10QSB - Quarterly Report

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB
                                   (Mark One)
              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 25, 2000

                                       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. 1-13818

                           Spencer's Restaurants, Inc.
                 (Name of small business issuer in its charter)

                               Delaware 06-1369616
                (State or other jurisdiction of (I.R.S. Employer
              incorporation or organization) Identification Number)

                                106 Federal Road
                                Danbury, CT 06810
               (Address of principal executive offices) (Zip Code)

                      The Rattlesnake Holding Company, Inc.
                                  (former Name)

       Registrant's telephone number, including area code: (203) 798-1390

     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

     57,102,926 Common Shares,  par value $.001 per share were outstanding as of
     September 25, 2000

<PAGE>

                                   FORM 10-QSB

                           Spencer's Restaurants, Inc.

                               September 25, 2000

                                      INDEX
<TABLE>
<CAPTION>


Part I - Financial Information

<S>                                                                                                       <C>
Condensed Consolidated Balance Sheets as of September 25, 2000  (unaudited)                               3
and June 26, 2000 (audited)

Unaudited Condensed Consolidated Statements of Operations for the thirteen weeks
ended  September 25, 2000 and September 27, 1999                                                          4

Unaudited Condensed Consolidated Statement of Cash Flows for the thirteen weeks ended                     5
September 25, 2000 and September 27, 1999

Unaudited Consolidated Statement of Stockholders Equity for the thirteen weeks ended                      6
September 25, 2000

Notes to Unaudited Condensed Consolidated Financial Statements                                            7

Management's Discussion and Analysis                                                                      9

Liquidity                                                                                                 11

Safe Harbor Statement                                                                                     12


Part II - Other Information

Item 1:  Legal Proceedings
13

Item 2:  Changes in Securities and use of Proceeds                                                        13

Item 3:  Defaults Upon Senior Securities                                                                  13

Item 4:  Submission of Matters Stockholders' vote                                                         13

Item 5:  Other Information
13

Item 6:  Exhibits and Reports on Form 8-K                                                                 13

Signatures                                                                                                14

</TABLE>
<PAGE>

                  SPENCER'S RESTAURANTS, INC. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
        As of September 25, 2000 (unaudited ) and June 26, 2000 (audited)

<TABLE>
<CAPTION>
                                                                                 UNAUDITED              AUDITED
                                                                                 ---------              -------
                                                                           September 25, 2000       June 26, 2000
ASSETS
<S>                                                                          <C>                     <C>
          Cash                                                               $       135,461         $    374,507
          Accounts Receivable                                                         27,268               24,500
          Inventory                                                                   47,709               47,862
          Prepaid expenses                                                            34,300                2,159
                                                                                     -------              --------
          Total current assets                                                       244,738              449,028

          Land, building, and equipment, net                                       2,004,848            2,021,456
          Intangable assets, net                                                      11,988               13,744
          Other assets                                                                14,276               18,776
                                                                                   ---------            ---------
TOTAL ASSETS                                                                 $     2,275,850         $  2,503,004
                                                                                   =========            =========
LIABILITIES
          Notes Payable, current portion                                     $       250,011         $    258,344
          Accounts Payable                                                           459,537              486,714
          Accrued Expenses                                                           307,798              322,673
          Dividends Payable                                                          152,557              347,904
          Others Payables                                                             63,149               77,555
                                                                                   ---------            ---------
TOTAL CURRENT LIABILITIES                                                          1,233,052            1,493,190

          Par Value-Series B Conv. $0.10; 5,000,000 shares                            31,679               31,507
          authorized; 316,792 shares issued and outstanding
          at 9/25/00; 315,076 shares issued and outstanding
          at 6/26/2000.
          Par Value - Common $0.001; 400,000,000 shares                               57,103               51,003
          authorized; 57,102,926 shares issued and outstanding
          at 9/25/00; 51,002,981 shares issued and outstanding
          at 6/26/2000.
          Additional Paid in Capital-Series B Preferred Stock                      6,291,410            6,535,088
          Additional Paid in Capital-Common Stock                                 14,713,989           14,476,583
          Accrued Dividends                                                        (152,557)            (347,904)
          Retained Earnings                                                     (19,898,826)         (19,736,463)
                                                                                ------------         ------------
TOTAL STOCKHOLDERS EQUITY                                                          1,042,798            1,009,814
                                                                                   ---------            ---------
TOTAL LIABILITIES & STOCKHOLDERS EQUITY                                      $     2,275,850         $  2,503,004
                                                                                   ---------            ---------
<FN>
See accompanying notes to the unaudited condensed consolidated financial statements.
</FN>
</TABLE>

