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 28, 1999
                                -----------------

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

      For the transition period from ______ to ______

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

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

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

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

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

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

                                      NONE

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

                          Common Stock, $.01 par value

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes |X| No |_|

      As of March 13, 2000, the aggregate market value of the Registrant's
Common Stock held by non-affiliates of the Registrant was $15,398,128. 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, 2000, there were 9,475,771 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 OF CONTENTS

ITEM                                                                        PAGE

                                     PART I

1.  Business .............................................................     3

2.  Properties ...........................................................    12

3.  Legal Proceedings ....................................................    12

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 ..........................    21
9.  Changes in and Disagreements with Accountants on Accounting and
     Financial Disclosure  ...............................................    21

                                    PART III

10. Directors and Executive Officers of the Registrant ...................    21
11. Executive Compensation ...............................................    21
12. Security Ownership of Certain Beneficial Owners and Management .......    21
13. Certain Relationships and Related Transactions .......................    22

                                     PART IV

14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K .....    22
    Signatures ...........................................................    24


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<PAGE>

                                     PART I

Item 1. Business

General

      Total Entertainment Restaurant Corp., a Delaware corporation ("the
Company"), owns and operates 35 entertainment restaurant locations which utilize
the Fox and Hound English Pub & Grille ("Fox and Hound"), Bailey's Sports Grille
and Bailey's Pub & Grille ("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 alternatives 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, 2000, the Company owns and operates 23 Fox and Hound units and 12
Bailey's units in Alabama, Arkansas, Illinois, Indiana, Georgia, 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 location features a full service bar and a
            wide variety of domestic, imported and


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<PAGE>

            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.

      Rapid 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 up to four locations in
2000 and between five and seven locations in 2001. The Company currently has two
leases executed with contingencies and three non-binding letters of intent and
is currently evaluating locations in markets that are familiar to its management
team and will be actively negotiating additional leases at a number of sites.

      Flexibility and Versatility of Concept. The Company is implementing its
concept through both the Fox and Hound and Bailey's brand names. This strategy
enables the Company to target both larger urban markets as well as smaller
regional markets. The Company's concept also 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, 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.


                                      -4-
<PAGE>

Locations

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

                                                                    Approximate
      Location                    Month Opened                    Square Footage
      --------                    ------------                    --------------
Fox and Hound
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

Bailey's Sports Grille
Charlotte, 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                         8,400
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, GA                       October 1998                          8,500
Detroit, MI                       November 1998                         9,100
Chapel Hill, NC                   December 1998                         9,000


                                      -5-
<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 up to four entertainment restaurant locations in 2000 and between five to
seven locations in 2001. 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 may in the future franchise and/or grant license or joint
venture rights to the Fox and Hound and Bailey's concepts in certain limited
geographic areas of the United States. It is expected that these franchisees,
licensees or joint venture partners will be required to develop a specific
number of locations within a specified time frame and that a license fee and/or
a royalty fee will be paid to 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 & 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 five 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 $1,578,000 and $1,634,000 in sales during
fiscal years ended December 28, 1999 and December 29, 1998, respectively. Of the
35 units open at December 28, 1999, 34 were leased facilities and had an average
cash investment of $1,209,000. The one open unit the Company owned as of
December 28, 1999 had a cost of $1,815,000 (including the costs for land
acquisition, construction, equipment and pre-opening costs). In


                                      -6-
<PAGE>

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 entrees and desserts. Appetizers typically range in price
from $3.99 to $6.99, and entrees range from $5.29 to $13.99, 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 55% of the Company's revenues in the fiscal year ended December
28, 1999.

Ambiance and Design

      Fox and Hound and Bailey's Pub & Grille. The Fox and Hound and Bailey's
Pub & Grille 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 Fox and Hound
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 & 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. Like Fox and
Hound, 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 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 (twenty-one Fox and Hound units,
three Bailey's Pub &


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<PAGE>

Grille units and one Bailey's Sports Grille unit) have incorporated the 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 in larger urban
markets while utilizing the Bailey's Sports Grille design for smaller regional
markets.

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 World Series, 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 six district managers, each of which oversees between five and seven
units. The disctrict 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 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


                                      -8-
<PAGE>

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 disctrict 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 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
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. 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.

Accounting and Administrative Services

      On July 17, 1997, the Company entered into a services agreement with
Coulter Enterprises, Inc., a company owned by Jamie B. Coulter, the Company's
former Chairman of the Board, for certain accounting and administrative
services. The fixed annual charge, which was pro rated


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for 1997, was $94,000 and the per unit per 28-day period fee was $426. For
fiscal year 1998 and through February 28, 1999, the fixed annual charge was
$194,500 and the per unit per 28-day accounting period fee was $466, plus
reimbursement of all direct out-of-pocket costs and expenses. The increase in
the fixed charge was due to an increase in the number of entertainment
restaurants operated by the Company.

      On March 1, 1999, the Company simultaneously terminated the services
agreement with Coulter Enterprises, Inc. and entered into a three-year services
agreement with Franchise Services Company ("FSC") for certain accounting and
administrative services. 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. At the conclusion of the three-year agreement FSC, the
Company may satisfy its accounting and administrative needs by hiring employees
directly.

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.
The legalization of casino gambling in geographic areas near any entertainment
restaurant location operated by the Company could also create the possibility
for entertainment alternatives that could have a material adverse effect on the
Company's business.

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.


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<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 and has never been
named as a defendant in a lawsuit involving "dram-shop" statutes.

      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. There can be no assurance that any future regulations
or legislation will not limit, restrict or eliminate the use or operation of
video gaming machines.

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.


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<PAGE>

Employees

      As of December 28, 1999, the Company employed approximately 1,650 persons,
five of whom are executive officers, six of whom are support staff, six of whom
are multi-unit supervisors, 125 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

      The Company is involved from time to time in litigation arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on the financial condition or results of operations of the
Company.

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 28,
1999.


                                      -12-
<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 1998
      ----------------
      First Quarter                     7           4-1/2
      Second Quarter                    7-5/8       4-3/8
      Third Quarter                     4-5/8       2-1/4
      Fourth Quarter                    4-5/8       2-1/2

      Fiscal Year 1999
      ----------------
      First Quarter                     5-7/8       2-3/4
      Second Quarter                    4-1/4       2-1/2
      Third Quarter                     3-1/16      1-1/4
      Fourth Quarter                    1-3/4       1-1/2

Holders

      As of March 13, 2000, there were 93 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.


