheets
September 30, 2000 and December 31, 1999

|                                                                                                                                |                                                                                                                                                    | September 30,
2000         |            | December 31,
1999
|------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ---------- | -----------------
|
|Assets                                                                                                                          |                                                                                                                                                    |                            |            |                  
|Current assets:                                                                                                                 |                                                                                                                                                    |                            |            |                  
|                                                                                                                                | Cash and cash equivalents                                                                                                                          |                            | $          | 2,523,741        
|                                                                                                                                | Trade accounts receivable, net of allowance for doubtful accounts of $220,833 in 2000 and $185,062 in 1999                                         |                            |            | 939,086          
|                                                                                                                                | Current installments of notes receivable                                                                                                           |                            |            | 76,784           
|                                                                                                                                | Other receivables                                                                                                                                  |                            |            | 757,035          
|                                                                                                                                | Inventories                                                                                                                                        |                            |            | 1,248,257        
|                                                                                                                                | Prepaid expenses                                                                                                                                   |                            |            | 683,514          
|                                                                                                                                | Deferred income taxes                                                                                                                              |                            |            | 202,372          
|                                                                                                                                |                                                                                                                                                    |                            |            |                  
|                                                                                                                                |                                                                                                                                                    | Total current assets       |            |                  
|Notes receivable, less allowance for doubtful accounts of $128,822 in 2000 and $148,902 in 1999, excluding current installments |                                                                                                                                                    |                            | 47,925     |                  
|Property and equipment, net                                                                                                     |                                                                                                                                                    |                            | 9,342,437  |                  
|Franchise royalty contracts, net of accumulated amortization of $4,254,494 in 2000 and $3,781,772 in 1999                       |                                                                                                                                                    |                            | 5,199,937  |                  
|Goodwill, net of accumulated amortization of $1,864,335 in 2000 and $1,603,760 in 1999                                          |                                                                                                                                                    |                            | 4,959,467  |                  
|Favorable lease rights, net of accumulated amortization of $116,343 in 2000 and $35,383 in 1999                                 |                                                                                                                                                    |                            | 437,490    |                  
|Deferred income taxes                                                                                                           |                                                                                                                                                    |                            | 873,418    |                  
|Financing costs, net of accumulated amortization of $43,020 in 2000 and $30,875 in 1999                                         |                                                                                                                                                    |                            | 147,283    |                  
|Other assets, net                                                                                                               |                                                                                                                                                    |                            | 425,962    |                  
|                                                                                                                                |                                                                                                                                                    |                            |            |                  
|                                                                                                                                |                                                                                                                                                    | $                          | 27,864,708 |                  
|                                                                                                                                |                                                                                                                                                    |                            |            |                  
|Liabilities and Stockholders' Equity                                                                                            |                                                                                                                                                    |                            |            |                  
|Current liabilities:                                                                                                            |                                                                                                                                                    |                            |            |                  
|                                                                                                                                | Bank overdraft                                                                                                                                     |                            | $          |                 
|                                                                                                                                | Credit line note payable to bank                                                                                                                   |                            |            | 476,707          
|                                                                                                                                | Current installments of long-term debt                                                                                                             |                            |            | 1,217,912        
|                                                                                                                                | Current installments of obligations under capital leases                                                                                           |                            |            | 45,547           
|                                                                                                                                | Accounts payable                                                                                                                                   |                            |            | 5,413,719        
|                                                                                                                                | Accrued expenses and other                                                                                                                         |                            |            | 2,465,726        
|                                                                                                                                |                                                                                                                                                    |                            |            |                  
|                                                                                                                                |                                                                                                                                                    | Total current liablilities |            |                  
|Long-term debt, excluding current installments                                                                                  |                                                                                                                                                    |                            | 5,008,383  |                  
|Obligations under capital leases, excluding current installments                                                                |                                                                                                                                                    |                            |           |                  
|                                                                                                                                |                                                                                                                                                    |                            |            |                  
|                                                                                                                                |                                                                                                                                                    | Total liabilities          |            |                  
|Stockholders' equity:                                                                                                           |                                                                                                                                                    |                            |            |                  
|                                                                                                                                | Common stock; $.01 par value. Authorized 20,000,000 shares; issued and outstanding 12,079,900 and 12,103,824 shares in 2000 and 1999, respectively |                            |            | 120,799          
|                                                                                                                                | Additional paid-in capital                                                                                                                         |                            |            | 8,625,150        
|                                                                                                                                | Retained earnings                                                                                                                                  |                            |            | 4,490,765        
|                                                                                                                                |                                                                                                                                                    |                            |            |                  
|                                                                                                                                |                                                                                                                                                    | Total stockholders' equity |            |                  
|                                                                                                                                |                                                                                                                                                    |                            |            |                  
|Commitments and contingencies                                                                                                   |                                                                                                                                                    | $                          | 27,864,708 |                  
|                                                                                                                                |                                                                                                                                                    |                            |            |                  

See accompanying notes to consolidated financial statements.