<PAGE>


                  SPENCER'S RESTAURANTS, INC. AND SUBSIDIARIES
                 Unaudited Condensed Consolidated Statements of
             Operations Thirteen weeks ended September 25, 2000 and
                               September 27, 1999

<TABLE>
<CAPTION>

                                                                    UNAUDITED             UNAUDITED
                                                               September 25, 2000    September 27, 1999

<S>                                                                 <C>                     <C>
Restaurant Sales                                                    $   1,048,528           $   323,697
Less: Promotional Sales                                                    17,838                 7,452
                                                                        ---------               -------
Net Restaurant Sales                                                    1,030,690               316,245

Costs & Expenses
Food & Beverage Cost                                                      376,776                79,689
Salaries, Wages & Employee Benefits                                       384,671               168,757
Operating Expense                                                         183,269                59,227
Occupancy                                                                  25,642                27,785
Depreciation And Amortization on Restaurants                               24,437                 9,731
                                                                          -------               -------
Total Restaurant Cost And Expense                                         994,795               345,189

Income (Loss) From Restaurant Operations                                   35,895              (28,944)

General And Administrative                                                236,823               173,766
Loss On Restaurant Closure                                                      0                42,800
Total G&A Expense                                                         236,823               216,566
                                                                        ---------             ---------
Total Loss From Operations                                              (200,928)             (245,510)

Other Income
Other Expense (Income) Net                                                (2,668)                     0
Interest Expense (Income) Net                                               2,083                     0
                                                                            -----                     -
Total Other Expense (Income)                                                (585)                     0
                                                                        ---------             ---------
Net Loss Before Extraordinary Item                                      (200,343)             (245,510)

Extraordinary Item
Gain On Extinguishment Of Debt                                             37,982                     0
                                                                        ---------             ---------
Net Loss Available To Shareholders                                      (162,361)             (245,510)

Dividends On Preferred Shares                                             152,557               171,659
                                                                          -------               -------
Net Loss Available To Common Shareholders                           $   (314,918)           $ (417,169)
                                                                        =========             =========

Net Loss Per Share:
Before Extraordinary Item                                           $      (0.01)           $    (0.01)
          Extraordinary item                                                    -                     -
                                                                           ------                ------
Net Loss Basic And Diluted                                          $      (0.01)           $    (0.01)
                                                                           ======                ======
Weighted Average Number Of Common
Shares Outstanding                                                     55,916,581            29,979,013
                                                                       ==========            ==========
<FN>
See  accompanying  notes  to  the  unaudited  condensed  consolidated  financial
statements
</FN>
</TABLE>

<PAGE>



                  SPENCER'S RESTAURANTS, INC. AND SUBSIDIARIES
            Unaudited Condensed Consolidated Statements of Cash Flows
         Thirteen weeks ended September 25, 2000 and September 27, 1999

<TABLE>
<CAPTION>

                                                                                       UNAUDITED           UNAUDITED
                                                                                    ------------------ ------------------
                                                                                    September 25, 2000 September 27, 1999

CASH FLOW FROM OPERATING ACTIVITY
     Adjustments to reconcile net loss to net cash used in
     operating activities:
<S>                                                                                      <C>                 <C>
           Net Income (Loss)                                                             $   (162,361)       $   (245,510)
           Depreciation and Amortization                                                        28,106               9,731
           Forgivness Of Debt                                                                 (37,982)
           Loss on conversion of asset                                                               0              42,800
     Stock issued for services preformed                                                             0              72,909
     Changes in assets and liabilities:
           Decrease (Increase) In Inventory                                                        153               7,931
           Decrease (Increase) In Accts. Rec.                                                  (2,768)               3,031
           Decrease (Increase) In Prepaid and Other Current Assets                            (32,141)             (8,395)
           Decrease (Increase) In Other Assets                                                   4,500
           Increase (Decrease) In Accounts Payable                                               9,407            (40,848)
           Increase (Decrease) In accrued expenses                                            (13,478)
           Increase (Decrease) In other payables                                              (14,406)            (16,413)
                                                                                             ---------           ---------
           NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                               (220,970)           (174,764)


