UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                -----------------
                                    FORM 10-K

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

        For the fiscal year ended December 30, 2003
                                  -----------------

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
        EXCHANGE ACT OF 1934

        For the transition period from ______ to ______


                        Commission file number 000-22753
                                               ---------

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

           Delaware                                      52-2016614
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. employer identification no.)
 incorporation or organization)


                           9300 E. Central, Suite 100
                                Wichita, KS 67206
               ---------------------------------------------------
               (Address of principal executive offices) (Zip code)

                                 (316) 634-0505
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

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

                                      NONE

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

                          Common Stock, $.01 par value

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of 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. Yes [ ] No [X]

     Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

      The aggregate market value of Common Stock held by non-affiliates of the
Registrant as of December 30, 2003, based on the closing price of the Common
Stock as reported by the Nasdaq National Market on June 17, 2003, was
$52,510,598. Solely for purposes of this computation, shares held by all
officers, directors and 10% or more beneficial owners of the registrant have
been excluded. Such exclusion should not be deemed a determination or an
admission that such officers, directors or 10% or more beneficial owners are, in
fact, affiliates of the registrant.

     As of March 22, 2004, there were 9,873,030 shares outstanding of the
Registrant's Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

         The Company intends to file a definitive proxy statement pursuant to
Regulation 14A within 120 days of the end of the fiscal year ended December 30,
2003. Portions of such proxy statement are incorporated by reference in response
to Part III, Items 10, 11, 12 and 13.

<PAGE>

                                TABLE OF CONTENTS
                                -----------------


ITEM                                                                        PAGE
----                                                                        ----

                                     PART I

   1.  Business ........................................................      3
   2.  Properties ......................................................     13
   3.  Legal Proceedings ...............................................     13
   4.  Submission of Matters to a Vote of Security Holders .............     14

                                    PART II

   5.  Market for the Registrant's Common Equity and Related
         Stockholder Matters ...........................................     14
   6.  Selected Financial Data .........................................     15
   7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations .....................................     16
   7A. Quantitative and Qualitative Disclosures About Market Risk ......     21
   8.  Financial Statements and Supplementary Data .....................     21
   9.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure ......................................     21
   9A. Controls and Procedures .........................................     21

                                    PART III

 10.   Directors and Executive Officers of the Registrant ..............     21
 11.   Executive Compensation ..........................................     21
 12.   Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters ...............................     21
 13.   Certain Relationships and Related Transactions ..................     21
 14.   Principal Accountant Fees and Services ..........................     22

                                     PART IV

 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K.     23
       Signatures ......................................................     26

                                      -2-
<PAGE>

                                     PART I

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

General

    We own and operate 66 restaurants under the "Fox and Hound" and "Bailey's"
brand names that each provide a social gathering place offering high quality
food, drinks and entertainment in an upscale, casual environment. Our
restaurants offer a broad menu of mid-priced appetizers, entrees and desserts
served in generous portions. In addition, each location features a full-service
bar and offers a wide selection of major domestic, imported and specialty beers.
Each restaurant emphasizes a high energy environment with satellite and cable
coverage of a variety of sporting events and music videos, and most of our
restaurants offer multiple billiards tables. In addition to our food, we believe
our customers are attracted to our elegant yet comfortable atmosphere of dark
wood interiors, polished brass, embroidered chairs and booths, and etched glass.
Our Fox and Hound and Bailey's restaurants share identical design and
operational principles and menus.

Our History

    The first Fox and Hound restaurant opened in August 1994 and the first
Bailey's restaurant opened in November 1989. In February 1997, the two companies
were combined to form Total Entertainment Restaurant Corp. In July 1997, we
completed our initial public offering. As of March 22, 2004, the Company owns
and operates 50 Fox and Hound restaurants and 16 Bailey's restaurants in
Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas,
Louisiana, Michigan, Missouri, Nebraska, New Mexico, North Carolina, Ohio,
Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas and Virginia.

Concept

    We believe our restaurants offer customers a unique and exciting upscale
destination for socializing, eating and drinking. We believe our restaurants are
differentiated from our competitors by offering all of the following features in
a single location:

        o   An Upscale, Neighborhood Social Gathering Place. Our restaurants
            provide a destination where friends and acquaintances can gather
            regularly for food, drinks and entertainment in an upscale yet
            casual environment.
        o   High Quality Food and Beverage. Our restaurants offer a broad menu
            of mid-priced appetizers, salads, desserts and entrees featuring
            beef, chicken, fish and barbecue, all served in generous portions.
            Each location features a full service bar and a wide variety of
            domestic, imported and specialty beers. To maximize the appeal of
            each area of our restaurants, sit-down food and beverage service is
            available in every room.
        o   State-of-the-Art Audio and Visual Technology. Our restaurants create
            an exciting, high-energy atmosphere through state-of-the-art audio
            and video systems for viewing sporting events and music videos from
            our customized playlist. Each location typically has more than 35
            televisions (including several big-screen televisions) with
            satellite and cable coverage of concurrent national, regional and
            local sporting events.
        o   Late-night Destination. Our restaurants are generally open from
            11:00 a.m. to 2:00 a.m., seven days a week, depending upon local
            law. We provide customers with an upscale entertainment and dining
            alternative by offering our full menu during our increasingly
            popular late-night segment.

Strategy

    Our goal is to become the leading neighborhood destination for socializing,
eating and drinking. Our strategy for attaining this leadership position is
based on the following key elements:
    Total Entertainment and Restaurant Experience. Our concept offers a social
gathering place, food and beverages, sports entertainment, games of skill and a
late-night destination all in a single location. Each location provides guests
with a multi-dimensional entertainment and restaurant experience that enables
them to participate in one or more elements of the experience.
    Seasoned Management Team. We employ a seasoned management team with
experience in successfully developing and operating multi-unit concepts in a
variety of geographic markets throughout the United States. We intend to
leverage this experience to secure favorable real estate sites, control costs
and implement proven operating procedures. In addition, we maintain centralized
financial and accounting controls through Franchise Services Company, a third
party accounting and administrative services company. By employing the services
and infrastructure provided by Franchise Services Company, we are able to focus
our energy and resources on brand and unit development.

                                      -3-
<PAGE>

    Growth and Expansion. We believe our restaurant concept will be attractive
in a variety of geographic markets throughout the United States. We plan to open
twelve to fifteen locations in 2004 and between twelve and fifteen locations in
2005. Through March 22, 2004, we have opened two restaurants in 2004 and
currently have four restaurants under construction, seven contracts executed
with contingencies and four leases currently under negotiation. We continually
evaluate locations in various markets and negotiate proposed additional leases
at desired sites. However, the number of locations actually opened and the
timing thereof may vary depending upon our ability to locate suitable sites and
negotiate favorable leases. Flexibility and Versatility of Concept. We are
implementing our concept through both the Fox and Hound and Bailey's brand
names. Our concept allows for significant versatility through the
reconfiguration of the entertainment areas within each of its locations to
accommodate various special events. Commitment to High Quality Products and
Services. We are committed to providing a superior experience that includes high
quality menu items, a wide variety of domestic, imported and specialty beers,
state-of-the-art audio and video systems and tournament-quality pocket billiard
tables. These features, combined with our focus on a high level of customer
service, help build a loyal clientele and attract new guests.

Locations

    The following table sets forth as of March 22, 2004, the location, opening
month and approximate square footage of each of our existing restaurant
locations:

                                                                    Approximate
     Location               Brand Name         Month Opened       Square Footage
     --------               ----------         ------------       --------------

     Wichita, KS            Fox and Hound      March 2004               9,600
     Phoenix #2, AZ         Fox and Hound      January 2004             8,800
     Richmond #2, VA        Bailey's           December 2003            9,900
     Philadelphia #2, PA    Fox and Hound      October 2003            10,800
     Albuquerque, NM        Fox and Hound      October 2003             9,800
     Oklahoma City, OK      Fox and Hound      September 2003           9,800
     Houston #3, TX         Fox and Hound      July 2003                8,600
     Arlington, VA          Bailey's           July 2003               15,500
     Philadelphia #1, PA    Fox and Hound      June 2003                7,400
     Denver #4, CO          Fox and Hound      April 2003              11,600
     Chicago #3, IL         Fox and Hound      March 2003               9,600
     Houston #2, TX         Fox and Hound      January 2003            12,000
     Kansas City #2, KS     Fox and Hound      November 2002            9,100
     Tucson, AZ             Fox and Hound      November 2002           11,600
     Chicago #2, IL         Fox and Hound      September 2002          12,600
     Austin, TX             Fox and Hound      July 2002               11,600
     Denver #3, CO          Fox and Hound      July 2002               12,600
     Dallas #5, TX          Fox and Hound      June 2002               15,800
     Richmond, VA           Bailey's           May 2002                 8,500
     Denver #2, CO          Fox and Hound      April 2002              10,300
     Charlotte #3, NC       Fox and Hound      March 2002               7,200
     Ft. Worth #2, TX       Fox and Hound      February 2002           14,000
     Phoenix, AZ            Fox and Hound      February 2002           11,600
     Denver #1, CO          Fox and Hound      January 2002            10,500
     Dallas #4, TX          Fox and Hound      December 2001           13,360
     Atlanta #2, GA         Bailey's           November 2001           10,500
     Charlotte #2, NC       Fox and Hound      August 2001             15,300
     Nashville #3, TN       Bailey's           May 2001                11,400
     Ft. Worth #1, TX       Fox and Hound      April 2001               9,900
     Dallas #3, TX          Fox and Hound      December 2000            7,600
     Detroit #2, MI         Bailey's           December 2000           10,450
     Cleveland #2, OH       Fox and Hound      October 2000            13,500
     Baton Rouge, LA        Fox and Hound      March 1999              11,500
     Houston, TX            Fox and Hound      February 1999            9,100
     Indianapolis, IN       Fox and Hound      February 1999            8,400
     Winston-Salem, NC      Fox and Hound      January 1999             9,400
     Pittsburgh, PA         Fox and Hound      January 1999            10,500
     New Orleans, LA        Fox and Hound      December 1998            9,200
     Chapel Hill, NC        Bailey's           December 1998            9,000
     Canton, OH             Fox and Hound      November 1998            9,700
     Kansas City, KS        Fox and Hound      November 1998            9,100

                                      -4-
<PAGE>

     Memphis #2, TN         Fox and Hound      November 1998            7,600
     Detroit #1, MI         Bailey's           November 1998            9,100
     Dayton, OH             Fox and Hound      October 1998             8,700
     Lubbock, TX            Fox and Hound      October 1998            10,600
     Atlanta #1, GA         Bailey's           October 1998             8,500
     Erie, PA               Fox and Hound      August 1998             10,400
     San Antonio, TX        Fox and Hound      August 1998              8,400
     Springfield, MO        Fox and Hound      August 1998              9,100
     Evansville, IN         Fox and Hound      July 1998                8,600
     Cleveland #1, OH       Fox and Hound      May 1998                 8,500
     Montgomery, AL         Fox and Hound      January 1998             7,700
     Chicago, IL            Fox and Hound      December 1997           10,100
     Omaha, NE              Fox and Hound      December 1997            9,000
     Nashville #2, TN       Bailey's           October 1997             7,500
     Memphis #1, TN         Fox and Hound      September 1997           8,400
     Columbia, SC           Bailey's           October 1996            10,000
     Johnson City, TN       Bailey's           May 1996                 8,250
     Knoxville, TN          Bailey's           December 1995            9,400
     Dallas #2, TX          Fox and Hound      November 1995            9,600
     Nashville #1, TN       Bailey's           April 1995               9,400
     Greenville, SC         Bailey's           September 1994           7,000
     College Station, TX    Fox and Hound      September 1994           7,700
     Dallas #1, TX          Fox and Hound      August 1994              6,500
     Little Rock, AR        Fox and Hound      February 1994            8,400
     Charlotte #1, NC       Bailey's           October 1990             7,600

Expansion Plans

    Our management team has extensive experience in the restaurant business and
has successfully developed and operated numerous restaurants in many geographic
markets throughout the United States. We intend to open twelve to fifteen
restaurant locations in 2004 and between twelve to fifteen locations in 2005. We
are currently evaluating locations in markets familiar to our management team.
However, the number of locations actually opened and the timing thereof may vary
depending upon our ability to locate suitable sites and negotiate favorable
leases.
     We may in the future franchise and/or grant license or joint venture rights
to the Fox and Hound and Bailey's concepts in certain limited geographic areas
of the United States. It is expected that these franchisees, licensees or joint
venture partners will be required to develop a specific number of locations
within a specified time frame and that a license fee and/or a royalty fee will
be paid to us in connection with the development and operation of each such
site.

Selection Criteria and Leasing

    We believe the site selection process is critical in determining the
potential success of each restaurant location. Senior management devotes
significant time and resources in analyzing each prospective site and inspects
and approves each location prior to final lease execution. A variety of factors
are considered in the site selection process, including local market
demographics (e.g., median household income levels and age), site visibility,
traffic count, nature of the surrounding retail environment and accessibility
and proximity to major retail centers, office complexes, hotels and
entertainment centers (e.g., stadiums, arenas and theaters).
    We lease all locations, with the exception of one Bailey's restaurant in
Columbia, South Carolina, which is owned by us. Most of the restaurants are
located in shopping centers. Leases are generally negotiated with initial terms
of five to fifteen years, with multiple renewal options. We are generally
required to complete construction and open a new location approximately 120 to
280 days after the later of signing of a contract or obtaining required permits.
Additional time is sometimes required to obtain certain government approvals and
licenses, such as liquor licenses. In the future, we anticipate leasing our
locations, although we may consider purchasing free-standing sites where it is
cost-effective to do so.

Unit Economics

    Our management team focuses on selecting locations with the potential of
producing significant revenues while controlling capital expenditures and rent
as a percentage of net sales. Our restaurants averaged $2,073,000 and $2,056,000
in sales during fiscal years ended December 30, 2003 and December 31, 2002,
respectively. The 63 leased restaurants open at December 30, 2003 had an average
cash investment of approximately $1,434,000. The one unit we own had a cost of
$1,964,000 (including the costs for land acquisition, construction, equipment
and pre-opening costs). In the future we anticipate most locations will be
leased rather than purchased and anticipate an average cash investment per
location between $1.7 million and $2.0 million.

                                      -5-
<PAGE>

Menu

    Our restaurants offer a single menu for lunch, dinner and late-night dining.
The menu features a broad selection of appealing appetizers (including
quesadillas, chicken wings and nachos) and soups and salads (including Caesar
salads, chili and soups of the day), typically ranging in price from $3.29 to
$6.99. The menu includes over 25 entrees typically priced between $5.99 to
$16.99 such as sandwiches, pizzas, ribs, burgers and a selection of grilled and
smoked barbecued entrees. Most entrees are priced under $12.00. The two
restaurants opened in 2004 feature a new and much broader menu including
additional appetizers, a full selection of traditional crust pizzas, and
additional entrees, sandwiches, soups and salads. A strong emphasis is placed on
the presentation of each of these menu items, increasing the quality and
satisfaction of our customer's overall dining experience. Each location features
a full service bar and most restaurants have over 100 brands of ales, lagers,
stouts and specialty beers from around the world, with an average of 30 beers on
tap. Alcoholic beverage service accounted for approximately 58% of the Company's
revenues in the fiscal year ended December 30, 2003.