2

---

AUSTINS STEAKS & SALOON, INC.Consolidated Statements of Operations    (Unaudited)

|                             |                                 | Three Months
Ended September 30,                  |            | Nine Months
Ended September 30, |           
|---------------------------- | ------------------------------- | ------------------------------------------------- | ---------- | ------------------------------- | ----------
|
|
|Revenues:                    |                                 |                                                   |            |                                 |           
|Company-operated stores      |                                 | $                                                 | 30,704,023 |                                 | $         
|Franchise operations         |                                 |                                                   | 1,414,789  |                                 |           
|Other                        |                                 |                                                   | 131,054    |                                 |           
|                             |                                 |                                                   |            |                                 |           
|                             |                                 | Total revenues                                    |            |                                 | 32,249,866
|                             |                                 |                                                   |            |                                 |           
|Costs and expenses:          |                                 |                                                   |            |                                 |           
|                             | Cost of company-operated stores |                                                   |            | 24,383,407                      |           
|                             | Cost of franchise operations    |                                                   |            | 548,612                         |           
|                             | Other cost of operations        |                                                   |            | 98,704                          |           
|                             | Restaurant operating expenses   |                                                   |            | 3,710,631                       |           
|                             | General and administrative      |                                                   |            | 2,969,995                       |           
|                             | Depreciation and amortization   |                                                   |            | 622,735                         |           
|                             |                                 |                                                   |            |                                 |           
|                             |                                 | Total costs and expenses                          |            |                                 | 32,334,084
|                             |                                 |                                                   |            |                                 |           
|                             |                                 | Income (loss) from operations                     |            |                                 | (84,218   
|Other income (expense):      |                                 |                                                   |            |                                 |           
|                             | Interest expense                |                                                   |            | (169,248                        | )         
|                             | Interest income                 |                                                   |            | 11,452                          |           
|                             | Other                           |                                                   |            | (219,798                        | )         
|                             |                                 |                                                   |            |                                 |           
|                             |                                 |                                                   | (377,594   | )                               |           
|                             |                                 |                                                   |            |                                 |           
|                             |                                 | Income (loss) before income tax expense (benefit) |            |                                 | (461,812  
|Income tax expense (benefit) |                                 |                                                   | (174,503   | )                               |           
|                             |                                 |                                                   |            |                                 |           
|                             |                                 | Net Income (loss)                                 |            | $                               | (287,309  
|                             |                                 |                                                   |            |                                 |           
|Earnings (loss) per share:   |                                 |                                                   |            |                                 |           
|                             | Basic                           |                                                   |            | (0.02                           | )         
|                             | Diluted                         |                                                   |            | (0.02                           | )         

See
accompanying notes to consolidated financial statements.

3

---



AUSTINS STEAKS & SALOON, INC.Consolidated Statement of Changes in Stockholders' Equity        Nine Months Ended September 30,
2000        (Unaudited)  (Restated)

|                             |  | Common Stock |   |   |         |   |   |           |  
|---------------------------- |  | ------------ | - | - | ------- | - | - | --------- | -
|
|
|Balances, December 31, 1999  |  | 12,103,824   |   | $ | 121,038 |   | $ | 8,677,425 |  
|Net income                   |  |             |   |   |        |   |   |          |  
|Repurchase of common stock   |  | (23,924      | ) |   | (239    | ) |   | (52,275   | )
|                             |  |              |   |   |         |   |   |           |  
|Balances, September 30, 2000 |  | 12,079,900   |   | $ | 120,799 |   | $ | 8,625,150 |  
|                             |  |              |   |   |         |   |   |           |  

See
accompanying notes to consolidated financial statements.