                                      -13-
<PAGE>

Sale of Unregistered Securities

(c)   The following unregistered securities were issued by the Company during
      the sixteen weeks ended December 28, 1999:

<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 15, 1999      Common Stock Options           5,000                   $1.750

 September 29, 1999      Common Stock Options           5,000                   $1.563

 November 17, 1999       Common Stock Options           5,000                   $1.625
</TABLE>

      All of the above options were granted to certain key employees pursuant to
      the 1997 Incentive and Nonqualified Stock Option Plan.

      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 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 historical income
statement data for Fox & Hound Entertainment and Restaurant Group ("FHERG") for
the fiscal years ended December 31, 1996 and 1995, the balance sheet data for
the Company as of December 28, 1999, December 29, 1998 and December 30, 1997,
and the balance sheet data for FHERG as of December 31, 1996 and 1995 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, 1996. 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, 1996, or which may be expected
to occur in the future.


                                      -14-
<PAGE>


<TABLE>
<CAPTION>
                                                                              Historical
                                        -------------------------------------------------------------------------------
                                                           The Company                    F&H            Fox & Hound
                                        -------------------------------------------   Restaurant      Entertainment and
                                                                                         Corp.        Restaurant Group
                                                                       46 weeks and  -------------   -------------------
                                               52 weeks ended          5 days ended  51 days ended   Year Ended Dec. 31,
                                        Dec. 28, 1999  Dec. 29, 1998  Dec. 30, 1997  Feb. 20, 1997     1996       1995
                                        -------------  -------------  -------------  --------------  ---------  --------
                                                                            (In thousands, except per share data)
Income Statement Data:

<S>                                          <C>            <C>          <C>              <C>         <C>       <C>
Net sales                                    $55,930        $34,114      $ 16,163         $   858     $ 5,507   $  2,618
Costs and expenses:
   Cost of sales                              15,349          9,429         4,287             245       1,721        824
   Operating expenses                         29,120         15,586         7,142             393       2,759      1,390
   Depreciation and amortization               3,697          2,875           939              35         311        224
   Store closure expense                       1,087            ---           ---             ---         ---        ---
                                             -------        -------      --------         -------     -------   --------
Entertainment and restaurant costs
   and expenses                               49,252         27,890        12,368             673       4,791      2,439
                                             -------        -------      --------         -------     -------   --------
Entertainment and restaurant
   operating income                            6,677          6,224         3,795             185         716        179
General and administrative expenses            3,900          2,609         1,794              36         296         70
Goodwill amortization                            244            244           210              24         ---        ---
                                             -------        -------      --------         -------     -------   --------
Income (loss) from operations                  2,533          3,371         1,791             125         420        109
Other income (expense)                        (1,298)           (70)          266              63         (56)       (13)
                                             --------       --------     --------         -------     --------  ---------
Income (loss) before provision for
   income taxes                                1,235          3,301         1,525              62         364         96
Provision for income taxes                       418          1,221           545              11         ---        ---
Minority interest                                ---            ---           ---              34         ---        ---
                                             -------        -------      --------         -------     -------   --------
Net income before cumulative effect
   of a change in accounting principle           817          2,080           980              17         364         96
Cumulative effect of change in
   accounting principle                       (1,128)           ---           ---             ---         ---        ---
                                             --------       -------      --------         -------     -------   --------
Net income (loss)                            $  (311)       $ 2,080      $    980         $    17     $   364   $     96
                                             ========       =======      ========         =======     =======   ========

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

Weighted number of shares outstanding         10,357         10,415         9,182
                                             =======        =======      ========


                                                The Company
                                                 Pro Forma
                                              ---------------
                                                Year Ended
                                           Dec. 30,     Dec. 31,
                                             1997         1996
                                           --------    --------

Income Statement Data:

<S>                                         <C>        <C>
Net sales                                   $18,557    $ 14,844
Costs and expenses:
   Cost of sales                              4,912       4,177
   Operating expenses                         8,281       6,747
   Depreciation and amortization              1,052         855
   Store closure expense                        ---         ---
                                            -------    --------
Entertainment and restaurant costs
   and expenses                              14,245      11,779
                                            -------    --------
Entertainment and restaurant
   operating income                           4,312       3,065
General and administrative expenses           2,014         915
Goodwill amortization                           242         237
                                            -------    --------
Income (loss) from operations                 2,056       1,913
Other income (expense)                          370         656
                                            -------    --------
Income (loss) before provision for
   income taxes                               1,686       1,257
Provision for income taxes                      605         471
Minority interest                               ---         ---
                                            -------    --------
Net income before cumulative effect
   of a change in accounting principle        1,081         786
Cumulative effect of change in
   accounting principle                         ---         ---
                                            -------    --------
Net income (loss)                           $ 1,081    $    786
                                            =======    ========

Basic and diluted net income per share      $   .12    $    .10
                                            =======    ========

Weighted number of shares outstanding         9,062       8,000
                                            =======    ========
</TABLE>

<TABLE>
<CAPTION>
                                                                                Historical
                                             -------------------------------------------------------------------------------
                                                                                                             Fox & Hound
                                                                                                          Entertainment and
                                                                  The Company                             Restaurant Group
                                             ---------------------------------------------------        ------------------
                                               December 28,      December 29,      December 30,          Year Ended Dec. 31,
                                                   1999              1998              1997               1996          1995
                                             --------------    --------------    ---------------        ---------    -------
                                                                                 (In thousands)
Balance Sheet Data:

<S>                                             <C>                 <C>            <C>                   <C>         <C>
Working capital (deficit)                       $   (630)           $  (947)       $   4,579             $ (554)     $  (447)

Total assets                                      41,352             41,284           23,224              2,520        2,638

Long-term debt, including current portion         14,395             11,815               --                696          759

Stockholders'/partners' equity                    22,232             23,736           21,665              1,564        1,559
</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 and
opened five Fox and Hound entertainment restaurant locations and closed one Fox
and Hound and one Bailey's entertainment restaurant location during the year


                                      -15-
<PAGE>

ended December 28, 1999.

