TABLE OF CONTENTS




|                                                                                      |                                                                    |                                            |  |  |  |  |  | 
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------ |  |  |  |  |  | 
|                                                                                      |                                                                    | CONSOLIDATED BALANCE SHEETS               
|                                                                                      |                                                                    | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                                                                      |                                                                    | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                                                                      |                                                                    | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                                                      | General                                                           
|                                                                                      | Results of Operations                                             
|                                                                                      | Liquidity and Capital Resources                                   
|                                                                                      | Item 3. Quantitative and Qualitative Disclosure About Market Risk.
|PART II  OTHER INFORMATION                                                          
|                                                                                      | Item 4. Submission of Matters to a Vote of Security Holders.      
|                                                                                      | Item 5. Other Information                                         
|                                                                                      | Item 6. Not applicable.                                           
|SIGNATURES                                                                           

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

(Mark One)



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

For the quarterly period ended June 30, 2001

OR



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

For the transition period from ___________ to __________

Commission File No. 33-94724

JERRYS FAMOUS DELI, INC.

(Exact name of registrant as specified in its charter)


|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|California                                                    |  | 95-3302338                          
|                                                              |  |                                     
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (I.R.S. Employer Identification No.)

12711 Ventura Boulevard, Suite 400, Studio City, California 91604

---

(Address of Principal Executive Offices)


(818) 766-8311

---

(Registrants Telephone Number, Including Area Code)




---

(Former name, former address and former fiscal year, if changed since last report)


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 [   ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date. As of July 25, 2001,
outstanding common shares totaled 4,673,040.





---



JERRYS FAMOUS DELI, INC.

INDEX

|                               |  |                                                                                                                  |  |       
|------------------------------ |  | ---------------------------------------------------------------------------------------------------------------- |  | ------
|                               |  |                                                                                                                  |  | Page  
|                               |  |                                                                                                                  |  | Number
|                               |  |                                                                                                                  |  |       
|PART I  FINANCIAL INFORMATION
|                              
|                              
|                              
|                              
|Item 1.                        |  | Consolidated Financial Statements                                                                                |  |       
|                              
|                              
|                              
|                              
|                               |  | Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000.                                           |  | 2     
|                              
|                              
|                              
|                              
|                               |  | Consolidated Statements of Operations for the Three Months and Six Months Ended
June 30, 2001 and June 30, 2000. |  | 3     
|                              
|                              
|                              
|                              
|                               |  | Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2001 and June 30, 2000.                  |  | 4     
|                              
|                              
|                              
|                              
|                               |  | Notes to Consolidated Financial Statements                                                                       |  | 5     
|                              
|                              
|                              
|                              
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations                            |  |       
|                              
|                              
|                              
|                              
|                               |  | General                                                                                                          |  | 7     
|                              
|                              
|                              
|                              
|                               |  | Results of Operations                                                                                            |  | 8     
|                              
|                              
|                              
|                              
|                               |  | Liquidity and Capital Resources                                                                                  |  | 9     
|                              
|                              
|                              
|                              
|Item 3.                        |  | Quantitative and Qualitative Disclosure About Market Risk                                                        |  | 9     
|                              
|                              
|                              
|                              
|PART II  OTHER INFORMATION   
|                              
|                              
|                              
|                              
|Items 1. through 6.            |  | 10                                                                                                              
|                              
|                              
|                              
|                              
|                               |  | Signatures                                                                                                       |  | 11    