Ambiance and Design

    We strive to offer a unique setting with a broad appeal to both male and
female customers through an inviting, clean and comfortable atmosphere. In order
to achieve the feeling of an upscale atmosphere for these customers, we
emphasize decor, lighting and cleanliness. For example, we recycle fresh
filtered air throughout our restaurants several times an hour and place
fresh-cut flowers in our restrooms. Each of our locations feature dedicated
areas for viewing sporting events and/or music videos. These entertainment areas
can be readily configured into a comfortable "arena" for concurrent viewing of
national, regional and local sporting and other television events. To maximize
the broad appeal of the atmosphere in our restaurants, the sound in each room is
carefully monitored to balance the desire among our customers for lively
entertainment versus quieter socializing. In addition, our locations generally
offer multiple tournament-quality billiard tables and darts and popular
interactive games to further enhance our appeal as a social destination. All
locations are also capable of accommodating business and social organizations
for special events.
    We believe the design of our restaurants plays an essential role in our
success. Most of our restaurants have a centrally-located bar and primary dining
room as well as two wing rooms that are partitioned from the central bar and
dining area by etched glass. The wing rooms serve as secondary dining areas and
house games of skill along with state-of-the-art audio and video technology.
This layout provides guests with an open view of the main dining room, bar and
gaming areas. Our last seven units opened have a separate dedicated non-smoking
dining area with one to three secondary dining and gaming areas. The open
kitchen is organized for efficient work flow and is also centrally located so as
to entice guests with its flavorful aromas.

Marketing

    We believe our restaurant concept attracts a loyal clientele, and we rely
primarily on word-of-mouth to attract new business. We do, however, advertise
through traditional marketing and advertising media in selected markets. These
media include television, radio and print advertising and local store marketing
to households.
    Our marketing efforts also seek to focus on national, regional and local
sporting events such as the Super Bowl and the NCAA basketball tournament, which
attract locally active groups of fans, supporters and alumni. The versatile
layout and design of our restaurants can also accommodate group events.

Operations and Management

    Our operations and management systems are based upon systems and controls
that were developed by our senior management and have been successfully used to
manage a large number of restaurants located in numerous states. We strive to
maintain quality and consistency in our restaurant locations through the careful
training and supervision of personnel and the establishment of standards
relating to food and beverage preparation, maintenance of locations and conduct
of personnel.
    We staff our restaurants with management that has experience in the
restaurant industry. We believe our strong team-oriented culture helps us
attract highly motivated employees who provide customers with a superior level
of service. We train our kitchen employees and wait staff to take great pride in
preparing and serving food in accordance with our high standards. Restaurant
managers and staff are trained to be courteous and attentive to customer needs,
and our managers, in particular, are instructed to visit each table. Senior
corporate management hosts weekly meetings with regional and district managers
to discuss staffing, marketing, individual restaurant performance and customer
comments. Moreover, we require our general managers to hold daily shift meetings
at their individual restaurants. Senior management regularly visits the Fox and
Hound and Bailey's locations and meets with the respective management teams to
ensure compliance with our strategies and standards of quality.

                                      -6-
<PAGE>

    Management. The management of a typical restaurant consists of one general
manager and three to five assistant managers depending upon restaurant revenue
and hours of operation. The assistant managers are responsible for their own
operational units, including a kitchen manager, bar manager and service manager,
but all have been trained to support and manage each operational unit of the
restaurant. Each general manager is responsible for the restaurant's day-to-day
operations and is required to follow our established operating procedures and
standards. Each location also employs a staff of hourly employees, many of whom
are part-time personnel. We currently employ twelve district managers, each of
which oversees between four and seven restaurants. We also employ two regional
managers who oversee the various districts. Our regional managers, district
managers, general managers and assistant managers participate in incentive cash
bonus programs. Awards under the incentive plans are tied to achievement of
specified operating targets, including achievement of specific unit objectives
and control of operating expense budgets. In addition, the regional managers,
district managers and general managers participate in our Employee Stock Option
Plan.
    Financial Controls. We maintain financial and accounting controls for each
of our restaurants through the use of centralized accounting and management
information systems. Sales and labor information are collected daily from each
location, and general managers are provided with operating statements for their
locations. Cash is controlled through daily deposits of sales proceeds in local
operating accounts, the balances of which are wire-transferred daily or weekly
to our principal operating account. We utilize a comprehensive peer review
reporting system for our general managers. Within 10 days after the close of
each 28-day accounting period, profit and loss statements are produced and,
subsequently, the general managers of each restaurant meet in person with their
respective regional and district managers to review the profit and loss
statements. The participants offer each other feedback on their respective
performances and suggest ways of improving profitability. The district managers
also meet in person with the senior management team to review the performance
for the past accounting period as well as set the operating agenda for the next
period. We believe the peer review system enables each general manager and
district manager to benefit from the collective experience of all of the
Company's management.
    Customer Service. We believe customer service and satisfaction are keys to
the success of our operations. In addition to customer evaluations, we use
secret shopper visits to independently evaluate customer satisfaction. A
national restaurant evaluation firm performs these visits, three times per
28-day period, to test our food and beverage service in a discrete manner
without the knowledge of the restaurant personnel. In addition, we encourage
frequent visits by restaurant management to customers' tables, active
involvement of management in responding to guest comments and assigning wait
persons so as to ensure customer satisfaction.
    Training. Management strives to instill enthusiasm and dedication in its
employees and to create a stimulating and rewarding working environment where
employees know what is expected of them in measurable terms. Each of our new
restaurant employees participates in a training program during which the
employee works under the close supervision of a manager. Restaurant management
personnel participate in an eight-week to twelve-week training program that
focuses on various aspects of the restaurant's operations and customer service.
Management continuously solicits employee feedback concerning restaurant
operations and strives to be responsive to the employees' concerns. We promote a
safe drinking environment through the use of certain internal procedures in
addition to extensive alcohol awareness training. It is mandatory for all
service employees and managers, regardless of a lack of state regulation, to
complete a third-party alcohol awareness-training program. We have also
established internal measures to promote a safe drinking environment, such as a
four-drink log (which is reviewed by the restaurant's district manager).

Purchasing

    We strive to obtain consistent, quality items at competitive prices from
reliable sources. We continually search for and test various products in order
to serve the highest quality products possible and to be responsive to changing
customer tastes. We engage a purchasing consultant to assist in the negotiation
of purchasing agreements with suppliers. Food and supplies are shipped directly
to the restaurant locations, although invoices for purchases are forwarded to a
central location for payment. Due to the experience of our senior management in
the restaurant business, we have been and expect to continue to be able to
purchase most of our restaurant equipment directly from equipment manufacturers.
We have not experienced any significant delays in receiving supplies or
equipment.

Management Information Systems

    We utilize a computer-based management support system, which is designed to
improve labor scheduling and food and beverage cost management, provide
corporate management quick access to financial data and reduce the general
manager's administrative time. Each general manager uses the system for
production planning, labor scheduling and food and beverage cost variance
analysis. The system generates reports on sales, bank deposits and variance
data. We generate weekly consolidated sales reports and food, beverage and
labor-cost variance reports as well as detailed profit and loss statements for
each restaurant location every four weeks. Additionally, we monitor sales
growth, labor variances and other sales trends on a daily basis.

                                      -7-
<PAGE>

Accounting and Administrative Services

    On March 1, 2002, we renewed our services agreement with Franchise Services
Company for certain accounting and administrative services for an additional
three-year period. We pay a per restaurant per 28-day fixed fee with no annual
charge.

Competition

    The entertainment and restaurant industries are highly competitive. There
are a large number of restaurants and entertainment businesses that compete
directly and indirectly with us. We compete with restaurants primarily on the
basis of quality of food and service, ambiance and location and compete with
sports bars and entertainment complexes on the basis of entertainment quality,
ambiance and location. Competition for sales in the entertainment and restaurant
industries is intense. Many of our existing and potential competitors are
well-established and have significantly greater financial, marketing and other
resources than we do. In addition to other entertainment and restaurant
companies, we compete with numerous businesses for suitable locations for our
restaurants.

Government Regulation

    Our restaurant locations are subject to numerous federal, state and local
laws affecting health, sanitation, safety and Americans with Disabilities Act
accessibility standards, as well as to state and local licensing regulation of
the sale of alcoholic beverages. Each restaurant has appropriate licenses from
regulatory authorities allowing it to sell liquor, beer and wine, and each
restaurant has food service licenses from local health authorities. Our licenses
to sell alcoholic beverages must be renewed annually and may be suspended or
revoked at any time for cause, including violation by us or our employees of any
law or regulation pertaining to alcoholic beverage control, such as those
regulating the minimum age of patrons or employees, advertising, wholesale,
purchasing, and inventory control. The failure of a restaurant to obtain or
retain liquor or food service licenses would have a material adverse effect on
our operations. In order to reduce this risk, each restaurant is operated in
accordance with standardized procedures designed to ensure compliance with all
applicable codes and regulations.
    We may be subject in certain states to "dram-shop" statutes, which generally
provide a person injured by an intoxicated person the right to recover damages
from an establishment that wrongfully served alcoholic beverages to the
intoxicated person. We carry liquor liability coverage as part of our existing
comprehensive general liability insurance.
    The development and construction of additional locations are subject to
compliance with applicable zoning, land use and environmental regulations. Our
operations are also subject to federal and state minimum wage laws governing
such matters as working conditions, overtime and tip credits and other employee
matters. Significant numbers of our personnel are paid at rates related to the
federal minimum wage, which is currently $5.15 per hour. Accordingly, increases
in the minimum wage will increase our labor costs.

Trademarks

    We have federally registered our "Fox & Hound(R)," "Bailey's Sports
Grille(R)," "Bailey's Smokehouse & Tavern(R)" and "Quality Is Our Passion(R)"
service marks. Our "7 Bailey's Sports Grille(R)" and "Serious Fun 7 Bailey's
Sports Grille(R)" design marks are also federally registered. We regard our
service and design marks as having significant value and as being an important
factor in the marketing of our restaurant concept. We are aware of names and
marks similar to our service marks that are used by other persons in certain
geographic areas. We believe such uses will not have a material adverse effect
on the Company as either the "Bailey's" or "Fox and Hound" brand names may be
used if the other name is unavailable. Our policy is to pursue registration of
our marks whenever possible and to oppose vigorously any infringement of our
marks.

Employees

    As of March 22, 2004, we employed approximately 3,700 persons, 350 of whom
are executive officers, regional managers, district managers and restaurant
management personnel and the remainder of whom are hourly restaurant personnel
and corporate support staff. None of our employees is covered by a collective
bargaining agreement. We believe our employee relations are satisfactory.

Website Access

    Our website address is www.tentcorp.com. Our filings with the Securities and
Exchange Commission ("SEC") are available at no cost on our website as soon as
practicable after the filing of such reports with the SEC.

                                      -8-
<PAGE>

Risk Factors

We May Not Be Able To Manage Our Planned Expansion, Which May Lead To Higher
Costs Or A Failure To Realize Anticipated Revenues Or Operating Profits.
    We face business risks commonly associated with rapidly growing companies,
including the risk that existing management, information systems and financial
controls may be inadequate to support our planned expansion. We experienced
difficulty managing our rapid expansion following our initial public offering in
fiscal year 1997 and, as a result, temporarily suspended development of new
restaurants in the second fiscal quarter of 1999. We cannot predict whether we
will be able to respond on a timely basis to all of the changing demands that
our planned expansion will impose on management and our systems and controls. If
we fail to adapt management, information systems and financial controls or
encounter unexpected difficulties during expansion, our business, financial
condition, operating results or cash flows could be materially adversely
affected. In addition, we anticipate entering new geographic markets in which we
have no operating experience. These new markets may have different demographic
characteristics, competitive conditions, consumer tastes and discretionary
spending patterns than our existing markets, which may cause new restaurants to
be less successful than restaurants in our existing markets.

If We Are Unable To Open New Restaurants In A Timely And Profitable Manner, Our
Business Could Be Materially Adversely Affected.
    To continue to expand our business, we must open new restaurants on a timely
and profitable basis. We have experienced occasional delays in opening
restaurants and may experience delays in the future. Delays in opening, or
failures to open, new restaurants could materially adversely affect our
business, financial condition, operating results and cash flows. Our ability to
expand successfully may depend on a number of factors, some of which are beyond
our control, including:

    - Identification and availability of suitable restaurant sites;

    - Competition for restaurant sites;

    - Negotiation of favorable leases;

    - Timely development in certain cases of commercial, residential, street or
      highway construction near our restaurants;

    - Management of construction and development costs of new restaurants;

    - Securing of required governmental approvals and permits;

    - Availability, staffing, training and retention of qualified management
      and hourly personnel, particularly district, general and assistant
      managers;

    - Competition in new markets; and

    - General economic conditions.

    There can be no assurance that we will be able to complete our planned
expansion or that new restaurants, if completed, will perform in a manner
consistent with our most recently opened restaurants or make a positive
contribution to our operating results.

The Price Of Our Common Stock Has Been Highly Volatile And May Continue To Be
Highly Volatile, Which May Adversely Affect Your Ability To Sell Your Shares And
Our Ability To Raise Additional Capital.
    A public market for our common stock has existed since 1997. The price of
our common stock has been highly volatile and may continue to be highly
volatile. For instance, from January 1, 2001 through March 22, 2004, our common
stock has traded from a low of $1.13 to a high of $17.25 per share. The price of
our common stock may experience significant volatility in response to many
factors, some of which are beyond our control and may not even be directly
related to us, including:

    - Changes in financial estimates or recommendations by securities analysts
      regarding us or our common stock;

    - Our performance and the performance of our competitors and other
      companies in the restaurant industry;

    - Quarterly fluctuations in our operating results or the operating results
      of other companies in the restaurant industry;

    - Additions or departures of key personnel;

                                      -9-
<PAGE>

    - The trading volume of our common stock;

    - General economic conditions and their effect on the casual dining
      industry in general; and

    - Competition, natural disasters, acts of war or terrorism or other
      developments affecting us or our competitors.

    In addition, in recent years the stock market has experienced extreme price
and volume fluctuations, which have often been unrelated or disproportionate to
the operating performance of particular companies. This volatility has
significantly affected, and may continue to affect, the price of our common
stock and may adversely affect your ability to sell your shares and our ability
to raise additional capital. See "Price Range of Common Stock."

Our Operating Results Could Be Materially Adversely Affected By The Negative
Performance Of A Small Number Of Restaurants Because Of Our Small Restaurant
Base.
    As of March 22, 2004, we operated only 66 restaurants, 10 of which opened in
the last 12 months. Due to the small number of restaurants, poor operating
results at any one or more new or existing restaurants could materially
adversely affect our profitability. Factors that could adversely affect the
operating results of any new or existing restaurant include local competition,
consumer preference, development of the area in which the restaurant is located
and access to the restaurant, including construction of highways that provide,
or in some cases prevent, access to the restaurant. The operating results of
certain existing restaurants have been, and may continue to be, affected by any
one or more of these factors. The business, financial condition, operating
results and cash flows or the lack of success of one or more new or existing
restaurants may have a more significant effect on our overall results of
operations than would be the case in a larger company with a significantly
larger restaurant base.

We May Be Unable To Fund Our Significant Future Capital Needs And We May Require
Additional Funding Sooner Than Anticipated.
    We plan to expend $20 million to $25 million over the next 12 months in
connection with new restaurant openings and expect that similar expenditures for
planned expansion in fiscal year 2005 will equal or exceed these amounts. The
capital resources required to develop each new restaurant are significant. We
believe that funds anticipated to be available from our existing line of credit
and anticipated cash flow from our operations will be sufficient to satisfy our
working capital and capital expenditure requirements for at least the next 12
months. There can be no assurance, however, that changes in our operating plans,
the acceleration or modification of our expansion plans, lower than anticipated
revenues, increased expenses, potential acquisitions or other events will not
cause us to seek additional financing, prevent us from achieving the goals of
our expansion strategy or prevent any newly opened restaurants from operating
profitably.

Because Our Business Is Focused On A Single Concept And Lacks Diversification,
Our Continued Success Could Suffer If Consumer Preferences Change.
    Our restaurant concept features a combination of casual dining and
entertainment, and our continued success depends, to a large degree, upon the
popularity of casual dining and the types of entertainment offered in our
restaurants. Changes in consumer tastes and preferences away from our concept,
dining style or entertainment options may have a disproportionate and materially
adverse impact on our business, financial condition, operating results, cash
flows and prospects.