CASH FLOW FROM INVESTING ACTIVITY
           Capital expenditures                                                                (9,743)           (294,942)
                                                                                               -------           ---------
           NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                 (9,743)           (294,942)

CASH FLOW FROM FINANCINIG ACTIVITY
           Principal repayments of Borrowings                                                  (8,333)                   0
           Proceeds from Issuance of Preferred Stock                                                 0              50,000
                                                                                               -------              ------
           NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                 (8,333)              50,000

           Increase (Decrease) In Cash                                                       (239,046)           (419,706)

Cash Beginning                                                                                 374,507           2,337,675
                                                                                               -------           ---------
Cash Ending                                                                                    135,461           1,917,969
                                                                                               -------           ---------
Cash paid during period for interest                                                             2,353                   -


<FN>
See  accompanying  notes  to  the  unaudited  condensed  consolidated  financial
statements
</FN>
</TABLE>


<PAGE>



                  SPENCER'S RESTAURANTS, INC. AND SUBSIDIARIES
             Unaudited Consolidated Statement of Stockholders Equity
                     Thirteen weeks ended September 25, 2000


<TABLE>
<CAPTION>
                                                             Preferred Stock     Preferred Stock
                                         Common     Common
                                         Shares     Stock    Series A  Series B  Series A Series B
                                         ------     -----    --------  --------  -----------------

<S>                                     <C>         <C>                <C>                <C>
BALANCE, JUNE 26, 2000                  51,002,981  $ 51,003           315,076            $ 31,507

Conversion   of  Series  B   preferred
to common stock                          6,099,945     6,100       -  (12,200)       -     (1,220)

Issuance of series B preferred stock
as dividend                                      -         -       -    13,916       -       1,392

Accrued dividends  - Series B                    -         -       -         -       -           -

Net loss for the thirteen weeks
ended September 25, 2000

BALANCE, September 25, 2000
(unaudited)                             57,102,926  $ 57,103           316,792            $ 31,679
</TABLE>

<TABLE>
<CAPTION>

                                            Additional                                      Additional
                                         Paid-in Capital     Accrued    Accumulated      Paid-in Capital
                                         Preferred  Stk     Dividends     Deficit          Common Stock
                                         --------------     ---------     -------          ------------

<S>                                      <C>               <C>           <C>                <C>
BALANCE, JUNE 26, 2000                   $ 6,535,088       $ (347,904)   $(19,736,463)      $ 14,476,583

Conversion   of  Series  B   preferred
to common stock                            (242,286)                -                -          237,406

Issuance of series B preferred stock
as dividend                                  (1,392)          347,904                -                -

Accrued dividends  - Series B                     -         (152,557)                -                -

Net loss for the thirteen weeks
ended September 25, 2000                          -                 -        (162,361)                -

BALANCE, September 25, 2000
(unaudited)                              $ 6,291,410      $ (152,557)    $(19,898,825)     $ 14,713,989
</TABLE>
<PAGE>


SPENCER'S  RESTAURANTS,  INC. AND  SUBSIDIARIES:  NOTES TO  UNAUDITED  CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS


1. Consolidated Financial Statements.

     The accompanying unaudited condensed consolidated financial statements were
prepared in accordance with generally accepted accounting principles and include
all adjustments  which,  in the opinion of management,  are necessary to present
fairly the  consolidated  financial  position of the Company as of September 25,
2000,  the results of operations  and cash flows for the thirteen weeks ended on
September 25, 2000 and September  27, 1999.  In the opinion of  management,  all
necessary  adjustments  that were  made are of a normal  recurring  nature.  The
balance sheet at June 26, 2000 was derived from audited financial statements

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting  principles
have  been  condensed  or  omitted.  It is  suggested  that  these  consolidated
financial  statements be read in  conjunction  with the  consolidated  financial
statements  and notes thereto  included in the  Company's  Annual Report on Form
10-KSB for the year-end June 26, 2000.  The results of operations for the period
ended  September  25,  2000  are not  necessarily  indicative  of the  operating
results, which may be achieved for the full year.

2. Basis of Presentation

     Management  of the Company has made a number of estimates  and  assumptions
relating  to the  reporting  of assets and  liabilities  and the  disclosure  of
contingent  assets and  liabilities  to prepare  these  financial  statements in
conformity  with  generally  accepted   accounting   principles.   All  material
intercompany balances and intercompany transactions have been eliminated. Actual
results could differ from those estimates.