1



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JERRYS FAMOUS DELI, INC.
CONSOLIDATED BALANCE SHEETS

|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |              |            |            |           | 
|------------------------------------- | ------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------- | ---------- | ----------- | ---------- | ------------ | ---------- | ---------- | --------- | 
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            | June 30,    |            | December 31,
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            | 2001        |            | 2000        
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            | (unaudited) |            |              |            |           
|ASSETS                                |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                     
|                                     
|                                     
|                                     
|Current assets                        |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                     
|                                     
|                                     
|                                     
|                                      | Cash and cash equivalents                   |                                                                                                                                                                      | $                                          | 462,450                   |            |             | $          | 1,833,686    |           
|                                     
|                                     
|                                     
|                                     
|                                      | Accounts receivable, net                    |                                                                                                                                                                      |                                            | 285,300                   |            |             |            | 601,733      |           
|                                     
|                                     
|                                     
|                                     
|                                      | Inventory                                   |                                                                                                                                                                      |                                            | 1,168,375                 |            |             |            | 1,298,418    |           
|                                     
|                                     
|                                     
|                                     
|                                      | Prepaid expenses                            |                                                                                                                                                                      |                                            | 474,987                   |            |             |            | 421,241      |           
|                                     
|                                     
|                                     
|                                     
|                                      | Deferred income taxes                       |                                                                                                                                                                      |                                            | 285,511                   |            |             |            | 285,511      |           
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                      |                                             |                                                                                                                                                                      |                                            | Total current assets      |            |             | 2,676,623  |              |            |            | 4,440,589 | 
|                                     
|                                     
|                                     
|                                     
|Property and equipment, net           |                                             |                                                                                                                                                                      | 31,299,162                                 |                           |            |             | 31,673,889 |             
|                                     
|                                     
|                                     
|                                     
|Deferred income taxes                 |                                             |                                                                                                                                                                      | 96,183                                     |                           |            |             | 96,183     |             
|                                     
|                                     
|                                     
|                                     
|Goodwill and covenants not to compete |                                             |                                                                                                                                                                      | 8,458,267                                  |                           |            |             | 8,720,620  |             
|                                     
|                                     
|                                     
|                                     
|Other assets                          |                                             |                                                                                                                                                                      | 1,540,573                                  |                           |            |             | 1,479,907  |             
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                      |                                             |                                                                                                                                                                      | Total assets                               |                           | $          | 44,070,808  |            |              | $          | 46,411,188 |          
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|LIABILITIES AND SHAREHOLDERS EQUITY  |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                     
|                                     
|                                     
|                                     
|Current liabilities                   |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                     
|                                     
|                                     
|                                     
|                                      | Accounts payable                            |                                                                                                                                                                      | $                                          | 2,671,122                 |            |             | $          | 3,136,596    |           
|                                     
|                                     
|                                     
|                                     
|                                      | Accrued expenses                            |                                                                                                                                                                      |                                            | 1,395,571                 |            |             |            | 1,563,454    |           
|                                     
|                                     
|                                     
|                                     
|                                      | Sales tax payable                           |                                                                                                                                                                      |                                            | 205,290                   |            |             |            | 354,813      |           
|                                     
|                                     
|                                     
|                                     
|                                      | Income taxes payable                        |                                                                                                                                                                      |                                            | 160,411                   |            |             |            | 31,826       |           
|                                     
|                                     
|                                     
|                                     
|                                      | Current portion of capital lease obligation |                                                                                                                                                                      |                                            | 49,210                    |            |             |            | 46,337       |           
|                                     
|                                     
|                                     
|                                     
|                                      | Current portion of long-term debt           |                                                                                                                                                                      |                                            | 1,712,260                 |            |             |            | 1,712,260    |           
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                      |                                             |                                                                                                                                                                      |                                            | Total current liabilities |            |             | 6,193,864  |              |            |            | 6,845,286 | 
|                                     
|                                     
|                                     
|                                     
|Long-term debt                        |                                             |                                                                                                                                                                      | 8,463,636                                  |                           |            |             | 11,007,256 |             
|                                     
|                                     
|                                     
|                                     
|Capital lease obligation              |                                             |                                                                                                                                                                      | 92,233                                     |                           |            |             | 119,710    |             
|                                     
|                                     
|                                     
|                                     
|Deferred rent                         |                                             |                                                                                                                                                                      | 415,809                                    |                           |            |             | 430,683    |             
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                      |                                             |                                                                                                                                                                      | Total liabilities                          |                           |            | 15,165,542  |            |              |            | 18,402,935 |          
|                                     
|                                     
|                                     
|                                     
|Minority interest                     |                                             |                                                                                                                                                                      | 485,353                                    |                           |            |             | 504,098    |             
|                                     
|                                     
|                                     
|                                     
|Shareholders equity                  |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                     
|                                     
|                                     
|                                     
|                                      |                                             | Preferred stock Series A, no par, 5,000,000 shares authorized;
no shares issued or outstanding at June 30, 2001 or
at December 31, 2000                              |                                            |                           |           |             |            |              |           |           
|                                     
|                                     
|                                     
|                                     
|                                      |                                             | Common stock, no par value, 60,000,000 shares authorized;
4,673,040 and 4,673,042 shares issued and outstanding at
June 30, 2001 and December 31, 2000, respectively |                                            |                           | 24,575,522 |             |            |              | 24,575,522 |           
|                                     
|                                     
|                                     
|                                     
|                                      |                                             | Retained earnings                                                                                                                                                    |                                            |                           | 3,844,391  |             |            |              | 2,928,633  |           
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                      |                                             |                                                                                                                                                                      | Total shareholders equity                 |                           |            | 28,419,913  |            |              |            | 27,504,155 |          
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             
|                                      |                                             |                                                                                                                                                                      | Total liabilities and shareholders equity |                           | $          | 44,070,808  |            |              | $          | 46,411,188 |          
|                                      |                                             |                                                                                                                                                                      |                                            |                           |            |             |            |             

The accompanying notes are an integral part of these consolidated financial statements.

