<PAGE>


                                  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 25, 2001
                                -----------------

      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)

<TABLE>
<CAPTION>

<S>                                                                <C>
                          DELAWARE                                                 52-2016614
(State or other jurisdiction of incorporation or organization)       (I.R.S. employer identification no.)
</TABLE>


                           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  X  No
               ---    ---

     As of March 13, 2002, the aggregate market value of the Registrant's Common
Stock held by non-affiliates of the Registrant was $44,505,098. Solely for the
purposes of this calculation, shares held by directors and officers of the
Registrant have been excluded. Such exclusion should not be deemed a
determination or an admission by the Registrant that such individuals are in
fact, affiliates of the Registrant.

     As of March 13, 2002, there were 8,665,611 shares outstanding of the
Registrant's Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

    The information required by Part III will be incorporated by reference to
certain portions of a definitive proxy statement which is expected to be filed
by the Registrant within 120 days after the close of its fiscal year.

<PAGE>

<TABLE>
<CAPTION>

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

ITEM                                                                                                 PAGE
----                                                                                                 ----

                                                          PART I

<S>                                                                                                  <C>
   1.  Business ...................................................................................    3
   2.  Properties .................................................................................   11
   3.  Legal Proceedings ..........................................................................   11
   4.  Submission of Matters to a Vote of Security Holders ........................................   12


                                                          PART II

   5.  Market for the Registrant's Common Equity and Related Stockholder Matters ..................   13
   6.  Selected Financial Data ....................................................................   14
   7.  Management's Discussion and Analysis of Financial Condition and Results of
           Operations .............................................................................   15
  7A.  Quantitative and Qualitative Disclosures About Market Risk .................................   21
   8.  Financial Statements and Supplementary Data ................................................   22
   9.  Changes in and Disagreements with Accountants on Accounting and Financial
           Disclosure .............................................................................   22


                                                          PART III

 10.   Directors and Executive Officers of the Registrant .........................................   22
 11.   Executive Compensation .....................................................................   22
 12.   Security Ownership of Certain Beneficial Owners and Management .............................   22
 13.   Certain Relationships and Related Transactions .............................................   22

                                                          PART IV

 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K ...........................   23
       Signatures .................................................................................   25
</TABLE>

                                      -2-
<PAGE>

                                     PART I

ITEM 1. BUSINESS
        --------

GENERAL

     Total Entertainment Restaurant Corp., a Delaware corporation ("the
Company"), owns and operates 47 entertainment restaurant locations which utilize
the Fox and Hound English Pub & Grille and Fox and Hound Smokehouse & Tavern
("Fox and Hound"), Bailey's Sports Grille, Bailey's Pub & Grille and Bailey's
Smokehouse & Tavern ("Bailey's") tradenames. The Company's entertainment
concepts combine a comfortable and inviting social gathering place, full menu
and full service bar, state-of-the-art audio and video systems for sports
entertainment, traditional games of skill such as pocket billiards and a
late-night dining and entertainment alternative all in a single location. The
Company's entertainment restaurant concepts appeal to a broad range of guests
who can participate in one or more aspects of the Company's total entertainment
restaurant experience. Both the Fox and Hound and Bailey's locations encompass
the Company's multi-dimensional concept and serve both larger urban and smaller
regional markets. The Company operates in one business segment.

     The first Bailey's unit was opened in Charlotte, North Carolina in 1989 and
the first Fox and Hound unit was opened in Arlington, Texas in 1994. As of March
13, 2002, the Company owns and operates 32 Fox and Hound units and 15 Bailey's
units in Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana,
Kansas, Louisiana, Michigan, Missouri, Nebraska, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee and Texas.

SECTION 351 EXCHANGE

     The Company was organized on February 7, 1997 for the purpose of developing
entertainment restaurant locations. On February 20, 1997, the Company effected
an exchange (the "Exchange") of property under Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code"), with the stockholders of four
corporations (the "Subsidiary Corporations") and certain limited partners of
four Texas limited partnerships (the "Subsidiary Limited Partnerships").
Pursuant to the Exchange, the Company became the owner of the eight
then-existing Bailey's locations and the three then-existing Fox and Hound
locations. The Company issued 8,000,000 shares of its common stock, $0.01 par
value (the "Common Stock"), in exchange for all the outstanding stock of the
Subsidiary Corporations and the outstanding limited partnership interests of the
Subsidiary Limited Partnerships not owned by the Subsidiary Corporations. The
Subsidiary Corporations and Subsidiary Limited Partnerships thereby became
wholly-owned subsidiaries of the Company.

CONCEPT

     The Company's entertainment restaurant concept differentiates itself by
offering all of the following features in a single location:

          o    SOCIAL GATHERING PLACE. The Company's concepts provide a
               contemporary social gathering place where friends and
               acquaintances can gather regularly for food, drinks and
               entertainment in an upscale yet casual environment.
          o    FOOD AND BEVERAGE. The Company's concepts offer a full menu with
               a wide range of mid-priced appetizers, entrees and desserts
               served in generous portions. Each

                                      -3-
<PAGE>

               location features a full service bar and a wide variety of
               domestic, imported and premium craft beers. Food and beverages
               can be enjoyed in all areas of each location.
          o    SPORTS ENTERTAINMENT. The Company's concepts feature
               state-of-the-art audio and video systems for viewing sporting
               events. Each location has numerous TV's (including several
               mega-screen TV's) with satellite and cable coverage of national,
               regional and local sporting events.
          o    GAMES OF SKILL. The Company's concepts offer traditional games of
               skill, including pocket billiards featuring tournament-quality
               tables, shuffleboard and darts. Most locations also offer a
               variety of popular interactive games.
          o    LATE-NIGHT DESTINATION. The Company provides guests with an
               upscale entertainment and dining alternative by serving food and
               beverages during the increasingly popular late-night segment.

STRATEGY

     Management believes its unique entertainment restaurant concept will enable
the Company to distinguish itself as the leader in this market segment.
Management's strategy for attaining this leadership position is based on the
following key elements:

     TOTAL ENTERTAINMENT AND RESTAURANT EXPERIENCE. The Company's 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. The Company employs a seasoned management team
with experience in successfully developing and operating multi-unit concepts in
a variety of geographic markets throughout the United States. The Company
intends to leverage this experience to secure favorable real estate sites,
control costs and implement proven operating procedures. In addition, the
Company maintains 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, the Company is able to focus its energy and resources on brand
and unit development.

     GROWTH AND EXPANSION. The Company believes its entertainment restaurant
concept will be attractive in a variety of geographic markets throughout the
United States. The Company plans to open ten to twelve locations in 2002 and
between seven and ten locations in 2003. The Company has opened four units in
2002 and currently has seven leases executed with contingencies and two
non-binding letters of intent. The Company is currently evaluating locations in
markets that are familiar to its management team and plans to actively negotiate
additional leases at a number of sites. However, the number of locations
actually opened and the timing thereof may vary depending upon the ability of
the Company to locate suitable sites and negotiate favorable leases.

     FLEXIBILITY AND VERSATILITY OF CONCEPT. The Company is implementing its
concept through both the Fox and Hound and Bailey's brand names. The Company's
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. The Company is committed
to providing a superior experience that includes high quality menu items, a wide
variety of domestic,


                                      -4-
<PAGE>

imported and premium craft beers, state-of-the-art audio and video systems and
tournament-quality pocket billiard tables. These features, combined with the
Company's focus on a high level of customer service, help build a loyal
clientele and attract new guests.


















                                      -5-
<PAGE>

LOCATIONS

     The following table sets forth the location, opening date and approximate
square footage of the Company's existing entertainment and restaurant locations:

<TABLE>
<CAPTION>

                                                                                         APPROXIMATE
                           LOCATION                   MONTH OPENED                     SQUARE FOOTAGE
                           --------                   ------------                     --------------
<S>                                                   <C>                              <C>
                  FOX AND HOUND ENGLISH PUB & GRILLE
                  Arlington, TX                       August 1994                           6,500
                  College Station, TX                 September 1994                        7,700
                  Dallas, TX                          December 1995                         9,600
                  Memphis #1, TN                      September 1997                        8,400
                  Omaha, NE                           December 1997                         9,000
                  Chicago, IL                         December 1997                        10,100
                  Montgomery, AL                      January 1998                          7,700
                  Cleveland, OH                       May 1998                              8,500
                  Evansville, IN                      July 1998                             8,600
                  Springfield, MO                     August 1998                           9,100
                  San Antonio, TX                     August 1998                           8,400
                  Erie, PA                            August 1998                          10,400
                  Lubbock, TX                         October 1998                         10,600
                  Dayton, OH                          October 1998                          8,700
                  Memphis #2, TN                      November 1998                         7,600
                  Overland Park, KS                   November 1998                         9,100
                  Canton, OH                          November 1998                         9,700
                  New Orleans, LA                     December 1998                         9,200
                  Pittsburgh, PA                      January 1999                         10,500
                  Winston-Salem, NC                   January 1999                          9,400
                  Indianapolis, IN                    February 1999                         8,400
                  Houston, TX                         February 1999                         9,100
                  Baton Rouge, LA                     March 1999                           11,500
                  Cleveland #2, OH                    October 2000                         13,500
                  Lewisville, TX                      December 2000                         7,600
                  Ft. Worth, TX                       April 2001                            9,900
                  Ft. Worth #2, TX                    February 2002                        14,000

                  FOX AND HOUND SMOKEHOUSE & TAVERN
                  Charlotte #3, NC                    August 2001                          15,300
                  Dallas #2, TX                       December 2001                        13,360
                  Denver, CO                          January 2002                         10,500
                  Phoenix, AZ                         January 2002                         11,600
                  Charlotte #4, NC                    March 2002                            7,200

                  BAILEY'S SPORTS GRILLE
                  Charlotte #2, NC                    October 1990                          7,600
                  Little Rock, AR                     February 1994                         8,400
                  Greenville, SC                      September 1994                        7,000
                  Nashville #1, TN                    April 1995                            9,400
                  Knoxville, TN                       December 1995                         9,400
                  Johnson City, TN                    May 1996                              8,250
                  Columbia, SC                        October 1996                         10,000
                  Clarksville, IN                     March 1997                            9,200
                  Nashville #2, TN                    October 1997                          7,500

                  BAILEY'S PUB & GRILLE
                  Atlanta #1, GA                      October 1998                          8,500
                  Detroit, MI                         November 1998                         9,100
                  Chapel Hill, NC                     December 1998                         9,000
                  Dearborn, MI                        December 2000                         8,450
                  Nashville #3, TN                    May 2001                             11,400

                  BAILEY'S SMOKEHOUSE & TAVERN
                  Atlanta #2, GA                      November 2001                        10,500
</TABLE>

                                      -6-
<PAGE>























                                      -7-
<PAGE>

EXPANSION PLANS

     The Company's 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. The Company intends to
open ten to twelve entertainment restaurant locations in 2002 and between seven
to ten locations in 2003. The Company is currently evaluating locations in
markets familiar to its management team. However, the number of locations
actually opened and the timing thereof may vary depending upon the ability of
the Company to locate suitable sites and negotiate favorable leases.

     The Company has granted a license agreement to operate one "Fox and Hound"
concept in Lincoln, Nebraska. This unit opened in February 2001. The Company may
in the future franchise and/or grant additional 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 the Company in connection with the development and operation of each
such site. The Company has granted to Stephen P. Hartnett, Co-Chairman, the
right to operate one "Fox and Hound" concept in Dallas, Texas without the
payment of any license fee.