4

---

AUSTINS STEAKS & SALOON, INC.Consolidated Statements of Cash Flows        Nine Months Ended September 30, 2000 and 1999        (Unaudited)

|                                                 |                                                                                   | September 30, |                                                                                        
|------------------------------------------------ | --------------------------------------------------------------------------------- | ------------- | ---------------------------------------------------------------------------------------
|
|
|Cash flows from operating activities:            |                                                                                   |               |                                                                                        
|                                                 | Net Income                                                                        |               | $                                                                                      
|                                                 | Adjustments to reconcile net income to net cash provided by operating activities: |               |                                                                                        
|                                                 |                                                                                   |               | Depreciation and amortization of property and equipment                                
|                                                 |                                                                                   |               | Amortization of franchise royalty contracts, goodwill, financing costs and other assets
|                                                 |                                                                                   |               | Provision for bad debts                                                                
|                                                 |                                                                                   |               | Provision for deferred taxes                                                           
|                                                 |                                                                                   |               | Gain on sale/disposal of property and equipment                                        
|                                                 |                                                                                   |               | (Increase) decrease in:                                                                
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               | Increase (decrease) in:                                                                
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|Cash flows from investing activities:            |                                                                                   |               |                                                                                        
|                                                 | Additions to property and equipment                                               |               |                                                                                        
|                                                 | Acquisition costs, net of cash received                                           |               |                                                                                        
|                                                 | Proceeds from sale of property and equipment                                      |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|Cash flows from financing activities:            |                                                                                   |               |                                                                                        
|                                                 | Net decrease in bank overdraft                                                    |               |                                                                                        
|                                                 | Proceeds from long-term debt                                                      |               |                                                                                        
|                                                 | Net increase in credit line note payable                                          |               |                                                                                        
|                                                 | Payments on long-term debt and capital leases                                     |               |                                                                                        
|                                                 | Proceeds from issuance of common stock in private placement                       |               |                                                                                        
|                                                 | Proceeds from exercise of common stock options                                    |               |                                                                                        
|                                                 | Repurchase of common stock                                                        |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|                                                 |                                                                                   |               |                                                                                        
|Cash and cash equivalents at beginning of period |                                                                                   |               | 510,833                                                                                
|                                                 |                                                                                   |               |                                                                                        
|Cash and cash equivalents at end of period       |                                                                                   | $             | 2,523,741                                                                              
|                                                 |                                                                                   |               |                                                                                        

See accompanying notes to consolidated financial statements.

5

---



AUSTINS STEAKS & SALOON, INC.Notes to Consolidated Financial Statements        September 30, 2000 and 1999    
(Unaudited)

(1) Summary of Significant Accounting Policies



During June 2000, Austins Steaks & Saloon, Inc. ("Austins") negotiated a short-term lease agreement with Franchise Finance Corporation of
America (FFCA). The lease agreement with FFCA was entered into by Western Sizzlin Stores of Virginia (WSSVA), an entity which was formed for the sole purpose of entering into this agreement. Under the
short-term lease agreement, Austins operated 97 restaurant units, owned by FFCA, and was entitled to receive from WSSVA, 3.5 percent of gross sales as a management fee for operating the restaurants.
The restaurants' operating results, including all revenues and expenses, were included in WSSVA's financial statements.

In
Austins' quarterly report on Form 10-QSB for the quarter ended September 30, 2000, Austins included in its consolidated financial statements the management fees earned under
its agreement with WSSVA, and did not consolidate WSSVA's operating results. Subsequent to the original Form 10-QSB filing, Austins determined that, based on Austins' substantive control of WSSVA, the
operating results of WSSVA should be consolidated in Austins' consolidated financial statements. The restated quarterly amounts shown below reflect the consolidation of WSSVA in Austins' consolidated
financial statements, including the elimination of the intercompany management fee and the consolidation of all revenues and expenses of the restaurants managed under the lease agreement with FFCA.



September 30, 2000

Previously Filed

RestatedTotal assets

$
24,505,892

$
27,864,708Total liabilities


10,499,020


14,627,994Total stockholders' equity


14,006,872


13,236,714




Nine Months Ended September 30, 2000

Previously Filed

RestatedNet revenues

$
34,558,596

$
60,911,663Net income


916,204


146,046




The accompanying unaudited consolidated financial statements have been prepared by Austins Steaks & Saloon, Inc. ("Austins" or the "Company") in
accordance with accounting principles generally accepted in the United States of American for interim financial reporting information and the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial
statements. In the opinion of management, all material reclassifications and adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of

6

---

the results of operations, financial position and cash flows for each period shown have been included. Operating results for interim periods are not necessarily indicative of the results for the full
year. The unaudited consolidated financial statements and notes are presented as permitted by Form 10-QSB and
do not contain certain information included in the Company's annual consolidated financial statements and notes. For further information, refer to the consolidated financial statements and notes
thereto included in the Company's annual consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999.



Certain reclassifications have been made to 1999 financial statement amounts to conform to the 2000 presentation.