2



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JERRYS FAMOUS DELI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |            |      |            |            | 
|--------------------------------------------- | --------------------------- | ------- | -------------------------------------------------------- | -------------- | ---- | --------------------------- | ---------- | ------------------------- | ---- | ---------- | ---------- | ---------- | ---- | ---------- | ---------- | ---------- | ---- | ---------- | ---------- | 
|                                              |                             |         |                                                          |                |      | Three Months Ended June 30, |            | Six Months Ended June 30,
|                                              |                             |         |                                                          |                |      |                             |            |                          
|                                              |                             |         |                                                          |                |      | 2001                        |            | 2000                      |      | 2001       |            | 2000      
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |           
|Revenues                                      |                             | $       | 16,627,590                                               |                |      | $                           | 16,264,346 |                           |      | $          | 35,495,321 |            |      | $          | 35,084,663 |           
|                                             
|                                             
|                                             
|                                             
|Cost of sales                                 |                             |         | 5,549,623                                                |                |      |                             | 5,548,398  |                           |      |            | 11,964,468 |            |      |            | 11,874,303 |           
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|                                              |                             |         | Gross profit                                             |                |      | 11,077,967                  |            |                           |      | 10,715,948 |            |            |      | 23,530,853 |            |            |      | 23,210,360 |           
|                                             
|                                             
|                                             
|                                             
|Operating expenses                            |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|                                             
|                                             
|                                             
|                                             
|                                              | Labor                       |         |                                                          | 5,985,154      |      |                             |            | 5,905,089                 |      |            |            | 12,508,364 |      |            |            | 12,281,367 |     
|                                             
|                                             
|                                             
|                                             
|                                              | Occupancy and other         |         |                                                          | 2,300,680      |      |                             |            | 2,134,036                 |      |            |            | 4,734,612  |      |            |            | 4,417,961  |     
|                                             
|                                             
|                                             
|                                             
|                                              | Occupancy  related party   |         |                                                          | 234,251        |      |                             |            | 278,765                   |      |            |            | 468,502    |      |            |            | 557,530    |     
|                                             
|                                             
|                                             
|                                             
|General and administrative expenses           |                             |         | 1,043,071                                                |                |      |                             | 1,067,435  |                           |      |            | 2,158,388  |            |      |            | 2,299,298  |           
|                                             
|                                             
|                                             
|                                             
|Depreciation                                  |                             |         | 734,765                                                  |                |      |                             | 716,749    |                           |      |            | 1,469,092  |            |      |            | 1,408,272  |           
|                                             
|                                             
|                                             
|                                             
|Amortization                                  |                             |         | 183,973                                                  |                |      |                             | 175,769    |                           |      |            | 373,946    |            |      |            | 351,137    |           
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|                                              |                             |         |                                                          | Total expenses |      |                             | 10,481,894 |                           |      |            | 10,277,843 |            |      |            | 21,712,904 |            |      |            | 21,315,565 | 
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|                                              |                             |         | Income from operations                                   |                |      | 596,073                     |            |                           |      | 438,105    |            |            |      | 1,817,949  |            |            |      | 1,894,795  |           
|                                             
|                                             
|                                             
|                                             
|Other income (expense)                        |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|                                             
|                                             
|                                             
|                                             
|                                              | Interest income             |         |                                                          | 4,366          |      |                             |            | 4,871                     |      |            |            | 10,139     |      |            |            | 15,241     |     
|                                             
|                                             
|                                             
|                                             
|                                              | Interest expense            |         |                                                          | (221,164       | )    |                             |            | (270,172                  | )    |            |            | (458,799   | )    |            |            | (533,399   | )   
|                                             
|                                             
|                                             
|                                             
|                                              | Licensing income            |         |                                                          | 10,000         |      |                             |            | 7,700                     |      |            |            | 21,111     |      |            |            | 7,700      |     
|                                             
|                                             
|                                             
|                                             
|                                              | Other income (expense), net |         |                                                          | 7,751          |      |                             |            | 3,260                     |      |            |            | 13,460     |      |            |            | 3,260      |     
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|                                              |                             |         | Income before income tax provision
and minority interest |                |      | 397,026                     |            |                           |      | 183,764    |            |            |      | 1,403,860  |            |            |      | 1,387,597  |           
|                                             
|                                             
|                                             
|                                             
|                                              | Income tax provision        |         |                                                          | 103,778        |      |                             |            | 50,319                    |      |            |            | 392,468    |      |            |            | 378,347    |     
|                                             
|                                             
|                                             
|                                             
|                                              | Minority interest           |         |                                                          | 51,101         |      |                             |            | 53,739                    |      |            |            | 95,634     |      |            |            | 126,441    |     
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|                                              |                             |         | Net income                                               |                | $    | 242,147                     |            |                           | $    | 79,706     |            |            | $    | 915,758    |            |            | $    | 882,809    |           
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|Net income per share:                         |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|                                             
|                                             
|                                             
|                                             
|                                              |                             | Basic   |                                                          | $              | 0.05 |                             |            | $                         | 0.02 |            |            | $          | 0.20 |            |            | $          | 0.19 |           
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|                                              |                             | Diluted |                                                          | $              | 0.05 |                             |            | $                         | 0.02 |            |            | $          | 0.20 |            |            | $          | 0.19 |           
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|Weighted average shares
outstanding  Basic   |                             |         | 4,673,040                                                |                |      |                             | 4,673,068  |                           |      |            | 4,673,040  |            |      |            | 4,673,068  |           
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           
|Weighted average shares
outstanding  Diluted |                             |         | 4,702,390                                                |                |      |                             | 4,673,068  |                           |      |            | 4,693,593  |            |      |            | 4,673,068  |           
|                                              |                             |         |                                                          |                |      |                             |            |                           |      |            |            |            |      |            |            |           

The accompanying notes are an integral part of these consolidated financial statements.