SELECTION CRITERIA AND LEASING

     The Company believes the site selection process is critical in determining
the potential success of each entertainment 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, site visibility, traffic count, nature of the retail
environment and accessibility and proximity to major retail centers, office
complexes, hotels and entertainment centers (e.g., stadiums, arenas, theaters).

     The Company leases all locations, with the exception of the Bailey's unit
in Columbia, South Carolina, which is owned by the Company. Most of the units
are located in shopping centers. Leases are generally negotiated with initial
terms of three to ten years, with multiple renewal options. The Company has
generally required approximately 90 to 120 days after the signing of a lease and
obtaining required permits to complete construction and open a new location.
Additional time is sometimes required to obtain certain government approvals and
licenses, such as liquor licenses. In the future, the Company anticipates
principally leasing its locations, although it may consider purchasing
free-standing sites where it is cost-effective to do so.

UNIT ECONOMICS

     The Company's 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. The Company's restaurants
have historically generated a sales to investment ratio of approximately 0.8 to
1, assuming that the average minimum annual rents pursuant to operating leases
were capitalized for purposes of determining the investment. The Company's
entertainment restaurants averaged $1,780,000 and $1,590,000 in sales during
fiscal years ended December 25, 2001 and December 26, 2000, respectively. Of the
43 units open at December 25, 2001, 42 were leased facilities and had an average
cash investment of $1,258,000. The one open unit the Company owned as of
December 25, 2001 had a cost of $1,845,000


                                      -8-
<PAGE>

(including the costs for land acquisition, construction, equipment and
pre-opening costs). In the future the Company anticipates most locations will be
leased rather than purchased and anticipates an average cash investment per unit
between $1.0 million and $1.5 million.

MENU

     Both Bailey's and Fox and Hound concepts offer a single menu for lunch
(weekends only in some locations), dinner and late-night dining. The menu
features a selection of appetizers, including quesadillas, chicken wings and
nachos, soups and salads, gourmet-style sandwiches, pizzas, ribs, burgers, a
selection of grilled and smoked barbecued entrees and desserts. Appetizers
typically range in price from $3.49 to $6.99, and entrees range from $5.99 to
$16.99, with most entrees priced below $10.00. Each location features a full
service bar and most units have over 100 brands of ales, lagers, stouts and
premium craft beers from around the world, including over 35 on tap. Alcoholic
beverage service accounted for approximately 60% of the Company's revenues in
the fiscal year ended December 25, 2001.

AMBIANCE AND DESIGN

     FOX AND HOUND ENGLISH PUB & GRILLE, FOX AND HOUND SMOKEHOUSE & TAVERN,
BAILEY'S PUB & GRILLE, AND BAILEY'S SMOKEHOUSE & TAVERN. The Fox and Hound
English Pub & Grille, Fox and Hound Smokehouse & Tavern, Bailey's Pub & Grille,
and Bailey's Smokehouse & Tavern entertainment restaurant concepts incorporate
the tradition, spirit and sophistication of a contemporary social gathering
place, with an elegant yet comfortable atmosphere of finished wood, polished
brass, embroidered chairs and booths, hunter green and burgundy walls and etched
glass. Each location features a full service restaurant and bar as well as
state-of-the-art audio and video technology (including several mega-screen TV's)
and traditional games of skill such as pocket billiards generously spaced to
avoid crowding, darts and shuffleboard. The entertainment area can be readily
configured into a comfortable "arena" for viewing national, regional and local
sporting and other television events. All locations are also capable of
accommodating business and social organizations for special events.

     Fox and Hound is the evolution of a concept originally conceived by Stephen
P. Hartnett, Co-Chairman. The first Fox and Hound unit was opened in August
1994. Management believes the design of Fox and Hound plays an essential role in
its success. The bar and primary dining room are centrally located while the
wing rooms are partitioned from the bar and dining area by etched glass 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. The open kitchen is organized for efficient work flow and is also
centrally located so as to entice guests with its flavorful aromas.

     BAILEY'S SPORTS GRILLE. The Bailey's Sports Grille concept has a casual,
relaxed atmosphere that features a full-service restaurant and bar, numerous
TV's (including several big screen TV's) with satellite and cable coverage of
sporting events, pocket billiard tables, darts, foosball and shuffleboard. Most
locations also feature a variety of popular interactive games. The bar and
primary dining room in each Bailey's unit is centrally located with games
situated around the perimeter.

     Bailey's is the evolution of a concept originally conceived by Dennis L.
Thompson, Co-Chairman and Thomas A. Hager, a director of the Company. The first
Bailey's unit opened in Charlotte, North Carolina in November 1989. There are
presently nine locations operating in five states. Since the opening of the
first location in 1989, management has modified and


                                      -9-
<PAGE>

improved its original concept. With each successive opening, the decor has been
modified to a more upscale yet casual decor.

    All locations opened since July 1997 have incorporated the general layout
and design of the Fox and Hound unit in Dallas, Texas. The Company anticipates
this layout and design will be utilized for future locations.




















                                      -10-
<PAGE>

MARKETING

     The Company believes its entertainment restaurant concept attracts a loyal
clientele, and the Company relies primarily on word-of-mouth to attract new
business. The Company does, however, advertise through traditional marketing and
advertising media in selected markets. These media include billboard signage,
radio and print advertising, local store marketing to households and volunteer
community involvement.

     The Company's 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 or alumni.
The versatile layout and design of the units can also accommodate group events.

OPERATIONS AND MANAGEMENT

     The Company's operations and management systems are based upon systems and
controls that were developed by senior management and have been successfully
used to manage a large number of restaurants located in numerous states. The
Company strives to maintain quality and consistency in its entertainment
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.

     The management of a typical unit consists of one general manager and
between two and four supporting managers depending upon unit revenue and hours
of operation. Each general manager is responsible for the unit's day-to-day
operations and is required to follow the Company's established operating
procedures and standards. Each entertainment restaurant location also employs a
staff of hourly employees, many of whom are part-time personnel. Unit management
personnel participate in an eight-week training program which focuses on various
aspects of the unit's operations and customer service. The Company currently
employs nine district managers, each of which oversees between two and six
units. The district managers, general managers and support 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. Senior management
regularly visits the Fox and Hound and Bailey's locations and meets with the
respective management teams to ensure compliance with the Company's strategies
and standards of quality.

     The Company maintains financial and accounting controls for each of its
entertainment restaurant locations 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 the Company's principal operating account. The Company utilizes a
comprehensive peer review reporting system for its 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 location
meet in person with their respective 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
then 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. The Company believes the peer review system enables each general manager


                                      -11-
<PAGE>

and district manager to benefit from the collective experience of all of the
Company's management.

     The Company believes customer service and satisfaction are keys to the
success of its operations. The Company's commitment to customer service and
satisfaction is evidenced by several Company practices and policies, including
multiple mystery-shop visits every 28-day period by a national restaurant
evaluation firm, periodic visits by unit management to guests' tables, active
involvement of management in responding to guest comments and assigning wait
persons so as to ensure customer satisfaction. Teamwork is emphasized for
efficient and timely service.

     Each new unit employee of the Company participates in a training program
during which the employee works under the close supervision of a manager.
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. Management continuously solicits
employee feedback concerning unit operations and strives to be responsive to the
employees' concerns.

PURCHASING

     The Company's management negotiates directly with suppliers for most food
and beverage products to ensure uniform quality, adequate supplies, and to
obtain competitive prices. The Company engages a purchasing consultant to assist
in the negotiation of purchasing agreements with suppliers. Food and supplies
are shipped directly to the entertainment restaurant locations, although
invoices for purchases are forwarded to a central location for payment. Due to
the experience of the Company's senior management in the restaurant business,
the Company has been and expects to continue to be able to purchase most of its
restaurant equipment directly from equipment manufacturers. The Company has not
experienced any significant delays in receiving supplies or equipment.

MANAGEMENT INFORMATION SYSTEMS

     The Company utilizes an in-store 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 for the Company's management on a daily basis.

     The Company generates weekly consolidated sales reports and food, beverage
and labor-cost variance reports as well as detailed profit and loss statements
for each entertainment restaurant location every four weeks. Additionally, the
Company monitors sales mix, sales growth, labor variances and other sales trends
on a daily basis.



                                      -12-
<PAGE>

ACCOUNTING AND ADMINISTRATIVE SERVICES

     On March 1, 2002, the Company entered into a three-year services agreement
with Franchise Services Company ("FSC") for certain accounting and
administrative services, which renewed its prior three-year agreement. The per
unit per 28-day accounting fee is at a market rate with no fixed annual charge
and is to remain fixed for the entire three-year agreement.

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 the Company. The Company competes with restaurants
primarily on the basis of quality of food and service, ambiance and location and
competes 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. While the Company believes
its entertainment restaurant units are distinctive in design and operating
concept, it is aware of competitors that operate with similar concepts. Many of
the Company's existing and potential competitors are well-established and have
significantly greater financial, marketing and other resources than does the
Company. In addition to other entertainment and restaurant companies, the
Company competes with numerous businesses for suitable locations for its units.

QUARTERLY FLUCTUATIONS, SEASONALITY AND INFLATION

     As a result of the revenues associated with each new location, the timing
of new unit openings will result in significant fluctuations in quarterly
results. The Company expects seasonality to be a factor in the operation or
results of its business in the future due to expected lower second and third
quarter revenues due to the summer season. The primary inflationary factors
affecting the Company's operations include food, liquor and labor costs.
Significant numbers of the Company's 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 the company's labor costs. As costs of food
and labor have increased, the Company has 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.







                                      -13-
<PAGE>

GOVERNMENT REGULATION

     The Company's entertainment 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 location has
appropriate licenses from regulatory authorities allowing it to sell liquor,
beer and wine, and each location has food service licenses from local health
authorities. The Company's licenses to sell alcoholic beverages must be renewed
annually and may be suspended or revoked at any time for cause, including
violation by the Company or its 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 location to obtain or retain liquor or food service licenses would
have a material adverse effect on the Company's operations. In order to reduce
this risk, each location is operated in accordance with standardized procedures
designed to ensure compliance with all applicable codes and regulations.

     The Company 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. The Company carries liquor liability coverage as part of its
existing comprehensive general liability insurance.

     The development and construction of additional locations will be subject to
compliance with applicable zoning, land use and environmental regulations. The
Company's 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 the company's 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 the Company's labor
costs.

     A portion of the Company's revenues is derived from the use and operation
of video gaming machines. In August 1999, law changes in South Carolina resulted
in a significant decrease in the revenue of video gaming machines. Further law
changes in July 2000 completely eliminated the use of video gaming machines in
South Carolina. Video gaming revenue was $100,253 and $350,306 during the fiscal
years ended December 26, 2000 and December 28, 1999, respectively.

TRADEMARKS

     The Company has federally registered its "Fox and Hound" and "Bailey's
Sports Grille" service marks. The Company's "7 Bailey's Sports Grille" and
"Serious Fun 7 Bailey's Sports Grille" design marks are also federally
registered. The Company regards its service and design marks as having
significant value and as being an important factor in the marketing of its
entertainment restaurant concept. The Company is aware of names and marks
similar to the service marks of the Company that are used by other persons in
certain geographic areas. The Company believes such uses will not have a
material adverse effect on the Company as either the Bailey's or Fox and Hound
tradenames may be used if either name is unavailable. The Company's policy is to
pursue registration of its marks whenever possible and to oppose vigorously any
infringement of its marks.