(2) Business Combination

Effective July 1, 1999, Austins Steaks & Saloon, Inc. ("Austins"), a Delaware corporation, merged with The WesterN SizzliN Corporation
("Western SizzliN"), a Tennessee corporation, located in Roanoke, Virginia. The assets and business of Western SizzliN are now owned by a wholly owned subsidiary of Austins, The WesterN SizzliN
Corporation, a Delaware corporation. As a result of the merger, Austins' six moderately priced, casual dining, full service restaurants located in Arizona, Nebraska and New Mexico have been combined
with WesterN SizzliN.

Effective
June 30, 1999, each of the outstanding 2,700,406 shares of common stock were split 1 for 3.135, leaving a total of 861,374 Austins shares outstanding prior to the
merger. Upon completion of the merger, the Austins shareholders own approximately 7 percent of the outstanding equity and the WesterN SizzliN shareholders own approximately 93 percent of the
outstanding equity of the combined company.

Pursuant
to the merger, each share of WesterN SizzliN common and series B convertible preferred stock (4,339,000 and 874,375 shares, respectively) were converted into two shares of
Austin's common stock. Also effective with the merger, each WesterN SizzliN common stock warrant (371,250 warrants) was also converted into two shares of Austins' common stock.

The
business combination has been accounted for as a reverse acquisition using the purchase method of accounting. In the acquisition, the shareholders of the acquired company, WesterN
SizzliN, received the majority of the voting interest in the surviving consolidated company. Therefore, Western SizzliN was deemed to be the acquiring company for financial reporting purposes and
accordingly, all of the assets and liabilities of Austins have been recorded at fair value and the operations of Austins have been reflected in the operations of the combined company from
July 1, 1999, the date of acquisition.

The
purchase of the business combination was determined based on the market price of Austins' securities over a reasonable period of time before and after the two companies reached an
agreement on the purchase price and the proposed transaction was announced. On February 23, 1999, Austins and WesterN SizzliN signed a letter of intent agreeing on the purchase price and
announced the proposed transaction. The average closing market price for the five business day period beginning February 19, 1999 and ending February 25, 1999 for Austins was $1.2695.
Applying this price per share to the

7

---

Austins' presplit common shares issued, and including the estimated direct costs incurred as a result of the acquisition of $570,813, resulted in a deemed purchase price of $3,999,081.

The
aggregate purchase price of the acquisition was allocated based upon management's best estimate of the fair values of identifiable assets and liabilities of Austins at the date of
acquisition as follows:

Current assets (including cash of $10,431)

$
204,675Property and equipment, net


2,672,361Other assets


380,615Favorable lease rights


553,833Goodwill


925,372Trademarks


76,283Deferred tax assets


1,344,184Long-term debt


(1,204,264
)Current liabilities


(684,050
)Note payable to shareholder


(269,928
)Total

$
3,999,081


Goodwill
resulting from the acquisition is being amortized on a straight-line basis over 15 years.

(3) Legal Settlement and Private Placement of Common Stock

On September 10, 1999, the Company completed its settlement agreement with David K. Wachtel, Jr. with respect to long-standing litigation initiated in
February 1995. Under the terms of the settlement agreement, Austins paid Mr. Wachtel $1,000,000 in settlement of all claims he had in the litigation, which was included in other expense
for the nine-month period ended September 30, 1999. Additionally, Mr. Wachtel withdrew his notice to dissent from the merger between Austins and the WesterN SizzliN with respect to the
684,000 WesterN SizzliN shares (premerger) owned by him, and Austins repurchased these shares for the sum of $3,420,000.

In
order to obtain the funds with which to pay Mr. Wachtel under the settlement agreement, the Company conducted a private placement of its common stock at prices ranging from
$2.25 to $2.50 per share to qualified shareholders, principally former Western SizzliN stockholders. On the closing date of September 10, 1999, the Company had received approximately $2.9
million of proceeds which it used, along with approximately $1.5 million of bank and other financing to complete the settlement with Mr. Wachtel.

As
a part of the private placement, Austins issued 1,286,200 shares of its common stock to the qualified investors-purchasers. The holders of a majority of the stock ultimately
acquired in the private placement have the right, for the one-year period commencing March 15, 2000, to request Austins to file a registration statement with the Securities and Exchange
Commission to permit the resale of the stock. The registration must remain effective for 45 days and Austins must cover the costs of the registration. If any investor sells all of his or her
share in a single three-month period utilizing Rule 144, then the registration rights will not apply to that investor.