3



---



JERRYS FAMOUS DELI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |            |            |           |            |  
|---------------------------------------------- | ------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------- | ----------------------------------------- | ---------- | ------------------------- | ---------- | ---------- | ---------- | --------- | ---------- | -
|                                               |                                       |                                                                                   |                               |                                           |            | Six Months Ended June 30,
|                                               |                                       |                                                                                   |                               |                                           |            |                          
|                                               |                                       |                                                                                   |                               |                                           |            | 2001                      |            | 2000      
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|Cash flows from operating activities:          |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                              
|                                              
|                                              
|                                              
|                                               |                                       | Net income                                                                        |                               | $                                         | 915,758    |                           |            | $          | 882,809    |          
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                               |                                       | Adjustments to reconcile net income to net cash provided by
operating activities: |                               |                                           |            |                           |            |            |            |          
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   | Depreciation and amortization |                                           |            | 1,843,038                 |            |            |            | 1,759,409 |           
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   | Minority interest             |                                           |            | 95,634                    |            |            |            | 126,441   |           
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   | Deferred rent                 |                                           |            | (14,874                   | )          |            |            | (16,161   | )         
|                                              
|                                              
|                                              
|                                              
|Changes in assets and liabilities:             |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   |                               | Accounts receivable                       |            |                           | 316,433    |            |            |           | 210,488    |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   |                               | Inventory                                 |            |                           | 130,043    |            |            |           | (34,178    | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   |                               | Prepaid expenses                          |            |                           | (53,746    | )          |            |           | (396,985   | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   |                               | Income taxes receivable                   |            |                           |           |            |            |           | 201,700    |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   |                               | Other assets                              |            |                           | (172,259   | )          |            |           | (239,352   | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   |                               | Accounts payable                          |            |                           | (465,474   | )          |            |           | (1,047,957 | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   |                               | Accrued expenses                          |            |                           | (167,883   | )          |            |           | (146,997   | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   |                               | Sales tax payable                         |            |                           | (149,523   | )          |            |           | (196,385   | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                       |                                                                                   |                               | Income taxes payable                      |            |                           | 128,585    |            |            |           | 226,647    |  
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                               |                                       |                                                                                   |                               | Total adjustments                         |            |                           | 1,489,974  |            |            |           | 446,670    |  
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                               |                                       |                                                                                   |                               | Net cash provided by operating activities |            |                           | 2,405,732  |            |            |           | 1,329,479  |  
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|Cash flows from investing activities:          |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                              
|                                              
|                                              
|                                              
|                                               |                                       | Net proceeds from sale of assets                                                  |                               |                                           | 19,774     |                           |            |            | 5,349      |          
|                                              
|                                              
|                                              
|                                              
|                                               |                                       | Additions to equipment                                                            |                               |                                           | (718,896   | )                         |            |            | (325,508   | )        
|                                              
|                                              
|                                              
|                                              
|                                               |                                       | Additions to improvements  land, building and leasehold                          |                               |                                           | (395,243   | )                         |            |            | (518,639   | )        
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                               |                                       |                                                                                   |                               | Net cash used in investing activities     |            |                           | (1,094,365 | )          |            |           | (838,798   | )
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|Cash flows from financing activities:          |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                              
|                                              
|                                              
|                                              
|                                               |                                       | Borrowings on credit facilities                                                   |                               |                                           | 646,970    |                           |            |            | 513,592    |          
|                                              
|                                              
|                                              
|                                              
|                                               |                                       | Payments on long-term debt                                                        |                               |                                           | (3,190,590 | )                         |            |            | (1,900,477 | )        
|                                              
|                                              
|                                              
|                                              
|                                               |                                       | Payments of obligations under capital leases                                      |                               |                                           | (24,604    | )                         |            |            | (13,552    | )        
|                                              
|                                              
|                                              
|                                              
|                                               |                                       | Distributions paid to minority shareholders                                       |                               |                                           | (84,493    | )                         |            |            | (166,682   | )        
|                                              
|                                              
|                                              
|                                              
|                                               |                                       | Dividends paid to minority shareholders                                           |                               |                                           | (29,886    | )                         |            |            | (42,084    | )        
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                               | Net cash used in financing activities |                                                                                   |                               | (2,682,603                                | )          |                           |            | (1,609,203 | )         
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|                                               |                                       |                                                                                   |                               | Net decrease in cash and cash equivalents |            |                           | (1,371,236 | )          |            |           | (1,118,522 | )
|                                              
|                                              
|                                              
|                                              
|Cash and cash equivalents, beginning of period |                                       |                                                                                   | 1,833,686                     |                                           |            |                           | 1,184,329  |           
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           
|Cash and cash equivalents, end of period       |                                       | $                                                                                 | 462,450                       |                                           |            | $                         | 65,807     |           
|                                               |                                       |                                                                                   |                               |                                           |            |                           |            |           

The accompanying notes are an integral part of these consolidated financial statements.

4



---



JERRYS FAMOUS DELI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Organization:

Basis of Presentation

The accompanying consolidated financial statements of Jerrys Famous Deli,
Incorporated and its subsidiaries (the Company) for the three and six months
ended June 30, 2001 and June 30, 2000 have been prepared in accordance with
generally accepted accounting principles and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. These financial statements have not been
audited by independent accountants, but include all adjustments (consisting of
normal recurring adjustments) which are, in Managements opinion, necessary for
a fair presentation of the financial condition, results of operations and cash
flows for such periods. However, these results are not necessarily indicative
of results for any other interim period or for the full year. The December 31,
2000 consolidated balance sheet is derived from the audited consolidated
financial statements included in the Companys December 31, 2000 Form 10-K.