Changes In Discretionary Spending Could Negatively Impact Our Operating Results.
    The success of our business and its operating results are dependent on
discretionary spending by consumers, particularly by consumers living in the
communities in which our restaurants are located. A decline in discretionary
spending could adversely affect our business, financial condition, operating
results and cash flows. Our business could also be adversely affected by general
economic conditions, terrorist attacks and the resulting cancellation or delay
of national sporting events, demographic trends, consumer confidence in the
economy and changes in disposable consumer income.

Because We Are Significantly Smaller And Less Established Than The Majority Of
Our National Competitors, We May Lack The Financial Resources Needed To Compete
Effectively And Sustain Profitability.
    Due to the nature of our business, we compete with competitors in both the
restaurant and entertainment industries. A great number of restaurants and
entertainment businesses compete directly and indirectly with us. Many of these
entities have a greater number of locations, are more established, and have
significantly greater financial (based on total assets and annual revenues),
marketing and other resources than us. Although there are only a few other
competing companies presently combining restaurant and entertainment operations
in a manner similar to us, we may encounter increased competition in the future.
This increased competition may have an adverse effect on our business, financial
condition, operating results and cash flows.

                                      -10-
<PAGE>

We Depend On The Expertise Of Key Personnel. If Any Of These Individuals Leave
Or Change Their Role With Us, Our Operations May Suffer.
    Our success and the results of operations are dependent to a large degree on
the efforts and abilities of our existing management, including Steven M.
Johnson, Chief Executive Officer; Gary M. Judd, President; Kenneth C. Syvarth,
Chief Operating Officer; and James K. Zielke, Chief Financial Officer, Secretary
and Treasurer. Messrs. Johnson, Judd, Syvarth and Zielke are employed by us
pursuant to employment agreements, each of which will expire as of June 30,
2004, and are also subject to non-competition, confidentiality and
non-solicitation agreements with us. The employment agreements are extended
automatically for successive one year terms unless terminated by either party no
later than 90 days prior to each June 30 annual anniversary date. If any of
Messrs. Johnson, Judd, Syvarth or Zielke were to leave us, our business,
financial condition, results of operations, cash flows and growth could suffer.
Our growth will also continue to depend, to a large degree, upon our ability to
attract and retain additional skilled management personnel.

Quarterly Fluctuations And Seasonality In Our Operating Results Could Cause Our
Stock Price To Fall.
    Our operating results may fluctuate significantly from period to period and
the results for one period may not be indicative of results for other periods.
Our operating results may also fluctuate significantly because of several
factors, including the timing of new restaurant openings and related expenses,
seasonality, profitability of new restaurants, increases or decreases in
comparable restaurant sales, general economic conditions, consumer confidence in
the economy, changes in consumer preferences, competitive factors and weather
conditions.
    The timing of new restaurant openings may result in significant fluctuations
in quarterly results as a result of the revenues and expenses associated with
each new restaurant location. We typically incur most preopening costs for a new
restaurant within the two months immediately preceding, and the month of, the
restaurant's opening. In addition, the labor and operating costs for a newly
opened restaurant during the first three to six months of operation are
materially greater than what can be expected after that time, both in aggregate
dollars and as a percentage of restaurant sales. Our growth, operating results
and profitability will depend to a large degree on our ability to increase the
number of our restaurants.
    We also expect seasonality to continue to be a factor in our results of
operations. Historically, our revenues have been moderately higher in the first
and fourth quarters due to weather conditions, major sporting events and the
year-end holidays. Our revenues in most of our restaurants have been lower
during the summer months of each year, and we expect lower second and third
quarter revenues to continue in the future. In addition, for accounting
purposes, the first, second and third quarters of each fiscal year consist of 12
weeks and the fourth quarter consists of 16 or 17 weeks. As a result, some of
the variations in our operating results may be attributable to the different
lengths of the fiscal quarters. These quarterly fluctuations and seasonality may
cause our operating results to fall below the expectations of securities
analysts and investors, which could cause our stock price to fall. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Quarterly Fluctuations, Seasonality and Inflation."

Our Operations Depend On Governmental Licenses And Regulation.
    We are subject to numerous federal, state and local laws affecting our
business. Each restaurant location is subject to licensing and regulation by a
number of governmental authorities, which may include alcoholic beverage
control, amusement and state and municipality health and safety and fire
agencies. Our business depends, in particular, on obtaining and maintaining
required food service and liquor licenses for each of our restaurants. If we
fail to obtain and maintain all necessary licenses or if government regulation
of our business changes, we may be forced to delay or cancel new restaurant
openings and close or reduce operations at existing locations, which could
materially adversely affect our operating results and profitability.
    Our operations are particularly dependent on holding the proper governmental
licenses concerning the sale of alcohol. In fiscal year 2003, 58% of our sales
were derived from alcoholic beverages. Each restaurant is required to obtain,
directly or indirectly, a license to sell alcoholic beverages on the premises
from a state authority and, in certain locations, county and municipal
authorities. Typically, licenses must be renewed annually and may be revoked or
suspended for cause at any time. Alcoholic beverage control regulations govern
numerous aspects of the daily operations of each restaurant location, including
the minimum age of patrons and employees, hours of operation, advertising
practices, wholesale purchasing, inventory control and handling, and storage and
dispensing of alcoholic beverages. Although we have not encountered any material
problems relating to alcoholic beverage licenses or alcoholic beverage control
regulations to date, the failure to receive or retain a liquor license in a
particular location could adversely affect our ability to obtain such a license
elsewhere and could materially adversely affect our operating results.

We May Face Liability Under "Dram-Shop" Statutes.
    The sale of alcoholic beverages subjects us to "dram-shop" statutes in 18 of
the 21 states in which our restaurants are located. These statutes generally
provide a person injured by an intoxicated person with the right to recover
damages from an establishment that wrongfully served alcoholic beverages to the
intoxicated individual. Recent litigation against restaurant chains has resulted
in significant judgments, including punitive damages, under dram shop statutes.
We carry liquor liability coverage as part of our existing comprehensive general
liability insurance, which coverage we believe is consistent with that carried
by other entities serving alcoholic beverages. Significant exposure to liquor
liability claims may result in our

                                      -11-
<PAGE>

experiencing higher costs than expected as a result of higher insurance premiums
and deductible claims. If we sustain significant adverse liquor liability claims
in the future, liquor liability insurance may become difficult or impossible to
obtain. If we fail to maintain our insurance coverage or if a judgment against
us is rendered under a dram-shop statute in excess of our liability coverage, we
could suffer a material adverse effect on our business, financial condition,
operating results and cash flows. Further, adverse publicity resulting from such
allegations may materially adversely affect us and our restaurants.

Federal And State Minimum Wage Laws Apply To A Number Of Our Employees And May
Increase Our Costs.
    Various federal, state and local labor laws and license and permit
requirements govern and affect our relationship with our employees, including
such matters as minimum wage requirements, overtime and other working
conditions. A significant number of hourly personnel at our restaurants are paid
at rates related to the federal minimum wage and, accordingly, legislated
increases in the minimum wage will increase labor costs at our restaurants.
Significant additional government-imposed increases in minimum wages, paid
leaves of absence, mandated health benefits or increased tax reporting and tax
payment requirements for employees who receive gratuities could be detrimental
to the economic viability of our operations. In addition, we are subject to
extensive rules and regulations with respect to discriminatory practices and
accommodation of persons with disabilities.

Adverse Publicity Concerning Customer Complaints Or Litigation May Harm Our
Business.
    We may be from time to time the subject of complaints or litigation from
customers alleging beverage and food-related illness, injuries suffered on our
premises, or other quality, health or operational concerns. Adverse publicity
resulting from these allegations may materially affect us, regardless of whether
such allegations are true or whether we are ultimately held liable. These
allegations may also divert financial and management resources that would
otherwise be used to benefit the future performance of our operations.

Increased Food And Alcohol Costs Could Materially Adversely Affect Our Operating
Results.
    Among other factors, the success of our business and our operating results
are dependent in part upon our ability to anticipate and react to changes in
food and alcohol costs and the mix between our food and liquor revenues. Various
factors beyond our control, such as adverse weather conditions; increases in
federal, state or local taxes, or other governmental regulation; or war, may
affect food and liquor costs. We may not be able to anticipate and react to
changing food and liquor costs by adjusting purchasing practices and
implementing menu changes and price adjustments, and a failure to do so could
materially adversely affect our business, financial condition, operating results
and cash flows. There can be no assurance that changes in our sales mix will not
adversely affect our profitability.

If We Are Unable To Secure The Exclusive Use Of Our Trademarks, Our Business
Maybe Adversely Affected.
    We are aware of names and marks similar to our service marks that are used
by other persons in certain geographic areas. We believe such uses will not have
a material adverse effect on us, as either the "Bailey's" or "Fox and Hound"
tradenames may be used if the other name is unavailable, but there can be no
assurance that such marks will be available for use by us in all locations or
that we will be able to secure the exclusive use of such marks. If we are unable
to secure and maintain the exclusive use of our trademarks and tradenames, our
business may be adversely affected.

Our Directors And Executive Officers And An Existing Stockholder Have
Considerable Control Over Our Company, Which May Lead To Conflicts With Other
Stockholders Over Corporate Governance.
    Our directors and executive officers and Jamie B. Coulter beneficially own
collectively approximately 38.6% of our outstanding common stock. As a result,
these persons, acting alone or together, will be able to significantly influence
all matters requiring stockholder approval, including the election of directors
and the approval of mergers and other business combination transactions, and
they may exercise this ability in a manner that advances their best interests
and not necessarily those of other stockholders.

We Have Implemented Anti-Takeover Provisions That Could Discourage Or Prevent A
Takeover, Even If An Acquisition Would Be Beneficial To Our Stockholders.
    Provisions of our certificate of incorporation, as amended, and bylaws, as
well as provisions of Delaware law, could make it more difficult for a third
party to acquire us, even if doing so would be beneficial to our stockholders.
    These provisions include provisions:

    - Establishing a classified board of directors requiring that members of our
board of directors be elected in different years;

    - Authorizing the issuance of "blank check" preferred stock that could be
issued by our board of directors to increase the number of outstanding shares,
facilitate implementation of a stockholder rights plan (or "poison pill") or
change the balance of voting control and thwart a takeover attempt;

                                      -12-
<PAGE>

    - Prohibiting cumulative voting in the election of directors, which would
otherwise allow less than a majority of our stockholders to elect director
candidates;

    - Limiting the ability of our stockholders to call special meetings of our
stockholders; and

    - Establishing advance notice requirements for nominations for election to
our board of directors and for proposing matters that can be acted upon by our
stockholders at stockholder meetings.

    In addition, Section 203 of the General Corporation Law of the State of
Delaware and the terms of our employment agreements and Option Plans may
discourage, delay or prevent a change in control. See "Description of Capital
Stock -- Preferred Stock," "Description of Capital Stock - Certain Anti-Takeover
Provisions," "Management" and "Principal and Selling Stockholders."

A Single Vendor Handles Much Of Our Accounting and Administrative Services.
    Franchise Services Company handles much of our accounting and administrative
services. While we believe we could replace this vendor, any disruption of
services by this vendor or any change to a new vendor could adversely affect our
restaurants.

The Risk Of Future Terrorist Attacks May Adversely Impact Our Revenue.
    Recent terrorist warnings, both in the United States and internationally,
suggest the possibility of future terrorist attacks, which together with the
unpredictability of future military action and other responses to such terrorist
attacks has resulted in economic uncertainty. The occurrence of future terrorist
attacks may adversely affect our business and make it more difficult to forecast
our future results of operation.

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

    All of our restaurants are located in leased space with the exception of the
restaurant in Columbia, South Carolina, which is owned by us. Most initial lease
terms range from five to ten years, with multiple renewal options. All of our
leases provide for a minimum annual rent, and some leases call for additional
rent based on sales volume at the particular restaurant over specified minimum
levels. Generally, the leases are net leases which require us to pay the costs
of insurance, taxes and a portion of lessors' operating cost. See
"Business-Locations."
    Our executive offices are located at 9300 E. Central, Suite 100, Wichita,
Kansas 67206. We believe there is sufficient office space available at favorable
leasing terms in the Wichita, Kansas area to satisfy the additional needs of the
Company that may result from future expansion.

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

    On February 28, 2001, Patrick O'Shea, David W. Faber, Ann Swanson, Stacy
Gregory, Wes L. Patterson, Dale Sproat, Mark Thagard, and Patrick Wilson filed a
complaint on their own behalf and on behalf of other similarly situated persons
against us, Fox & Hound of Indiana, Inc., our subsidiary; Gary Judd, our
President; Steven M. Johnson, our Chief Executive Officer; J.C. Weinberg, our
former Chief Operating Officer; and Kenneth Syvarth, our Chief Operating
Officer, in the United States District Court for the Southern District of
Indiana.
    The plaintiffs alleged that they were employed by the defendants with the
titles of manager-in-training, assistant manager, and/or general manager, and
that we and the other defendants willfully and in bad faith failed to pay the
plaintiffs overtime pay for hours worked in excess of forty hours per week in
violation of the provisions of the Fair Labor Standards Act (FLSA). The
plaintiffs' complaint sought (i) declaratory judgment that the Company and other
defendants violated the plaintiffs' legal rights, (ii) an accounting of
compensation to which the defendants were owed, (iii) monetary damages in the
form of back pay compensation and benefts, unpaid entitlements, liquidated
damages, and pre-judgment and post-judgment interest, and (iv) attorneys' fees
and costs.
    On June 4, 2002, the court entered an order allowing the plaintiffs to send
a notice to all persons who had worked for us under the employee-manager titles
since February 29, 1998, so that such persons could decide whether to opt-in to
the collective action. Forty individuals opted in; however, only 18 of the 40
individuals were ultimately allowed to opt-in by the court. The parties and
their counsel, without admitting liability or violation of the FLSA and
specifically denying any illegal or improper conduct on the part of the
defendants, considered that the interests of all concerned were best served by
settlement and dismissal of this action. Therefore, the parties entered into a
settlement agreement in December 2003. The magistrate approved the settlement
agreement on December 24, 2003, the terms of which are confidential. This legal
proceeding has been satisfactorily resolved and concluded.
    On October 2, 2000, R&A Bailey & Company of Dublin, Ireland, filed a notice
of opposition in the Trademark Trial and Appeal Board ("TTAB") of the U.S.
Patent and Trademark Office to the Company's U.S. service mark applications for
"BAILEY'S PUB & GRILLE" (color), "BAILEY'S PUB & GRILLE" (stylized), and
"BAILEY'S PUB & GRILLE."

                                      -13-
<PAGE>

Additionally, on November 14, 2000, R&A Bailey & Company filed a petition in the
TTAB of the U.S. Patent and Trademark Office to cancel the Company's U.S.
service mark registrations for "7 BAILEY'S SPORTS GRILLE" (+ Design), "SERIOUS
FUN 7 BAILEY'S SPORTS GRILLE" (+ Design), and "BAILEY'S SPORTS GRILLE."
    R&A Bailey & Company alleged that the cited registrations and applications
caused it damage, were likely to create a likelihood of confusion, mistake, or
deception, and would likely dilute and lessen its "famous" marks in violation of
the Lanham Act. R&A Bailey & Company sought cancellation of our registrations
and opposed the registration of our applications for registration of the
above-listed marks.
    On December 10, 2002, the parties executed a settlement agreement to resolve
both the opposition and cancellation matters, the terms of which require us to
amend the subject applications and registrations to remove "bar services" from
the description of services. We filed the necessary Requests for Amendments with
the TTAB on December 20, 2002. The U.S. Patent and Trademark office accepted and
approved the requested amendments in December 2003. This legal proceeding has
been satisfactorily resolved and concluded.

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

    No matters were submitted to a vote of the holders of our Common Stock
during the fourth quarter of the Company's fiscal year ended December 30, 2003.