                                      -14-
<PAGE>

     However, as more fully described in Item 3 - Legal Proceedings, below, a
cancellation proceeding has recently been filed with the Trademark Trial and
Appeal Board of the U.S. Patent and Trademark Office seeking to cancel certain
of the Bailey's marks.

EMPLOYEES

     As of December 25, 2001, the Company employed approximately 3,000 persons,
four of whom are executive officers, ten of whom are support staff, nine of whom
are multi-unit supervisors, 200 of whom are entertainment restaurant unit
management personnel and the remainder of whom are hourly entertainment
restaurant personnel. None of the Company's employees is covered by a collective
bargaining agreement. The Company believes its employee relations are
satisfactory.

ITEM 2. PROPERTIES
        ----------

     All of the Company's units are located in leased space with the exception
of the Bailey's unit in Columbia, South Carolina, which is owned by the Company.
Initial lease terms range from three to ten years, with multiple renewal
options. All of the Company's leases provide for a minimum annual rent, and some
leases call for additional rent based on sales volume at the particular location
over specified minimum levels. Generally, the leases are net leases which
require the Company to pay the costs of insurance, taxes and a portion of
lessors' operating cost. See "Business-Locations."

     The Company's executive offices are located at 9300 E. Central, Suite 100,
Wichita, Kansas 67206. The Company believes 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 the Company, Fox & Hound of Indiana, Inc., a subsidiary of the Company,
Gary Judd, the Company's president, Steven M. Johnson, the Company's chief
executive officer, J.C. Weinberg, the Company's former chief operating officer,
and Kenneth Syvarth, the Company's vice president - operations, in the United
States District Court for the Southern District of Indiana.

     The plaintiffs, who purport to have been employees of the defendants with
the titles of manager-in-training, assistant manager, and/or general manager,
each alleged that the Company and the other defendants willfully and in bad
faith failed to pay the defendants overtime pay for hours worked in excess of
forty hours per week in violation of the provisions of the Fair Labor Standards
Act. The plaintiffs' complaint seeks (1) declaratory judgment that the Company
and other defendants violated the plaintiffs' legal rights, (2) an accounting of
compensation to which the defendants are owed, (3) monetary damages in the form
of back pay compensation and benefits, unpaid entitlements, liquidated damages,
and pre-judgment and post-judgment interest, and (4) attorneys' fees and costs.
Defendants including the Company have filed their answer to the plaintiffs'
complaint. The court has not yet entered its order establishing this case as a
collective action. On June 27, 2001, the Magistrate Judge held


                                      -15-
<PAGE>

an initial pre-trial conference and entered orders establishing deadlines in
this action. A settlement conference is scheduled for June 27, 2002 and a
five-day trial is scheduled for March 3, 2003.

     Although it is not possible at this time for the Company to evaluate the
merits of this claim, nor their likelihood of success, management of the Company
is of the opinion that any resulting liability should not have a material
adverse effect on the Company's financial statements.

     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 the Company's U.S. service mark applications for "BAILEY'S
PUB & GRILLE" (color), "BAILEY'S PUB & GRILLE" (stylized), and "BAILEY'S PUB &
GRILLE." 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 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 claims to be the owner of several U.S. trademark
registrations, including "BAILEYS ORIGINAL IRISH CREAM" (+ Design), "BAILEYS,"
"BAILEYS THE ORIGINAL LIGHT CREAM," "BAILEYS" (+ Design), and "BAILEYS YUM,"
that are claimed to be used in association with liqueurs, distilled spirits, ice
cream, coffee cups, and other ceramic accessories. R&A Bailey & Company has
alleged that the cited Company registrations and applications cause it damage,
are 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 seeks cancellation of the Company's registrations and opposes
the registration of the Company's applications for registration of the
above-listed marks.

     On December 29, 2000, the Company through its trademark counsel filed an
answer to R&A Bailey & Company's notice of opposition, denying its allegations.
On February 16, 2001, the Company filed a Stipulated Motion to Extend Answer to
Petition in response to the petition to cancel by R&A Bailey & Company. The
actions have been suspended by the Trademark Trial & Appeal Board to allow the
parties time to negotiate for possible settlement of these pending actions. The
Company is actively pursuing settlement, and is of the opinion that any
resulting liability should not have a material adverse effect on the Company's
financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        ---------------------------------------------------

     No matters were submitted to a vote of the holders of the Company's Common
Stock during the fourth quarter of the Company's fiscal year ended December 25,
2001.



                                      -16-
<PAGE>



                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        -----------------------------------------------------------------
        MATTERS
        -------

MARKET INFORMATION

     The Company's Common Stock is traded over-the-counter on the Nasdaq
National Market System (ticker symbol: TENT). The following table sets forth,
for the periods indicated, the high and low bid quotations for the Common Stock,
as reported by Nasdaq. These quotations reflect the inter-dealer prices, without
retail markup, markdown or commission and may not necessarily represent actual
transactions.

                                                      Bid Prices
                                                      ----------
         Fiscal Year 1999                        High              Low
         ----------------                        ----              ---
         First Quarter                           5.88             2.75
         Second Quarter                          4.25             2.50
         Third Quarter                           3.06             1.25
         Fourth Quarter                          1.75             1.50

         Fiscal Year 2000                        High              Low
         ----------------                        ----              ---
         First Quarter                           1.75             1.38
         Second Quarter                          2.50             1.50
         Third Quarter                           2.31             2.19
         Fourth Quarter                          2.38             1.44

         Fiscal Year 2001                        High              Low
         ----------------                        ----              ---
         First Quarter                           3.31             1.38
         Second Quarter                          3.20             2.10
         Third Quarter                           3.32             2.50
         Fourth Quarter                          3.20             2.19



HOLDERS

     As of March 13, 2002, there were 70 holders of record of the Company's
Common Stock.

DIVIDENDS

     The Company has not paid any cash dividends on its Common Stock and does
not intend to pay cash dividends on its Common Stock for the foreseeable future.
The Company intends to retain future earnings to finance future development.



                                      -17-
<PAGE>



SALE OF UNREGISTERED SECURITIES

(c)    The following unregistered securities were issued by the Company during
     the sixteen weeks ended December 25, 2001:

<TABLE>
<CAPTION>

                                                                       Number of Shares
                                            Description of            Sold/Issued/Subject          Offering/Exercise
         Date of Sale/Issuance            Securities Issued         to Options or Warrants          Price Per Share
         ---------------------            -----------------         ----------------------          ---------------
<S>                                     <C>                             <C>                         <C>
         September 27, 2001             Common Stock Options                  5,000                       $2.50

         September 27, 2001             Common Stock Options                  5,000                       $2.50

         September 27, 2001             Common Stock Options                  5,000                       $2.50

         September 27, 2001             Common Stock Options                  5,000                       $2.50

         September 27, 2001             Common Stock Options                  5,000                       $2.50

         September 27, 2001             Common Stock Options                  5,000                       $2.50

         October 24, 2001               Common Stock Options                  7,500                       $2.75
</TABLE>

         All of the above options were granted to certain key employees pursuant
         to the 1997 Incentive and Nonqualified Stock Option Plan or to
         non-employee directors pursuant to the Directors Stock Option Plan. The
         options for employees have a vesting period of five years and a life of
         ten years and the options for non-employee directors have a vesting
         period of three years and a life of five years.

         The issuance of these securities is claimed to be exempt from
         registration pursuant to Section 4(2) of the Securities Act of 1933, as
         amended, as transactions by an issuer not involving a public offering.
         There were no underwriting discounts or commissions paid in connection
         with the issuance of any of these securities.


ITEM 6. SELECTED FINANCIAL DATA
        -----------------------

     The following selected financial data of the Company and its predecessors
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 Company for the 52 weeks ended December 25, 2001,
December 26, 2000, December 28, 1999 and December 29, 1998 and period from
February 7, 1997 through December 30, 1997, the historical income statement data
for F&H Restaurant Corp. ("FHRC") for the period from January 1, 1997 through
February 20, 1997, the balance sheet data for the Company as of December 25,
2001, December 26, 2000, December 28, 1999, December 29, 1998 and December 30,
1997 are derived from the Company's and its predecessors' audited financial
statements. The table also sets forth the pro forma income statement data for
the Company as if the Exchange had occurred on January 1, 1997. The pro forma
data set forth below for the periods presented are unaudited and have been
prepared by management solely to facilitate period-to-period comparison and do
not purport to be indicative of the consolidated results of operations that
would have occurred had the Exchange occurred at January 1, 1997, or which may
be expected to occur in the future.


                                      -18-
<PAGE>

<TABLE>
<CAPTION>

                                                                 Historical
                                 ---------------------------------------------------------------------------

                                                           The Company
                                 ---------------------------------------------------------------------------

                                                    52 Weeks Ended                              46 weeks and
                                 -------------------------------------------------------------  5 days ended
                                 DEC. 25, 2001  DEC. 26, 2000   DEC. 28, 1999   DEC. 29, 1998  Dec. 30, 1997
                                 -------------  -------------   -------------   -------------  -------------
<S>                                 <C>          <C>              <C>             <C>            <C>

                                                            (In thousands, except per share data)
INCOME STATEMENT DATA:

Net sales                            $70,952      $55,990          $55,930         $34,114        $16,163
Costs and expenses:
   Cost of sales                      19,213       14,790           15,349           9,429          4,287
   Operating expenses                 35,741       28,395           28,632          15,586          7,142
   Depreciation and amortization      3,706         3,592            3,697           2,875            939
   Preopening costs                   1,218           501              488              --             --
   Provision for asset impairment
       and store closing                575         2,362            1,087              --             --
                                     ------       -------          -------         -------        -------
Entertainment and restaurant costs
   and expenses                      60,453        49,640           49,253          27,890         12,368
                                     ------       -------          -------         -------        -------
Entertainment and restaurant
   operating income                  10,499         6,350            6,677           6,224          3,795
General and administrative expenses   3,991         3,768            3,900           2,609          1,794
Goodwill amortization                   244           244              244             244            210
                                     ------       -------          -------         -------        -------
Income  from operations               6,264         2,338            2,533           3,371          1,791
Other income (expense)                 (997)       (1,148)          (1,298)            (70)           266
                                     ------       -------          -------         -------        -------
Income before provision for
   income taxes                       5,267         1,190            1,235           3,301          1,525
Provision for income taxes            1,938           342              418           1,221            545
Minority interest                        --            --               --              --             --
                                     ------       -------          -------         -------        -------
Income before cumulative effect
   of a change in accounting
      principle                       3,329           848              817           2,080            980
Cumulative effect of change in
   accounting principle                  --            --           (1,128)             --             --
                                     ------       -------          -------         -------        -------
Net income (loss)                    $3,329       $   848          $  (311)        $ 2,080        $   980
                                     ======       =======          =======         =======        =======

Basic and diluted net income (loss)
   per share                         $  .38       $   .09          $  (.03)        $   .20        $   .11
                                     ======       =======          =======         =======        =======

Weighted number of shares
   outstanding                        8,670         9,323           10,348          10,415          9,182
                                     ======       =======          =======         =======        =======

CONT'D

<CAPTION>

                                                     The Company
                                                      Pro Forma
                                         FHRC        -----------
                                     -------------    Year ended
                                     51 days ended    DEC. 30,
                                     FEB. 20, 1997      1997
                                     -------------  ------------



INCOME STATEMENT DATA:

<S>                                     <C>          <C>
Net sales                               $ 858        $ 18,557
Costs and expenses:
   Cost of sales                          245           4,912
   Operating expenses                     393           8,281
   Depreciation and amortization           35           1,052
   Preopening costs                        --              --
   Provision for asset impairment
       and store closing                   --              --
                                        -----        --------
Entertainment and restaurant costs
   and expenses                           673          14,245
                                        -----        --------
Entertainment and restaurant
   operating income                       185           4,312
General and administrative expenses        36           2,014
Goodwill amortization                      24             242
                                        -----        --------
Income  from operations                   125           2,056
Other income (expense)                     63             370
                                        -----        --------
Income before provision for
   income taxes                            62           1,686
Provision for income taxes                 11             605
Minority interest                          34              --
                                        -----        --------
Income before cumulative effect
   of a change in accounting
      principle                            17           1,081
Cumulative effect of change in
   accounting principle                    --              --
                                        -----        --------
Net income (loss)                       $  17        $  1,081
                                        =====        ========

Basic and diluted net income (loss)
   per share                                         $    .12
                                                     ========

Weighted number of shares
   outstanding                                          9,062
                                                        =====


<CAPTION>

                                                                        The Company
                                        -------------------------------------------------------------------------
                                        December 25,    December 26,   December 28,   December 29,   December 30,
                                            2001            2000          1999           1998           1997
                                        ------------    ------------   ------------   ------------   ------------
                                                                      (In thousands)
BALANCE SHEET DATA:

<S>                                       <C>           <C>              <C>           <C>            <C>
Working capital (deficit)                 $ (5,160)     $   (3,435)      $   (489)     $    (947)     $   4,579

Total assets                                43,150          40,128         41,352          41,284        23,224

Notes payable, including current portion    10,350          11,980         14,395          11,815           ---

Stockholders' equity                        24,149          20,987         22,232          23,736        21,665

</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        -----------------------------------------------------------
        AND RESULTS OF OPERATIONS
        -------------------------

GENERAL

     The following discussion and analysis should be read 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.

     The Company began operations February 20, 1997 with three Fox and Hound and
eight Bailey's entertainment restaurant locations, and opened three Fox and
Hound and two Bailey's entertainment restaurant locations during the year ended
December 30, 1997, opened thirteen Fox and Hound and three Bailey's
entertainment restaurant locations during the year ended December 29, 1998,
opened five Fox and Hound entertainment restaurant locations and closed one Fox
and Hound and one Bailey's entertainment restaurant location during the year
ended December 28, 1999, and opened two Fox and Hound and one Bailey's
entertainment restaurant locations during the year ended


                                      -19-
<PAGE>

December 26, 2000, and opened four Fox and Hound and one Bailey's entertainment
restaurant locations during the year ended December 25, 2001.

     Prior to December 30, 1998, pre-opening costs which include labor costs,
costs of hiring and training personnel and certain other costs relating to
opening new restaurants, were capitalized and amortized over a 12 month period,
beginning in the period that the restaurant opened. Effective December 30, 1998,
pre-opening costs are expensed as incurred.

RESULTS OF OPERATIONS

     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. 25,        Dec. 26,       Dec. 28,
                                                              2001            2000           1999
                                                            ---------      ---------      ---------
<S>                                                         <C>             <C>            <C>
INCOME STATEMENT DATA:
    Net sales                                                 100.0%          100.0%         100.0%
    Costs and expenses:
       Cost of sales                                           27.1            26.4           27.4
       Operating expenses                                      50.4            50.7           51.2
       Depreciation and amortization                            5.2             6.4            6.6
       Preopening costs                                         1.7             1.0            1.0
       Provision for asset impairment
           and store closing                                    0.8             4.2            1.9
                                                              -------        -------         ------
       Restaurant costs and expenses                           85.2            88.7           88.1
                                                              -------        -------         ------
       Restaurant operating income                             14.8            11.3           11.9
       General and administrative                               5.6             6.7            7.0
       Goodwill amortization                                    0.4             0.4            0.4
                                                              -------        -------         ------
    Income from operations                                      8.8             4.2            4.5
       Loss on disposal of assets                              (0.2)           (0.1)          (0.2)
       Other income, principally interest                       ---             ---             ---
       Interest expense                                        (1.2)           (2.0)          (2.1)
                                                              -------        -------         ------
    Income before provision for income taxes                    7.4             2.1            2.2
    Provision for income taxes                                  2.7             0.6            0.7
                                                              -------        -------         ------
    Income before cumulative effect of a
       change in accounting principle                           4.7             1.5            1.5
    Cumulative effect of change in
       accounting principle                                     ---             ---           (2.0)
                                                              -------        -------         ------
    Net income (loss)                                           4.7%            1.5%          (0.5)%
                                                              =======        =======         =======

RESTAURANT OPERATING DATA:
    Number of locations at end of period                         43              38             35
    Number of store operating weeks (2)                       2,071           1,831          1,843
    Annualized average weekly sales per location (3)         $1,780          $1,590         $1,578
</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.


                                      -20-
<PAGE>

THE COMPANY

     FIFTY-TWO WEEKS ENDED DECEMBER 25, 2001 COMPARED TO FIFTY-TWO WEEKS ENDED
     DECEMBER 26, 2000
     Net sales increased $14,962,000 (26.7%) for the fifty-two weeks ended
December 25, 2001 to $70,952,000 from $55,990,000 in the fifty-two weeks ended
December 26, 2000, which is attributable to a 11.9% increase in average unit
volumes ($1,780,000 versus $1,590,000) and a 13.1% increase in store operating
weeks (2,071 versus 1,831). Same store sales increased 7.4% for the fifty-two
weeks ended December 25, 2001.

     Costs of sales, primarily food and beverages, increased $4,423,000 (29.9%)
for the fifty-two weeks ended December 25, 2001 to $19,213,000 from $14,790,000
in the fifty-two weeks ended December 26, 2000, and such expenses increased as a
percentage of sales to 27.1% from 26.4%. This increase as a percentage of sales
is principally attributable to higher food costs associated with a new menu
implemented in the first quarter of 2001 and an increase in certain raw product
costs.

     Restaurant operating expenses for the fifty-two weeks ended December 25,
2001 increased $7,346,000 (25.9%) to $35,741,000 from $28,395,000 in the
fifty-two weeks ended December 26, 2000, and such expenses decreased as a
percentage of net sales to 50.4% from 50.7%. This decrease as a percentage of
sales is principally attributable to the effect of leveraging fixed expenses
against higher unit volumes.

     Depreciation and amortization increased $114,000 (3.2%) for the fifty-two
weeks ended December 25, 2001 to $3,706,000 from $3,592,000 in the fifty-two
weeks ended December 26, 2000, and such expenses decreased as a percentage of
net sales to 5.2% from 6.4%. This net increase is due principally to
depreciation incurred during 2001 on eight units opened since September 5, 2000
offset by depreciation in 2000 on assets in two units for which an impairment
charge was taken in the fourth quarter of 2000 and depreciation in 2000 on
certain assets with a two-year life which were added in 1998. No depreciation
charge was incurred on these assets in 2001.

     Preopening costs increased $716,000 (142.9%) for the fifty-two weeks ended
December 25, 2001 to $1,217,000 from $501,000 in the fifty-two weeks ended
December 26, 2000, and such expenses increased as a percentage of net sales to
1.7% from 1.0%. Preopening costs for 2001 were related to the opening of five
units in 2001 and costs related to units which will open in 2002. Preopening
costs for 2000 were related to the opening of three units in 2000 and costs
related to units which opened in 2001.

     Provision for asset impairment and store closing decreased $1,787,000
(75.7%) for the fifty-two weeks ended December 25, 2001 to $575,000 from
$2,362,000 in the fifty-two weeks ended December 26, 2000, and such expenses
decreased as a percentage of net sales to 0.8% from 4.2%. The provision in 2001
and 2000 reflects the charge made in the fourth quarter of 2001 and 2000 for the
write down of certain under-performing restaurant assets. The Company
periodically reviews its long lived assets which are held and used in its
entertainment restaurant operations for indications of impairment (see Note 1 of
Notes to Consolidated Financial Statements).

     General and administrative expenses increased $222,000 (5.9%) for the
fifty-two weeks ended December 25, 2001 to $3,991,000 from $3,769,000 in the
fifty-two weeks ended December 26, 2000, and such expenses decreased as a
percentage of net sales to 5.6% from 6.7%. The increase reflects the addition of
multi-unit supervisory positions and corporate-level positions to accommodate
future unit growth.

                                      -21-
<PAGE>

     Loss on disposal of assets was $134,000 for the fifty-two weeks ended
December 25, 2001 and $67,000 for the fifty-two weeks ended December 26, 2000.
The losses reflect the disposal of certain video games for several units in both
years.

     Interest expense decreased $217,000 (20.1%) for the fifty-two weeks ended
December 25, 2001 to $864,000 from $1,081,000. This decrease is due to a lower
interest rate applicable to the revolving note payable in the current year
compared with the prior year offset by a higher average balance on the revolving
note payable during the current year compared with the prior year.

     The effective income tax rate on income was 36.8% for the fifty-two weeks
ended December 25, 2001 as compared to 28.7% for the fifty-two weeks ended
December 26, 2000. This increase 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.


     FIFTY-TWO WEEKS ENDED DECEMBER 26, 2000 COMPARED TO FIFTY-TWO WEEKS ENDED
     DECEMBER 28, 1999
     Net sales increased $60,000 (0.1%) for the fifty-two weeks ended December
26, 2000 to $55,990,000 from $55,930,000 in the fifty-two weeks ended December
28, 1999, which is attributable to a 0.8% increase in average unit volumes
($1,590,000 versus $1,578,000) offset by a 0.7% decrease in store operating
weeks (1,831 versus 1,843). Same store sales increased 3.8% for the fifty-two
weeks ended December 26, 2000.

     Costs of sales, primarily food and beverages, decreased $559,000 (3.6%) for
the fifty-two weeks ended December 26, 2000 to $14,790,000 from $15,349,000 in
the fifty-two weeks ended December 28, 1999, and such expenses decreased as a
percentage of sales from 27.4% to 26.4%. This decrease is attributable to better
food and beverage controls.

     Restaurant operating expenses for the fifty-two weeks ended December 26,
2000 decreased $237,000 (0.8%) to $28,395,000 from $28,632,000 in the fifty-two
weeks ended December 28, 1999, and such expenses decreased as a percentage of
net sales to 50.7% from 51.2%. This decrease is primarily attributable to lower
hourly labor costs (1.7%) resulting from better labor controls, offset by higher
other operating expenses including maintenance costs (0.6%) and live music costs
(0.6%).

     Depreciation and amortization decreased $105,000 (2.8%) for the fifty-two
weeks ended December 26, 2000 to $3,592,000 from $3,697,000 in the fifty-two
weeks ended December 28, 1999, and such expenses decreased as a percentage of
net sales to 6.4% from 6.6%. This decrease is due to the closing of two units in
1999 offset by three new units opened in the fourth quarter of 2000.

     Preopening costs increased $14,000 (2.9%) for the fifty-two weeks ended
December 26, 2000 to $501,000 from $487,000 in the fifty-two weeks ended
December 28, 1999, and such expenses were 1.0% of net sales for both periods.
Preopening costs for 2000 were related to the opening of three units in 2000 and
costs related to units which will open in 2001. Preopening costs for 1999 were
related to the opening of five units in 1999.