8

---

(4) Earnings Per Share

Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Stock options for shares of common stock were not included in computing diluted earnings per share
for the three and nine-month periods ended September 30, 2000 because these effects are anti-dilutive. Common stock warrants are not included in computing diluted earnings per share, prior to
their conversion in connection with the reverse merger acquisition, since the conditions for their issuance, such as an initial public offering or registration of the Company's common stock, had not
taken place.

The
following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the years included:

|                                      |  | Income (Loss)
(Numerator) |          | Weighted Average Shares
(Denominator) |            | Earnings
Per Share
Amount |      
|------------------------------------- |  | ------------------------- | -------- | ------------------------------------- | ---------- | ------------------------- | -----
|
|Three months ended September 30, 2000 |  |                           |          |                                       |            |                           |      
|Net lossbasic and diluted            |  | $                         | (287,309 | )                                     | 12,095,936 |                           | (0.02
|                                      |  |                           |          |                                       |            |                           |      
|Three months ended September 30, 1999 |  |                           |          |                                       |            |                           |      
|Net incomebasic                      |  | $                         | 13,037   |                                       | 8,955,022  |                           |     
|Effect of dilutive stock options      |  |                           |         |                                       | 114,539    |                           |     
|                                      |  |                           |          |                                       |            |                           |      
|Net incomediluted                    |  | $                         | 13,037   |                                       | 9,069,561  |                           |     
|                                      |  |                           |          |                                       |            |                           |      
|Nine months ended September 30, 2000  |  |                           |          |                                       |            |                           |      
|Net incomebasic and diluted          |  | $                         | 146,046  |                                       | 12,101,195 |                           | 0.01 
|                                      |  |                           |          |                                       |            |                           |      
|Nine months ended September 30, 1999  |  |                           |          |                                       |            |                           |      
|Net incomebasic                      |  | $                         | 182,548  |                                       | 8,772,491  |                           |     
|Effect of dilutive stock options      |  |                           |         |                                       | 38,599     |                           | 0.02 
|                                      |  |                           |          |                                       |            |                           |      
|Net incomediluted                    |  | $                         | 182,548  |                                       | 8,811,090  |                           | 0.02 
|                                      |  |                           |          |                                       |            |                           |      

(5) Reportable Segments

The Company has defined two reportable segments: Company-operated restaurants and franchising and other. The Compnay-operated restaurant segment consists of
the operations of all Company-operated restaurants and derives its revenues from the operations of "WesterN SizzliN Steakhouse," "Great American Steak & Buffet," "WesterN SizzliN Wood Grill,"
"Quincy's Steakhouse and "Austins Steaks & Saloon." The franchising and other segment consists of franchise sales and support activities and derives its revenues from sales of franchise and
development rights and collection of royalties from franchisees.

Generally,
the Company evaluates performance and allocates resources based on income from operations before income taxes and eliminations. Administrative and capital costs are
allocated to

9

---

segments based upon predetermined rates or actual or estimated resource usage. The Company accounts for intercompany sales and transfers as if the sales or transfers were with third parties and
eliminates the related profit in consolidation.

Reportable
segments are business units that provide different products or services. Separate management of each segment is required because each business unit is subject to different
operational issues and strategies. Through September 30, 2000, all revenues for each business segment were derived from business activities conducted with customers located in the United
States. No single external customer accounted for 10 percent or more to the Company's consolidated revenues.

10

---

The following table summarizes reportable segment information:

|                                   |                       | Three Months Ended
September 30,        |   | Nine Months Ended
September 30,
|---------------------------------- | --------------------- | --------------------------------------- | - | -------------------------------
|
|
|Revenues from reportable segments: |                       |                                         |   |                                
|                                   | Restaurants           |                                         | $ | 30,704,023                     
|                                   | Franchising and other |                                         |   | 1,545,843                      
|                                   |                       |                                         |   |                                
|                                   |                       | Total revenues                          |   | $                              
|                                   |                       |                                         |   |                                
|Depreciation and amortization:     |                       |                                         |   |                                
|                                   | Restaurants           |                                         |   | 439,247                        
|                                   | Franchising and other |                                         |   | 183,488                        
|                                   |                       |                                         |   |                                
|                                   |                       | Total depreciation and amortization     |   | $                              
|                                   |                       |                                         |   |                                
|Interest expense:                  |                       |                                         |   |                                
|                                   | Restaurants           |                                         |   | 150,469                        
|                                   | Franchising and other |                                         |   | 18,779                         
|                                   |                       |                                         |   |                                
|                                   |                       | Total interest expense                  |   | $                              
|                                   |                       |                                         |   |                                
|Interest income:                   |                       |                                         |   |                                
|                                   | Restaurants           |                                         |   | 10,128                         
|                                   | Franchising and other |                                         |   | 1,324                          
|                                   |                       |                                         |   |                                
|                                   |                       | Total interest income                   |   | $                              
|                                   |                       |                                         |   |                                
|Income (loss) before income taxes: |                       |                                         |   |                                
|                                   | Restaurants           |                                         |   | (1,561,819                     
|                                   | Franchising and other |                                         |   | 1,100,007                      
|                                   |                       |                                         |   |                                
|                                   |                       | Total income (loss) before income taxes |   | $                              
|                                   |                       |                                         |   |                                