                                     PART II

Item 5.       Market for the Registrant's Common Equity and Related Stockholder
              Matters
              -----------------------------------------------------------------

Market Information

     Our common stock has traded on the Nasdaq National Market under the symbol
"TENT" since our initial public offering on July 17, 1997. The following table
sets forth, for the periods indicated, the high and low closing prices per share
of our common stock, as reported by the Nasdaq National Market. These quotations
reflect the inter-dealer prices, without retail markup, markdown or commission
and may not necessarily represent actual transactions.

         Fiscal Year 2001                    High              Low
         ----------------                    ----              ---
         First Quarter                        3.31             1.34
         Second Quarter                       3.20             2.10
         Third Quarter                        3.32             2.50
         Fourth Quarter                       3.20             2.19

         Fiscal Year 2002                    High              Low
         ----------------                    ----              ---
         First Quarter                        8.50             3.31
         Second Quarter                      15.94             7.62
         Third Quarter                       16.99             8.38
         Fourth Quarter                       9.76             6.08

         Fiscal Year 2003                    High              Low
         ----------------                    ----              ---
         First Quarter                        9.68             7.10
         Second Quarter                       9.21             7.05
         Third Quarter                       10.95             9.10
         Fourth Quarter                      12.46            10.30


Holders

    As of March 22, 2004, there were 49 holders of record our common stock.

Dividends

    We have not paid any cash dividends on our common stock and do not intend to
pay cash dividends on our common stock for the foreseeable future. We intend to
retain future earnings to finance future development.

                                      -14-
<PAGE>

Item 6.       Selected Financial Data
              -----------------------

    The following selected financial data should be read in conjunction with the
financial statements and the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Form 10-K. The historical income statement data for the 52 weeks ended
December 30, 2003, the 53 weeks ended December 31, 2002, and for the 52 weeks
ended December 25, 2001, December 26, 2000, and December 28, 1999, the balance
sheet data as of December 30, 2003, December 31, 2002, December 25, 2001,
December 26, 2000, and December 28, 1999 are derived from our audited financial
statements.
<TABLE>
<CAPTION>
                                                                                                   52 weeks ended
                                                 52 weeks ended   53 weeks ended   -----------------------------------------------
                                                 Dec. 30, 2003    Dec. 31, 2002    Dec. 25, 2001    Dec. 26, 2000    Dec. 28, 1999
                                                 -------------    -------------    -------------    -------------    -------------
                                                                           (In thousands, except per share data)
<S>                                              <C>              <C>              <C>              <C>              <C>
     Income Statement Data:
     Net sales                                   $     121,708    $     102,464    $      70,052    $      54,928    $      55,020
     Costs and expenses:
       Cost of sales                                    32,006           26,815           18,955           14,515           15,115
       Operating expenses                               63,490           52,067           35,079           27,713           28,061
       Depreciation and amortization                     6,036            5,177            3,616            3,504            3,606
       Preopening costs                                  1,822            1,654            1,218              500              487
       Provision for asset impairment
          and store closing                              2,008               --               --            2,362            1,087
                                                 -------------    -------------    -------------    -------------    -------------
     Restaurant costs and expenses                     105,362           85,713           58,868           48,594           48,356
                                                 -------------    -------------    -------------    -------------    -------------
     Restaurant operating income                        16,346           16,751           11,184            6,334            6,664
     General and administrative expenses                 6,293            5,181            3,991            3,769            3,901
     Goodwill amortization                                  --               --              244              244              244
     Loss on disposal of assets                             58               31              134               67              124
                                                 -------------    -------------    -------------    -------------    -------------
     Income from operations                              9,995           11,539            6,815            2,254            2,395
     Other income (expense)                               (265)            (388)            (863)          (1,080)          (1,174)
                                                 -------------    -------------    -------------    -------------    -------------
     Income from continuing operations
       before income taxes                               9,730           11,151            5,952            1,174            1,221
     Provision for income taxes                          3,192            3,961            2,200              336              413
                                                 -------------    -------------    -------------    -------------    -------------
     Income from continuing operations
       before cumulative effect of a
       change in accounting principle                    6,538            7,190            3,752              838              808
     Income (loss) from discontinued operations             --               13             (423)              10                9
                                                 -------------    -------------    -------------    -------------    -------------
     Income before cumulative effect of a
       change in accounting principle                    6,538            7,203            3,329              848              817
     Cumulative effect of a change in
       accounting principle                                 --               --               --               --           (1,128)
                                                 -------------    -------------    -------------    -------------    -------------
     Net income (loss)                           $       6,538    $       7,203    $       3,329    $         848    $        (311)
                                                 =============    =============    =============    =============    =============

     Earnings (loss) per share information:
     Basic
       Income from continuing operations
          before cumulative effect of a
          change in accounting principle         $        0.67    $        0.77    $        0.43    $        0.09    $        0.08
       Income (loss) from discontinued operations           --               --            (0.05)              --               --
       Cumulative effect of accounting change,
          net of tax                                        --               --               --               --            (0.11)
                                                 -------------    -------------    -------------    -------------    -------------
       Net income (loss)                         $        0.67    $        0.77    $        0.38    $        0.09    $       (0.03)
                                                 =============    =============    =============    =============    =============
       Weighted average number of common
          shares outstanding                             9,792            9,344            8,670            9,323           10,348
     Diluted
       Income from continuing operations
          before cumulative effect of a change
          in accounting principle                $        0.64    $        0.73    $        0.43    $        0.09    $        0.08
       Income (loss) from discontinued operations           --               --            (0.05)              --               --
       Cumulative effect of accounting change,
          net of tax                                        --               --               --               --            (0.11)
                                                 -------------    -------------    -------------    -------------    -------------
       Net income (loss)                         $        0.64    $        0.73    $        0.38    $        0.09    $       (0.03)
                                                 =============    =============    =============    =============    =============
       Weighted average number of common
          shares outstanding                            10,228            9,801            8,694            9,329           10,352
</TABLE>
                                      -15-
<PAGE>

<TABLE>
<CAPTION>
                                                Dec. 30, 2003    Dec. 31, 2002    Dec.  25, 2001   Dec. 26, 2000    Dec. 28, 1999
                                                -------------    -------------    -------------    -------------    -------------
     Balance Sheet Data:                                                          (In thousands)
<S>                                             <C>              <C>              <C>              <C>              <C>
     Working capital (deficit)                  $      (5,861)   $      (5,618)   $      (5,100)   $      (3,435)   $        (489)

     Total assets                                      67,613           55,895           43,150           40,128           41,352

     Notes payable, including current portion           3,635            2,540           10,350           11,980           14,395

     Stockholders' equity                              49,320           43,284           24,149           20,987           22,232
</TABLE>

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

General

     You should read the following discussion and analysis in conjunction with
the information set forth under "Selected Financial Data" and the Financial
Statements and Notes thereto included elsewhere in this Form 10-K.
     We began operations February 20, 1997 with three Fox and Hound and eight
Bailey's restaurants. We have opened and closed restaurants since that date as
follows:
<TABLE>
<CAPTION>
                                         1997(1)   1998     1999     2000    2001    2002    2003   2004(2)
                                         ----      ----     ----     ----    ----    ----    ----   ----
<S>                                        <C>       <C>      <C>      <C>     <C>     <C>     <C>    <C>
     Open at beginning of period           11        16       32       35      38      43      54     64
     Opened during period                   5        16        5        3       5      12      10      2
     Closed during period                  --        --        2       --      --       1      --     --
                                         ----      ----     ----     ----    ----    ----    ----   ----
     Open at end of period                 16        32       35       38      43      54      64     66
                                         ====      ====     ====     ====    ====    ====    ====   ====
</TABLE>
---------------

(1) From February 20, 1997 through December 30, 1997
(2) From December 31, 2003 through March 22, 2004

     The components of our net sales are food and non-alcoholic beverages,
alcoholic beverages, and entertainment and other (principally billiard table
rental fees). For fiscal years 2003 and 2002, the components of net sales were
as follows: (i) food and non-alcoholic beverages: 34.2% and 33.1%, respectively;
(ii) alcoholic beverages: 58.3% and 58.5%, respectively; and (iii) entertainment
and other: 7.5% and 8.4%, respectively.
     The components of our cost of sales primarily include direct costs of food,
non-alcoholic beverages and alcoholic beverages. These costs are generally
variable and will fluctuate with changes in sales volume and sales mix.
     Components of restaurant operating expenses include operating payroll and
fringe benefits, and occupancy, maintenance and utilities. All but one of our
locations are leased and provide for a minimum annual rent, with some leases
calling for additional rent based on sales volume at the particular location in
excess of specified minimum sales levels.
     Depreciation and amortization costs primarily include depreciation and
amortization of capital expenditures for restaurants.
     Preopening costs include labor costs, costs of hiring and training
personnel and certain other costs relating to opening new restaurants.
     The provision for asset impairment reflects the charges made for the write
down of certain underperforming restaurant assets. We periodically review our
long lived assets that are held and used in our restaurant operations for
indications of impairment. The provision for restaurant closing primarily
includes the remaining lease obligation for closed restaurants.
     General and administrative expenses include all corporate and
administrative functions that support existing operations and provide an
infrastructure to support future growth. Management, supervisory and staff
salaries, employee benefits, travel, information systems, training, rent and
office supplies, as well as accounting services fees, are major items in this
category.
     In calculating comparable restaurant sales, we include a restaurant in the
comparable restaurant base after it has been in operation for 18 full months. As
of March 22, 2004, there were 53 restaurants in the comparable restaurant base.
Annualized average weekly sales are computed by dividing net sales during the
period by the number of store operating weeks and multiplying the result by 52.

                                      -16-
<PAGE>

Results of Operations

     The following discussion of results of operations should be read in
conjunction with the information under the caption "Selected Financial Data,"
our Consolidated Financial Statements and related Notes thereto and the other
financial data included elsewhere in this Form 10-K. We operate on a 52 or 53
week fiscal year ending the last Tuesday in December. Fiscal years 2001 and 2003
each consisted of 52 weeks and fiscal year 2002 consisted of 53 weeks. Our
fiscal quarters consist of three accounting periods of 12 weeks each and a final
period of 16 or 17 weeks.
     The following table sets forth for the periods indicated the percentages
which certain items included in the Condensed Consolidated Statement of Income
bear to net sales and other selected operating data.
<TABLE>
<CAPTION>
                                                                      Year Ended(1)
                                                           ----------------------------------
                                                           Dec. 30,     Dec. 31,     Dec. 25,
                                                             2003         2002         2001
                                                           --------     --------     --------
<S>                                                        <C>          <C>          <C>
     Income Statement Data:
        Net sales                                             100.0%       100.0%       100.0%
        Costs and expenses:
           Cost of sales                                       26.3         26.2         27.1
           Operating expenses                                  52.2         50.8         50.1
           Depreciation and amortization                        5.0          5.1          5.2
           Preopening costs                                     1.5          1.6          1.6
           Provision for asset impairment                       1.6           --           --
                                                           --------     --------     --------
        Restaurant costs and expenses                          86.6         83.7         84.0
                                                           --------     --------     --------
        Restaurant operating income                            13.4         16.3         16.0
        General and administrative                              5.2          5.0          5.7
        Goodwill amortization                                    --           --          0.4
        Loss on disposal of assets                               --           --         (0.2)
                                                           --------     --------     --------
        Income from operations                                  8.2         11.3          9.7
           Other income/(expense)                                --         (0.1)          --
           Interest expense                                    (0.2)        (0.3)        (1.2)
                                                           --------     --------     --------
        Income from continuing operations
           before income taxes                                  8.0         10.9          8.5
        Provision for income taxes                              2.6          3.9          3.1
                                                           --------     --------     --------
        Income from continuing operations                       5.4          7.0          5.4
        Income (loss) from discontinued operations               --           --         (0.6)
                                                           --------     --------     --------
        Net income                                              5.4%         7.0%         4.8%
                                                           ========     ========     ========

Restaurant Operating Data:
        Number of locations at end of period                     64           54           43
        Number of store operating weeks (2)                   3,052        2,599        2,071
        Annualized average weekly sales per location (3)   $  2,073     $  2,056     $  1,780
</TABLE>
--------------------------

     (1)      The Company operates on a 52 or 53 week fiscal year ending the
              last Tuesday in December.  The fiscal quarters for the Company
              consist of accounting periods of 12, 12, 12 and 16 or 17 weeks,
              respectively.
     (2)      Store operating weeks represents the number of weeks all locations
              were open during the period.
     (3)      Annualized average weekly sales per location are computed by
              dividing net sales during the period by the number of store
              operating weeks and multiplying the result by fifty-two.

Fifty-two Weeks Ended December 30, 2003 Compared to Fifty-three Weeks Ended
December 31, 2002

    Net sales increased $19,244,000 (18.8%) for the 52 weeks ended December 30,
2003 to $121,708,000 from $102,464,000 for the 53 weeks ended December 31, 2002,
which was attributable to a 0.8% increase in annualized average weekly sales
($2,073,000 versus $2,056,000) and a 17.4% increase in store operating weeks
(3,052 versus 2,599). Same store sales decreased 2.2% for the 52 weeks ended
December 30, 2003.
    Costs of sales increased $5,191,000 (19.4%) for the 52 weeks ended December
30, 2003 to $32,006,000 from $26,815,000 for the 53 weeks ended December 31,
2002, and increased as a percentage of net sales to 26.3% from 26.2%. This
increase as a percentage of net sales was principally attributable to an
increase in the cost of certain raw products offset by the impact of a price
increase taken in the first quarter of 2003.
    Restaurant operating expenses increased $11,422,000 (21.9%) for the 52 weeks
ended December 30, 2003 to $63,490,000 from $52,067,000 for the 53 weeks ended
December 31, 2002, and increased as a percentage of net sales to 52.2% from
50.8%. This increase as a percentage of net sales was principally attributable
to an increase in occupancy costs of new units and an increase in the cost of
liability insurance premiums and claims expense.

                                      -17-
<PAGE>

    Depreciation and amortization increased $859,000 (16.6%) for the 52 weeks
ended December 30, 2003 to $6,036,000 from $5,177,000 for the 53 weeks ended
December 31, 2002, and decreased as a percentage of net sales to 5.0% from 5.1%.
This increase in expense is due to additional depreciation on ten restaurants
opened since December 31, 2002, net of older restaurants with fully depreciated
equipment during the year.
    Preopening costs increased $168,000 (10.2%) for the 52 weeks ended December
30, 2003 to $1,822,000 from $1,654,000 for the 53 weeks ended December 31, 2002,
and decreased to 1.5% from 1.6% as a percentage of net sales. Preopening costs
for fiscal year 2003 were related to the opening of ten restaurants in fiscal
year 2003 and partial preopening costs related to restaurants that will open in
fiscal year 2004. Preopening costs for fiscal year 2002 were related to the
opening of twelve restaurants in fiscal year 2002 and costs related to
restaurants that opened in fiscal year 2003.
    Provision for asset impairment was $2,008,000 for the 52 weeks ended
December 30, 2003.
    General and administrative expenses increased $1,112,000 (21.5%) for the 52
weeks ended December 30, 2003 to $6,293,000 from $5,181,000 for the 53 weeks
ended December 31, 2002, due to an increase in corporate infrastructure to
support our expansion. General and administrative expenses increased as a
percentage of net sales to 5.2% from 5.0%.
    Other income was $2,000 for the 52 weeks ended December 30, 2003 compared to
other expense of $46,000 for the 53 weeks ended December 31, 2002. This expense
in 2002 was related to the write-off of an interest in a limited partnership
investment.
    Loss on disposal of assets was $58,000 for the 52 weeks ended December 30,
2003 and $31,000 for the 53 weeks ended December 31, 2002. The losses reflect
the disposal of certain video games for both years.
    Interest expense decreased $76,000 for the 52 weeks ended December 30, 2003
to $266,000 from $342,000 for the 53 weeks ended December 31, 2002. This
decrease is due to both a lower interest rate and lower average balance
applicable to our line of credit in the current fiscal year compared with the
prior fiscal year.
    The effective income tax rate on income was 32.8% for the 52 weeks ended
December 30, 2003 as compared to 35.5% for the 53 weeks ended December 30, 2002.
This decrease was primarily due to the impact of the credit for social security
taxes paid on tips in excess of minimum wage relative to the amount of income
before taxes and a decrease in the effective state tax rate.
    Income from discontinued operations was $13,000 for the 53 weeks ended
December 31, 2002 due to income applicable to the restaurant closed on March 31,
2002.