     The accompanying unaudited condensed consolidated financial statements have
been prepared on a going concern basis,  which  contemplates  the realization of
assets and the  satisfaction of liabilities and commitments in the normal course
of  business.  However,  due to  the  matters  discussed  below,  the  Company's
continuation as a going concern cannot be reasonably assured.

3. Description of Business

     Spencer's  Restaurants,  Inc.  (formerly known as The  Rattlesnake  Holding
Company,  Inc.), a Delaware corporation (unless the context otherwise indicates,
with its subsidiaries,  the "Company"),  was formed and commenced  operations in
1993, and effected an initial  public  offering of its stock in 1995 to develop,
build and operate a chain of casual dining  southwestern  restaurants  under the
name  Rattlesnake(R)  Southwestern  Grill.  At one time, the Company  operated a
total of 8 restaurants in the New York metropolitan area.  Management was unable
to  operate  the   restaurants   profitably,   failed  to  control  general  and
administrative  expenses and did not develop a workable  growth  strategy.  As a
consequence,   the  Company  experienced   substantial  losses  and  incurred  a
significant  amount of debt. In 1997, the Board of Directors  elected certain of
its members as officers to take control of  operations  and replace the existing
management  pursuant to its cost  reduction  plan.  The Company then disposed of
development  projects  and  non-performing  restaurants,   negotiated  severance
agreements  with  the  former  management,   and  sharply  reduced  general  and
administrative expenses.

     In fiscal  1999,  106  Federal  Road  Restaurant  Corp.,  our  wholly-owned
subsidiary,  purchased the Danbury,  Connecticut facility previously closed. The
restaurant  has been remodeled and  reconfigured  to serve as the first location
for our new 200 seat Spencer's Steak and Shrimp restaurant concept.

     In fiscal 2000, we opened the new Spencer's Steak and Shrimp restaurant and
its operations have been satisfactory.

     We continue to operate a self-sustaining  Rattlesnake(R) Southwestern Grill
in South Norwalk, Connecticut

4. Management Plans

     The accompanying  consolidated financial statements have been prepared on a
going  concern  basis  which  contemplates  the  realization  of assets  and the
satisfaction  of liabilities  and  commitments in the normal course of business.
However, due to the matters discussed below, its continuation as a going concern
can not be reasonably assured.

     The Company has incurred  aggregate  losses since inception of $19,898,826,
inclusive  of a net loss for the  thirteen  weeks  ended  September  25, 2000 of
$162,361 and at September  25, 2000 had a working  capital  deficit of $988,314.
Additionally,  $229,173  of  Series B  convertible  subordinated  notes  payable
matured on July 7, 2000,  $18,749 of Series C subordinated notes payable matured
on August 6, 1997,  and a $2,089 Series A subordinated  note payable  matured on
August 6, 1996, are in default as of September 25, 2000.

     The Company  anticipates that it will require additional working capital to
fund operations.  The Company  believes that it will have sufficient  capital to
meet these  obligations  and  implement an expansion  strategy  through a second
stock offering.  In addition, in October 2000, the Company obtained financing on
its real estate  holdings at 106 Danbury Road (Note 8).  However there can be no
assurance that the Company will have  sufficient  capital to support  operations
and implement its business plan.

5. Stockholder's Equity

Preferred Stock

     As of the quarter  ended  September  25,  2000,  12,200  shares of Series B
preferred stock was converted to 6,099,945 shares of common stock.

     In September  2000,  the Company issued 13,916 shares of Series B preferred
stock as payment of dividends  declared for the $347,904 of accrued dividends as
of June 26, 2000.

6. Reclassification

     Reclassification  of  certain  expense  captions  have  been  made  to  the
statement of operations for fiscal quarter ending  September 27, 1999 to conform
to the September 25, 2000  presentation.  In addition  $59,227 was  reclassified
from  general and  administrative  to operating  expense for the quarter  ending
November 27, 1999

     The impact of the reclassification did not result in changes to the balance
sheet and  consolidated  statement of cash flows for the fiscal  quarter  ending
September 27, 1999.

7. Litigation

     The  Company is  defending  an action  brought by Jack  Cioffi  Trust,  the
landlord of a former  Rattlesnake  restaurant  in Lynbrook  New York leased by a
subsidiary of the Company. The action against the Company is based on an alleged
guaranty of the lease  payments  due from the  subsidiary  of the  Company.  The
Company is of the position that the landlord waived the guarantee at the time of
the  surrender of the premises in  September  1997.  The action seeks the sum of
approximately  $190,000.  A Compliance  Conference was adjourned  until June 21,
2000. The Company intends to vigorously defend this action.