Certain information and footnote disclosures normally included in
financial statements in accordance with generally accepted accounting
principles have been omitted pursuant to requirements of the Securities and
Exchange Commission. Management believes that the disclosures included in the
accompanying interim financial statements and footnotes are adequate to make
the information not misleading, but should be read in conjunction with the
consolidated financial statements and notes thereto included in the Companys
Form 10-K for the preceding fiscal year.

Organization

The accompanying consolidated financial statements consist of Jerrys
Famous Deli, Incorporated (JFD Inc.), a California corporation, JFD Encino
(JFD Encino), a California limited partnership, and National Deli
Corporation, (NDC), a Florida corporation and wholly-owned subsidiary of
JFD Inc. JFD Inc. and JFD Encino operate family oriented, full-service
restaurants. NDC operates The Epicure Market (Epicure), a specialty gourmet
food store located in Miami Beach, Florida. These entities are collectively
referred to as Jerrys Famous Deli, Inc. or the Company.

JFD Inc. and JFD Encino include the operations of the Southern
California restaurants located in Studio City, Encino, Marina del Rey, West
Hollywood, Westwood, Sherman Oaks, Woodland Hills, and Costa Mesa. JFD Inc.
also includes the two Rascal House restaurants located in Miami Beach and Boca
Raton, Florida.

Reclassification

Certain amounts in the previously presented financial statements have been
reclassified to conform to the current period presentation.

2. Supplemental Cash Flow Information

|                                                                        |                |                                            |  |                           |         |      |  |   |         | 
|----------------------------------------------------------------------- | -------------- | ------------------------------------------ |  | ------------------------- | ------- | ---- |  | - | ------- | 
|                                                                        |                |                                            |  | Six Months Ended June 30,
|                                                                        |                |                                            |  |                          
|                                                                        |                |                                            |  | 2001                      |         | 2000
|                                                                        |                |                                            |  |                           |         |     
|Supplemental cash flow information:                                     |                |                                            |  |                           |         |      |  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Cash paid for: |                                            |  |                           |         |      |  |   |        
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                | Interest                                   |  | $                         | 499,100 |      |  | $ | 537,600 | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                | Income taxes                               |  | $                         | 263,900 |      |  | $ | 50,000  | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Supplemental information on noncash investing and financing activities: |                |                                            |  |                           |         |      |  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                | Capital lease obligation for new equipment |  | $                         |        |      |  | $ | 134,737 | 

5



---



JERRYS FAMOUS DELI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Net Income Per Share

In accordance with Statement of Financial Accounting Standards (SFAS)
No. 128, Earnings Per Share, basic net income per share is computed by
dividing the net income attributable to common shareholders by the weighted
average number of common shares outstanding during the period. Diluted net
income per common share is computed by dividing the net income attributable to
common shareholders by the weighted average number of common and common share
equivalents outstanding during the period. Common share equivalents included
in the diluted computation represent shares issuable upon assumed exercise of
stock options using the treasury stock method.

4. Shareholders Equity

As of February 3, 2000, the Companys stock is being traded over the
Nasdaq SmallCap Market.

On February 9, 2000, the Company completed a one-for-three reverse stock
split of its Common Stock applicable to the shareholders of record on February
9, 2000. The reverse stock split reduced the Companys outstanding shares from
14,019,203 to approximately 4,673,068. All common share and per share amounts
have been adjusted to give retroactive effect to the one-for-three reverse
stock split for the periods presented.

On April 27, 2001, the Company mailed to all of its shareholders of record
as of April 6, 2001, an Offer to Purchase up to 600,000 shares of its Common
Stock, at a purchase price of $5.30 per share. The Offer to Purchase will
remain open until August 31, 2001, and is subject to certain conditions, as
described in the Offer to Purchase.

5. New Accounting and Disclosure Standards Issued

In July, 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 141, Business Combinations. SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001. Use of the pooling-of-interest method will be prohibited. The
Company has evaluated this Standard and believes that adoption will not have an
impact on its consolidated financial statements.

In July, 2001, the FASB also issued SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142, which changes the accounting for goodwill
and indefinite-lived intangible assets from an amortization method to an
impairment-only approach, will be effective for fiscal years beginning after
December 15, 2001. The Company has not determined the impact that adoption of
this Standard will have on its consolidated financial statements.

6. Subsequent Event

In July, 2001, the Company purchased the real estate parcel that it had
previously leased for the Rascal House restaurant located in Boca Raton,
Florida. The Company was informed that the landlord was selling the property
for this restaurant and determined that it would be advantageous to exercise
its right of first refusal included in the original lease. The purchase price
was approximately $2,350,000. The purchase price was financed through a new
term loan obtained from an existing lender.