Fifty-three Weeks Ended December 31, 2002 Compared to Fifty-two Weeks Ended
December 25, 2001

    Net sales increased $32,412,000 (46.3%) for the 53 weeks ended December 31,
2002 to $102,464,000 from $70,052,000 for the 52 weeks ended December 25, 2001,
which was attributable to a 15.5% increase in annualized average weekly sales
($2,056,000 versus $1,780,000) and a 25.5% increase in store operating weeks
(2,599 versus 2,071). Same store sales increased 6.6% for the 53 weeks ended
December 31, 2002.
    Costs of sales increased $7,860,000 (41.5%) for the 53 weeks ended December
31, 2002 to $26,815,000 from $18,955,000 for the 52 weeks ended December 25,
2001, and decreased as a percentage of net sales to 26.2% from 27.1%. This
decrease as a percentage of net sales was principally attributable to lower food
costs associated with new barbeque items and price increases on selected menu
items implemented in the fourth quarter of fiscal year 2002.
    Restaurant operating expenses increased $16,988,000 (48.4%) for the 53 weeks
ended December 31, 2002 to $52,067,000 from $35,079,000 for the 52 weeks ended
December 25, 2001, and increased as a percentage of net sales to 50.8% from
50.1%. This increase as a percentage of net sales was principally attributable
to higher hourly labor costs on new restaurants during the initial months after
opening, increases in group insurance costs and workers compensation premiums
and higher advertising costs as a result of radio advertising in several
markets, offset by leveraging fixed expenses against a higher sales volume.
    Depreciation and amortization increased $1,561,000 (43.2%) for the 53 weeks
ended December 31, 2002 to $5,177,000 from $3,616,000 for the 52 weeks ended
December 25, 2001, and decreased as a percentage of net sales to 5.1% from 5.2%.
This increase in expense is due to additional depreciation on twelve restaurants
opened net of one restaurant closed since December 25, 2001.
    Preopening costs increased $436,000 (35.8%) for the 53 weeks ended December
31, 2002 to $1,654,000 from $1,218,000 for the 52 weeks ended December 25, 2001,
and remained 1.6% as a percentage of net sales. Preopening costs for fiscal year
2002 were related to the opening of twelve restaurants in fiscal year 2002 and
partial preopening costs related to restaurants that will open in fiscal year
2003. Preopening costs for fiscal 2001 were related to the opening of five
restaurants in fiscal year 2001 and costs related to restaurants that opened in
fiscal year 2002.
     General and administrative expenses increased $1,190,000 (29.8%) for the 53
weeks ended December 31, 2002 to $5,181,000 from $3,991,000 for the 52 weeks
ended December 25, 2001, due to an increase in corporate infrastructure to
support our expansion. General and administrative expenses decreased as a
percentage of net sales to 5.0% from 5.7%, due to higher sales volume.
     Other expense was $46,000 for the 53 weeks ended December 31, 2002. This
expense was related to the write-off of an interest in a limited partnership
investment.

                                      -18-
<PAGE>

    Loss on disposal of assets was $31,000 for the 53 weeks ended December 31,
2002 and $134,000 for the 52 weeks ended December 25, 2001. The losses reflect
the disposal of certain video games for both years.
    Interest expense decreased $522,000 for the 53 weeks ended December 31,
2002 to $342,000 from $864,000 for the 52 weeks ended December 25, 2001. This
decrease is due to both a lower interest rate and lower average balance
applicable to our line of credit in the current fiscal year compared with the
prior fiscal year.
    The effective income tax rate on income was 35.5% for the 53 weeks ended
December 31, 2002 as compared to 36.8% for the 52 weeks ended December 25, 2001.
This decrease was primarily due to the impact of the credit for social security
taxes paid on tips in excess of minimum wage relative to the amount of income
before taxes.
    Income from discontinued operations was $13,000 for the 53 weeks ended
December 31, 2002 due to income applicable to the restaurant closed on March 31,
2002.

Quarterly Fluctuations, Seasonality and Inflation

    Our operating results may fluctuate significantly from period to period and
the results for one period may not be indicative of results for other periods.
Our operating results may also fluctuate significantly because of several
factors, including the timing of new restaurant openings and related expenses,
seasonality, profitability of new restaurants, increases or decreases in
comparable restaurant sales, general economic conditions, consumer confidence in
the economy, changes in consumer preferences, competitive factors and weather
conditions.
    The timing of new restaurant openings may result in significant fluctuations
in quarterly results as a result of the revenues and expenses associated with
each new restaurant location. We typically incur most preopening costs for a new
restaurant within the two months immediately preceding, and the month of, the
restaurant's opening. In addition, the labor and operating costs for a newly
opened restaurant during the first three to six months of operation are
materially greater than what can be expected after that time, both in aggregate
dollars and as a percentage of restaurant sales. Our growth, operating results
and profitability will depend to a large degree on our ability to increase the
number of our restaurants.
    We expect seasonality to continue to be a factor in our results of
operations. Historically, our revenues have been moderately higher in the first
and fourth quarters due to weather conditions, major sporting events and the
year-end holidays. Our revenues in most of our restaurants have been lower
during the summer months of each year, and we expect lower second and third
quarter revenues to continue in the future. In addition, for accounting
purposes, the first, second and third quarters of each fiscal year consist of 12
weeks and fourth quarter consists of 16 or 17 weeks. As a result, some of the
variations in our operating results may be attributable to the different lengths
of the fiscal quarters. These quarterly fluctuations may cause our operating
results to fall below the expectations of securities analysts and investors,
which could cause our stock price to fall.
    The primary inflationary factors affecting our operations include food,
liquor and labor costs. Significant numbers of our personnel are paid at rates
related to the federal minimum wage which is currently $5.15 per hour.
Accordingly, increases in the minimum wage will increase our labor costs. As
costs of food and labor have increased, we have historically been able to offset
these increases through economies of scale and improved operating procedures. To
date, inflation has not had a material impact on operating margins.

Liquidity and Capital Resources

    As is customary in the restaurant industry, we operate with negative working
capital. Negative working capital increased $243,000 to $5,861,000 as of
December 30, 2003 from $5,618,000 as of December 31, 2002. This increase is
attributable primarily to the cost of purchases of property and equipment and
common stock in excess of working capital provided by operations and net
proceeds from the line of credit. Cash decreased $303,000 to $813,000 as of
December 30, 2003 from $1,116,000 as of December 31, 2002. We do not have
significant receivables or inventory and receive trade credit based upon
negotiated terms in purchasing food and supplies. Because funds available from
cash sales are not needed immediately to pay for food and supplies, or to
finance inventory, they may be considered as a source of financing for
noncurrent capital expenditures.
    On September 1, 1998 we entered into a loan agreement with Intrust Bank,
N.A. (the "Line of Credit") which provides for a line of credit of $20,000,000
subject to certain limitations based on earnings before interest, taxes,
depreciation and amortization of the past fifty-two weeks and the amount of
capital lease obligations on personal property. On October 1, 2003, this line of
credit was amended to extend the original term of the agreement by three years.
All other terms of the agreement remained unchanged. The Line of Credit is
secured by substantially all of our assets. The Line of Credit requires monthly
payments of interest only until November 1, 2006, at which time equal monthly
installments of principal and interest are required as necessary to fully
amortize the outstanding indebtedness plus future interest over a period of four
years. Interest is accrued at 1/2% below the prime rate as published in The Wall
Street Journal. Proceeds from the Line of Credit are being used for restaurant
development. As of December 30, 2003, we had borrowed $3,635,000 under the Line
of Credit. We are in compliance with all debt covenants.

                                      -19-
<PAGE>

    Cash flows from operations were $16,195,000 for the 52 weeks ended December
30, 2003 compared to $13,852,000 for the 53 weeks ended December 31, 2002.
Purchases of property and equipment were $16,758,000 in the 52 weeks ended
December 30, 2003 compared to $17,903,000 in the 53 weeks ended December 31,
2002. Net proceeds from the revolving note payable to bank were $1,095,000 for
the 52 week period ending December 30, 2003 compared to net payments on the
revolving note payable to bank of $7,810,000 for the 53 weeks ending December
31, 2002. At December 30, 2003, we had $813,000 in cash and cash equivalents.
    We intend to open twelve to fifteen new locations in fiscal year 2004 and
twelve to fifteen in fiscal year 2005. At March 22, 2004, two restaurants had
been opened in fiscal 2004, five restaurants were under construction and an
additional six contracts had been executed. We are currently evaluating
locations in markets familiar to our management team. However, the number of
locations actually opened and the timing thereof may vary depending upon our
ability to locate suitable sites and negotiate favorable leases. We expect to
expend approximately $20 to $25 million to open new locations over the next
twelve months.
    We believe the funds available from the Line of Credit and cash flow from
operations will be sufficient to satisfy our working capital and capital
expenditure requirements for at least the next twelve months. There can be no
assurance, however, that changes in our operating plans, the acceleration or
modification of our expansion plans, lower than anticipated revenues, increased
expenses, stock repurchases, potential acquisitions or other events will not
cause the us to seek additional financing sooner than anticipated, prevent us
from achieving the goals of our expansion strategy or prevent any newly opened
locations from operating profitably. There can be no assurance that additional
financing will be available on terms acceptable to us or at all.
    A summary of our obligations and commitments to make future payments under
contracts, including debt, lease agreements and the administrative services
agreement is presented below. The long-term debt payments represent principal
payments only. The Company must also make monthly interest payments on the
outstanding debt balance at a rate of 1/2% below the prime rate as published in
The Wall Street Journal (3.50% at December 30, 2003).

<TABLE>
<CAPTION>
                                                  Less than        1-3           4-5          After
     Contractual Obligations          Total         1 Year        Years         Years        5 Years
     -----------------------       -----------   -----------   -----------   -----------   -----------
<S>                                <C>           <C>           <C>           <C>           <C>
     Long-term debt                $ 3,635,000   $        --   $   141,000   $ 1,765,000   $ 1,729,000
     Operating leases               72,780,000     8,186,000    15,536,000    13,643,000    35,415,000
     Other commitments                 843,000       730,600       112,400            --            --
                                   -----------   -----------   -----------   -----------   -----------
     Totals                        $77,258,000   $ 8,916,600   $15,789,400   $15,408,000   $37,144,000
</TABLE>

Critical Accounting Policies and Estimates

    We consider determination of impairment of long-lived assets as a critical
accounting policy because the determination as to whether the long-lived assets
of a restaurant are impaired, and, if impaired, the fair value of such assets,
requires the use of judgment, particularly as it relates to projecting whether
the sum of expected undiscounted future cash flows for the restaurant over an
extended period of time will equal or exceed the carrying value of such assets.
We use the best information available to make the determination; however, actual
future cash flows for a restaurant may vary significantly from the cash flows
projected in conjunction with the impairment assessment. The potential impact on
our financial statements of incorrect judgments regarding impairment of
long-lived assets is that a provision for impairment could be needlessly
recorded if projected future cash flows for a restaurant are significantly
underestimated or a provision for impairment could be deferred until later
determined necessary in a future period if initial projected cash flows are
overestimated. See Note 1 of Notes to Consolidated Financial Statements for a
description of our accounting policy for impairment of long-lived assets.

Forward Looking Statements

    This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. Although we believe that the assumptions
underlying the forward-looking statements contained herein are reasonable, any
of the assumptions could be inaccurate, and, therefore, there can be no
assurance that the forward-looking statements included in this report will prove
to be accurate. Our actual results may differ materially from the
forward-looking statements contained herein. Factors that could cause actual
results to differ from the results discussed in the forward-looking statements
include, but are not limited to, potential increases in food, alcohol, labor,
and other operating costs, changes in competition, the inability to find
suitable new locations, changes in consumer preferences or spending patterns,
changes in demographic trends, the effectiveness of our operating and growth
initiatives and promotional efforts, and changes in government regulation. In
light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be
regarded as a representation by us or any other person that our objectives and
plans will be achieved.

                                      -20-
<PAGE>

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

    Interest Rate Risk

    Our Line of Credit has a variable rate which is directly affected by
changes in U.S. interest rates. The average interest rate of the Line of Credit
was 3.625% for the year ended December 30, 2003. The following table presents
the quantitative interest rate risks at December 30, 2003:

<TABLE>
<CAPTION>
                                                   Principal Amount by Expected Maturity
                                     ---------------------------------------------------------------------
                                                                (In thousands)                                 Fair
                                                                                            There-             Value
     (dollars in thousands)          2004       2005       2006       2007       2008       after    Total    12/30/03
     ----------------------          ----       ----       ----       ----       ----      ------   ------   --------
<S>                                 <C>        <C>        <C>        <C>        <C>         <C>      <C>       <C>
     Variable rate debt             $  --      $  --      $ 141      $ 867      $ 898      $1,729   $3,635    $3,635
     Average Interest Rate--
       1/2% below prime              3.50%      3.50%      3.50%      3.50%      3.50%       3.50%
</TABLE>

Item 8.        Financial Statements and Supplementary Data
               -------------------------------------------

    See the Consolidated Financial Statements listed in the accompanying Index
to Financial Statements on Page F-1 herein. Information required for financial
schedules under Regulation S-X is either not applicable or is included in the
financial statements or notes thereto.

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

       Not applicable.

Item 9A.       Controls and Procedures
               -----------------------

    Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of the our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective. There were no significant
changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
    Certifications of the Chief Executive Officer and Chief Financial Officer
regarding, among other items, disclosure controls and procedures are included
immediately after the signature section of this Form 10-K.

                                    PART III

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

    The information required by this Item 10 will be in our definitive proxy
materials to be filed with the Securities and Exchange Commission and is
incorporated in this Annual Report on Form 10-K by this reference.

Item 11.       Executive Compensation
               ----------------------

    The information required by this Item 11 will be in our definitive proxy
materials to be filed with the Securities and Exchange Commission and is
incorporated in this Annual Report on Form 10-K by this reference.

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

    The information required by this Item 12 will be in our definitive proxy
materials to be filed with the Securities and Exchange Commission and is
incorporated in this Annual Report on Form 10-K by this reference.

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

    The information required by this Item 13 will be in our definitive proxy
materials to be filed with the Securities and Exchange Commission and is
incorporated in this Annual Report on Form 10-K by this reference.

                                      -21-
<PAGE>

Item 14.       Principal Accountant Fees and Services
               --------------------------------------

    The information required by this Item 14 will be in our definitive proxy
materials to be filed with the Securities and Exchange Commission and is
incorporated in this Annual Report on Form 10-K by this reference.

                                      -22-
<PAGE>

                                     PART IV

Item 15.       Exhibits, Financial Statement Schedules, and
               and Reports on Form 8-K
               --------------------------------------------

               (a)   The following documents are filed as part of this report:

                     (1) Financial Statements.

                     See Index to Financial Statements which appears on page
                     F-1 herein.

                     (2) Exhibits

                                       INDEX TO EXHIBITS
                        Exhibit
                        Number                          Exhibit
                        ------                          -------

                         *2.1        Form of Stock for Stock Exchange Agreement
                                     between the Registrant, the Shareholders of
                                     F&H Restaurant Corp., Fox & Hound, Inc.,
                                     Fox & Hound II, Inc. and Bailey's Sports
                                     Grille, Inc. and Certain Limited Partners
                                     of N. Collins Enter- tainment, Ltd., 505
                                     Entertainment, Ltd., Midway Entertain-
                                     ment, Ltd. and F&H Dallas, L.P., dated
                                     February 20, 1997.