     Provision for asset impairment and store closing increased $1,275,000
(117.3%) for the fifty-two weeks ended December 26, 2000 to $2,362,000 from
$1,087,000 in the fifty-two weeks ended December 28, 1999, and such expenses
increased as a percentage of net sales to 4.2% from 1.9%. The provision in 2000
reflects the charge made in the fourth quarter of 2000 for the write down of
certain under-performing restaurant assets. The Company periodically reviews its
long lived assets which are held and used in its entertainment restaurant
operations for indications of impairment (see Note 1 of Notes to Consolidated
Financial Statements). The provision in 1999 represents the estimated costs
associated with closing the Fox and Hound


                                      -22-
<PAGE>

location in Davenport, Iowa. The provision included $394,000 of future lease
costs, $640,000 in abandoned leasehold improvements and $53,000 in abandoned
furniture, fixtures and equipment. This unit was opened in June 1998 and closed
in October 1999. The unit had been experiencing consistent negative cash flows
due to low sales volumes.

     General and administrative expenses decreased $132,000 (3.4%) for the
fifty-two weeks ended December 26, 2000 to $3,768,000 from $3,900,000 in the
fifty-two weeks ended December 28, 1999, and such expenses decreased as a
percentage of net sales to 6.7% from 7.0%. The decrease reflects the realignment
of certain executive positions during 2000.

     The loss on disposal of assets in 2000 consisted mainly of the disposal of
certain video games in several units. The loss on disposal of assets in 1999
consisted mainly of the disposal of POS equipment in six units which was
replaced with POS systems consistent with the systems used in each of the other
units.

     Interest expense decreased $94,000 (8.0%) for the fifty-two weeks ended
December 26, 2000 to $1,081,000 from $1,175,000. This decrease reflects a
decrease in the average debt balance offset by an increase in the average
interest rate.

     The effective income tax rate on income was 28.7% for the fifty-two weeks
ended December 26, 2000 as compared to 44.0% for the fifty-two weeks ended
December 28, 1999. 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.

QUARTERLY FLUCTUATIONS, SEASONALITY AND INFLATION

     As a result of the revenues associated with each new location, the timing
of new unit openings will result in significant fluctuations in quarterly
results. The Company expects seasonality to be a factor in the operation or
results of its business in the future due to expected lower second and third
quarter revenues due to the summer season. The primary inflationary factors
affecting the Company's operations include food, liquor and labor costs.
Although a large number of the Company's restaurant personnel are paid at the
federal minimum wage level, the majority of personnel are tipped employees, and
therefore, recent as well as future minimum wage changes are likely to have very
little effect on labor costs. As costs of food and labor have increased, the
Company has 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

     The Company was formed on February 7, 1997 and, pursuant to the Exchange on
February 20, 1997, the Company became the owner of the eight then-existing
Bailey's locations and three then-existing Fox and Hound locations. Prior to the
Exchange, Bailey's financed its expansion primarily with loans from stockholders
and loans from banks. Prior to the Exchange, Fox and Hound financed its
expansion primarily with partners' equity contributions and loans from related
parties.

    Immediately following the Initial Public Offering, the Company repaid
outstanding indebtedness to Intrust Bank, N.A., Wichita, in the principal amount
of approximately $10.8 million out of a total credit line of $12.0 million
available to the Company. This outstanding indebtedness was incurred to
refinance the debt of the acquired entities in the Exchange of approximately
$9.1 million and to finance the stockholder dividend payment to the former
stockholders of Bailey's of approximately $1.7 million.


                                      -23-
<PAGE>

     On September 1, 1998 the Company entered into a loan agreement with Intrust
Bank, N.A. (the "Facility") 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 fifty-two weeks. The Facility requires
monthly payments of interest only until November 1, 2003, 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 1/2% below the prime rate as
published in THE WALL STREET JOURNAL. Proceeds from the Facility were used for
restaurant development, common stock repurchases, and general corporate
purposes. As of December 25, 2001, the Company had borrowed $10,350,000 under
the Facility. The Company is in compliance with all debt covenants.

     Cash flows from operations were $10,388,000 in the fifty-two weeks ended
December 25, 2001 compared to $7,131,000 in the fifty-two weeks ended December
28, 1999. This increase is attributable to an increase in net income before the
provision for asset impairment to $3,904,000 in the fifty-two weeks ended
December 25, 2001 compared to net income before the provision for asset
impairment to $3,210,000 in the fifty-two weeks ended December 26, 2000.
Purchases of property and equipment were $9,540,000 for the fifty-two weeks
ended December 25, 2001 compared to $3,005,000 for the fifty-two weeks ended
December 26, 2000. Net payments of the revolving note payable to bank was
$1,630,000 for the fifty-two weeks December 25, 2001 compared to net payments of
$2,415,000 for the fifty-two week period ending December 26, 2000. The Company
spent $167,000 to repurchase 75,800 shares of common stock in 2001 compared to
$2,093,000 of common stock repurchases in 2000. At December 25, 2001, the
Company had $1,346,000 in cash and cash equivalents.

     The Company intends to open ten to twelve entertainment restaurant
locations in 2002 and between seven to ten locations in 2003. Four units have
been opened in fiscal 2002, two units are currently under construction and an
additional five leases have been executed. The Company is currently evaluating
locations in markets familiar to its management team. However, the number of
locations actually opened and the timing thereof may vary depending upon the
ability of the Company to locate suitable sites and negotiate favorable leases.
The Company expects to expend approximately $12.0 to $18.0 million to open new
locations over the next 12 months.

     The Company believes the funds available from the Facility and its cash
flow from operations will be sufficient to satisfy its working capital and
capital expenditure requirements for at least the next 12 months. There can be
no assurance, however, that changes in the Company's operating plans, the
acceleration of the Company's expansion plans, lower than anticipated revenues,
increased expenses, potential acquisitions or other events will not cause the
Company to seek additional financing sooner than anticipated, prevent the
Company from achieving the goals of its expansion strategy or prevent any newly
opened locations from operating profitably. There can be no assurance that
additional financing will be available on acceptable terms or at all.

     A summary of the Company's obligations and commitments to make future
payments under contracts, including debt and lease agreements 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
(4.50% at December 25, 2001).

<TABLE>
                                           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              $10,350,000    $       --    $ 2,829,166    $ 5,208,631    $ 2,312,203
Operating leases             29,258,798     4,950,171      7,578,008      5,028,837     11,647,782
                            -----------    ----------    -----------    -----------    -----------
Totals                      $39,608,798    $4,950,171    $10,407,174    $10,291,468    $13,959,985
</TABLE>

Critical Accounting Policies

     The Company considers determination of impairment of long-lived assets as a
critical accounting policy because 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. Management uses the best information available to make the
determination; however, actual future cash flows for the restaurant may vary
significantly from the cash flows projected in conjunction with the impairment
assessment. The potential impact on the 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 under estimated or a provision for impairment could
be deferred until later determined necessary in a future period if initial
projected cash flows are over estimated. See Note 1 of Notes to Consolidated
Financial Statements for a description of the Company's accounting policy for
impairment of long-lived assets.

NEW ACCOUNTING STANDARDS

     In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets (SFAS No. 142). SFAS No. 142 will require that goodwill and intangible
assets with indefinite useful lives no longer be amortized, but instead tested
for impairment at least annually in accordance with the provisions of SFAS No.
142. In addition, SFAS No. 142 requires the Company to perform an assessment of
whether its recorded goodwill is impaired as of the date of adoption.


                                      -24-
<PAGE>

SFAS No. 142 is effective for the Company's fiscal year 2002. The Company
currently records annual goodwill amortization of approximately $244,000.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets (SFAS No. 144). SFAS No. 144 addresses
significant issues relating to the implementation of SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," and develops a single accounting method under which long-lived assets that
are to be disposed of by sale are measured at the lower of book value or fair
value less cost to sell. Additionally, SFAS No. 144 expands the scope of
discontinued operations to include all components of an entity with operations
that (1) can be distinguished from the rest of the entity and (2) will be
eliminated from the ongoing operations of the entity in a disposal transaction.
SFAS No. 144 is effective for financial statements issued for fiscal years
beginning after December 15, 2001 and its provisions are to be applied
prospectively. Management believes that the adoption of SFAS No. 144 will not
have a significant impact on the financial statements.

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 1936, as amended, which are intended to be covered by
the safe harbors created thereby. Although the Company believes 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. 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 and liquor costs, competition and the inability
to find suitable new locations. 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 the Company or
any other person that the objectives and plans of the Company will be achieved.














                                      -25-
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         ----------------------------------------------------------

     INTEREST RATE RISK

     The Company's Facility has a variable rate which is directly affected by
changes in U.S. interest rates. The average interest rate of the Facility was
6.73% for the year ended December 25, 2001. The following table presents the
quantitative interest rate risks at December 25, 2001:

<TABLE>
<CAPTION>
                                                  PRINCIPAL AMOUNT BY EXPECTED MATURITY
                                       --------------------------------------------------------------------
                                                                (In thousands)
                                                                                                                Fair
                                                                                            There-              Value
     (dollars in thousands)          2002       2003       2004       2005       2006       After    Total    12/25/01
     ----------------------          ----       ----       ----       ----       ----       -----    -----    --------

<S>                                 <C>      <C>        <C>        <C>         <C>      <C>        <C>       <C>
     Variable rate debt              ---        $395     $2,434     $2,546     $2,663      $2,312   $10,350    $10,350
     Average Interest Rate --
     1/2% below prime               4.50%       4.50%      4.50%      4.50%      4.50%       4.50%
</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.









                                      -26-
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
         --------------------------------------------------

     The information required by this Item 10 will be in the Company's
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 the Company's
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
         --------------------------------------------------------------

     The information required by this Item 12 will be in the Company's
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 the Company's
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.











                                      -27-
<PAGE>

                                     PART IV


ITEM 14. 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

<TABLE>
<CAPTION>
                                                INDEX TO EXHIBITS
              Exhibit
              Number                                 Exhibit
              ------                                 -------

<S>                        <C>
               *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.

              *10.2        Form of Employment Agreement between the Registrant and
                           Gary M. Judd.

              *10.3        Form of Employment Agreement between the Registrant and
                           James K. Zielke.

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

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

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

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

</TABLE>


                                      -28-
<PAGE>

<TABLE>
<CAPTION>

<S>                        <C>
              *10.9        Non-Competition, Confidentiality and Non-Solicitation
                           Agree- ment between the Registrant and
                           Thomas A. Hager, dated February 20, 1997.

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

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

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

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

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

            **21.1         Subsidiaries of Registrant.

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

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

         (b)  Reports on Form 8-K filed in the fourth quarter of 2001:

                  None

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



                                      -29-
<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 20th day of March 2002.


                                 TOTAL ENTERTAINMENT RESTAURANT CORP.
                                              (Registrant)



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




                                      -30-
<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.