     As of October 2, 2000 the Company received  notification from its attorneys
regarding  the Cioffi Trust case  indicating  the case is  Certified,  ready for
trial. Plaintiff has until October 30, 2000 to file a note of issue requesting a
trial  date.  On  November  2,  2000  plaintiff  filed  the  Note of  Issue  and
Certificate of Readiness.

8. Subsequent Events

     On October 19, 2000 the Company closed on an $800,000  sale,  leaseback and
purchase  option (the  "Transaction")  for its 106 Federal  Road  property  (the
"Property")  owned by 106 Federal Road,  Inc., a wholly owned  subsidiary of the
Company. The Transaction  consisted of a sale of the Property to Mercury Capital
Corporation,  which in turn leased back the Property to 106 Federal  Road,  Inc.
The Company has the right to purchase  back the  Property for $800,000 at a date
no earlier than May 1, 2001 and no later than November 9, 2002.  For  accounting
purposes the Transaction will be recorded as a financing of the property


MANAGEMENT  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND  RESULTS OF
OPERATIONS.

     The  following  discussion  of the  results  of  operations  and  financial
condition should be read in conjunction with the Company's audited  consolidated
financial  statements  and notes  thereto  issued in its  10-KSB  report for the
fiscal period June 26, 2000.

     This analysis by management contains some forward-looking  statements. When
we use the words"  "anticipate,"  "believe,"  "estimate,"  "expect," and similar
expressions that relate to the Company and its management,  they are intended to
identify  such  forward-looking  statements  within the  meaning of the  Private
Securities  Litigation  Reform Act of 1995. Our actual results  performance  and
achievements  could differ  materially from the results  expressed or implied by
these forward-looking statements.

     In  connection  with its February 1999 Offering the Company was required to
file a registration  statement with the Securities and Exchange Commission.  The
Company filed a registration statement on August 16, 1999 and July 2000, filed a
first amendment to the registration statement.

     The Company presently  operates a Rattlesnake  Southwestern  Grill in South
Norwalk,  Connecticut and the Spencer's  Restaurant in Danbury,  CT. The Company
has closed all other restaurants previously owned as of June 30, 1999.


Operating  results for the thirteen  weeks ended  September 25, 2000 as compared
with the thirteen weeks ended September 27, 1999 are as follows:

     Gross restaurant  sales increased  $724,831 or 223.9% to $1,048,528 for the
thirteen  weeks ended  September 25, 2000 from  $323,697 for the thirteen  weeks
ended September 27, 1999. Net restaurant  sales increased  $714,445 or 225.9% to
$1,030,690  for the thirteen  weeks ended  September  25, 2000 from $316,245 the
thirteen weeks ended September 27, 1999. These increases in restaurant sales are
primarily due to the new Spencer's  Danbury  restaurant which opened in November
of 1999.

     Promotional  sales increased  $10,386 or 139.4% to $17,838 for the thirteen
weeks  ended  September  25,  2000 from  $7,452  for the  thirteen  weeks  ended
September  27,  1999.  The  increase  is  attributable  to the  commencement  of
operations  of the new  Spencer's  restaurant  that  opened  November  3,  1999.
Promotional  sales as a percentage of net sales  decreased .6% to 1.7% from 2.3%
in the respective periods

     Cost of food and beverage  sales  increased  $297,087 or 372.8% to $376,776
for the thirteen  weeks ended  September  25, 2000 from $79,689 for the thirteen
weeks ended September 27, 1999. Cost of food and beverage as a percentage of net
sales  increased  11.4%  to 36.6%  from  25.2% in the  respective  periods.  The
percentage increase is attributable to the Spencer's  restaurant that features a
high quality, high value menu.

     Restaurant  salaries and fringe benefits,  which consist of direct salaries
of restaurant  managers,  hourly  employee  wages and related  fringe  benefits,
increased  $215,914 or 127.9% to $384,671 for the thirteen weeks ended September
25,  2000 from  $168,757  for the  thirteen  weeks  ended  September  27,  1999.
Restaurant  salaries and fringe  benefits as a percentage of net sales decreased
16.1%  to 37.3%  from  53.4%  in the  respective  periods.  The  decrease,  as a
percentage,  is  primarily  attributable  the prior year  reporting of corporate
salaries  in this  line  item and  greater  sales in the  thirteen  weeks  ended
September 25, 2000.