      Prior to December 30, 1998, pre-opening costs 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>
                                                                   Historical             Pro Forma
                                                            ---------------------------  ----------
                                                                          Year Ended(1)
                                                            ---------------------------------------
                                                            Dec. 28,        Dec. 29,       Dec. 30,
                                                              1999            1998           1997
                                                            ---------      ---------       -------
Income Statement Data:
<S>                                                           <C>             <C>            <C>
    Net sales                                                 100.0%          100.0%         100.0%
    Costs and expenses:
       Cost of sales                                           27.4            27.6           26.4
       Operating expenses                                      52.1            45.7           44.6
       Depreciation and amortization                            6.6             8.4            5.7
       Store closure expense                                    2.0              --             --
                                                              -----           -----          -----
       Restaurant costs and expenses                           88.1            81.7           76.7
                                                              -----           -----          -----
       Restaurant operating income                             11.9            18.3           23.3
       General and administrative                               7.0             7.6           10.8
       Goodwill amortization                                    0.4             0.7            1.3
                                                              -----           -----          -----
    Income from operations                                      4.5            10.0           11.2
       Gain(loss) on disposal of assets                        (0.2)             --             --
       Other income, principally interest                        --             0.2            0.6
       Interest expense                                        (2.1)           (0.4)          (2.7)
                                                              -----           -----          -----
    Income before provision for income taxes                    2.2             9.8            9.1
    Provision for income taxes                                  0.7             3.6            3.3
                                                              -----           -----          -----
    Net income before cumulative effect of
       a change in accounting principle                         1.5             6.2            5.8
    Cumulative effect of change in
       accounting principle                                    (2.0)             --             --
                                                              -----           -----          -----
    Net income                                                 (0.5)%           6.2%           5.8%
                                                              =====           =====          =====

Restaurant Operating Data:
    Number of locations at end of period                         35              32             16
    Number of store operating weeks (2)                       1,843           1,085            644
    Annualized average weekly sales per location (3)         $1,578          $1,634         $1,492
</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 full weeks all locations
      were open during the period.

(3)   Annualized average weekly sales per location are computed by dividing net
      sales for full weeks open during the period by the number of store
      operating weeks and multiplying the result by fifty-two.


                                      -16-
<PAGE>

The Company

      Fifty-two Weeks Ended December 28, 1999 Compared to Fifty-two Weeks Ended
December 29, 1998

      Net sales increased $21,816,000 (64.0%) for the fifty-two weeks ended
December 28, 1999 to $55,930,000 from $34,114,000 in the fifty-two weeks ended
December 29, 1998, which is attributable to a 69.9% increase in store operating
weeks (1,843 versus 1,085) and a 3.4% decrease in average unit volumes
($1,578,000 versus $1,634,000). Same store sales decreased 0.5% for the
fifty-two weeks ended December 28, 1999.

      Costs of sales, primarily food and beverages, increased $5,920,000 (62.8%)
for the fifty-two weeks ended December 28, 1999 to $15,349,000 from $9,429,000
in the fifty-two weeks ended December 39, 1998, and such expenses decreased as a
percentage of sales from 27.6% to 27.4%. This decrease is attributable to better
food and beverage controls.

      Restaurant operating expenses for the fifty-two weeks ended December 28,
1999 increased $13,534,000 (86.8%) to $29,120,000 from $15,586,000 in the
fifty-two weeks ended December 29, 1998, and such expenses increased as a
percentage of net sales to 52.1% from 45.7%. This increase is attributable to
higher labor costs (2.2%) resulting from the increase in food sales as a portion
of the overall sales mix (which has a higher labor cost compared to beverages
and entertainment), higher occupancy costs (1.1%) for units opened since June
1998, a one-time charge for a state sales tax assessment (0.6%), and higher
other operating expenses (1.4%) including maintenance costs, premium TV costs
and higher costs associated with training new managers. This increase is also
attributable to the change in accounting method for preopening expenses which,
prior to 1999, were capitalized and then amortized over a twelve month period.
The preopening expenses included in restaurant operating expenses for the
fifty-two weeks ended December 28, 1999 was $487,000 or 0.9% of sales.

      Depreciation and amortization increased $822,000 (28.6%) for the fifty-two
weeks ended December 28, 1999 to $3,697,000 from $2,875,000 in the fifty-two
weeks ended December 29, 1998, and such expenses decreased as a percentage of
net sales to 6.6% from 8.4%. This percentage decrease is due to the change in
accounting method for preopening expenses. The preopening amortization expense
included in depreciation and amortization for the fifty-two weeks ended December
29, 1998 was $941,000 or 2.8% of sales. Excluding the impact of preopening
amortization, depreciation and amortization expense as a percentage of sales
actually increased 1.0% due to higher depreciation costs for units opened since
June 1998.

      Store closure expense was $1,087,000 or 2.0% of sales for the fifty-two
weeks ended December 28, 1999 and represents the estimated costs associated with
closing the Fox & Hound in Davenport, Iowa. The expense includes $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 increased $1,291,000 (49.5%) for the
fifty-two weeks ended December 28, 1999 to $3,900,000 from $2,609,000 in the
fifty-two weeks ended December 29, 1998, and such expenses decreased as a
percentage of net sales from 7.6% to 7.0%. The decrease reflects the effect of
leveraging the general and administrative expenses against higher sales. For
fiscal 1998 and through February 28, 1999, certain accounting and administrative
services were contracted from Coulter Enterprises, Inc. ("CEI"), a restaurant
management services company owned by the Company's former Chairman of the Board,
Jamie B. Coulter. The service agreement provided for specified accounting and
administrative services to be provided on a cost pass-through basis. For fiscal
1998 and through February 28, 1999, the fixed annual charge was $194,500, plus
an additional fee of $466 per restaurant per


                                      -17-
<PAGE>

28-day accounting period.

      On October 19, 1998, Lone Star Steakhouse & Saloon, Inc. ("Lone Star"), a
restaurant company of which Mr. Coulter is chairman and CEO, purchased certain
assets and assumed certain liabilities of CEI, including the former services
agreement with the Company. From October 19, 1998 to February 28, 1999, such
services were provided by Lone Star. Beginning March 1, 1999, these services
were provided by Franchise Services Company ("FSC") at a market rate.

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

      The interest earned during the fifty-two weeks ended December 29, 1998 was
from the investment of the net proceeds of the Initial Public Offering. The
decrease in interest earned resulted from the prior utilization of the proceeds
from the Initial Public Offering to develop additional locations. Interest
expense increased $1,035,000 for the fifty-two weeks ended December 28, 1999 to
$1,175,000. This increase reflects the borrowings made to fund additional unit
development .

      The effective income tax rate on income before the cumulative effect of a
change in accounting principle for the fifty-two weeks ended December 28, 1999
was 33.8% and the effective income tax rate for the fifty-two weeks ended
December 29, 1998 was 37.0%. 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.

      Fifty-two Weeks Ended December 29, 1998 (Historical) Compared to Fifty-two
Weeks Ended December 30, 1997 (Pro Forma)

      Net sales increased $15,557,000 (83.8%) for the fifty-two weeks ended
December 29, 1998 to $34,114,000 from $18,557,000 in the fifty-two weeks ended
December 30, 1997, which is principally attributable to a 68.5% increase in
store operating weeks (1,085 versus 644) and 9.5% increase in average unit
volumes ($1,634,000 versus $1,492,000). However, same store sales decreased 0.9%
for the fifty-two weeks ended December 29, 1998.