<TABLE>
<CAPTION>

                         SIGNATURE                                TITLE                             DATE
                         ---------                                -----                             ----
<S>                                                 <C>                                    <C>



                  /s/ Dennis L. Thompson                 Co-Chairman of the Board              March 20, 2002
          ----------------------------------------
                    Dennis L. Thompson



                  /s/ Stephen P. Hartnett                Co-Chairman of the Board              March 20, 2002
          ----------------------------------------
                    Stephen P. Hartnett



                   /s/ Steven M. Johnson                Chief Executive Officer and            March 20, 2002
          ----------------------------------------                Director
                     Steven M. Johnson                (principal executive officer)



                     /s/ Gary M. Judd                     President and Director               March 20, 2002
          ----------------------------------------
                       Gary M. Judd



                    /s/ James K. Zielke                  Chief Financial Officer,              March 20, 2002
          ----------------------------------------         Treasurer, Secretary
                      James K. Zielke                          and Director
                                                      (principal accounting officer)
</TABLE>



                                      -31-
<PAGE>

<TABLE>
<CAPTION>
<S>                                                   <C>                                   <C>

                    /s/ Thomas A. Hager                          Director                      March 20, 2002
          ----------------------------------------
                      Thomas A. Hager



                  /s/ C. Wells Hall, III                         Director                      March 20, 2002
          ----------------------------------------
                    C. Wells Hall, III



                    /s/ E. Gene Street                           Director                      March 20, 2002
          ----------------------------------------
                      E. Gene Street



                  /s/ John D. Harkey, Jr.                        Director                      March 20, 2002
          ----------------------------------------
                    John D. Harkey, Jr.

</TABLE>



                                      -32-
<PAGE>

<TABLE>
<CAPTION>

              SUBSIDIARIES OF TOTAL ENTERTAINMENT RESTAURANT CORP.
              ----------------------------------------------------
                              AS OF MARCH 13, 2002
                              --------------------


<S>                                                <C>
               F & H RESTAURANT CORP.                BRYANT BEVERAGE CORPORATION
               TENT FINANCE, INC.                    CAMPBELL BEVERAGE CORP.
               TENT MANAGEMENT, INC.                 DOWNTOWN BEVERAGE CORP.
               BAILEY'S SPORTS GRILL                 FOX & HOUND CLUB
               BAILEY'S SPORTS GRILLE, INC.          GUADALUPE BEVERAGE CORP.
               FOX & HOUND, INC.                     JACKSON BEVERAGE CORPORATION
               FOX & HOUND II, INC.                  LEWISVILLE BEVERAGE CORP.
               F & H RESTAURANTS OF TEXAS, INC.      RAIDER BEVERAGE CORPORATION
               ALABAMA FOX & HOUND, INC.             ROCKET BEVERAGE CORPORATION
               FOX & HOUND OF ARIZONA, INC.          SKILLMAN BEVERAGE CORP.
               FOX & HOUND OF COLORADO, INC.         MIDWAY ENTERTAINMENT, LTD.
               F & H RESTAURANT OF GEORGIA, INC.     N. COLLINS ENTERTAINMENT, LTD.
               FOX & HOUND OF ILLINOIS, INC.         505 ENTERTAINMENT, LTD.
               FOX & HOUND OF INDIANA, INC.          FOX & HOUND OF SAN ANTONIO, LTD.
               F & H OF IOWA, INC.                   FOX & HOUND OF AUSTIN, LTD.
               FOX & HOUND OF KANSAS, INC.           FOX & HOUND OF DALLAS, LTD.
               F & H OF KENNESAW, INC.               FOX & HOUND OF DALLAS #3, LTD.
               FOX & HOUND OF LOUISIANA, INC.        FOX & HOUND OF LUBBOCK, LTD.
               FOX & HOUND OF MICHIGAN, INC.         FOX & HOUND OF HOUSTON, LTD.
               FOX & HOUND OF MISSOURI, INC.         FOX & HOUND OF HOUSTON #2, LTD.
               FOX & HOUND OF NEBRASKA, INC.         FOX & HOUND OF HOUSTON #3, LTD.
               FOX & HOUND OF NORTH CAROLINA, INC.   FOX & HOUND OF LEWISVILLE, LTD.
               FOX & HOUND OF OHIO, INC.             FOX & HOUND OF FT. WORTH, LTD.
               PENNSYLVANIA FOX & HOUND, INC.        FOX & HOUND OF RICHARDSON, LTD.
               FOX & HOUND OF TENNESSEE, INC.
               FOX & HOUND OF TEXAS, INC.
               FOX & HOUND OF VIRGINIA, INC.

</TABLE>




                                      -33-

<PAGE>

<TABLE>
<CAPTION>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.

                          INDEX TO FINANCIAL STATEMENTS

                                                                                                     PAGE
<S>                                                                                                  <C>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Independent Auditors' Report -------------------------------------------------------------------------F-2
Report of Independent Certified Public Accountants ---------------------------------------------------F-3
Consolidated Balance Sheets as of December 25, 2001 and December 26, 2000-----------------------------F-4
Consolidated Statements of Income for the years ended December 25, 2001,
     December 26, 2000, and December 28, 1999---------------------------------------------------------F-6
Consolidated Statements of Stockholders' Equity for the years ended December 25, 2001,
     December 26, 2000, and December 28, 1999---------------------------------------------------------F-7
Consolidated Statements of Cash Flows for the years ended December 25, 2001,
     December 26, 2000, and December 28, 1999---------------------------------------------------------F-8
Notes to Consolidated Financial Statements-----------------------------------------------------------F-10
</TABLE>







                                      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 25, 2001 and
December 26, 2000 and the related consolidated statements of income,
stockholders' equity and cash flows for the years then ended. 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 25, 2001 and December 26, 2000,
and the results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.



                                                         /s/ KPMG LLP
Wichita, Kansas
February 1, 2002



                                      F-2

<PAGE>


               Report of Independent Certified Public Accountants


The Stockholders
Total Entertainment Restaurant Corp.

We have audited the accompanying consolidated statements of income,
stockholders' equity and cash flows of Total Entertainment Restaurant Corp. for
the year ended December 28, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and consolidated
cash flows of Total Entertainment Restaurant Corp. for the year ended December
28, 1999, in conformity with accounting principles generally accepted in the
United States of America.

As described in Note 1 to the financial statements, on December 30, 1998, the
Company changed its method of accounting for pre-opening costs.



                                                         /s/ Grant Thornton LLP
Wichita, Kansas
January 28, 2000




                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                              TOTAL ENTERTAINMENT RESTAURANT CORP.
                                   CONSOLIDATED BALANCE SHEETS


                                                                     DECEMBER 25,         DECEMBER 26,
                                                                         2001                 2000
                                                                 ------------------------------------------
<S>                                                                    <C>                  <C>
ASSETS
Current assets:
   Cash and cash equivalents                                           $   1,346,495        $   2,244,606
   Inventories                                                             1,230,636            1,028,975
   Deferred income taxes                                                     223,742              161,206
   Other current assets                                                      586,967              579,594
                                                                 ------------------------------------------
Total current assets                                                       3,387,840            4,014,381

Property and equipment:
   Land                                                                      600,000              600,000
   Buildings                                                                 670,629              670,629
   Leasehold improvements                                                 26,336,678           21,851,941
   Equipment                                                              15,284,124           13,397,524
   Furniture and fixtures                                                  3,890,170            3,265,386
                                                                 ------------------------------------------
                                                                          46,781,601           39,785,480
   Less accumulated depreciation and amortization                         12,249,339            9,022,781
                                                                 ------------------------------------------
Net property and equipment                                                34,532,262           30,762,699

Other assets:
   Goodwill, net of accumulated amortization of $1,222,121
     ($977,959 at December 26, 2000)                                       3,661,134            3,905,296
   Deferred income taxes                                                     982,875            1,059,839
   Other assets                                                              586,048              385,385
                                                                 ------------------------------------------
Total other assets                                                         5,230,057            5,350,520
                                                                 ------------------------------------------

Total assets                                                            $ 43,150,159         $ 40,127,600
                                                                 ==========================================

</TABLE>



                                      F-4
<PAGE>

<TABLE>
<CAPTION>

                                                                     DECEMBER 25,         DECEMBER 26,
                                                                         2001                 2000
                                                                 ------------------------------------------
<S>                                                                  <C>                      <C>
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
   Current portion notes payable                                     $             -          $   418,108
   Accounts payable                                                        3,741,281            3,520,542
   Sales tax payable                                                         529,852              442,297
   Accrued payroll                                                           873,765              775,012
   Accrued payroll taxes                                                      23,258              242,134
   Accrued income taxes                                                    2,155,170            1,009,592
   Lease obligation for closed store                                         158,342              263,924
   Other accrued liabilities                                               1,065,734              777,504
                                                                 ------------------------------------------
Total current liabilities                                                  8,547,402            7,449,113


Notes payable                                                             10,350,000           11,561,892
Deferred revenue                                                             103,875              129,549

Stockholders' equity:
   Preferred stock, $.10 par value, 2,000,000 shares
     authorized; none issued                                                       -                    -
   Common stock, $.01 par value; 20,000,000 shares authorized;
     8,665,611 shares issued and
     outstanding (8,741,411 at December 26, 2000)                             86,656               87,414
   Additional paid-in capital                                             17,134,953           17,301,511
   Retained earnings                                                       6,927,273            3,598,121
                                                                 ------------------------------------------
Total stockholders' equity                                                24,148,882           20,987,046
                                                                 ------------------------------------------

Commitments

Total liabilities and stockholders' equity                             $  43,150,159        $  40,127,600
                                                                 ==========================================
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




                                      F-5

<PAGE>

<TABLE>
<CAPTION>

                              TOTAL ENTERTAINMENT RESTAURANT CORP.
                                CONSOLIDATED STATEMENTS OF INCOME


                                                                      YEAR ENDED          YEAR ENDED          YEAR ENDED
                                                                  DECEMBER 25, 2001    DECEMBER 26, 2000   DECEMBER 28, 1999
                                                                 --------------------------------------------------------------
<S>                                                                    <C>                  <C>                 <C>
Sales:
Food and beverage                                                      $64,504,884          $50,837,163         $50,525,221
Entertainment and other                                                  6,447,603            5,152,660           5,404,628
                                                                 --------------------------------------------------------------
   Total net sales                                                      70,952,487           55,989,823          55,929,849

Cost and expenses:
   Cost of sales                                                        19,213,441           14,789,948          15,349,274
   Entertainment and restaurant operating expenses                      35,741,386           28,394,610          28,631,590
   Depreciation and amortization                                         3,706,054            3,592,299           3,697,083
   Preopening costs                                                      1,217,455              500,739             487,475
   Provision for asset impairment and store closing                        575,098            2,361,840           1,086,785
                                                                 --------------------------------------------------------------
Entertainment and restaurant costs and expenses                         60,453,434           49,639,436          49,252,207
                                                                 --------------------------------------------------------------
Entertainment and restaurant operating income                           10,499,053            6,350,387           6,677,642

General and administrative expenses:
   Related parties                                                               -                    -              60,563
   Other                                                                 3,990,827            3,768,774           3,839,623
Goodwill amortization                                                      244,163              244,163             244,163
                                                                 --------------------------------------------------------------
Income from operations                                                   6,264,063            2,337,450           2,533,293
Other income (expense):
   Loss on disposal of assets                                             (133,825)             (66,902)           (123,648)
   Other income (principally interest income)                                1,484                  404                 126
    Interest expense                                                      (864,375)          (1,080,919)         (1,174,739)
                                                                 --------------------------------------------------------------
Income before provision for income taxes                                 5,267,347            1,190,033           1,235,032
Provision for income taxes                                               1,938,195              341,646             418,211
                                                                 --------------------------------------------------------------
Income before cumulative effect of a
   change in accounting principle                                        3,329,152              848,387             816,821
Cumulative effect of a change in accounting principle                            -                    -          (1,127,536)
                                                                 --------------------------------------------------------------
Net income (loss)                                                     $  3,329,152       $      848,387      $     (310,715)
                                                                 ==============================================================

Basic and diluted earnings (loss) per share:
Earnings before cumulative effect of a
   change in accounting principle                                     $      0.38        $        0.09       $         0.08
Cumulative effect of a change in accounting principle                           -                    -                (0.11)
                                                                 --------------------------------------------------------------
Basic and diluted earnings (loss) per share                           $      0.38        $        0.09       $        (0.03)
                                                                 ==============================================================
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.