                         *3.1        Certificate of Incorporation of the
                                     Registrant.

                         *3.1.1      Amendment to the Certificate of
                                     Incorporation of the Registrant. *3.2
                                     By-laws of the Registrant.

                         *4.1        Specimen Certificate of the Registrant's
                                     Common Stock.

                        *10.1        Form of 1997 Incentive and Nonqualified
                                     Stock Option Plan of the Registrant.

                        *10.2        Form of 1997 Directors' Stock Option Plan
                                     of the Registrant.

                        *10.3        Form of Indemnification Agreement for
                                     officers and directors of the Registrant.

                        *10.4        Non-Competition, Confidentiality and
                                     Non-Solicitation Agree- ment between the
                                     Registrant and Dennis L. Thompson, dated
                                     February 20, 1997.

                        *10.5        Non-Competition, Confidentiality and
                                     Non-Solicitation Agree- ment between the
                                     Registrant and Thomas A. Hager, dated
                                     February 20, 1997.

                        *10.6        Lease by and between Real Alchemy I, L.P.
                                     and Midway Entertainment, Ltd., dated June
                                     1, 1995.

                        *10.6.1      First Amendment to Lease by and between
                                     Real Alchemy I, L.P. and Midway
                                     Entertainment, Ltd., dated December 6,
                                     1996.

                        *10.6.2      Amendment to Lease by and between Real
                                     Alchemy I, L.P. and Midway Entertainment,
                                     Ltd., dated December 6, 1996.

                        *10.7        Lease by and between 505 Center, L.P. and
                                     505 Entertainment, Ltd., dated January 31,
                                     1994.

                        *10.7.1      Amendment to Lease by and between 505
                                     Center, L.P. and 505 Entertainment, Ltd.,
                                     dated December 6, 1996.

                                      -23-
<PAGE>

                       **10.8        Loan Agreement by and among Intrust Bank,
                                     N.A., TENT Finance, Inc., the Registrant,
                                     and various subsidiaries of Registrant, as
                                     "Guarantors," dated September 1, 1998.

                       **10.8.1      First Amendment to Loan Agreement by and
                                     among Intrust Bank, N.A., TENT Finance,
                                     Inc., the Registrant, and various
                                     subsidiaries of Registrant, as
                                     "Guarantors," dated October 30, 2001.

                       **10.8.2      Second Amendment to Loan Agreement by and
                                     among Intrust Bank, N.A., TENT Finance,
                                     Inc., the Registrant, and various
                                     subsidiaries of Registrant, as
                                     "Guarantors," dated June 14, 2002.

                      ***10.8.3      First Restated Loan Amendment to Loan
                                     Agreement by and among Intrust Bank, N.A.,
                                     TENT Finance, Inc., the Registrant, and
                                     various subsidiaries of Registrant, as
                                     "Guarantors," dated October 1, 2003.

                      **10.9         Agreement for Sale and Purchase of Assets
                                     between BMR Restaurants, LLC and Fox &
                                     Hound of Virginia, Inc., dated February 6,
                                     2002.

                       **10.10       Subscription Agreement between Fox & Hound
                                     of Colorado, Inc. and Cool River Restaurant
                                     Denver, L.P., dated April 27, 2000.

                       **10.11       Subscription Agreement between Fox & Hound
                                     of Texas, Inc. and Cool River Restaurant
                                     Austin, L.P., dated April 27, 2000.

                       **10.12       Employment Agreement between the Registrant
                                     and Steven M. Johnson, dated June 12, 2002.

                       **10.13       Employment Agreement between the Registrant
                                     and Kenneth C. Syvarth, dated June 12,
                                     2002.

                       **10.14       Employment Agreement between the Registrant
                                     and James K. Zielke, dated June 12, 2002.

                       **10.15       Employment Agreement between the Registrant
                                     and Gary M. Judd, dated June 12, 2002.

                       **10.16       Fox & Hound of Littleton, Inc. Stockholders
                                     Agreement by and among TENT Finance, Inc.,
                                     Gary M. Judd and James K. Zielke dated as
                                     of June 12, 2002.

                       **10.17       Fox & Hound of Littleton, Inc. Form of
                                     Pledge and Security Agreement.

                      ***14          Code of Ethics

                      ***21.1        Subsidiaries of Registrant.

                      ***24.1        Powers of Attorney (included on the
                                     signature page of this Form 10-K).

                      ***31.1        Certification of Chief Executive Officer
                                     pursuant to Section 302 of the
                                     Sarbanes-Oxley Act

                      ***31.2        Certification of Chief Financial Officer
                                     pursuant to Section 302 of the
                                     Sarbanes-Oxley Act

                                      -24-
<PAGE>

                      ***32.1        Certification by Steven M. Johnson pursuant
                                     to 18 U.S.C. Section 1350, as adopted
                                     pursuant to Section 906 of the
                                     Sarbanes-Oxley Act of 2002.

                      ***32.2        Certification by James K. Zielke pursuant
                                     to 18 U.S.C. Section 1350, as adopted
                                     pursuant to Section 906 of the
                                     Sarbanes-Oxley Act of 2002.

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

               (b)   Reports on Form 8-K filed in the fourth quarter of 2003:

                     During the fourth quarter of 2003, we filed three Form 8-Ks
                     under Item #5 - Other Events, Item 7, Financial Statements,
                     Item 9, Regulation FD Disclosure, and Item 12, Results of
                     Operations, on the following dates: September 25, 2003,
                     September 26, 2003, and November 13, 2003.

                   * Incorporated by reference to the Company's Registration
                     Statement on Form S-1, as amended (Commission File No.
                     333-23343).
                  ** Incorporated by reference to the Company's Registration
                     Statement on Form S-2, as amended (Commission File No.
                     333-90542).
                 *** Filed herewith

                                      -25-
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Wichita, State of Kansas, on this 29th day of March, 2004.


                                     TOTAL ENTERTAINMENT RESTAURANT CORP.
                                                 (Registrant)



                                     /s/ JAMES K. ZIELKE
                                     -------------------------------------------
                                                 James K. Zielke
                                             Chief Financial Officer,
                                        Treasurer, Secretary and Director
                                         (principal accounting officer)

                                      -26-
<PAGE>

                                   SIGNATORIES

Know all men by these presents, that each person whose signature appears below
hereby constitutes and appoints James K. Zielke his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this Form 10-K and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or either of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

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

/s/ DENNIS L. THOMPSON              Co-Chairman of the Board      March 29, 2004
---------------------------------
Dennis L. Thompson


/s/ STEPHEN P. HARTNETT             Co-Chairman of the Board      March 29, 2004
---------------------------------
Stephen P. Hartnett


/s/ STEVEN M. JOHNSON               Chief Executive Officer and   March 29, 2004
---------------------------------   Director
Steven M. Johnson                   (principal executive officer)


/s/ GARY M. JUDD                    President and Director        March 29, 2004
---------------------------------
Gary M. Judd


/s/ JAMES K. ZIELKE                 Chief Financial Officer,      March 29, 2004
---------------------------------   Treasurer, Secretary
James K. Zielke                     and Director
                                    (principal accounting officer)

                                      -27-
<PAGE>
          SIGNATURE                           TITLE                    DATE
          ---------                           -----                    ----


/s/ THOMAS A. HAGER                 Director                      March 29, 2004
---------------------------------
Thomas A. Hager


/s/ C. WELLS HALL, III              Director                      March 29, 2004
---------------------------------
C. Wells Hall, III


/s/ E. GENE STREET                  Director                      March 29, 2004
---------------------------------
E. Gene Street


/s/ JOHN D. HARKEY, JR.             Director                      March 29, 2004
---------------------------------
John D. Harkey, Jr.

                                      -28-
<PAGE>

                      Total Entertainment Restaurant Corp.

                          Index to Financial Statements

                                                                            Page
Total Entertainment Restaurant Corp.
Independent Auditors' Report ...........................................    F-2
Consolidated Balance Sheets as of December 30, 2003 and
  December 31, 2002 ....................................................    F-3
Consolidated Statements of Income for the years ended December 30,
  2003, December 31, 2002, and December 25, 2001 .......................    F-5
Consolidated Statements of Stockholders' Equity for the years ended
  December 30, 2003, December 31, 2002, and December 25, 2001 ..........    F-6
Consolidated Statements of Cash Flows for the years ended December
  30, 2003, December 31, 2002, and December 25, 2001 ...................    F-7
Notes to Consolidated Financial Statements .............................    F-8

                                      F-1
<PAGE>

                          Independent Auditors' Report


The Stockholders
Total Entertainment Restaurant Corp.

We have audited the accompanying consolidated balance sheets of Total
Entertainment Restaurant Corp. and subsidiaries as of December 30, 2003 and
December 31, 2002 and the related consolidated statements of income,
stockholders' equity and cash flows for the years ended December 30, 2003,
December 31, 2002 and December 25, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Total Entertainment
Restaurant Corp. and subsidiaries as of December 30, 2003 and December 31, 2002,
and the results of their operations and their cash flows for the years ended
December 30, 2003, December 31, 2002 and December 25, 2001 in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets, effective December 26, 2001.


                                             /s/ KPMG LLP
Wichita, Kansas
January 30, 2004

                                      F-2
<PAGE>

                      Total Entertainment Restaurant Corp.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                             December 30,  December 31,
                                                                2003          2002
                                                             -----------   -----------
<S>                                                          <C>           <C>
Assets
Current assets:
   Cash and cash equivalents                                 $   812,740   $ 1,116,094
   Inventories                                                 2,096,584     1,603,672
   Prepaid income taxes                                          996,625            --
   Deferred income taxes                                         281,079       212,367
   Other current assets                                        1,538,327     1,034,151
                                                             -----------   -----------
Total current assets                                           5,725,355     3,966,284

Property and equipment:
   Land                                                          600,000       600,000
   Buildings                                                     702,739       702,739
   Leasehold improvements                                     45,092,351    36,653,603
   Equipment                                                  25,106,680    20,802,285
   Furniture and fixtures                                      7,514,220     5,845,627
                                                             -----------   -----------
                                                              79,015,990    64,604,254
   Less accumulated depreciation and amortization             22,615,256    17,391,742
                                                             -----------   -----------
Net property and equipment                                    56,400,734    47,212,512

Other assets:
   Goodwill, net of accumulated amortization of $1,222,121
   (Note 2)                                                    3,661,134     3,661,134
   Advances to developer (Note 3)                                841,940       570,000
   Other assets                                                  983,364       485,354
                                                             -----------   -----------
Total other assets                                             5,486,438     4,716,488
                                                             -----------   -----------


Total assets                                                 $67,612,527   $55,895,284
                                                             ===========   ===========
</TABLE>

                                      F-3
<PAGE>

<TABLE>
<CAPTION>
                                                                 December 30,  December 31,
                                                                    2003          2002
                                                                 -----------   -----------
<S>                                                              <C>           <C>
Liabilities and stockholders' equity
Current liabilities:
   Current portion notes payable                                 $        --   $    98,413
   Accounts payable                                                5,509,934     4,043,123
   Sales tax payable                                               1,186,922     1,032,184
   Accrued payroll                                                 1,674,592     1,148,677
   Accrued payroll taxes                                             824,029       751,920
   Accrued income taxes                                                   --       960,645
   Lease obligation for closed store                                      --        42,606
   Other accrued liabilities                                       2,390,890     1,506,847
                                                                 -----------   -----------
Total current liabilities                                         11,586,367     9,584,415


Notes payable                                                      3,635,000     2,441,587
Deferred taxes                                                     2,503,040        98,633
Deferred revenue                                                      20,769        73,875
Accrued rent                                                         546,870       413,167

Stockholders' equity:
   Preferred stock, $.10 par value, 2,000,000 shares
     authorized; none issued                                              --            --
   Common stock, $.01 par value; 20,000,000 shares authorized;
     9,825,376 shares issued and
     outstanding (9,866,335 at December 31, 2002)                     98,254        98,663
   Additional paid-in capital                                     28,553,400    29,054,438
   Retained earnings                                              20,668,827    14,130,506
                                                                 -----------   -----------
Total stockholders' equity                                        49,320,481    43,283,607
                                                                 -----------   -----------

Commitments

Total liabilities and stockholders' equity                       $67,612,527   $55,895,284
                                                                 ===========   ===========
</TABLE>

                 See notes to consolidated financial statements

                                      F-4
<PAGE>

                      Total Entertainment Restaurant Corp.
                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                             Year ended           Year ended           Year ended
                                                         December 30, 2003    December 31, 2002    December 25, 2001
                                                         -----------------    -----------------    -----------------
<S>                                                      <C>                  <C>                  <C>
Sales:
Food and beverage                                        $     112,593,602    $      93,852,805    $      63,740,163
Entertainment and other                                          9,114,411            8,611,089            6,311,536
                                                         -----------------    -----------------    -----------------
   Total net sales                                             121,708,013          102,463,894           70,051,699

Cost and expenses:
   Cost of sales                                                32,005,657           26,814,798           18,955,174
   Restaurant operating expenses                                63,489,538           52,067,449           35,079,310
   Depreciation and amortization                                 6,036,556            5,176,553            3,616,147
   Preopening costs                                              1,822,436            1,654,072            1,217,455
   Provision for asset impairment                                2,008,330                   --                   --
                                                         -----------------    -----------------    -----------------
Restaurant costs and expenses                                  105,362,517           85,712,872           58,868,086
                                                         -----------------    -----------------    -----------------
Restaurant operating income                                     16,345,496           16,751,022           11,183,613

General and administrative expenses                              6,292,766            5,181,114            3,990,827
Goodwill amortization                                                   --                   --              244,163
Loss on disposal of assets                                          57,707               30,489              133,825
                                                         -----------------    -----------------    -----------------
Income from operations                                           9,995,023           11,539,419            6,814,798
Other income (expense):
   Other income(expense)                                             1,271              (46,423)               1,484
   Interest expense                                               (265,710)            (341,791)            (864,375)
                                                         -----------------    -----------------    -----------------
Income from continuing operations before income taxes            9,730,584           11,151,205            5,951,907
Provision for income taxes                                       3,192,263            3,960,804            2,200,313
                                                         -----------------    -----------------    -----------------
Income from continuing operations                                6,538,321            7,190,401            3,751,594
Income (loss) from discontinued operations, net of tax                  --               12,832             (422,442)
                                                         -----------------    -----------------    -----------------
Net income                                               $       6,538,321    $       7,203,233    $       3,329,152
                                                         =================    =================    =================

Basic earnings per share:
   Income from continuing operations                     $            0.67    $            0.77    $            0.43
   Loss on discontinued operations                                      --                   --                (0.05)
                                                         -----------------    -----------------    -----------------
   Basic earnings per share                              $            0.67    $            0.77    $            0.38
                                                         =================    =================    =================

Diluted earnings per share:
   Income from continuing operations                     $            0.64    $            0.73    $            0.43
   Loss on discontinued operations                                      --                   --                (0.05)
                                                         -----------------    -----------------    -----------------
   Diluted earnings per share                            $            0.64    $            0.73    $            0.38
                                                         =================    =================    =================
</TABLE>
                 See notes to consolidated financial statements.