      Costs of sales, primarily food and beverages, increased $4,517,000 (91.9%)
for the fifty-two weeks ended December 29, 1998 to $9,429,000 from $4,912,000 in
the fifty-two weeks ended December 30, 1997, and such expenses increased as a
percentage of sales from 26.4% to 27.6%. This increase is attributable to a
higher food & beverage sales mix.

      Restaurant operating expenses for the fifty-two weeks ended December 29,
1998 increased $7,305,000 (88.2%) to $15,586,000 from $8,281,000 in the
fifty-two weeks ended December 30, 1997, and such expenses increased as a
percentage of net sales to 45.7% from 44.6%. This increase was mainly
attributable to additional labor required during the first few months after a
new unit opens as well as the additional labor required by the higher food &
beverage sales.

      Depreciation and amortization increased $1,823,000 (173.4%) for the
fifty-two weeks ended December 29, 1998 to $2,875,000 from $1,052,000 in the
fifty-two weeks ended December 30, 1997, principally reflecting the depreciation
and preopening amortization relating to the opening of sixteen new restaurants
since December 1997.

      General and administrative expenses increased $595,000 (29.6%) for the
fifty-two weeks ended December 29, 1998 to $2,609,000 from $2,014,000 in the
fifty-two weeks ended December 30, 1997, and such expenses decreased as a
percentage of net sales from 10.8% to 7.6%. The decrease reflects the effect of
leveraging the general and administrative expenses against higher sales.

      Other income, principally interest, decreased $59,000 (45.1%) for the
fifty-two weeks ended


                                      -18-
<PAGE>

December 29, 1998 to $70,000 from $129,000 in the fifty-two weeks ended December
30, 1997. This decrease was a result of the utilization of the remaining net
proceeds of the initial public offering of the Company, which commenced on July
17, 1997 (the "Initial Public Offering").

      Interest expense decreased $359,000 for the fifty-two weeks ended December
29, 1998 to $140,000 from $499,000 in the fifty-two weeks ended December 30,
1997. All debt was repaid in July 1997 from the net proceeds of the Initial
Public Offering and the Company began borrowing to fund additional unit
development in July 1998.

      The effective income tax rate for the fifty-two weeks ended December 29,
1998 was 37.0% and the effective pro forma income tax rate for the fifty-two
weeks ended December 30, 1997 was 35.9%. This increase was primarily due to the
impact of higher tax exempt interest income earned during 1997 as compared to
1998.

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 & 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 & Hound financed its expansion
primarily with partners' equity contributions and loans from related parties.

      As is customary in the restaurant industry, prior to the Initial Public
Offering the Company had operated with negative working capital. The Company
does not have significant receivables or inventory and receives trade credit
based upon negotiated terms in purchasing food and supplies. Because funds
available from cash sales are not needed immediately to pay for food and
supplies, or to finance inventory, they may be considered as a source of
financing for noncurrent capital expenditures.

      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.

      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


                                      -19-
<PAGE>

based on earnings before interest, interest taxes, depreciation and amortization
of the past fifty-two weeks. The Facility requires monthly payments of interest
only until November 1, 2001, 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. As of December 28, 1999, the Company had borrowed $14,395,000 under
the Facility. The Company is in compliance with all debt covenants.

      Cash flows from operations were $4,903,000 and purchases of property and
equipment were $ 4,695,000 for the 52 weeks ended December 28, 1999.

      The Company intends to open up to four entertainment restaurant locations
in 2000 and between five to seven locations in 2001. The Company expects to
expend approximately $5.0 to $7.0 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.

Year 2000 Compliance

      The Company utilizes and is dependent upon computer systems and software
to conduct its business. In 1997, the Company initiated a review and assessment
of all hardware and software to confirm they will function properly in the year
2000. The systems and software include those developed and maintained by FSC
in-house computer department as well as purchased software which is run on
in-house computer systems, including POS systems and back-of-house systems in
the units. The Company has experienced no Year 2000 issues and no problems are
expected in the future.

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.


                                      -20-
<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
7.76% for the year ended December 28, 1999. The following table presents the
quantitative interest rate risks at December 28, 1999:

<TABLE>
<CAPTION>
                                               Principal Amount by Expected Maturity
                                -------------------------------------------------------------------
                                                           (In thousands)
                                                                                                         Fair
                                                                                  There-                 Value
(dollars in thousands)          2000      2001      2002       2003      2004       after     Total    12/28/99
----------------------          ----      ----      ----       ----      ----       -----     -----    --------

<S>                            <C>       <C>      <C>        <C>        <C>        <C>       <C>        <C>
Variable rate debt               --      $513     $3,223     $3,490     $3,780     $3,389    $14,395    $14,395
Average Interest Rate-
1/2% below prime               8.00%     8.00%      8.00%      8.00%      8.00%      8.00%
</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.

                                    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.


                                      -21-
<PAGE>

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.

                                     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

                                INDEX TO EXHIBITS

Exhibit
 Number                              Exhibit
 ------                              -------

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

  *3.1     Certificate of Incorporation of the Registrant.

*3.1.1     Amendment to the Certificate of Incorporation of the
           Registrant.

  *3.2     By-laws of the Registrant.

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

 *10.2     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.


                                      -22-
<PAGE>

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

 *10.7     Confidentiality and Non-Competition Agreement among F&H
           Dallas, L.P., Midway Entertainment, Ltd., N. Collins Entertain-
           ment, Ltd., 505 Entertainment, Ltd. and Jamie B. Coulter, dated
           December 6, 1996.

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

 *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).

**27.1     Financial Data Schedule.

----------

(b)   Reports on Form 8-K filed in the fourth quarter of 1998: none

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

**    Filed herewith.


                                      -23-
<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 17th day of March 2000.

                                         TOTAL ENTERTAINMENT RESTAURANT CORP.
                                                      (Registrant)


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


                                      -24-
<PAGE>

                                   SIGNATORIES

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

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

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


/s/ Dennis L. Thompson             Co-Chairman of the Board       March 17, 2000
------------------------------
  Dennis L. Thompson


/s/ Stephen P. Hartnett            Co-Chairman of the Board       March 17, 2000
------------------------------
  Stephen P. Hartnett


 /s/ Steven M. Johnson            Chief Executive Officer and     March 17, 2000
------------------------------              Director
   Steven M. Johnson            (principal executive officer)


   /s/ Gary M. Judd                 President and Director        March 17, 2000
------------------------------
     Gary M. Judd


  /s/ James K. Zielke              Chief Financial Officer,       March 17, 2000
------------------------------       Treasurer, Secretary
    James K. Zielke                      and Director
                                (principal accounting officer)


                                      -25-
<PAGE>

  /s/ Thomas A. Hager                      Director               March 17, 2000
------------------------------
    Thomas A. Hager


/s/ C. Wells Hall, III                     Director               March 17, 2000
------------------------------
  C. Wells Hall, III


  /s/ E. Gene Street                       Director               March 17, 2000
------------------------------
    E. Gene Street


/s/ John D. Harkey, Jr.                    Director               March 17, 2000
------------------------------
  John D. Harkey, Jr.