|                                                       |                       | September 30,
2000                  |  |            |            | September 30,
1999 |  |           
|------------------------------------------------------ | --------------------- | ----------------------------------- |  | ---------- | ---------- | ------------------ |  | ----------
|Gross fixed assets:                                    |                       |                                     |  |            |            |                    |  |           
|                                                       | Restaurants           |                                     |  | 11,963,919 |            |                    |  | 12,927,921
|                                                       | Franchising and other |                                     |  | 1,486,639  |            |                    |  | 1,407,537 
|                                                       |                       |                                     |  |            |            |                    |  |           
|                                                       |                       | Total gross fixed assets            |  | $          | 13,450,558 |                    |  |           
|                                                       |                       |                                     |  |            |            |                    |  |           
|Expenditures for fixed assets (including acquisition): |                       |                                     |  |            |            |                    |  |           
|                                                       | Restaurants           |                                     |  | 401,070    |            |                    |  | 4,648,829 
|                                                       | Franchising and other |                                     |  | 120,020    |            |                    |  | 133,658   
|                                                       |                       |                                     |  |            |            |                    |  |           
|                                                       |                       | Total expenditures for fixed assets |  | $          | 521,090    |                    |  |           
|                                                       |                       |                                     |  |            |            |                    |  |           

11

---



Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

Austins Steaks & Saloon, Inc. (the Company) underwent a reverse merger acquisition, effective July 1, 1999, with the WesterN SizzliN
Corporation (WSC). A further description of the transaction is provided in note 2 to the consolidated financial statements included in this quarterly report.

As
of September, the Company operated and franchised a total of 316 restaurants located in 24 states, including 112 company-owned and 204 franchise restaurants. The restaurants
include a family steakhouse concept, a steak and buffet concept, and the casual dining steakhouse concept.

During
June 2000, the Company negotiated a short-term lease agreement with Franchise Finance Corporation of America (FFCA). The lease agreement with FFCA was entered into by
Western Sizzlin Stores of Virginia (WSSVA), an entity which was formed for the sole purpose of entering into this agreement. Under the short-term lease agreement, the Company leased and operated 97
Quincy Steakhouses, owned by FFCA. The restaurants' operating results, including all revenues and expenses, were included in the Company's consolidated financial statements for the quarter ended
September 30, 2000.

From
time to time, the Company may publish forward-looking statements relating to certain matters, including anticipated financial performance, business prospects, the future opening
of Company-operated and franchised restaurants, anticipated capital expenditures, and other matters. All statements other than statements of historical fact contained in the Form 10-QSB or in any
other report of the Company are forward-looking statements. The Private Securities Litigation Reform Act of 1995 provided a safe harbor for forward-looking statements. In order to comply with the
terms of that safe harbor, the Company notes that a variety of factors, individually or in the aggregate, could cause the Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's forward-looking statements including, without limitation, the following: the ability of the Company or its franchises to obtain
suitable locations for restaurant development; consumer spending trends and habits; competition in the restaurant segment with respect to price, service, location, food quality and personnel
resources; weather conditions in the Company's operating regions; laws and government regulations; general business and economic conditions; availability of capital; success of operating initiatives
and marketing and promotional efforts; and
changes in accounting policies. In addition, the Company disclaims any intent or obligation to update those forward-looking statements.

Results of Operations

Net income (loss) for the three and nine-month periods ended September 30, 2000 was ($287,309) and $146,046 respectively, as compared to $13,037 and
$182,548 for the three and nine-month periods ended September 30, 1999, respectively. The results for the nine-month period ended September 30, 2000 were negatively effected by the
consolidation of the Quincy operations. The Quincy operations had a net loss of approximately ($770,000) for the nine-months ended September 30, 2000. The results for the nine-month period ended
September 30, 1999 were negatively affected by a $1,000,000 charge related to the settlement of litigation with the former president of WSC.