                                      F-5
<PAGE>

                      Total Entertainment Restaurant Corp.
                 Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                                               Common Stock             Additional
                                                        ----------------------------      Paid-in         Retained
                                                           Number          Amount         Capital         Earnings        Total
                                                        ------------    ------------    ------------    ------------   ------------
<S>                                                        <C>          <C>             <C>             <C>            <C>
Balance at December 26, 2000                               8,741,411    $     87,414    $ 17,301,511    $  3,598,121   $ 20,987,046
    Purchase and retirement of shares of common stock        (75,800)           (758)       (166,558)             --       (167,316)
    Net income                                                    --              --              --       3,329,152      3,329,152
                                                        ------------    ------------    ------------    ------------   ------------
Balance at December 25, 2001                               8,665,611          86,656      17,134,953       6,927,273     24,148,882
    Net income                                                    --              --              --       7,203,233      7,203,233
    Stock options exercised                                  286,967           2,869       1,947,022              --      1,949,891
    Tax benefit related to options exercises                      --              --         315,958              --        315,958
    Forfeiture of shares of common stock                      (5,840)            (58)             58              --             --
    Purchase and retirement of shares of common stock       (430,403)         (4,304)     (3,177,901)             --     (3,182,205)
    Shares issued - secondary offering, net of
      issuance costs                                       1,350,000          13,500      12,834,348              --     12,847,848
                                                        ------------    ------------    ------------    ------------   ------------
Balance at December 31, 2002                               9,866,335          98,663      29,054,438      14,130,506     43,283,607
    Net income                                                    --              --              --       6,538,321      6,538,321
    Stock options exercised                                  116,996           1,170         399,360              --        400,530
    Tax benefit related to options exercises                      --              --         364,413              --        364,413
    Purchase and retirement of shares of common stock       (157,955)         (1,579)     (1,264,811)             --     (1,266,390)
                                                        ------------    ------------    ------------    ------------   ------------
Balance at December 30, 2003                               9,825,376    $     98,254    $ 28,553,400    $ 20,668,827   $ 49,320,481
                                                        ============    ============    ============    ============   ============
</TABLE>
                 See notes to consolidated financial statements.

                                      F-6
<PAGE>

                      Total Entertainment Restaurant Corp.
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                          Year ended      Year ended      Year ended
                                                         December 30,    December 31,    December 25,
                                                             2003            2002            2001
                                                         ------------    ------------    ------------
<S>                                                      <C>             <C>             <C>
Operating activities
   Net income                                            $  6,538,321    $  7,203,233    $  3,329,152
   Adjustments to reconcile net income to net
       cash provided by operating activities:
       Write off of property and equipment related
            to asset impairment and store closure           2,008,330              --         575,098
       Loss on disposal of assets                              57,707          30,489         133,825
       Depreciation                                         6,048,005       5,190,087       3,725,337
       Amortization                                            73,989          41,347         272,952
       Deferred taxes                                       2,335,695       1,092,883          14,428
       Net change in operating assets and liabilities:
         Inventories                                         (492,912)       (373,036)       (201,661)
         Prepaid income taxes                                (632,212)             --              --
         Other current assets                                (504,176)       (447,184)         (7,373)
         Advances to developer                               (271,940)       (570,000)             --
         Other assets                                        (571,999)         59,347        (229,453)
         Accounts payable                                     891,624         289,090       1,505,297
         Accrued liabilities                                  676,160       1,127,876       1,428,260
         Deferred revenue                                     (53,106)        (30,000)        (25,674)
         Accrued rent                                         133,703         353,743         (27,020)
         Lease obligation for closed store                    (42,606)       (115,736)       (105,582)
                                                         ------------    ------------    ------------
Net cash provided by operating activities                  16,194,583      13,852,139      10,387,586

Investing activities
   Purchases of property and equipment                    (16,758,169)    (17,902,969)     (9,540,231)
   Proceeds from disposal of assets                            31,092          14,895          51,850
                                                         ------------    ------------    ------------
Net cash used in investing activities                     (16,727,077)    (17,888,074)     (9,488,381)

Financing activities
   Proceeds from revolving note payable to bank            31,235,000      29,390,000      41,945,000
   Payments of revolving note payable to bank             (30,140,000)    (37,200,000)    (43,575,000)
   Proceeds from exercise of stock options                    400,530       1,949,891              --
   Proceeds from sale of stock                                     --      14,175,000              --
   Issuance costs on sale of stock                                 --      (1,327,152)             --
   Purchase of common stock                                (1,266,390)     (3,182,205)       (167,316)
                                                         ------------    ------------    ------------
Net cash provided by (used in) financing activities           229,140       3,805,534      (1,797,316)

Net decrease in cash and cash equivalents                    (303,354)       (230,401)       (898,111)
Cash and cash equivalents at beginning of year              1,116,094       1,346,495       2,244,606
                                                         ------------    ------------    ------------
Cash and cash equivalents at end of year                 $    812,740    $  1,116,094    $  1,346,495
                                                         ============    ============    ============

Supplemental disclosure of cash flow information
Cash paid for interest                                   $    287,572    $    375,358    $    885,206
Cash paid for income taxes                                  2,449,425       3,762,526         778,189

Supplemental disclosure of non cash activity
Additions to property and equipment in accounts
   payable at year end                                   $    575,187    $    238,475    $    261,525
Tax benefit related to stock options exercised                364,413         315,958              --
</TABLE>
                 See notes to consolidated financial statements

                                      F-7
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

1. Background and Significant Accounting Policies

o    Background

Total Entertainment Restaurant Corp. (the Company) owns and operates a chain of
restaurant locations under the Fox and Hound English Pub & Grille, Fox and Hound
Pub & Grille, and Fox and Hound Smokehouse & Tavern (Fox & Hound), Bailey's
Sports Grille, Bailey's Pub & Grille, and Bailey's Smokehouse & Tavern
(Bailey's) brand names. As of December 30, 2003, the Company owned and operated
48 Fox & Hounds and 16 Bailey's in Alabama, Arizona, Arkansas, Colorado,
Georgia, Illinois, Indiana, Kansas, Louisiana, Michigan, Missouri, Nebraska, New
Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee,
Texas and Virginia. The Company operates in one business segment.

The company has a 52/53 week fiscal year ending on the last Tuesday in December.
Fiscal years 2001 and 2003 each consisted of 52 weeks and fiscal year 2002
consisted of 53 weeks.

o    Principles of Consolidation

The accompanying financial statements include the accounts of Total
Entertainment Restaurant Corp. and its wholly-owned subsidiaries. All
significant intercompany accounts have been eliminated.

o    Cash and Cash Equivalents

The Company considers cash and cash equivalents to include currency on hand,
demand deposits with banks or financial institutions, and short-term investments
with maturities of three months or less when purchased. Cash and cash
equivalents are carried at cost, which approximates fair value.

o    Concentration of Credit Risk

The Company's financial instruments exposed to credit risk consist primarily of
cash. The Company places its cash with high credit financial institutions and,
at times, such cash may be in excess of the Federal Depository insurance limit.

o    Inventories

Inventories consist of food and beverages and are stated at the lower of cost
(first-in, first-out) or market.

o    Pre-opening Costs

Costs related to pre-opening activities are expensed as incurred.

o    Property and Equipment

Property and equipment are stated at cost. Maintenance repairs and renewals
which do not enhance the value of or increase the life of the assets are
expensed as incurred.

Buildings and leasehold improvements are amortized on the straight-line method
over the lesser of the life of the lease, including renewal options, or the
estimated useful lives of the assets, which range from 5 to 30 years. Equipment
and furniture and fixtures are depreciated using the straight-line method over
the estimated useful lives of the assets, which range from two to seven years.

o    Goodwill

Goodwill represents the excess of the cost of companies acquired over the fair
value of the net assets at the date of acquisition and was being amortized over
20 years until December 25, 2001 (see note 2).

                                      F-8
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

1. Background and Significant Accounting Policies (continued)

o    Impairment of Long-Lived Assets

Long-lived assets and certain intangibles, including goodwill, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company reviews
applicable intangible assets and long-lived assets related to each restaurant on
a periodic basis. When events or changes in circumstances indicate an asset may
not be recoverable, the Company estimates the future cash flows expected to
result from the use of the asset. If the sum of the expected undiscounted cash
flows is less than the carrying value of the asset, an impairment loss is
recognized. The impairment loss is recognized by measuring the difference
between the carrying value of the assets and the fair value of the assets. The
Company's estimates of fair values are based on the best information available
and require the use of estimates, judgments and projections as considered
necessary. The actual results may vary significantly. A provision for impairment
amounting to $2,008,330 ($1,279,508 net of income tax effect of $728,822) has
been recorded for the year ended December 30, 2003. The Company does not intend
to close the related restaurants. Additionally, a provision for asset impairment
was established in fiscal 2001 related to a restaurant which was closed in
fiscal 2002. Pursuant to SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets, each restaurant is a component of the entity, and the
operations of the closed restaurant could be distinguished from the rest of the
entity and were eliminated from the ongoing operations of the Company. Included
in discontinued operations is the provision for asset impairment applicable to
this restaurant which was recorded during the year ended December 25, 2001,
amounting to $575,098 ($354,430 net of income tax effect of $220,668).

o    Income Taxes

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Valuation allowances are established when necessary to reduce deferred
tax assets to the amounts expected to be realized. Deferred tax assets and
liabilities are measured using enacted tax rates. 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.

o    Advertising Costs

Advertising costs are expensed as incurred. Advertising expense for the years
ended December 30, 2003, December 31, 2002, and December 25, 2001 were
$1,181,471, $1,202,987, and $536,342, respectively.

o    Deferred Revenue

During 1999, the Company received an upfront payment of $150,000 from its soft
drink provider. The Company is recognizing the upfront payment evenly over the
five-year life of the soft drink contract.

o    Accounting for Stock-Based Compensation

In accordance with Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees, the Company uses the intrinsic value-based method
for measuring stock-based compensation cost which measures compensation cost as
the excess, if any, of the quoted market price of Company's common stock at the
grant date over the amount the employee must pay for the stock. The Company's
policy is to grant stock options with grant prices equal to the fair value of
the Company's common stock at the date of grant. Proceeds from the exercise of
common stock options issued to officers, directors and key employees under the
Company's stock option plans are credited to common stock to the extent of par
value and to additional paid-in capital for the excess.

                                      F-9
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

1. Background and Significant Accounting Policies (continued)

Pro forma information regarding net income and earnings per share is required by
Statement No. 123, which also requires the information be determined as if the
Company has accounted for its employee stock options granted under the fair
value of that Statement. The fair value method for these options were estimated
at the date of grant using a Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rate ranging from
2.9% to 5.3%; no dividend yields; volatility factor ranging from 0.281 to 0.853;
and a weighted-average expected life of the option of 5 years.

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

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the option's vesting period. The Company's pro
forma information is as follows:

<TABLE>
<CAPTION>
                                                 December 30,    December 31,    December 25,
                                                    2003            2002            2001
                                                -------------   -------------   -------------
<S>                                             <C>             <C>             <C>
     Net income, as reported                    $   6,538,321   $   7,203,233   $   3,329,152
     Pro forma stock-based employee
        Compensation cost, net of tax                 643,234         388,541         349,398
                                                -------------   -------------   -------------
     Pro forma net income                       $   5,895,087   $   6,814,692   $   2,979,754
                                                =============   =============   =============
     Earnings per share:
        Basic, as reported                      $        0.67   $        0.77   $        0.38
        Basic, pro forma                        $        0.60   $        0.73   $        0.34
        Diluted, as reported                    $        0.64   $        0.73   $        0.38
        Diluted, pro forma                      $        0.58   $        0.70   $        0.34
     Weighted average fair value of options
       granted during the year                  $        5.52   $        6.12   $        1.24
</TABLE>

o    Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from estimates.

o    Earnings per Share

Basic earnings per common share is calculated by dividing net income by the
average number of common shares outstanding during the year. Diluted earnings
per common share is calculated by adjusting outstanding shares, assuming
conversion of all potentially dilutive stock options.

2.  Goodwill

The Company adopted the provisions of SFAS No. 142, Goodwill and Other
Intangible Assets, effective December 26, 2001. SFAS No. 142 requires that
goodwill no longer be amortized, but instead tested for impairment annually, or
more frequently if circumstances indicate potential impairment through a
comparison of fair value to its carrying value. No impairment losses were
recorded upon the initial adoption of SFAS No. 142.

                                      F-10
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

2. Goodwill (continued)

The effect of the adoption of SFAS No. 142 on net income and earnings per share
is as follows:
<TABLE>
<CAPTION>
                                                                  Fiscal Year Ended
                                                   ---------------------------------------------
                                                    December 30,    December 31,    December 25,
                                                        2003            2002            2001
                                                   -------------   -------------   -------------
<S>                                                <C>             <C>             <C>
     Net income, as reported                       $   6,538,321   $   7,203,233   $   3,329,152
     Goodwill amortization (net of income taxes)              --              --         182,634
                                                   -------------   -------------   -------------
     Net income, as adjusted                       $   6,538,321   $   7,203,233   $   3,511,786
                                                   =============   =============   =============

     Basic earnings per share, as reported         $        0.67   $        0.77   $        0.38
     Goodwill amortization (net of income taxes)              --              --            0.02
                                                   -------------   -------------   -------------
     Basic earnings per share, as adjusted         $        0.67   $        0.77   $        0.40
                                                   =============   =============   =============

     Diluted earnings per share, as reported       $        0.64   $        0.73   $        0.38
     Goodwill amortization (net of income taxes)              --              --            0.02
                                                   -------------   -------------   -------------
     Diluted earnings per share, as adjusted       $        0.64   $        0.73   $        0.40
                                                   =============   =============   =============
</TABLE>

3. Advances to Developer

Advances to developer represent monies advanced to the developer of two
build-to-suit locations at December 31, 2002. Additional monies were advanced to
the same developer on two additional locations during 2003 totaling $546,940.
Also during 2003, the developer repaid the advance on one location in the amount
of $275,000. The advances to developer totaled $841,940 and $570,000, at
December 30, 2003 and December 31, 2002, respectively. The advances are to be
repaid upon the earlier of 1) the Company's written demand but no sooner than
one year after the location opens, 2) the sale of the property, or 3) four years
after the location opens.

4. Preferred Stock

The Company's Board of Directors has the authority to issue up to 2,000,000
shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preference
and the number of shares constituting any series or the designation of such
series.

5. Note Payable

On September 1, 1998 the Company entered into a line of credit agreement with
Intrust Bank, N.A. (the line of credit) which provides for a line of credit of
$20,000,000 subject to certain limitations based on earnings before interest,
income taxes, depreciation and amortization of the past 52 weeks. On October 1,
2003, this line of credit was amended to extend the original term of the
agreement by three years. All other terms of the agreement remained unchanged.

The line of credit is secured by substantially all assets of the Company. The
line of credit restricts the ability of the Company to pay dividends. The
Facility requires monthly payments of interest only until November 1, 2006, at
which time equal monthly installments of principal and interest are required as
necessary to fully amortize the outstanding indebtedness plus future interest
over a period of four years. Interest is accrued at a rate of 0.5% below the
prime rate as published in The Wall Street Journal (3.50% and 3.75% at December
30, 2003 and December 31, 2002, respectively). Proceeds from the line of credit
were used for restaurant development and acquisition of treasury stock. As of
December 30, 2003 and December 31, 2002, the Company had borrowed $3,635,000 and
$2,540,000, respectively, under the line of credit. The Company had additional
borrowings available at December 30, 2003 under the line of credit of
$16,365,000.

                                      F-11
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

5. Note Payable (continued)

The following represents future maturities of the note:

                     2004                          $        --
                     2005                                   --
                     2006                              141,530
                     2007                              866,713
                     2008                              897,539
                     Thereafter                      1,729,218
                                                   -----------
                     Total                         $ 3,635,000
                                                   ===========

6. Stock Options

The Company has elected to follow APB Opinion No. 25, Accounting for Stock
Issued to Employees and related interpretations in accounting for its employee
stock options. Under APB Opinion No. 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.