                                      -26-
<PAGE>

                      Total Entertainment Restaurant Corp.

                          Index to Financial Statements

                                                                            Page

Total Entertainment Restaurant Corp.
Report of Independent Certified Public Accountants ..........................F-2
Report of Independent Auditors ..............................................F-3
Consolidated Balance Sheets as of December 28, 1999 and December 29, 1998 ...F-4
Consolidated Statements of Income for the years ended December 28, 1999,
    December 29, 1998, and the period from February 7, 1997 (Inception)
    through December 30, 1997  ..............................................F-6
Consolidated Statements of Stockholders' Equity for the years ended
    December 28, 1999, December 29, 1998, and the period from
    February 7, 1997 (Inception) through December 30, 1997 ..................F-7
Consolidated Statements of Cash Flows for the years ended
    December 28, 1999, December 29, 1998, and the period from
    February 7, 1997 (Inception) through December 30, 1997 ..................F-8
Notes to Consolidated Financial Statements .................................F-10


                                      F-1
<PAGE>

               Report of Independent Certified Public Accountants

The Stockholders
Total Entertainment Restaurant Corp.

We have audited the accompanying consolidated balance sheet of Total
Entertainment Restaurant Corp. as of December 28, 1999 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our 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 financial position of Total
Entertainment Restaurant Corp. as of December 28, 1999, and the consolidated
results of its operations and its consolidated cash flows for the year then
ended in conformity with generally accepted accounting principles.

As described in Note 2 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-2
<PAGE>

                         Report of Independent Auditors

The Stockholders
Total Entertainment Restaurant Corp.

We have audited the accompanying consolidated balance sheet of Total
Entertainment Restaurant Corp. as of December 29, 1998, and the related
consolidated statements of income, stockholders' equity and cash flows for the
year ended December 29, 1998 and the period from February 7, 1997 (Inception)
through December 30, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Total
Entertainment Restaurant Corp. at December 29, 1998, and the consolidated
results of its operations and its cash flows for the year ended December 29,
1998 and the period from February 7, 1997 (Inception) through December 30, 1997,
in conformity with generally accepted accounting principles.


                                         /s/ Ernst & Young LLP
March 22, 1999
Wichita, Kansas


                                      F-3
<PAGE>

                      Total Entertainment Restaurant Corp.
                           Consolidated Balance Sheets

                                                   December 28,     December 29,
                                                       1999             1998
                                                   -----------------------------
Assets
Current assets:

  Cash and cash equivalents                        $  2,550,469     $    945,861
  Inventories                                           973,156          854,686
  Preopening costs, net                                       -        1,789,740
  Deferred income taxes                                 136,827          106,408
  Other current assets                                  435,639          662,747
                                                   -----------------------------
Total current assets                                  4,096,091        4,359,442

Property and equipment:
  Land                                                  600,000          600,000
  Buildings                                             670,629          655,795
  Leasehold improvements                             20,720,043       19,175,677
  Equipment                                          13,189,864       11,922,806
  Furniture and fixtures                              3,108,243        2,633,742
                                                   -----------------------------
                                                     38,288,779       34,988,020
  Less accumulated depreciation and amortization      5,988,331        2,830,656
                                                   -----------------------------
Net property and equipment                           32,300,448       32,157,364

Other assets:
  Goodwill, net of accumulated amortization of
    $733,795 ($489,633 at December 29, 1998)          4,149,459        4,393,621
  Deferred income taxes                                 490,460                -
  Other assets                                          315,911          374,007
                                                   -----------------------------
Total other assets                                    4,955,830        4,767,628
                                                   -----------------------------

Total assets                                       $ 41,352,369     $ 41,284,434
                                                   =============================


                                      F-4
<PAGE>

                                                   December 28,     December 29,
                                                       1999             1998
                                                   -----------------------------
Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                                 $  1,040,448     $  3,046,165
  Accounts payable - affiliates                               -           11,451
  Sales tax payable                                     359,458          282,151
  Accrued payroll                                       655,702          465,519
  Accrued payroll taxes                                 355,543          337,994
  Accrued income taxes                                  876,838          358,583
  Lease obligation for closed store                     368,476                -
  Other accrued liabilities                             928,359          804,257
                                                   -----------------------------
Total current liabilities                             4,584,824        5,306,120


Notes payable                                        14,395,000       11,815,000
Deferred income taxes                                         -          427,537
Deferred revenue                                        140,769                -

Commitments                                                   -                -

Stockholders' equity:
  Preferred stock, $.10 par value, 2,000,000 shares
    authorized; none issued                                   -                -
  Common stock, $.01 par value; 20,000,000 shares
    authorized; 9,681,271 shares issued and
    outstanding (10,415,000 at December 29, 1998)        96,813          104,150
  Additional paid-in capital                         19,385,229       20,571,178
  Retained earnings                                   2,749,734        3,060,449
                                                   -----------------------------
Total stockholders' equity                           22,231,776       23,735,777
                                                   -----------------------------

Total liabilities and stockholders' equity         $ 41,352,369     $ 41,284,434
                                                   =============================

                 See notes to consolidated financial statements


                                      F-5
<PAGE>

                      Total Entertainment Restaurant Corp.
                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                                                Period from
                                                                                             February 7, 1997
                                                         Year ended         Year ended      (inception) through
                                                      December 28, 1999  December 29, 1998   December 30, 1997
                                                      ---------------------------------------------------------
<S>                                                      <C>                <C>                 <C>
Sales:
Food and beverage                                        $ 50,525,221       $ 30,009,876        $ 13,509,874
Entertainment and other                                     5,404,628          4,103,743           2,652,783
                                                         ---------------------------------------------------
  Total net sales                                          55,929,849         34,113,619          16,162,657

Cost and expenses:
  Cost of sales                                            15,349,274          9,428,645           4,287,185
  Entertainment and restaurant operating expenses          29,119,065         15,585,758           7,141,800
  Depreciation and amortization                             3,697,083          2,875,262             939,160
  Store closure expense                                     1,086,785                 --                  --
                                                         ---------------------------------------------------
Entertainment and restaurant costs and expenses            49,252,207         27,889,665          12,368,145
                                                         ---------------------------------------------------
Entertainment and restaurant operating income               6,677,642          6,223,954           3,794,512