                                      F-6
<PAGE>

<TABLE>
<CAPTION>


                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                                                               COMMON STOCK
                                                      -------------------------------  ADDITIONAL
                                                                                         PAID-IN         RETAINED
                                                           NUMBER         AMOUNT         CAPITAL         EARNINGS         TOTAL
                                                      ------------------------------------------------------------------------------
<S>                                                     <C>            <C>           <C>              <C>             <C>
Balance at December 29, 1998                              10,415,000     $104,150      $20,571,178      $3,060,449      $23,735,777
   Purchase and retirement of shares of common stock        (733,729)      (7,337)      (1,185,949)              -       (1,193,286)
   Net loss                                                        -            -                -        (310,715)        (310,715)
                                                      ------------------------------------------------------------------------------
Balance at December 28, 1999                               9,681,271       96,813       19,385,229       2,749,734       22,231,776
   Purchase and retirement of shares of common stock        (939,860)      (9,399)      (2,083,718)              -       (2,093,117)
   Net income                                                      -            -                -         848,387          848,387
                                                      ------------------------------------------------------------------------------
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
                                                      ==============================================================================

</TABLE>

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.












                                      F-7
<PAGE>

<TABLE>
<CAPTION>

                              TOTAL ENTERTAINMENT RESTAURANT CORP.
                              CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                          YEAR ENDED         YEAR ENDED         YEAR ENDED
                                                                         DECEMBER 25,       DECEMBER 26,       DECEMBER 28,
                                                                             2001               2000               1999
                                                                     ----------------------------------------------------------
<S>                                                                     <C>                <C>                <C>
OPERATING ACTIVITIES
   Net income (loss)                                                    $    3,329,152     $      848,387     $     (310,715)
   Adjustments to reconcile net income (loss) to net
     cash provided by operating activities:
       Cumulative effect of a change in accounting
          principle                                                                  -                  -          1,127,536
       Write off of property and equipment related
          to asset impairment and store closure                                575,098          2,361,840            692,746
       Loss on disposal of assets                                              133,825             66,902            123,648
       Depreciation                                                          3,725,337          3,611,878          3,725,240
       Amortization                                                            272,952            269,413            287,744
       Deferred taxes                                                           14,428           (593,759)          (286,212)
       Net change in operating assets and liabilities:
         Inventories                                                          (201,661)           (55,819)          (118,470)
         Other current assets                                                   (7,373)          (143,955)           227,108
         Other assets                                                         (229,453)          (122,368)            14,514
         Accounts payable                                                    1,505,297            934,011         (2,005,717)
         Accounts payable - affiliates                                               -                  -            (11,451)
         Accrued liabilities                                                 1,401,240             70,639            927,396
         Deferred revenue                                                      (25,674)           (11,220)           140,769
         Lease obligation for closed store                                    (105,582)          (104,552)           368,476
                                                                     ----------------------------------------------------------
Net cash provided by operating activities                                   10,387,586          7,131,397          4,902,612

INVESTING ACTIVITIES
   Purchases of property and equipment                                      (9,540,231)        (3,005,492)        (4,694,718)
   Proceeds from disposal of assets                                             51,850             76,349             10,000
                                                                     ----------------------------------------------------------
Net cash used in investing activities                                       (9,488,381)        (2,929,143)        (4,684,718)

FINANCING ACTIVITIES
   Proceeds from revolving note payable to bank                             41,945,000         38,480,000         41,200,000
   Payments of revolving note payable to bank                              (43,575,000)       (40,895,000)       (38,620,000)
   Purchase of common stock                                                   (167,316)        (2,093,117)        (1,193,286)
                                                                     ----------------------------------------------------------
Net cash (used in) provided by financing activities                         (1,797,316)        (4,508,117)         1,386,714




Net (decrease) increase in cash and cash equivalents                          (898,111)          (305,863)         1,604,608
Cash and cash equivalents at beginning of year                               2,244,606          2,550,469            945,861
                                                                     ----------------------------------------------------------
Cash and cash equivalents at end of year                                 $   1,346,495      $   2,244,606     $    2,550,469
                                                                     ==========================================================
</TABLE>




                                      F-8
<PAGE>

<TABLE>
<CAPTION>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)




                                                                          YEAR ENDED         YEAR ENDED         YEAR ENDED
                                                                         DECEMBER 25,       DECEMBER 26,       DECEMBER 28,
                                                                             2001               2000               1999
                                                                     ----------------------------------------------------------
<S>                                                                        <C>              <C>                <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                                     $   885,206      $   1,208,313      $   1,171,349
Cash paid for income taxes                                                     778,189            802,650            190,668

SUPPLEMENTAL DISCLOSURE OF NON CASH ACTIVITY
Additions to property and equipment in accounts
   payable at year end                                                     $   261,525      $   1,546,083      $           -
</TABLE>





                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.















                                      F-9
<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
entertainment and restaurant locations under the Fox and Hound English 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. The Company's entertainment restaurant locations combine a comfortable
and inviting social gathering place, full menu and full service bar,
state-of-the-art audio and video systems for sports entertainment, traditional
games of skill such as pocket billiards and late-night dining alternatives in a
single location. The Company's entertainment restaurant locations appeal to a
broad range of guests who can participate in one or more aspects of the
Company's total entertainment restaurant experience. Fox & Hound and Bailey's
encompass the Company's multi-dimensional concept and serve both larger urban
and smaller regional markets. As of December 25, 2001, the Company owned and
operated 29 Fox & Hounds and 14 Bailey's in Alabama, Arkansas, Georgia,
Illinois, Indiana, Kansas, Louisiana, Michigan, Missouri, Nebraska, North
Carolina, Ohio, Pennsylvania, South Carolina, Tennessee and Texas. The Company
operates in one business segment.

The company has a 52/53 week fiscal year ending on the last Tuesday in December.

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.


                                      F-10
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

o   PRE-OPENING COSTS

In April 1998, the American Institute of Certified Public Accountants issued SOP
98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES, which requires costs
related to pre-opening activities be expensed as incurred. Prior to fiscal year
1999, the Company capitalized substantially all costs incurred prior to the
opening of new restaurants, excluding those costs capitalized as property and
equipment, and amortized such pre-opening costs over a one-year period. The
Company adopted the provisions of SOP 98-5 effective December 30, 1998. The
effect of adoption of SOP 98-5 was to increase income from continuing operations
in 1999 by $1,064,401 ($0.10 per share), net of tax expense of $625,125, and to
record a charge for the cumulative effect of an accounting change of $1,127,536,
net of tax benefits of $662,204, to expense costs that had been capitalized
prior to 1999.

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 is being amortized over
20 years.

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




                                      F-11
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 $575,098 and $2,361,840 has been
recorded for the years ended December 25, 2001 and December 26, 2000,
respectively.

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 25, 2001, December 26, 2000, and December 28, 1999 were $536,342,
$696,364, and $622,555, respectively.

o   ACCOUNTING FOR STOCK-BASED COMPENSATION

In accordance with APB Opinion No. 25, 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.
Required pro forma disclosures of compensation expense determined under the fair
value method of Statement of Financial Accounting Standards (SFAS) No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, are presented in Note 4.

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.



                                      F-12
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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. 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.

3. REVOLVING NOTE PAYABLE

On September 1, 1998 the Company entered into a loan agreement with Intrust
Bank, N.A. (the "Facility") 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 fifty-two weeks. The note is secured
by substantially all assets of the Company. The note restricts the ability of
the Company to pay dividends. The Facility requires monthly payments of interest
only until November 1, 2003, 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 1/2% below the prime rate as published in THE
WALL STREET JOURNAL (4.50% and 9.00% at December 25, 2001 and December 26, 2000,
respectively). Proceeds from the Facility were used for restaurant development
and acquisition of treasury stock. As of December 25, 2001 and December 26,
2000, the Company had borrowed $10,350,000 and $11,980,000, respectively, under
the Facility. The Company had additional borrowings available at December 25,
2001 under the Facility of $9,650,000.

The following represents future maturities of the note:

                            2002                           $         -
                            2003                               395,147
                            2004                             2,434,019
                            2005                             2,545,838
                            2006                             2,662,793
                            Thereafter                       2,312,203
                                                        -----------------
                            Total                          $10,350,000
                                                        =================




                                      F-13
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4. 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 because, as described below, the alternative fair value accounting
provided for under FASB Statement No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, requires the use of option valuation models that were not
developed for use in valuing 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.

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.

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
4.1% to 5.3%; no dividend yields; volatility factor ranging from 0.281 to 0.800;
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.



                                      F-14
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4. STOCK OPTIONS (CONTINUED)

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 25,       DECEMBER 26,       DECEMBER 28,
                                                     2001               2000               1999
                                               ------------------ ------------------ -----------------
<S>                                               <C>                  <C>             <C>
     Pro forma net income (loss)                    $2,979,754           $645,479        $(524,264)
     Pro forma earnings (loss) per
        share--basic and diluted                         $0.34              $0.07           $(0.05)
     Weighted  average  fair value of options
       granted during the year                           $1.24              $1.23            $3.05
</TABLE>

A summary of the Company's stock option activity and related information for the
years ended December 25, 2001, December 26, 2000, and December 28, 1999 follows:

<TABLE>
<CAPTION>

                                DECEMBER 25, 2001          DECEMBER 26, 2000         DECEMBER 28, 1999
                             ------------------------- -------------------------- ------------------------
                              WEIGHTED                  WEIGHTED                   WEIGHTED
                               AVERAGE                   AVERAGE                    AVERAGE
                              EXERCISE                  EXERCISE                   EXERCISE
                               PRICE       OPTIONS       PRICE        OPTIONS       PRICE       OPTIONS
                             ----------- ------------- ----------- -------------- ----------- ------------
<S>                          <C>         <C>           <C>        <C>             <C>         <C>
Outstanding beginning           $ 5.60      980,069       $ 5.57     1,180,903       $ 7.19    1,129,401
  of year
     Granted                      2.49      278,000         1.92        58,000         4.02      638,292
     Exercised                     -              -          -               -          -              -
     Canceled                    (3.71)    (114,724)       (4.45)     (258,834)       (6.05)    (586,790)
                                         -------------             --------------             ------------
Outstanding end of year         $ 5.10    1,143,345       $ 5.60       980,069       $ 5.57    1,180,903
                                         =============             ==============             ============
</TABLE>

As of December 25, 2001, the Company's outstanding options have a weighted
average remaining contract life of 6.6 years and exercise prices ranging from
$1.63 to $9.00. There were 546,379 options exercisable at December 25, 2001 and
417,113 options exercisable at December 26, 2000.