12

---

The following table sets forth for the periods presented the percentage relationship to total revenues of certain items included in the consolidated statements of operations and
certain restaurant data for the periods presented:

|                                |                              | Three Months Ended September 30,        |      | Nine Months Ended September 30, |     
|------------------------------- | ---------------------------- | --------------------------------------- | ---- | ------------------------------- | ----
|
|
|Revenues:                       |                              |                                         |      |                                 |     
|                                | Company-operated stores      |                                         | 95.2 | %                               | 86.5
|                                | Franchise royalties and fees |                                         | 4.4  |                                 | 12.3
|                                | Other sales                  |                                         | 0.4  |                                 | 1.2 
|                                |                              |                                         |      |                                 |     
|                                |                              | Total revenues                          |      | 100.0                           |     
|                                |                              |                                         |      |                                 |     
|Costs and expenses:             |                              |                                         |      |                                 |     
|Cost of company-operated stores |                              | 75.6                                    |      | 62.0                            |     
|Cost of franchise operations    |                              | 1.7                                     |      | 4.8                             |     
|Other cost of operations        |                              | 0.3                                     |      | 0.9                             |     
|Restaurant operating expenses   |                              | 11.5                                    |      | 10.4                            |     
|General and administrative      |                              | 9.2                                     |      | 13.1                            |     
|Depreciation and amortization   |                              | 2.0                                     |      | 5.4                             |     
|                                |                              |                                         |      |                                 |     
|                                |                              | Total costs and expenses                |      | 100.3                           |     
|                                |                              |                                         |      |                                 |     
|                                |                              | Income (loss) from operations           |      | (0.3                            | )   
|Other income (expense)          |                              | (1.1                                    | )    | (3.2                            | )   
|                                |                              |                                         |      |                                 |     
|                                |                              | Income (loss) before income tax expense |      | (1.4                            | )   
|                                | Income tax expense (benefit) |                                         | (0.5 | )                               | 0.1 
|                                |                              |                                         |      |                                 |     
|                                |                              | Net income (loss)                       |      | (0.9                            | )%  
|                                |                              |                                         |      |                                 |     

|                                        |                                   | Three Months Ended
September 30, |     | Nine Months Ended
September 30,
|--------------------------------------- | --------------------------------- | -------------------------------- | --- | -------------------------------
|
|Restaurant Data                         |                                   |                                  |     |                                
|Number of Company-Operated Restaurants: |                                   |                                  |     |                                
|                                        | Beginning of period               |                                  | 25  |                                
|                                        | Opened                            |                                  |    |                                
|                                        | Closed                            |                                  |    |                                
|                                        | Acquired from franchisee or other |                                  |    |                                
|                                        |                                   |                                  |     |                                
|                                        | End of period                     |                                  | 25  |                                
|                                        |                                   |                                  |     |                                
|Number of Quincy-operated Restaurants:  |                                   |                                  |     |                                
|                                        | Beginning of lease agreement      |                                  | 97  |                                
|                                        | Closed                            |                                  | 10  |                                
|                                        |                                   |                                  |     |                                
|                                        | End of period                     |                                  | 87  |                                
|                                        |                                   |                                  |     |                                
|Number of U.S. Franchised Restaurants:  |                                   |                                  |     |                                
|                                        | Beginning of period               |                                  | 207 |                                
|                                        | Opened                            |                                  |    |                                
|                                        | Closed                            |                                  | 3   |                                
|                                        | Acquired by Company               |                                  |    |                                
|                                        |                                   |                                  |     |                                
|                                        | End of period                     |                                  | 204 |                                
|                                        |                                   |                                  |     |                                

13

---

Quarter and Year-To-Date Ended September 30, 2000 Compared to Quarter and Year-To-Date Ended September 30, 1999

Total revenues increased 172.3 percent to $32.2 million for the three-months ended September 30, 2000 as compared to $11.8 million for the comparable
three-month period ended September 30, 1999. Total revenues for the nine-month period ended September 30, 2000 increased 91.4 percent to $60.9 million from $31.8 million for the nine
months ended September 30, 1999. The three and nine month increase is primarily attributable to the consolidation of the Quincy operations, which had revenue of approximately $20.7 million and
$26.4 million for the three and nine months ended September 30, 2000.

Costs and Expenses

Cost of company-operated stores, consisting of food, beverage, and employee costs increased $17.0 million for the three months ended September 30, 2000
from $7.3 million in 1999 to $24.3 million in 2000 and as a percentage of total revenues from 62.0% in 1999, to 75.6% in 2000. For the nine months ended September 30, 2000, the cost of
company-operated stores increased $23.8 million from $18.8 million in 1999 to $42.6 million in 2000 and as a percentage of total revenues from 59.2% in 1999 to 69.9% in 2000. The increase is due to
the addition of the Quincy operations. The primary reason for the increase of these costs as a percentage of total revenues is the costs of the Quincy stores, whose operating margins were
significantly less than the Company's other operated restaurants.