     Operating expense increased $124,042 or 209.4% to $183,269 for the thirteen
weeks  ended  September  25,  2000 from  $59,227  for the  thirteen  weeks ended
September 27, 1999.  Operating  expense as a percentage  of net sales  decreased
1.0% to 17.7% from 18.7% in the respective  periods,  due to the addition of the
Danbury location.

     Occupancy  and other related  expenses,  which include rent and common area
maintenance,  decreased  $2,143 or 7.7% to $25,642 for the thirteen  weeks ended
September 25, 2000 from $27,785 for the thirteen weeks ended September 27, 1999.
Occupancy as a percentage of net sales  decreased  6.3% to 2.5% from 8.8% in the
respective periods. The percentage decrease is due to the additional  restaurant
sales and the fact that the Company  did not incur rent at its Danbury  location
as the Company owned the property during such period.

     Depreciation  and  amortization  expense  increased  $14,706  or  151.1% to
$24,437  for the  thirteen  weeks ended  September  25, 2000 from $9,731 for the
thirteen weeks ended  September 27, 1999. The increase is attributable to assets
at the new restaurant. The increase is attributable to the Danbury location.

     General and  administrative  expenses which  includes,  among other things,
legal  accounting  and  professional  fees,   corporate  and  training  salaries
increased  $63,057 or 36.3% to $236,823 for the thirteen  weeks ended  September
25, 2000 from  $173,766 for the thirteen  weeks ended  September  27, 1999.  The
increase  is  attributable  to  administrative  costs  associated  with  the new
restaurant as well as costs  associated with the various legal matters.  General
and administrative expense as a percentage of net sales decreased 32.0% to 23.0%
from 55.0% in the respective periods.  The percentage  reduction from prior year
is the result of added sales from the new restaurant.

     Loss on restaurant closure decreased $42,800 or 100% to $0 for the thirteen
weeks  ended  September  25,  2000 from  $42,800  for the  thirteen  weeks ended
September 27, 1999.  Loss on restaurant  closure as a percent of net  restaurant
sales  decreased  13.5% to 0% from  13.5%  in the  respective  periods.  This is
attributable to the 1999 closing of the Flemington location.

     Other  expense  (income)  net  increased  $2,668 or 100% to $2,668  for the
thirteen  weeks ended  September  25, 2000 from $0 for the thirteen  weeks ended
September 27, 1999.  Other expense (income) as a percent of net restaurant sales
increased .3% to .3% from 0% in the prior period.

     Interest expense  (income) net,  increased $2,083 or 100% to $2,083 for the
thirteen  weeks ended  September 25, 2000 compared to $0 for the thirteen  weeks
ended September 27, 1999.  Interest  expense is for Series B notes payable,  due
July 2000 that carry interest of 9% per annum less interest  earned on available
cash balances.

     Gain on extinguishment of debt increased $37,982 or 100% to $37,982 for the
thirteen  weeks ended  September  25, 2000 from $0 for the thirteen  weeks ended
September  27,  1999.  Gain  on  extinguishment  of  debt  as a  percent  of net
restaurant  sales  increased 3.7% to 3.7% from 0.0% in the  respective  periods.
This is attributable to the write off of certain payables from closed location.

     Net Loss available to Shareholders  decreased  $86,149 or 33.9% to $162,361
for the thirteen  weeks ended  September  25, 2000  compared to $245,510 for the
thirteen  weeks ended  September 27, 1999.  Net Loss  available to  Shareholders
decreased as a percent of net restaurant  sales  decreased  61.9% to -15.8% from
-77.7% in the respective periods.


ACCOUNTING STANDARDS TO BE ADOPTED

     In April 1998, Statement of Position 98-5 ("SOP 98-5"), "Reporting the Cost
of Start-up  Activities,"  was issued.  SOP 98-5  requires  that costs  incurred
during  start-up  activities,   including  pre-opening  costs,  be  expensed  as
incurred.  The Company  adopted SOP 98-5 in the first quarter of fiscal 2000 and
did not result in any cumulative effect of a change in accounting principle.