The Company's stock option plans are as follows:

o    1997 Incentive and Nonqualified Stock Option Plan

     In March 1997, the Board of Directors adopted a stock option plan providing
     for incentive and nonqualified stock options pursuant to which up to
     1,500,000 shares of common stock will be available for issuance. The Plan
     was amended in May 1999 to increase the number of authorized shares
     reserved for issuance to 1,600,000 shares from 1,500,000 shares. The Plan
     covers the former Chairman of the Board, certain officers and key
     employees. Options granted have a vesting period of three to five years and
     a life of ten years.

o    Directors' Stock Option Plan

     In March 1997, the Board of Directors adopted a stock option plan providing
     for nondiscretionary grants to nonemployee directors pursuant to which up
     to 150,000 shares of common stock will be available for issuance. The Plan
     was amended in May 2002 to increase the number of authorized shares
     reserved for issuance to 400,000 shares from 150,000 shares.

A summary of the Company's stock option activity and related information for the
years ended December 30, 2003, December 31, 2002, and December 25, 2001 follows:

<TABLE>
<CAPTION>
                                December 30, 2003          December 31, 2002         December 25, 2001
                             -----------------------   -----------------------    -----------------------
                              Weighted                  Weighted                   Weighted
                              Average                   Average                    Average
                              Exercise                  Exercise                   Exercise
                               Price       Options       Price       Options        Price       Options
                             ----------  -----------   ----------  -----------    ----------  -----------
<S>                             <C>       <C>             <C>       <C>              <C>         <C>
Outstanding beginning
  of year                       $ 5.42    1,032,741       $ 5.10    1,143,345        $ 5.60      980,069
     Granted                      8.16      295,098         8.07      284,137          2.49      278,000
     Exercised                   (3.42)    (116,996)       (6.79)    (286,967)           --           --
     Canceled                    (5.63)     (27,203)       (5.37)    (107,774)        (3.71)    (114,724)
                                         -----------               -----------                -----------
Outstanding end of year         $ 6.29    1,183,640       $ 5.42    1,032,741        $ 5.10    1,143,345
                                         ===========               ===========                ===========
</TABLE>

As of December 30, 2003, the Company's outstanding options have a weighted
average remaining contract life of 6.25 years and exercise prices ranging from
$1.63 to $11.76. There were 588,948 options exercisable at December 30, 2003 and
498,818 options exercisable at December 31, 2002.

                                      F-12
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

6. Stock Options (continued)

For options outstanding as of December 30, 2003, the number of options,
weighted-average exercise price and weighted-average remaining contract life for
each group of options are as follows:

                                     Options Outstanding
            --------------------------------------------------------------------
                                  Number           Weighted-         Weighted-
                              Outstanding at        Average           Average
               Range of        December 30,        Exercise          Remaining
                Prices             2003              Price         Contract Life
            --------------------------------------------------------------------
            $1.63 to $2.88        307,934            2.72           6.51 years
            $2.95 to $7.75        464,957            6.02           6.58 years
            $8.24 to $9.00        319,112            8.80           4.77 years
            $9.10 to $11.76        91,637           10.94           8.84 years
                               ----------
                 Total          1,183,640            6.29           6.25 years
                               ==========

The number of shares and weighted-average exercise price of options exercisable
at December 30, 2003 are as follows:

                                      Options Exercisable
                  -------------------------------------------------------
                                            Number              Weighted-
                                        Exercisable at           Average
                     Range of            December 30,           Exercise
                      Prices                 2003                 Price
                  -------------------------------------------------------
                  $1.63 to $ 2.88           198,978               2.76
                  $2.95 to $ 7.75           161,224               4.01
                  $8.24 to $ 9.00           209,866               8.97
                  $9.10 to $11.76            18,880              11.30
                                           --------
                       Total                588,948               5.59
                                           ========

7. Leases

The Company leases many of its facilities under noncancelable operating leases
having terms expiring between 2004 and 2023. The leases have renewal clauses of
3 to 5 years, exercisable at the option of the lessee. In addition, certain
leases contain escalation clauses based on a fixed percentage increase and
provisions for contingent rentals based on a percentage of gross revenues, as
defined by the lease. The difference between the actual lease payments and the
amount of rent expense recorded on a straight-line basis is recorded as accrued
rent. Total rental expense for the years ended December 30, 2003, December 31,
2002, and December 25, 2001 was $7,238,491, $5,795,697, and $3,898,642,
respectively. Contingent rentals for the years ended December 30, 2003, December
31, 2002, and December 25, 2001 were $9,222, $86,158, and $10,107, respectively.

The following presents the future minimum lease payments under noncancelable
operating leases with initial terms in excess of one year for each of the next
five years and thereafter as of December 30, 2003:

                    2004                            $  8,185,763
                    2005                               7,967,345
                    2006                               7,569,164
                    2007                               7,165,662
                    2008                               6,476,932
                    Thereafter                        35,414,884
                                                    ------------
                    Total                           $ 72,779,750
                                                    ============

It is expected in the normal course of business that leases will be renewed as
they expire.

                                      F-13
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

8. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share data):
<TABLE>
<CAPTION>
                                                       2003         2002         2001
                                                    ----------   ----------   ----------
<S>                                                 <C>          <C>          <C>
Numerator
  Income from continuing operations                 $    6,538   $    7,190   $    3,752
  Income (loss) from discontinued operations                --           13         (423)
                                                    ----------   ----------   ----------
Net income                                          $    6,538   $    7,203   $    3,329
                                                    ==========   ==========   ==========

Denominator
  Denominator for basic earnings per share -
     weighted-average shares                             9,792        9,344        8,670
Effect of dilutive securities:
  Employee stock options                                   436          457           24
                                                    ----------   ----------   ----------
Dilutive potential common shares
  Denominator for diluted earnings per share -
     adjusted weighted-average shares and assumed
     conversions                                        10,228        9,801        8,694
                                                    ==========   ==========   ==========

Basic earnings per share:
  Income from continuing operations                 $     0.67   $     0.77   $     0.43
  Loss on discontinued operations                           --           --        (0.05)
                                                    ----------   ----------   ----------
  Basic earnings per share                          $     0.67   $     0.77   $     0.38
                                                    ==========   ==========   ==========

Diluted earnings per share:
  Income from continuing operations                 $     0.64   $     0.73   $     0.43
  Loss on discontinued operations                           --           --        (0.05)
                                                    ----------   ----------   ----------
  Diluted earnings per share                        $     0.64   $     0.73   $     0.38
                                                    ==========   ==========   ==========
</TABLE>

Employee stock options of 61,046; 37,554; and 926,545 for the years ended
December 30, 2003, December 31, 2002, and December 25, 2001, respectively, are
not included in the computation of diluted earnings per share because to do so
would have been antidiutive for the periods presented. Such options could
potentially dilute basic earnings per share in the future.

9. Income Taxes

The Company's provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                             December 30,   December 31,   December 25,
                                                 2003           2002           2001
                                             ------------   ------------   ------------
<S>                                          <C>            <C>            <C>
    Income tax expense (benefit) allocated
         to discontinued operations          $         --   $      7,962   $   (262,118)
    Income tax expense allocated to
         continuing operations                  3,192,263      3,960,804      2,200,313
                                             ------------   ------------   ------------
    Total income tax expense                 $  3,192,263   $  3,968,766   $  1,938,195
                                             ============   ============   ============


                                             December 30,   December 31,   December 25,
                                                 2003           2002           2001
                                             ------------   ------------   ------------
     Current:
         Federal                             $    424,975   $  2,225,240   $  1,427,641
         State                                    431,593        650,643        496,126
                                             ------------   ------------   ------------
     Total Current                                856,568      2,875,883      1,923,767
     Deferred:
         Federal                                2,261,804        999,440         11,951
         State                                     73,891         93,443          2,477
                                             ------------   ------------   ------------
     Total Deferred                             2,335,695      1,092,883         14,428
                                             ------------   ------------   ------------
     Total income tax expense                $  3,192,263   $  3,968,766   $  1,938,195
                                             ============   ============   ============
</TABLE>

                                      F-14
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

9. Income Taxes (continued)

The income tax effects of temporary differences that give rise to significant
portions of deferred income tax assets and liabilities at December 30, 2003 and
December 31, 2002 are as follows:

                                                  December 30,     December 31,
                                                      2003             2002
                                                  -----------      -----------
  Deferred tax assets:
     Preopening and organization costs            $   595,484      $   558,686
     Store closure costs                               18,835          250,020
     Deferred revenue                                   7,062           25,118
     Accrued liabilities                              388,232          307,175
     Vacation                                          74,821           58,070
     Other                                             79,952           64,730
                                                  -----------      -----------
     Total deferred tax assets                      1,164,386        1,263,799
                                                  -----------      -----------

  Deferred tax liabilities:
     Property and equipment                         3,086,389          922,776
     Goodwill                                         299,958          227,289
                                                  -----------      -----------
  Total deferred tax liabilities                    3,386,347        1,150,065
                                                  -----------      -----------
  Net deferred tax (liability) asset              $(2,221,961)     $   113,734
                                                  ===========      ===========

A reconciliation between the reported provision for income taxes and tax
determined by applying the applicable U.S. Federal Statutory income tax rate to
income before taxes follows:

<TABLE>
<CAPTION>
                                                     December 30,                 December 31,                 December 25,
                                                         2003                         2002                         2001
                                               ------------------------     ------------------------     ------------------------
                                                 Amount         Rate          Amount         Rate          Amount         Rate
                                               -----------    ---------     -----------    ---------     -----------    ---------
<S>                                            <C>                 <C>      <C>                 <C>      <C>                 <C>
Income tax expense at federal statutory rate   $ 3,308,398         34.0%    $ 3,798,480         34.0%    $ 1,790,898         34.0%
State income taxes, net of federal benefit         311,575          3.2         476,040          4.3         281,307          5.3
Tax credits                                       (457,719)        (4.7)       (368,207)        (3.3)       (200,227)        (3.8)
Other items, net                                    30,009          0.3          62,453          0.5          66,217          1.3
                                               -----------    ---------     -----------    ---------     -----------    ---------
Actual income tax expense                      $ 3,192,263         32.8%    $ 3,968,766         35.5%    $ 1,938,195         36.8%
                                               ===========    =========     ===========    =========     ===========    =========
</TABLE>

10. Fair Values of Financial Instruments

The carrying amount reported in the balance sheet for all financial instruments,
including cash and cash equivalents, certain payables, and debt instruments,
approximates its fair value.

                                      F-15
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

11. Quarterly Financial Summaries (Unaudited)

The following table summarizes the unaudited consolidated quarterly results of
operations for fiscal 2003 and 2002:

<TABLE>
<CAPTION>
                                           1st           2nd           3rd           4th
                                         Quarter       Quarter       Quarter       Quarter
                                       (12 weeks)    (12 weeks)    (12 weeks)    (16 weeks)
                                       -----------   -----------   -----------   -----------
<S>                                    <C>           <C>            <C>          <C>
   2003
   Net sales                           $27,040,911   $25,248,989    25,268,503   $44,149,610
   Restaurant operating income           4,934,636     3,404,351     2,254,208     5,752,301
   Income from continuing operations     2,267,585     1,235,459       480,111     2,555,166
   Net income (a)                        2,267,585     1,235,459       480,111     2,555,166
   Basic earnings per share                   0.23          0.13          0.05          0.26
   Diluted earnings per share                 0.22          0.12          0.05          0.25

                                           1st           2nd           3rd           4th
                                         Quarter       Quarter       Quarter       Quarter
                                       (12 weeks)    (12 weeks)    (12 weeks)    (17 weeks)
                                       -----------   -----------   -----------   -----------
   2002
   Net sales                           $21,824,734   $21,408,848   $21,011,908   $38,218,404
   Restaurant operating income           4,192,914     3,123,888     1,995,615     7,438,605
   Income from continuing operations     1,865,352     1,144,907       475,374     3,704,768
   Net income                            1,897,463     1,125,628       475,374     3,704,768
   Basic earnings per share                   0.22          0.13          0.05          0.37
   Diluted earnings per share                 0.21          0.12          0.05          0.35
</TABLE>

   (a) The fourth quarter of fiscal 2003 includes a charge to earnings of
   $2,008,330 ($1,279,508 net of income tax) related to the provision for asset
   impairment in the quarter.

12.  Legal Proceedings

On February 28, 2001, eight former employees filed a complaint on their own
behalf and on behalf of other similarly situated persons against the Company,
Fox & Hound of Indiana, Inc., a subsidiary of the Company, and several Company
officers, in the United States District Court for the Southern District of
Indiana.

The plaintiffs alleged that they were employed by the defendants with the titles
of manager-in-training, assistant manager, and/or general manager, and that the
Company and the other defendants willfully and in bad faith failed to pay the
plaintiffs overtime pay for hours worked in excess of forty hours per week in
violation of the provisions of the Fair Labor Standards Act (FLSA). The
plaintiffs' complaint sought (i) declaratory judgment that the Company and other
defendants violated the plaintiffs' legal rights, (ii) an accounting of
compensation to which the defendants were owed, (iii) monetary damages in the
form of back pay compensation and benefits, unpaid entitlements, liquidated
damages, and pre-judgment and post-judgment interest, and (iv) attorneys' fees
and costs.

The parties and their counsel, without admitting liability or violation of the
FLSA and specifically denying any illegal or improper conduct on the part of the
defendants, considered that the interests of all concerned were best served by
settlement and dismissal of this action. Therefore, the parties entered into a
settlement agreement in December 2003, which was approved by the magistrate. The
Company agreed to pay approximately $100,000 related to the settlement
agreement. This amount has been reflected in general and administrative expenses
in the accompanying consolidated statement of income for the year ended December
30, 2003.

                                      F-16
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

12.  Legal Proceedings (continued)

On October 2, 2000, R&A Bailey & Company of Dublin, Ireland, filed a notice of
opposition in the Trademark Trial and Appeal Board of the U.S. Patent and
Trademark Office to certain of the Company's U.S. service mark applications.
Additionally, on November 14, 2000, R&A Bailey & Company filed a petition in the
Trademark Trial and Appeal Board of the U.S. Patent and Trademark Office to
cancel certain of the Company's U.S. service mark registrations. In both
instances, the service marks involved in the actions included the word
"Bailey's".

The parties executed a settlement agreement to resolve both the opposition and
cancellation matters, the terms of which require the Company to amend its
related acquisitions and registrations. The U.S. Patent and Trademark office
accepted and approved the requested amendments in December 2003.

The Company is involved in various legal actions arising in the ordinary course
of business. In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on the Company's consolidated
financial position and results of operations.

Recent litigation against restaurant chains has resulted in significant
judgments, including punitive damages, under dram shop statutes. A judgment
significantly in excess of our insurance coverage or involving punitive damages,
which may not be covered by insurance, could materially adversely affect our
financial condition or results of operations. Further, adverse publicity
resulting from these allegations may materially adversely affect us and our
restaurants.

13.  Related Party Transactions

The Company leases two of its restaurants, the College Station and Dallas #2
locations, from limited partnerships controlled by a Co-Chairman of the
Company's board of directors. The total rental expense paid to the limited
partnerships for both restaurants for the years ended December 30, 2003,
December 31, 2002, and December 25, 2001 was $276,560, $280,720, and $267,686,
respectively.

In February 2002, the Company purchased the assets of a seafood restaurant in
Richmond, Virginia, from BMR Restaurants, LLC ("BMR"), which has been converted
to a Bailey's restaurant. The Company's Co-Chairman of the board of directors is
the manager of BMR. The Co-Chairman and his wife collectively own 82.6% of BMR,
which had owned the restaurant assets for more than two years. The Company paid
a total of $300,000 for these assets, which included a real estate lease,
leasehold improvements, furniture and equipment. The price was based on the
parties' estimates of market rates for leasehold rents and equivalent property
and is believed to be equivalent to the price that would have been paid in an
arms' length transaction with an unaffiliated party.

In April 2000 and February 2001, the Company invested an aggregate of $200,000
for limited partnership interests in limited partnerships formed to develop and
operate Cool River Restaurants. Two members of the Company's board of directors
and a Co-Chairman are the majority owners of the managing general partner of
these partnerships. In June 2002, the Company was refunded $100,000 of its
original investment in exchange for rights to one of the related limited
partnership interests.

                                      F-17