For options outstanding as of December 25, 2001, the number of options,
weighted-average exercise price and weighted-average remaining contract life for
each group of options are as follows:

<TABLE>
<CAPTION>

                                              OPTIONS OUTSTANDING
               ---------------------------------------------------------------------------------
                                         Number               Weighted-             Weighted-
                                     Outstanding at            Average               Average
                  Range of            December 25,            Exercise              Remaining
                   Prices                 2001                  Price             Contract Life
               ---------------------------------------------------------------------------------
<S>                                  <C>                    <C>                <C>
               $1.63 to $4.00            695,248                3.04               7.40 years
               $4.13 to $5.25             65,175                4.39               5.39 years
               $7.00 to $9.00            382,922                8.96               5.32 years
                                         -------
                    Total              1,143,345                5.10               6.59 years

</TABLE>


                                      F-15
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4. STOCK OPTIONS (CONTINUED)

The number of shares and weighted-average exercise price of options exercisable
at December 25, 2001 are as follows:


                                   OPTIONS EXERCISABLE
               ----------------------------------------------------------
                                         Number               Weighted-
                                     Exercisable at            Average
                  Range of            December 25,            Exercise
                   PRICES                 2001                  PRICE
               ----------------------------------------------------------
               $1.63 to $4.00            176,771                3.35
               $4.13 to $5.25             30,036                4.41
               $7.00 to $9.00            339,572                8.98
                                         -------
                    Total                546,379                6.91

5. RELATED PARTY TRANSACTIONS

The Company utilized an affiliate to provide certain accounting, computer, and
administrative services during 1999. The Company incurred fees of $60,563
related to these services for the year ended December 28, 1999.

6. LEASES

The Company leases many of its facilities under noncancelable operating leases
having terms expiring between 2002 and 2017. 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. Total rental expense for the years ended December 25,
2001, December 26, 2000, and December 28, 1999 was $3,898,642, $3,246,774, and
$3,196,886, respectively, of which $267,686, $243,409, and $241,892,
respectively, was paid to a related party. Contingent rentals for the year ended
December 25, 2001 were $10,107. There were no contingent rentals during 2000 or
1999.

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 25, 2001:

                          2002                             $4,950,171
                          2003                              4,648,272
                          2004                              2,929,736
                          2005                              2,713,873
                          2006                              2,368,964
                          Thereafter                       11,647,782
                                                        ----------------
                          Total                          $ 29,258,798
                                                        ================

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



                                      F-16
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


7. 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>
<S>                                                  <C>                <C>              <C>
                                                           2001               2000              1999
                                                    ------------------- ----------------- ------------------
NUMERATOR
Net income (loss)                                         $3,329             $ 848            $ (311)
                                                    =================== ================= ==================

DENOMINATOR
  Denominator for basic earnings (loss)
     per share - weighted-average shares                   8,670             9,323             10,348

Effect of dilutive securities:
  Employee stock options                                      24                 6                  4
                                                    ------------------- ----------------- ------------------

Dilutive potential common shares
  Denominator for diluted earnings (loss) per
     share - adjusted weighted-average shares and
     assumed conversions                                   8,694             9,329             10,352
                                                    =================== ================= ==================
Basic earnings (loss) per common share                    $ 0.38            $ 0.09           $ (0.03)
                                                    =================== ================= ==================
Diluted earnings (loss) per common share                  $ 0.38            $ 0.09           $ (0.03)
                                                    =================== ================= ==================
</TABLE>

8. INCOME TAXES

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

<TABLE>
<CAPTION>

                                                   DECEMBER 25,       DECEMBER 26,       DECEMBER 28,
                                                      2001               2000                1999
                                               ---------------------------------------------------------
<S>                                               <C>                 <C>                 <C>
     Current:
         Federal                                  $ 1,427,641         $  786,663          $ 534,938
         State                                        496,126            148,742             49,953
                                               ---------------------------------------------------------
     Total Current                                  1,923,767            935,405            584,891
     Deferred:
         Federal                                       11,951           (546,984)          (777,401)
         State                                          2,477            (46,775)           (51,483)
                                               ---------------------------------------------------------
     Total Deferred                                    14,428           (593,759)          (828,884)
                                               ---------------------------------------------------------
     Total income tax expense (benefit)           $ 1,938,195          $ 341,646        $  (243,993)
                                               =========================================================
</TABLE>



                                      F-17
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8. 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 25, 2001 and
December 26, 2000 are as follows:

<TABLE>
<CAPTION>
                                                            DECEMBER 25,       DECEMBER 26,
                                                                2001               2000
                                                         ------------------- ------------------
<S>                                                           <C>                <C>
  Deferred tax assets:
     Preopening and organization costs                        $ 545,788          $ 527,423
     Store closure costs                                        289,370            387,452
     Asset impairment costs                                   1,023,695            956,545
     Deferred revenue                                            33,847             52,467
     State income taxes                                         211,486             47,003
     Vacation                                                    39,809             43,403
     Federal tax credit carryovers                              426,764            913,641
     Other                                                        2,101              3,253
                                                         ------------------- ------------------
     Total deferred tax assets                                2,572,860          2,931,187
                                                         ------------------- ------------------

  Deferred tax liabilities:
     Property and equipment                                   1,209,568          1,486,054
     Goodwill                                                   154,621            167,442
     Other                                                        2,054             56,646
                                                         ------------------- ------------------
  Total deferred tax liabilities                              1,366,243          1,710,142
                                                         ------------------- ------------------
  Net deferred tax asset                                     $1,206,617         $1,221,045
                                                         =================== ==================
</TABLE>

The federal tax credit carryovers consist of credits for social security taxes
paid on tips in excess of minimum wage of $171,242 and $658,119 at December 25,
2001 and December 26, 2000, respectively, which expire in 2021 and credits for
alternative minimum tax of $255,522 and $255,522 at December 25, 2001 and
December 26, 2000, respectively, which have no expiration date. A valuation
allowance for deferred tax assets was not considered necessary at December 25,
2001.

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 25,         DECEMBER 26,          DECEMBER 28,
                                                    2001                 2000                  1999
                                            ---------------------------------------------------------------
                                              AMOUNT     RATE     AMOUNT      RATE      AMOUNT     RATE
                                            ---------- -------- ------------ -------- ----------- ---------
<S>                                         <C>        <C>      <C>          <C>      <C>         <C>
Income tax (benefit) expense at federal
      statutory rate                        $1,790,898   34.0%  $   404,611     34.0% $ (188,601)    34.0%

State income taxes, net of
  federal (provision) benefit                  281,307    5.3        41,199      3.5     (15,217)     2.7
Tax credits                                   (200,227)  (3.8)     (177,591)   (14.9)   (126,615)    22.8
Other items, net                                66,217    1.3        73,427      6.1                (15.5)
                                                                                          86,440
                                            ---------- -------- ------------ -------- ----------- ---------
Actual income tax expense (benefit)         $1,938,195   36.8%  $   341,646     28.7% $ (243,993)    44.0%
                                            ========== ======== ============ ======== =========== =========
</TABLE>

                                      F-18
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9. 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.

10. QUARTERLY FINANCIAL SUMMARIES (UNAUDITED)

The following table summarizes the unaudited consolidated quarterly results of
operations for fiscal 2001 and 2000:

<TABLE>
<CAPTION>

                                            1st              2nd               3rd              4th
                                          Quarter          Quarter            Quarter          Quarter
                                        (12 weeks)        (12 weeks)        (12 weeks)       (16 weeks)
                                       ------------------------------------------------------------------
<S>                                     <C>               <C>              <C>               <C>
   2001
   Net sales                            $16,437,017       $14,725,028      $14,550,685       $25,239,757
   Entertainment and restaurant
       operating income (a)               3,073,406         1,789,149        1,508,109         4,128,389
   Net income (a)                         1,191,209           362,051          219,984         1,555,908
   Basic and diluted earnings
       per share                               0.14              0.04             0.03              0.18
</TABLE>

   (a) The fourth quarter of fiscal 2001 includes a charge to earnings of
       $575,098 ($354,430 net of income tax) related to the provision for asset
       impairment in the quarter.

<TABLE>
<CAPTION>
                                            1st               2nd               3rd              4th
                                          Quarter          Quarter            Quarter          Quarter
                                        (12 weeks)        (12 weeks)        (12 weeks)       (16 weeks)
                                       ------------------------------------------------------------------
<S>                                     <C>               <C>              <C>               <C>
   2000
   Net sales                            $13,649,790       $12,006,223      $11,282,667       $19,051,143
   Entertainment and restaurant
       operating income (a)               2,831,044         1,676,877        1,213,162           629,304
   Net income (loss) (a)                    971,316           294,971           20,221          (438,121)
   Basic and diluted earnings (loss)
       per share                               0.10              0.03             0.00             (0.05)
</TABLE>

   (a) The fourth quarter of fiscal 2000 includes a charge to earnings of
       $2,361,840 ($1,457,491 net of income tax) related to the provision for
       asset impairment in the quarter.

11.  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 the Company and the other defendants willfully and
in bad faith failed to pay the defendants overtime pay for hours worked in
excess of forty hours per week in

                                      F-19
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


violation of the provisions of the Fair Labor Standards Act. The plaintiffs'
complaint seeks (1) declaratory judgment that the Company and other defendants
violated the plaintiffs' legal rights, (2) an accounting of compensation to
which the defendants are owed, (3) monetary damages in the form of back pay
compensation and benefits, unpaid entitlements, liquidated damages, and
pre-judgment and post-judgment interest, and (4) attorneys' fees and costs.
Defendants including the Company have filed their answer to the plaintiffs'
complaint. The court has not yet entered its order establishing this case as a
collective action. On June 27, 2001, the Magistrate Judge held an initial
pre-trial conference and entered orders establishing deadlines in this action. A
settlement conference is scheduled for June 27, 2002 and a five-day trial is
scheduled for March 3, 2003.

Although it is not possible at this time for the Company to evaluate the merits
of this claim, nor their likelihood of success, management of the Company is of
the opinion that any resulting liability should not have a material adverse
effect on the Company's financial statements.

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".

On December 29, 2000, the Company through its trademark counsel filed an answer
to R&A Bailey & Company's notice of opposition, denying its allegations. On
February 16, 2001, the Company filed a Stipulated Motion to Extend Answer to
Petition in response to the petition to cancel by R&A Bailey & Company. The
actions have been suspended by the Trademark Trial & Appeal Board to allow the
parties time to negotiate for possible settlement of these pending actions. The
Company is actively pursuing settlement, and is of the opinion that any
resulting liability should not have a material adverse effect on the Company's
financial statements.

NEW ACCOUNTING STANDARDS

     In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets (SFAS No. 142). SFAS No. 142 will require that goodwill and intangible
assets with indefinite useful lives no longer be amortized, but instead tested
for impairment at least annually in accordance with the provisions of SFAS No.
142. In addition, SFAS No. 142 requires the Company to perform an assessment of
whether its recorded goodwill is impaired as of the date of adoption. SFAS No.
142 is effective for the Company's fiscal year 2002. The Company currently
records annual goodwill amortization of approximately $244,000.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets (SFAS No. 144). SFAS No. 144 addresses
significant issues relating to the implementation of SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," and develops a single accounting method under which long-lived assets that
are to be disposed of by sale are measured at the lower of book value or fair
value less cost to sell. Additionally, SFAS No. 144 expands the scope of
discontinued operations to include all components of an entity with operations
that (1) can be distinguished from the rest of the entity and (2) will be
eliminated from the ongoing operations of the entity in a disposal transaction.
SFAS No. 144 is effective for financial statements issued for fiscal years
beginning after December 15, 2001 and its provisions are to be applied
prospectively. Management believes that the adoption of SFAS No. 144 will not
have a significant impact on the financial statements.



                                      F-20