     In  June  1998,  Statement  of  Financial  Accounting  Standards  No.  133,
"Accounting  for  Derivative  Instruments  and Hedging  Activities"  ("Statement
133"),  was issued and amended by Statement 138 in June, 2000 which is effective
for fiscal years beginning after June 15, 2000.  Statement 133  standardizes the
accounting  for  derivative   instruments   and  requires  that  all  derivative
instruments be carried at fair value.  The Company adopted  Statement 133 in the
first  quarter of fiscal 2001 and did not result in any  cumulative  effect of a
change in accounting principle.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Company is not  subject to interest  rate risk,  as  substantially  all
borrowings  are fixed rate  obligations.  However,  the Company has  exposure to
commodity  risk,  including the  dependence on the rapid  availability  of food,
principally  steak and shrimp,  and fluctuations in price of these  commodities.
Although  the  Company  believes  that  its  relationships  with  suppliers  are
satisfactory  and that  alternative  sources are available,  the loss of certain
suppliers, or substantial price increases,  could have a material adverse effect
on the Company.


YEAR 2000 MODIFICATIONS:

     The Year 2000 Issue was the result of computer programs being written using
two digits rather than four to define the applicable  year. Any of the Company's
computer programs that have  date-sensitive  software may have recognized a date
using "00" as the year 1900  rather  than the year 2000,  resulting  in possible
system failure or miscalculations causing disruptions of operations,  including,
among other things, a temporary inability to process certain transactions,  send
invoices, or engage in similar normal business activities.

     The Company did not experience any year 2000 issues.

LIQUIDITY

     The Company has a long  history of losses,  which has  depleted its capital
resources.  Without  additional  funds,  the  Company  will have to abandon  its
long-term  plans  for the  Spencer's  concept  development  and the  opening  of
additional  restaurants,  and  drastically  reduce its corporate  overhead.  The
Company estimates,  that with financing, the Company will be able to affect some
expansion and to operate through fiscal 2001. There can be no assurance that the
Company  will  have  adequate  resources  after  such time  unless  it  conducts
profitable  operations and/or obtains additional financing of which there can be
no assurance.  The Company continues to explore equity  investments but there is
no  assurance  the  Company  will be  successful.  In October  2000 the  Company
obtained a sale leaseback financing. See Note 8. above.

     The Company has incurred  aggregate  losses since  inception of $19,898,826
inclusive  of a net loss for the  thirteen  weeks  ended  September  25, 2000 of
$162,361 and at September  25, 2000 had a working  capital  deficit of $988,314.
Additionally,  $229,173  of  Series B  convertible  subordinated  notes  payable
matured on July 7, 2000,  $18,749 of Series C subordinated notes payable matured
on August 6, 1997,  and a $2,089 Series A subordinated  note payable  matured on
August 6, 1996, are in default as of September 25, 2000.

     On July 2, 1999 the Company sold an additional 2,000 shares of its Series B
Preferred Stock for a value of $50,000 as part of its Offering.

     The preferred  shares will be  convertible,  at the option of the holder at
any time after November 1999, at a conversion price initially equal to $0.05 per
share of common stock.  The conversion rate will be reduced by 10% per month for
each month the Company fails to comply with its obligations to file, and in good
faith process, a registration statement.

     Dividends for the first quarter were accrued at 8% per annum.

     Dividends  were paid in September  1999 and  September  2000 in the form of
7,954 and 13,916 additional shares of Series B Preferred Stock respectively.

     Cash flows used in operating activities for the nine months ended September
25, 2000 were  ($220,970)  as opposed to  ($174,764)  for the same period in the
previous year.

     Cash flows used in  investing  activities  were  ($9,743)  for the thirteen
weeks  ended  September  25,  2000  whereas  in 1999,  for the  thirteen  weeks,
($294,942)  accounted  for the cash flows  used in  investing  activities.  This
difference  can  be  attributed  to the  preparations  of  the  new  restaurant,
Spencer's.   The  Company  does  not  have  further   commitments   for  capital
expenditures beyond the completion of the Danbury location except those normally
associated with day-to-day operations.  However, the Company does plan to expand
the Spencer's concept and should that occur,  further capital expenditures would
be required.

     Cash flows from  financing  activities  were $8,333 for the thirteen  weeks
ended  September 25, 2000,  whereas for the thirteen  weeks ended  September 27,
1999 cash flows from financing activities were $50,000 due to the sale of Series
B Preferred Stock in July 1999.