Cost
of franchise operations and other cost of operations decreased as a percentage of total revenues to 2.0% and $647,000 for the three months ended September 30, 2000 from
5.7% and $674,000 in 1999. These costs decreased to 3.2% and $1.97 million for the nine months ended September 30, 2000 from 6.1% and $1.96 million in 1999. The addition of the Quincy units did
not effect these costs, but due to the increased sales did effect the percentages.

Restaurant
operating expenses which include utilities, maintenance and other such costs of the company-operated stores increased $2.5 million and $3.6 million for the three and nine
months ended September 30, 2000. The majority of this increase is due to the addition of the Quincy stores. These expenses as a percentage of total revenues increased to 11.5% and 11.1% in 2000
compared to 10.4% and 10.0% in 1999 for the three and nine months ended September 30, as the operating costs for the
Quincy units were higher as a percentage of total revenue than the Company's other operated restaurants.

General
and administrative expenses increased $1.4 million and $2.5 million for the three and nine months ended September 30, 2000 over the respective prior periods due to the
addition of the Quincy operations. General and administrative expenses decreased as a percentage of total revenues from 13.1% and 12.2% in 1999 to 9.2% and 10.8% in 2000 for the three and nine months
ended September 30. This decrease in percentage is due to the fact that while significant revenues were added with the Quincy stores, the company's administrative function was able to handle
the additional workload without incurring significant additional incremental cost.

Depreciation
and amortization expense is comparable for the three and nine months ended September 30, 2000 and 1999.

Other Income (Expense)

The largest single item affecting other income and expense in 1999 is the settlement of long-standing litigation with WSC's former president in
June 1999. The settlement, including $1 million related to the lawsuit, is more fully discussed in note 3 to the consolidated financial statements and is included in other expense.

14

---

Interest expense for the three-month and nine-month periods ended September 30, 2000 and 1999 is comparable. Interest income fluctuates according to the levels of available and
investable cash balances. The Company employs a cash management system whereby available balances are invested on an overnight basis.

Income
tax expense is directly affected by the levels of pretax income. The Company's effective tax rate of approximately 39.3 percent in 2000 is comparable to the annualized rate of
38.3 percent in 1999.

Liquidity and Capital Resources

As is customary in the restaurant industry, the Company has operated with negative working capital. Historically, the Company has leased the majority of its
restaurants and through a strategy of controlled
growth has financed expansions from operating cash flow, proceeds from the sale of common stock, the utilization of the Company's line of credit and long-term debt provided by various lenders.

For
the nine months ended September 30, 2000 and 1999, the Company had net cash provided by operating activities of $4,780,725 and $2,604,795, respectively. The increase is
attributable to consolidation of the Quincy's operations. Cash flows from operations were the primary source of capital expenditures and debt repayments during the periods. In addition, the Company
utilizes its existing line of credit to provide additional short-term funding. Management is actively reviewing available financing alternatives to provide cash for future expansion, restructure
existing debt, and provide additional working capital; however, no final agreements have been reached.

Impact of Inflation

The impact of inflation on the costs of food and beverage products, labor and real estate can affect the Company's operations. Over the past few years,
inflation had had a lesser impact on the Company's operations due to the lower rates of inflation in the nation's economy and economic conditions in the Company's market areas.

Management
believes the Company has historically been able to pass on increased costs through certain selected menu price increases and has offset increased costs by increased
productivity and purchasing efficiencies, but there can be no assurance that the Company will be able to do so in the future. Management anticipates that the average cost of restaurant real estate
leases and construction cost could increase in the future which could affect the Company's ability to expand. In addition, mandated health care or additional increases in the federal or state minimum
wages could significantly increase the Company's costs of doing business.

15

---



PART II.  OTHER INFORMATION

Item 1.  Legal ProceedingsN/A

Item 2.  Change in Securities and Use of ProceedsN/A

Item 3.  Defaults Upon Senior SecuritiesN/A

Item 4.  Submission of Matters to a Vote of Security HoldersN/A

Item 5.  Other InformationN/A

Item 6.  Exhibits and Reports on form 8-K:





16

---





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.

|                   |  | Austins Steaks & Saloon, Inc.
|------------------ |  | -----------------------------
|Date: July 5, 2001 |  | By:                          

17

---

QuickLinks