6



---



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

General

The following table presents for the three and six months ending June 30,
2001 and 2000, the Consolidated Statements of Operations of the Company
expressed as percentages of total revenue. The results of operations for the
first six months of 2001 are not necessarily indicative of the results to be
expected for the full year ending December 31, 2001.

|                                                               |                     |                          |       |                             |      |                           |       |      |      |      |       |      |      |   |       |      |      |  
|-------------------------------------------------------------- | ------------------- | ------------------------ | ----- | --------------------------- | ---- | ------------------------- | ----- | ---- | ---- | ---- | ----- | ---- | ---- | - | ----- | ---- | ---- | -
|                                                               |                     |                          |       | Percentage of Total Revenue
|                                                               |                     |                          |       |                            
|                                                               |                     |                          |       | Three Months Ended June 30, |      | Six Months Ended June 30,
|                                                               |                     |                          |       |                             |      |                          
|                                                               |                     |                          |       | 2001                        |      | 2000                      |       | 2001 |      | 2000
|                                                               |                     |                          |       |                             |      |                           |       |      |      |     
|Revenues                                                       |                     |                          | 100.0 | %                           |      |                           | 100.0 | %    |      |      | 100.0 | %    |      |   | 100.0 | %   
|                                                              
|                                                              
|                                                              
|                                                              
|Cost of sales                                                  |                     |                          | 33.4  |                             |      |                           | 34.1  |      |      |      | 33.7  |      |      |   | 33.8  |     
|                                                               |                     |                          |       |                             |      |                           |       |      |      |      |       |      |      |   |       |     
|Gross profit                                                   |                     |                          | 66.6  |                             |      |                           | 65.9  |      |      |      | 66.3  |      |      |   | 66.2  |     
|                                                              
|                                                              
|                                                              
|                                                              
|Operating expenses                                             |                     |                          |       |                             |      |                           |       |      |      |      |       |      |      |   |       |     
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Labor               |                          |       | 36.0                        |      |                           |       | 36.3 |      |      |       | 35.2 |      |   |       | 35.0 |     
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Occupancy and other |                          |       | 15.3                        |      |                           |       | 14.8 |      |      |       | 14.7 |      |   |       | 14.2 |     
|                                                               |                     |                          |       |                             |      |                           |       |      |      |      |       |      |      |   |       |     
|                                                               |                     | Total operating expenses |       |                             | 51.3 |                           |       |      | 51.1 |      |       |      | 49.9 |   |       |      | 49.2 |  
|                                                              
|                                                              
|                                                              
|                                                              
|General and administrative expenses                            |                     |                          | 6.2   |                             |      |                           | 6.6   |      |      |      | 6.1   |      |      |   | 6.6   |     
|                                                              
|                                                              
|                                                              
|                                                              
|Depreciation and amortization expense                          |                     |                          | 5.5   |                             |      |                           | 5.5   |      |      |      | 5.2   |      |      |   | 5.0   |     
|                                                               |                     |                          |       |                             |      |                           |       |      |      |      |       |      |      |   |       |     
|                                                               |                     | Total expenses           |       |                             | 63.0 |                           |       |      | 63.2 |      |       |      | 61.2 |   |       |      | 60.8 |  
|                                                               |                     |                          |       |                             |      |                           |       |      |      |      |       |      |      |   |       |     
|Income from operations                                         |                     |                          | 3.6   |                             |      |                           | 2.7   |      |      |      | 5.1   |      |      |   | 5.4   |     
|                                                              
|                                                              
|                                                              
|                                                              
|Interest income                                                |                     |                          | 0.0   |                             |      |                           | 0.0   |      |      |      | 0.0   |      |      |   | 0.0   |     
|                                                              
|                                                              
|                                                              
|                                                              
|Interest expense                                               |                     |                          | (1.3  | )                           |      |                           | (1.7  | )    |      |      | (1.3  | )    |      |   | (1.5  | )   
|                                                              
|                                                              
|                                                              
|                                                              
|Other income, net                                              |                     |                          | 0.1   |                             |      |                           | 0.1   |      |      |      | 0.1   |      |      |   | 0.0   |     
|                                                               |                     |                          |       |                             |      |                           |       |      |      |      |       |      |      |   |       |     
|Income before provision for income
taxes and minority interest |                     |                          | 2.4   |                             |      |                           | 1.1   |      |      |      | 3.9   |      |      |   | 3.9   |     
|                                                              
|                                                              
|                                                              
|                                                              
|Provision for income taxes                                     |                     |                          | 0.6   |                             |      |                           | 0.3   |      |      |      | 1.1   |      |      |   | 1.1   |     
|                                                              
|                                                              
|                                                              
|                                                              
|Minority interest                                              |                     |                          | 0.3   |                             |      |                           | 0.3   |      |      |      | 0.3   |      |      |   | 0.3   |     
|                                                               |                     |                          |       |                             |      |                           |       |      |      |      |       |      |      |   |       |     
|                                                               |                     | Net income               |       |                             | 1.5  | %                         |       |      | 0.5  | %    |       |      | 2.5  | % |       |      | 2.5  | %
|                                                               |                     |                          |       |                             |      |                           |       |      |      |      |       |      |      |   |       |     

7



---



Results of Operations

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

Revenues for the three months ended June 30, 2001 increased approximately
$364,000, or 2.2%, to approximately $16,628,000 for the 2001 quarter from
approximately $16,264,000 for the 2000 quarter. The overall increase in
revenues was primarily due to the increase in revenues for all stores.
Contributing to the increase in revenues were the following: same store sales
for the eight Southern California stores in operation since January 1, 2001
increased approximately $217,000 or 2.1%; the Rascal House restaurants increased revenues
by approximately $58,000 or 2.2%; and, The Epicure Market increased revenues by
approximately $84,000 or 2.3%.

Cost of sales, as a percentage of revenues, decreased 0.7 percentage
points to 33.4% for the 2001 quarter from 34.1% for the 2000 quarter. This
decrease is primarily the result of the Companys continued focus on more
efficient buying and increased management monitoring of purchase costs at both
the restaurants and Epicure.