     Given the above,  cash during the thirteen  weeks ended  September 25, 2000
decreased by $239,046 as compared to a decrease of $419,706  during the thirteen
weeks ended  September 27 1999. The decrease  during the year is attributable to
the opening of the Danbury location in fiscal 2000.

     At  September  25,  2000,  the  following  obligations  are past due and in
default; (i) $237,506 of Series B convertible subordinated notes payable matured
on July 7,  2000;  and (ii)  $18,750  of Series C  subordinated  notes  payable,
matured in August 1997 and a $2,089  subordinated note payable matured in August
1996 (the Company has been unable to locate either  noteholder).  The Company is
currently seeking to restructure the Series B Preferred notes and/or to exchange
the same for equity, although there can be no assurance of the same.

SAFE HARBOR STATEMENT

     Certain  statements in this Form 10-QSB,  including  information  set forth
under  "Management's  Discussion and Analysis of Financial Condition and Results
of Operations" constitute "forward-looking statements" within the meaning of the
Private  Securities  Litigation  Reform  Act of 1995 (the  "Act").  The  Company
desires to avail itself of certain  "safe  harbor"  provisions of the Act and is
therefore  including  this  special  note  to  enable  the  Company  to  do  so.
Forward-looking statements included in this Form 10-QSB or hereafter included in
other  publicly  available  documents  filed with the  Securities  and  Exchange
Commission,  reports to the Company`s  stockholders and other publicly available
statements  issued or released by the Company  involve known and unknown  risks,
uncertainties, and other factors which could cause the Company's actual results,
performance  (financial or operating) or  achievements to differ from the future
results,  performance  (financial  or operating)  or  achievements  expressed or
implied by such forward looking  statements.  Such future results are based upon
management's  best estimates  based upon current  conditions and the most recent
results of  operations.  These risks  include,  but are not  limited  to,  risks
associated  with  potential  acquisitions,   successful  implementation  of  the
Company`s cost containment plan and new operating  strategy,  immediate need for
additional  capital,  competition,  and other risks  detailed  in the  Company`s
Securities and Exchange Commission filings,  including its Annual Report on Form
10-KSB  for the fiscal  year  1999,  each of which  could  adversely  affect the
Company's business and the accuracy of the forward looking statements  contained
herein.


PART II - OTHER INFORMATION


Item 1 - Legal Proceedings

Lynbrook, New York

     The  Company is  defending  an action  brought by Jack  Cioffi  Trust,  the
landlord of a former  Rattlesnake  restaurant  in Lynbrook  New York leased by a
subsidiary of the Company. The action against the Company is based on an alleged
guaranty of the lease  payments  due from the  subsidiary  of the  Company.  The
Company is of the position that the landlord waived the guarantee at the time of
the  surrender of the premises in  September  1997.  The action seeks the sum of
approximately  $190,000.  A Compliance  Conference was adjourned  until June 21,
2000. The Company intends to vigorously defend this action.

         As of  October  2,  2000 the  Company  received  notification  from its
attorneys  regarding  the Cioffi Trust case  indicating  the case is  Certified,
ready for trial.  Plaintiff  has until  October 30, 2000 to file a note of issue
requesting a trial date. On November 2, 2000  plaintiff  filed the Note of Issue
and Certificate of Readiness.


Item 2 - Changes in Securities and Use of Proceeds

            None.

Item 3 - Defaults Upon Senior Securities

            None in this quarter.

Item 4 -  Submission  of Matters to a Vote of  Stockholders  during the  quarter
ending September 25, 2000:

            None.

Item 5. - Other Information.

     The Company  securities are traded on the NASDAQ Bulletin Board. Due to the
nature of such  markets and the "penny  stock'  rules to which the common  stock
trades  (Rule  15g-9  promulgated  under the SEC Act)  there may not be a liquid
trading market in the common stock.

Item 6. - Exhibits and Reports on Forms 8-K.

            During the thirteen  weeks ended  September  25,  2000,  the Company
filed for a change in Certifying Accountants on Form 8-K.

<PAGE>



                                   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.

                           Spencer's Restaurants, Inc.
                                  (Registrant)


November 13, 2000              By:/s/ Kenneth Berry
                                  -----------------
                                  Kenneth Berry
                                  President CEO



November 13, 2000              By:/s/ John S. Reuther, Jr.
                                  ------------------------
                                 John S. Reuther, Jr.
                                 Chief Financial Officer