General and administrative expenses:
  Related parties                                              60,563            320,599             337,140
  Other                                                     3,839,623          2,288,663           1,456,684
Goodwill amortization                                         244,163            244,163             209,539
                                                         ---------------------------------------------------
Income from operations                                      2,533,293          3,370,529           1,791,149
Other income (expense):
  Loss on disposal of assets                                 (123,648)                --                  --
  Other income (principally interest income)                      126             70,914             129,011
  Interest expense:
    Related parties                                                --                 --             (27,315)
    Other                                                  (1,174,739)          (140,376)           (367,960)
                                                         ---------------------------------------------------
Income before provision for income taxes                    1,235,032          3,301,067           1,524,885
Provision for income taxes                                    418,211          1,220,775             544,728
                                                         ---------------------------------------------------
Income before cumulative effect of a
   change in accounting principle                             816,821          2,080,292             980,157
Cumulative effect of a change in accounting principle      (1,127,536)                --                  --
                                                         ---------------------------------------------------
Net income (loss)                                        $   (310,715)      $  2,080,292        $    980,157
                                                         ===================================================

Basic and diluted (loss) earnings per share:
Earnings before cumulative effect of a
   change in accounting principle                        $       0.08       $       0.20        $       0.11
Cumulative effect of a change in accounting principle           (0.11)                --                  --
                                                         ---------------------------------------------------
Basic and diluted (loss) earnings per share              $      (0.03)      $       0.20        $       0.11
                                                         ===================================================
</TABLE>

                       See notes to consolidated financial statements.


                                      F-6
<PAGE>

                             Total Entertainment Restaurant Corp.
                       Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                                         Common Stock
                                                   ----------------------    Additional
                                                                               Paid-in      Retained
                                                      Number      Amount       Capital      Earnings         Total
                                                   ------------------------------------------------------------------
<S>                                                 <C>         <C>         <C>            <C>           <C>
Balance at February 7, 1997 (inception)                 8,000   $      80   $        920   $        --          1,000
  Common stock cancelled                               (8,000)        (80)            80            --             --
  Shares issued to acquire restaurant companies     8,000,000      80,000      1,449,390            --      1,529,390
  Shares issued - initial public offering           2,415,000      24,150     19,130,374            --     19,154,524
  Net income                                               --          --             --       980,157        980,157
                                                   ------------------------------------------------------------------
Balance at December 30, 1997                       10,415,000     104,150     20,580,764       980,157     21,665,071
  Additional initial public offering                       --          --         (9,586)           --         (9,586)
    expenses
  Net income                                               --          --             --     2,080,292      2,080,292
                                                   ------------------------------------------------------------------
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
                                                   ==================================================================
</TABLE>

                 See notes to consolidated financial statements.


                                      F-7
<PAGE>

                      Total Entertainment Restaurant Corp.
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                            Period from
                                                                                          February 7, 1997
                                                           Year ended     Year ended   (inception) through
                                                           December 28,   December 29,      December 30,
                                                              1999            1998             1997
                                                          -------------------------------------------------
Operating activities
<S>                                                        <C>             <C>              <C>
  Net (loss) income                                        $   (310,715)   $  2,080,292     $    980,157
  Adjustments to reconcile net (loss) income 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 store closure                                     692,746              --               --
      Loss on disposal of assets                                123,648              --               --
      Depreciation                                            3,725,250       1,917,027          638,598
      Amortization                                              287,744       1,202,398          510,101
      Deferred taxes                                           (286,212)        165,250           77,284
      Net change in operating assets and liabilities:
        Accounts receivable - affiliate                              --              --           20,774
        Accounts receivable                                          --              --           56,702
        Inventories                                            (118,470)       (457,928)        (122,644)
        Preopening costs                                             --      (2,343,896)        (399,640)
        Other current assets                                    227,108        (312,423)        (150,307)
        Other assets                                             14,514        (212,989)        (236,649)
        Accounts payable                                     (2,005,717)        851,460          620,515
        Accounts payable - affiliates                           (11,451)        (13,195)        (104,404)
        Accrued liabilities                                     927,396       1,487,527          (66,932)
        Deferred revenue                                        140,769              --               --
        Lease obligation for closed store                       368,476              --               --
                                                           ---------------------------------------------
Net cash provided by operating activities                     4,902,612       4,363,523        1,823,555

Investing activities
  Purchases of property and equipment                        (4,694,718)    (19,758,730)      (6,358,118)
  Proceeds from disposal of assets                               10,000              --               --
  Cash of companies acquired in Exchange                             --              --          720,029
  Purchase of marketable securities                                  --              --       (7,465,056)
  Proceeds from sale of marketable securities                        --       3,315,056        4,150,000
                                                           ---------------------------------------------
Net cash used in investing activities                        (4,684,718)    (16,443,674)      (8,953,145)

Financing activities
  Proceeds from revolving note payable to bank               41,200,000      23,955,000       10,835,695
  Payments of revolving note payable to bank                (38,620,000)    (12,140,000)     (10,835,695)
  Payment of dividends payable to certain predecessor
      stockholders                                                   --              --       (1,675,332)
  Payment of notes payable to affiliates                             --              --         (233,000)
  Payment of notes payable to banks                                  --              --       (4,366,933)
  Payment of notes payable to stockholders                           --              --       (4,530,071)
  Net (expenses) proceeds from issuance of common stock              --          (9,586)      19,154,524
  Purchase of common stock                                   (1,193,286)             --               --
                                                           ---------------------------------------------
Net cash provided by financing activities                     1,386,714      11,805,414        8,349,188
</TABLE>


                                      F-8
<PAGE>

                      Total Entertainment Restaurant Corp.
                Consolidated Statements of Cash Flows (continued)

<TABLE>
<CAPTION>
                                                                                            Period from
                                                                                          February 7, 1997
                                                           Year ended     Year ended   (inception) through
                                                           December 28,   December 29,      December 30,
                                                              1999            1998             1997
                                                          -------------------------------------------------
<S>                                                        <C>             <C>              <C>
Net (decrease) increase in cash and cash equivalents          1,604,608        (274,737)       1,219,598
Cash and cash equivalents at beginning of period                945,861       1,220,598            1,000
                                                           ---------------------------------------------
Cash and cash equivalents at end of period                 $  2,550,469    $    945,861     $  1,220,598
                                                           =============================================
Supplemental disclosure of cash flow information

Cash paid for interest                                     $  1,171,349    $    194,801     $    458,971
Cash paid for income taxes                                      190,668         561,600          547,812

Supplemental disclosure of non cash activity
Additions to property and equipment in accounts
  payable at year end                                      $         --    $  1,733,580     $         --
</TABLE>

                 See notes to consolidated financial statements.