Total expenses, as a percentage of revenues, decreased slightly by 0.2
percentage point to 63.0% for the three months ended June 30, 2001 from 63.2%
for the three months ended June 30, 2000. The overall decrease in total
expenses is primarily attributable to the overall decrease in general and
administrative expenses, which as a percentage of revenues, decreased 0.4
percentage point to 6.2% for the 2001 quarter from 6.6% for the 2000 quarter.
This decrease was partially offset by the slight increase in operating
expenses. The overall increase in operating expenses is primarily attributable
to an increase in occupancy and other expense of 0.5 percentage point to 15.3%
for the 2001 quarter from 14.8% for the 2000 quarter, mostly due to higher
utility related costs. Labor costs decreased 0.3 percentage point to 36.0% for
the 2001 quarter as compared to 36.3% for the same quarter in 2000.
Depreciation and amortization expense as a percentage of revenue remained
comparable at 5.5% for the three months ended June 30, 2001 as compared to the
same 2000 quarter.

The decrease in interest expense of approximately $49,000 to approximately
$221,000 for the 2001 second quarter from approximately $270,000 for the same
2000 period, primarily resulted from the reduction of the Companys debt.

Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

Revenues increased approximately $410,000, or 1.2%, to approximately
$35,495,000 for the 2001 six-month period from approximately $35,085,000 for
the 2000 six-month period. The overall increase in revenues was in part due to
the increase in revenue of approximately $351,000 or 1.7% in same store sales
for the eight Southern California stores in operation since January 1, 2000.
Also contributing to the overall increase was an increase in revenues of
approximately $144,000 or 1.8% for The Epicure Market. The combined increase
was partially offset by a decrease in sales of approximately $85,000 or 1.3%
for the Florida restaurants.

Cost of sales, as a percentage of revenues, decreased 0.1 percentage
point, to 33.7% for the 2001 period from 33.8% for the 2000 period. The reason
for this decrease is discussed in the above quarter-to-quarter comparison.

Total expenses, as a percentage of revenues, increased slightly by 0.4
percentage point to 61.2% for the six months ended June 30, 2001 from 60.8% for
the six months ended June 30, 2000. The overall increase in total expenses is
primarily attributable to the overall increase in operating expenses, which as
a percentage of revenues, increased 0.7 percentage point to 49.9% for 2001 from
49.2% for the same six month 2000 period. The overall increase in operating
expenses is primarily attributable to a slight increase in labor expense of 0.2
percentage point to 35.2% for the 2001 six month period from 35.0% for the same
2000 period, coupled with an increase in occupancy and other expense of 0.5
percentage point to 14.7% for the 2001 six month period from 14.2% for the same
2000 period. Also contributing to the overall increase in operating expenses,
depreciation and amortization expense increased 0.2% to 5.2% for the six months
ended June 30, 2001 from 5.0% for the same six month 2000 period. The increase
in operating expenses was partially offset by a slight decrease in general and
administrative expenses, as a percentage of revenues, of 0.5 percentage point
to 6.1% for the 2001 six month period from 6.6% for the same 2000 period. The
aforementioned changes are mostly due to the same factors as those discussed
above with respect to the quarter-to-quarter comparison.

8



---



Interest expense decreased approximately $74,000 to approximately $459,000
for the period ended June 30, 2001 as compared to $533,000 for the same 2000
period mostly due to the reduction in the Companys debt.

Liquidity and Capital Resources

The Company paid approximately $3,191,000 of debt and used approximately
$85,000 for the distribution of capital to the limited partners of JFD Encino
during the six months ended June 30, 2001. The Companys capital requirements
are primarily for the development, construction and equipping of new
restaurants. Generally, the Company leases the property and extensively
remodels the existing building. Additional capital expenditures will be
required if new locations are added. The cost of renovation will depend upon
the style of restaurant being converted. Renovation of Jerrys Famous Deli
restaurants have cost between $2.0 million and $3.0 million per location, or
$267 to $400 per square foot. Cost of development of the new Jerrys Famous Deli in South
Miami, Florida, which is leased, is anticipated to be approximately $3.0
million.

In September 1998, the Company entered into a $15,000,000 credit facility
with BankBoston, N.A. in the form of a $9,000,000 term loan and $6,000,000
revolving line of credit. In conjunction with the agreement, the Company
repaid certain existing debt with the proceeds from the term loan. The term
loan and the revolver mature five years from inception and bear interest at the
Eurodollar rate plus a variable percentage margin totaling approximately 7.74%
at June 30, 2001. The debt is collateralized by assets of the Company and
includes certain financial covenants. As of June 30, 2001, the amount of
borrowings under the revolving line of credit was approximately $1,500,000.

In July of 2001 the Company purchased the real estate parcel that they had
previously leased for the Rascal House restaurant located in Boca Raton,
Florida. The Company was informed that the landlord was selling the property
for this restaurant and determined that it would be advantageous to exercise
its right of first refusal included in the original lease. The purchase price
was approximately $2,350,000. The purchase price was financed through a new
term loan obtained from an existing lender.

Management believes that cash on hand, including cash available on the
line of credit and cash flows from operations will be sufficient for operation
of the Companys existing restaurants and market, as well as the Offer to
Purchase. Future anticipated capital needs cannot be projected with certainty.
Additional capital expenditures will be required if new locations are added.

The Company continues to search for prime locations appropriate for its
customer base and to develop them into restaurants, both in the Southern
California and Southern Florida areas, as well as new areas, while continuing
to provide quality food and service in its existing restaurants. However, the
issue of whether or not to aggressively expand is currently under review. The
Company seeks to exploit its brand names for ancillary income from licensing
and possibly third party retail sales. This is a new initiative and the
outlook is not yet clear.

Statements made herein that are not historical facts are forward looking
statements and are subject to a number of risk factors, including the publics
acceptance of the Jerrys Famous Deli format in each new location, consumer
trends in the restaurant industry, competition from other restaurants, the
costs and delays experienced in the course of remodeling or building new
restaurants, the amount and rate of growth of administrative expenses
associated with building the infrastructure needed for future growth, the
availability, amount, type and cost of financing for the Company and general
economic conditions and other factors. Further information on these and other
factors is contained in the Companys Annual Report on Form 10-K for the year
ended December 31, 2000 and its other reports filed with the Securities and
Exchange Commission.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

The Company is exposed to market risk from changes in interest rates on
debt. The Companys exposure to interest rate risk relates to its $9,000,000
term loan and $6,000,000 revolving line of credit. Borrowings under the
agreements bear interest at the Eurodollar rate plus a variable margin.
Borrowings outstanding under the agreements were $4,900,000 at June 30, 2001.
Consequently, a hypothetical 1% interest rate change could have a material
impact on the Companys results of operations.

9



---



PART II  OTHER INFORMATION

Items 1. through 3. Not applicable.

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

On May 29, 2001, the Company held its Annual Meeting of Shareholders.
Shareholders voted upon the election of directors and upon the ratification of
PricewaterhouseCoopers LLP, as the Companys independent public accountants for
the fiscal year ending December 31, 2001. Isaac Starkman, Guy Starkman, Jason
Starkman, Paul Gray, Stanley Schneider and Kenneth Abdalla, all of whom were
directors prior to the Annual Meeting and were nominated by management for
re-election, were re-elected at the meeting. The following votes were cast for
each of the nominees:

|                  |  |     |           |           |  |  |       | 
|----------------- |  | --- | --------- | --------- |  |  | ----- | 
|Name              |  | For |           | Authority
|                  |  |     |           | Withheld 
|                  |  |     |           |           |  | 
|Isaac Starkman    |  |     | 3,567,671 |           |  |  | 7,765 | 
|                 
|                 
|                 
|                 
|Guy Starkman      |  |     | 3,567,671 |           |  |  | 7,765 | 
|                 
|                 
|                 
|                 
|Jason Starkman    |  |     | 3,567,784 |           |  |  | 7,652 | 
|                 
|                 
|                 
|                 
|Paul Gray         |  |     | 3,567,916 |           |  |  | 7,520 | 
|                 
|                 
|                 
|                 
|Stanley Schneider |  |     | 3,567,916 |           |  |  | 7,520 | 
|                 
|                 
|                 
|                 
|Kenneth Abdalla   |  |     | 3,567,803 |           |  |  | 7,633 | 

The following votes were cast for the ratification of
PricewaterhouseCoopers LLP as the Companys independent public accountants for
the fiscal year ending December 31, 2001: For: 3,573,704; Against: 1,424;
Abstain: 308.

Shareholders who wish to submit proposals to be included in the Companys
proxy materials for the 2002 annual meeting may do so in accordance with
Securities and Exchange Commission Rule 14a-8. For those shareholder proposals
which are not submitted in accordance with Rule 14a-8, the Companys management
proxies may exercise their discretionary voting authority, without any
discussion of the proposal in the Companys proxy materials, for any proposal
which is received by the Company after January 4, 2002.

Item 5. Other Information

On April 27, 2001, the Company issued an Offer to Purchase for cash up to
600,000 shares of it common stock at $5.30 per share. The Offer was originally
scheduled to expire on June 29, 2001, and was extended until August 31, 2001 in
order to allow more shareholders the opportunity to accept the Offer. The
Company intends to complete the purchase of all tendered shares, up to the
600,000 shares offered to be repurchased, on or about August 31, 2001. As of
the date hereof, the number of shares tendered does not exceed the 600,000
shares offered to be repurchased. However, it is possible that the number of
shares tendered could increase to an amount above 600,000 shares prior to the
expiration date. In that event, the Company will determine whether it may
increase the amount to be repurchased or whether it will be required to
purchase tendered shares pro rata in accordance with the terms of the Offer to
Purchase. The Company intends to issue a press release announcing the results
of the tender offer on or about August 31, 2001.

Item 6. Not applicable.

10



---



SIGNATURES

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

|                      |                                                                               |                   
|--------------------- | ----------------------------------------------------------------------------- | ------------------
|                      | JERRYS FAMOUS DELI, INC.                                                    
|                     
|Date: August 13, 2001 | By:                                                                           | /s/ Isaac Starkman
|                      |                                                                              
|                      | Isaac Starkman
Chief Executive Officer and Chairman
of the Board of Directors

| |                                            |                       
| | ------------------------------------------ | ----------------------
| | By:                                        | /s/ Christina Sterling
| |                                           
| | Christina Sterling
Chief Financial Officer

11