                                      F-9
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

1. Basis of Presentation and Description of Business

Total Entertainment Restaurant Corp. (the Company) was organized as a Delaware
corporation on February 7, 1997, for the purpose of developing entertainment
restaurant locations. Effective February 20, 1997, the Company entered into
simultaneous stock exchange transactions and issued an aggregate of 8,000,000
shares of its common stock for all the common stock of Bailey's Sports Grille,
Inc., all the common stock of F&H Restaurant Corp. and the remaining 25%
minority interest in Fox & Hound Entertainment and Restaurant Group
(collectively, the Exchange). The Exchange among the Company and F&H Restaurant
Corp. was accounted for as a business combination using the purchase method of
accounting. For accounting purposes, F&H Restaurant Corp. was deemed to be the
acquiring corporation since, on completion of the Exchange, its former
stockholders controlled 50% of the Company. Accordingly, the assets and
liabilities of F&H Restaurant Corp. were recorded by the Company on the
acquisition date using their historical amounts.

The Exchange among the Company and the owners of the remaining 25% of Fox &
Hound Entertainment and Restaurant Group and the owners of Bailey's Sports
Grille, Inc. was also accounted for using the purchase method of accounting. The
operations of the Company effectively commenced on February 20, 1997, and
include the operating results of the companies acquired in the Exchange from
that date. The acquired assets and liabilities assumed have been recorded at
their estimated fair values at the Exchange date, with exception of F&H
Restaurant Corp., which was recorded at historical costs as described
previously. The Exchange resulted in goodwill of approximately $4,740,000,
including approximately $3,448,000 previously recorded by F&H Restaurant Corp.
in its acquisition of its 75% partnership interest in the Fox & Hound
Entertainment and Restaurant Group. The purchase price allocation to the assets
and liabilities acquired in the Exchange is summarized as follows:

Assets acquired:
  Current assets                                 $1,498,276
  Property and equipment                          7,039,719
  Goodwill and other assets                       4,789,911
                                                 ----------
                                                 13,327,906

Less assumed liabilities:
  Current liabilities                               822,428
  Dividends payable to certain
    predecessor stockholders                      1,675,332
  Notes payable to stockholder                    4,530,071
  Notes payable to affiliates                       233,000
  Notes payable to banks                          4,366,933
  Deferred taxes                                    170,752
                                                 ----------
Net assets acquired                              $1,529,390
                                                 ==========


                                      F-10
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

1. Basis of Presentation and Description of Business (continued)

Upon formation, the Company issued 8,000 shares of common stock at $0.125 per
share. In connection with the Exchange, the shares originally issued were
canceled and 100,000 new shares of common stock were issued. In February 1997,
the Company's Board of Directors approved a 79 for 1 stock dividend. All share,
per share, and stock option data included in the accompanying financial
statements and notes thereto have been restated to reflect the stock dividend.

The following supplemental proforma information for the 52 weeks ended December
30, 1997 presents the combined results of operations of the Company as though
the Exchange had occurred at January 1, 1997. The proforma information is
unaudited and not necessarily indicative of the results of the Company had the
Exchange occurred at such date.

Revenues                                        $18,557,115
Net income                                       $1,081,192
Basic earnings per share                              $0.12

As of December 28, 1999, the Company owned and operated 35 entertainment and
restaurant locations under the Fox and Hound English Pub & Grille (Fox & Hound),
Bailey's Sports Grille and Bailey's Pub & Grille (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 28, 1999, the Company owned and operated 23 Fox & Hounds
and 12 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.

2. Significant Accounting Policies

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.


                                      F-11
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

2. Significant Accounting Policies (continued)

o     Concentration of Credit Risk

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

o     Inventories

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

o     Pre-opening Costs

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.
Accumulated amortization was $1,515,356 at December 29, 1998. 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. Pro forma net income and earnings per share amounts, assuming the new
accounting principle is applied retroactively, are as follows:

                                                       1998           1997
                                                       ----           ----
Net income--as reported                             $2,080,292       $980,157
Net income--pro forma                               $1,196,189       $736,723

Basic and diluted earnings per share--as reported       $ 0.20         $ 0.11
Basic and diluted earnings per share--pro forma         $ 0.11         $ 0.08

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.


                                      F-12
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

2. Significant Accounting Policies (continued)

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. The carrying value of goodwill will be reviewed if the facts and
circumstances suggest it may be impaired.

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 expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

o     Advertising Costs

Advertising costs are expensed as incurred. Advertising expense for the periods
ended December 28, 1999, December 29, 1998, and December 30, 1997 were $622,555,
$489,929, and $179,737, 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 6.

o     Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles 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-13
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

2. 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.

o     Reclassifications

Certain reclassifications have been made to the 1998 and 1997 consolidated
financial statements to conform with the 1999 presentation.

3. Initial Public Offering

On July 17, 1997, the Company completed an initial public offering of 2,415,000
shares of its common stock at an offering price of $9.00 per share. Total net
proceeds to the Company from the offering, after deducting commissions and
offering costs were $19,144,938.

4. Preferred Stock

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

5. Revolving Note Payable

On February 24, 1997, the Company borrowed approximately $10,800,000 under a
$12,000,000 revolving line of credit with Intrust Bank, N.A., Wichita, Kansas.
The proceeds from the borrowing were used to retire certain indebtedness assumed
in connection with the Exchange, including all notes payable to affiliates,
notes payable to banks and dividends payable to certain predecessor stockholders
representing substantially all of the undistributed S Corporation earnings
attributable to such stockholders prior to the Exchange. The line of credit was
retired upon completion of the Company's initial public offering in July 1997.

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, 2001, 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 (8.50% and 7.25% at December 28, 1999 and December 29, 1998,
respectively). Proceeds from the Facility were used for restaurant development
and acquisition of treasury


                                      F-14
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

5. Revolving Note Payable (continued)

stock. As of December 28, 1999 and December 29, 1998, the Company had borrowed
$14,395,000 and $11,815,000, respectively, under the Facility.

The following represents future maturities of the note:

      2001                         $   512,618
      2002                           3,222,972
      2003                           3,490,477
      2004                           3,780,185
      2005                           3,388,748
                                   -----------
      Total                        $14,395,000
                                   ===========

6. Stock Options

The Company has elected to follow APB Opinion No. 25, Accounting for Stock
Issued to Employees and related interpretations in accounting for its employee
stock options 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
5.0% to 5.3%; no dividend yields; volatility factor ranging from .344 to .800;
and a weighted-average expected life of the option of 5 years.


                                      F-15
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

6. Stock Options (continued)

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

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

                                    December 28,    December 29,   December 30,
                                        1999            1998           1997
                                    ------------    ------------   ------------
Pro forma net (loss) income          $(524,264)     $1,719,143       $838,152
Pro forma (loss) earnings per
   share--basic and diluted             $(0.05)          $0.17          $0.09
Weighted  average  fair  value of
  options granted during the year        $3.05           $2.56          $3.45

A summary of the Company's stock option activity and related information for the
periods ended December 28, 1999, December 29, 1998, and December 30, 1997
follows:

<TABLE>
<CAPTION>
                              December 28, 1999       December 29, 1998      December 30, 1997
                             -------------------     -------------------    -------------------
                             Weighted                Weighted               Weighted
                             Average                 Average                Average
                             Exercise                Exercise               Exercise
                              Price      Options      Price      Options     Price      Options
                             --------    -------     --------    -------    ---------   -------
<S>                           <C>       <C>           <C>        <C>           <C>
Outstanding beginning         $ 7.19    1,129,401     $ 8.87     812,746       $  -         -
   of period
     Granted                    4.02      638,292       3.80     432,584       8.89     829,414
     Exercised                    -             -         -            -          -         -
     Canceled                  (6.05)    (586,790)     (6.30)   (115,929)    (9.00)     (16,668)
                                        ---------              ---------                -------
Outstanding end of period     $ 5.57    1,180,903     $ 7.19   1,129,401     $ 8.87     812,746
                                        =========              =========                =======
</TABLE>

As of December 28, 1999, the Company's outstanding options have a weighted
average remaining contract life of 8.5 years and exercise prices ranging from
$1.57 to $9.00. There were 220,539 options exercisable at December 28, 1999 and
150,650 options exercisable at December 29,1998.

7. Related Party Transactions

The Company utilized an affiliate to provide certain accounting, computer, and
administrative services during 1999, 1998, and 1997. The Company incurred fees
of $60,563, $320,599, and $337,140 related to these services for the periods
ended December 28, 1999, December 29, 1998, and December 30, 1997, respectively.


                                      F-16
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

8. Leases

The Company leases many of its facilities under noncancelable operating leases
having terms expiring between 2000 and 2010. 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 periods ended December 28,
1999, December 29, 1998, and December 30, 1997 were $3,196,886, $1,564,399,
$846,330, respectively, of which $223,923, $241,892, and $229,218, respectively,
were paid to a related party. There were no contingent rentals during 1999,
1998, or 1997.

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 28, 1999:

      2000                         $ 3,361,000
      2001                           2,902,991
      2002                           2,717,632
      2003                           2,071,343
      2004                             538,517
      Thereafter                     1,371,671
                                   -----------
      Total                        $12,963,154
                                   ===========

9. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share data):

                                              1999        1998      1997
                                           ------------------------------
Numerator
Net (loss) income                            $ (311)     $2,080      $980
                                           ==============================

Denominator
  Denominator for basic (loss) earnings
    per share - weighted-average shares       10,348     10,415     9,182

Effect of dilutive securities:
  Employee stock options                           4         21        --
                                           ------------------------------

Dilutive potential common shares
  Denominator for diluted (loss)
    earnings per share - adjusted
    weighted-average shares and assumed       10,352     10,436     9,182
    conversions                            ==============================
Basic (loss) earnings per common share        $(0.03)     $0.20     $0.11
                                           ==============================
Diluted (loss) earnings per common share      $(0.03)     $0.20     $0.11
                                           ==============================


                                      F-17
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

10. Income Taxes

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

                                     December 28,   December 29,   December 30,
                                         1999           1998           1997
                                     ------------------------------------------
Current:
   Federal                             $ 534,938     $  836,853      $ 378,051
   State                                  49,953        218,672         89,393
                                       ---------------------------------------
Total Current                            584,891      1,055,525        467,444
Deferred:
   Federal                              (777,401)       137,563         64,165
   State                                 (51,483)        27,687         13,119
                                       ---------------------------------------
Total Deferred                          (828,884)       165,250         77,284
                                       ---------------------------------------
Total income tax (benefit) expense     $(243,993)    $1,220,775      $ 544,728
                                       =======================================

The income tax effects of temporary differences that give rise to significant
portions of deferred income tax assets and liabilities at December 28, 1999,
December 29, 1998, and December 30, 1997 are as follows:

                                      December 28,  December 29,    December 30,
                                          1999          1998            1997
                                     ------------------------------------------
Deferred tax assets:
  Preopening and organization costs    $  760,554    $  78,406       $ 149,151
  Store closure costs                     429,795           --              --
  Deferred revenue                         57,012           --              --
  Bonuses                                  26,447           --              --
  Vacation                                 38,208       39,309          16,456
  Federal tax credit carryovers           604,588           --              --
  Other                                    72,226       38,828          18,034
                                       ---------------------------------------
  Total deferred tax assets             1,988,830      156,543         183,641
                                       ---------------------------------------

Deferred tax liabilities:
  Property and equipment                1,103,778      334,042         235,587
  Goodwill                                150,704      118,171         103,933
  Other                                   107,061       25,459              --
                                       ---------------------------------------
Total deferred tax liabilities          1,361,543      477,672         339,520
                                       ---------------------------------------
Net deferred tax asset (liability)     $  627,287    $(321,129)      $(155,879)
                                       =======================================

The federal tax credit carryovers consist of credits for social security taxes
paid on tips in excess of minimum wage of $327,006 which expire in 2018 and 2019
and credits for alternative minimum tax of $277,582 which have no expiration
date.


                                      F-18
<PAGE>

                      Total Entertainment Restaurant Corp.
                   Notes to Consolidated Financial Statements

10. Income Taxes (continued)

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 28,          December 29,         December 30,
                                                     1999                  1998                 1997
                                             -------------------------------------------------------------
                                               Amount     Rate       Amount     Rate      Amount     Rate
                                             -------------------------------------------------------------
<S>                                          <C>           <C>     <C>           <C>     <C>          <C>
Income tax (benefit) expense at federal
   statutory rate                            $(188,601)    34.0%   $1,122,363    34.0%   $ 518,460    34.0%
State income taxes, net of
   federal (provision) benefit                 (15,217)     2.7       141,616     4.3       65,418     4.3
Tax credits                                   (126,615)    22.8       (92,565)   (2.8)     (59,151)   (3.9)
Other items, net                                86,440    (15.5)       49,361     1.5       20,001     1.3
                                             -------------------------------------------------------------
Actual income tax (benefit) expense          $(243,993)    44.0%    $1,220,775   37.0%   $ 544,728    35.7%
                                             =============================================================
</TABLE>

11. Fair Values of Financial Instruments

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


                                      F-19