<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q

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

                 For the quarterly period ended March 31, 1999

                                      OR

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

                       Commission file number 000-24711


                            EBS Litigation, L.L.C.
            (Exact name of registrant as specified in its charter)

                Delaware                                      13-3989964
    (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                     Identification Number)

             90 Park Avenue
       New York, New York  10016
(Address of principal executive offices)

                                 (212) 682-7474
              (Registrant's telephone number, including area code)



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 [ ]


At May 1, 1999 there were 10,000,000 Class A Membership Units outstanding and no
Class B Membership Units outstanding.
<PAGE>
 
                         PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements


                            EBS LITIGATION, L.L.C.
                              Statement of Income
              For the Three Months Ended March 31, 1999 and 1998
              --------------------------------------------------


<TABLE> 
<CAPTION> 

                                   For the three months ended
                                           March 31,

                                      1999           1998
                                   (unaudited)    (unaudited)
<S>                                <C>            <C> 
Income:

     Defendant payment revenue        $      -       $283,621

     Interest                           24,797        147,849
                                      --------       --------
          Total income                $ 24,797       $431,470
                                      ========       ========

Expenses:

     Insurance                        $ 22,192       $ 24,657

     Manager Fees                       15,966         31,057

     Transfer agent and settlement      10,000         21,000
     administration fees

     Legal and accounting fees           2,000         70,674

     Other                                 100         35,966
                                      --------       --------
          Total expenses                50,258        183,354
                                      --------       --------
Net (loss) income                     $(25,461)      $248,116
                                      ========       ========
</TABLE> 


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

                                       2
<PAGE>
 
                            EBS LITIGATION, L.L.C.
                                Balance Sheet 
                     March 31, 1999 and December 31, 1998
                     ------------------------------------

<TABLE> 
<CAPTION> 
                                                                  March 31, 1999   December 31,1998
                                                                    (unaudited)
<S>                                                               <C>              <C> 
Assets
Cash and cash equivalents

Available for general operations                                      $2,114,741         $2,190,255
Available for holders of Class A Membership Units distributed                                      
in November and December of 1998                                                            781,785
Prepaid insurance                                                         43,890             66,082
Interest receivable                                                        7,745             11,560
                                                                      ----------         ----------
  Total assets                                                        $2,166,376         $3,049,682
                                                                      ==========         ==========

Liabilities
Accrued expenses                                                      $   91,437         $  161,560
                                                                      ----------         ----------
    Total liabilities                                                     91,437            161,560
                                                                      ----------         ----------

Members' equity:
  Membership Units (Class A - 10,000,000 authorized,
   10,000,000 and 10,000,000 issued and outstanding at
   March 31, 1999 and December 31, 1998, respectively; Class B
   - None authorized issued and outstanding at March 31, 1999 
   and December 31, 1998, respectively)
Paid-in capital                                                                -                  -
Retained earnings                                                      2,074,939          2,888,122
                                                                      ----------         ----------
  Total members' equity                                                2,074,939          2,888,122
                                                                      ----------         ----------
    Total liabilities and members' equity                             $2,166,376         $3,049,682
                                                                      ==========         ==========
</TABLE> 

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

                                       3
<PAGE>


 
                            EBS LITIGATION, L.L.C.
                    Statement of Changes in Members' Equity
For the Year Ended December 31, 1998 and For Three Months Ended March 31, 1999
------------------------------------------------------------------------------
<TABLE>
<CAPTION>



                                Class A       Class B
                               Membership    Membership      Paid in       Retained
                                 Units         Units         Capital       Earnings        Total
<S>                            <C>           <C>            <C>          <C>           <C>
Balance, December 31, 1997      9,064,140      935,860     $ 2,000,000   $  9,922,436   $ 11,922,436
Capital distribution                    -            -      (2,000,000)   (11,732,812)   (13,732,812)
Units transferred                 936,138     (936,138)              -              -              -
Units and proceeds returned
 from June distribution              (278)         278               -            173            173

Period income                           -            -               -      4,698,325      4,698,325
                               ----------     --------     -----------   ------------   ------------
Balance, December 31, 1998     10,000,000                                   2,888,122      2,888,122
Capital distribution
 (unaudited)                            -            -               -       (787,722)      (787,722)

Current period income
 (unaudited)                            -            -               -        (25,461)       (25,461)
                               ----------     --------     -----------   ------------   ------------
Balance, March 31, 1999
 (unaudited)                   10,000,000            -     $        -    $  2,074,939   $  2,074,939
                               ==========     ========     ===========   ============   ============
</TABLE>


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

                                       4
<PAGE>
 
                            EBS LITIGATION, L.L.C.
                            Statement of Cash Flows
              For the Three Months Ended March 31, 1999 and 1998
              --------------------------------------------------

<TABLE>
<CAPTION>
                                                      For the three months ended
                                                               March 31,
                                                          1999           1998
                                                       (unaudited)    (unaudited)
<S>                                                   <C>             <C>
Cash flows from operating activities:                 
  Net (loss) income                                    $  (25,461)    $   248,116
  Reconciliation of net (loss) income to cash flows   
   provided by operating activities:                  
    Decrease (increase) in prepaid insurance               22,192         (48,768)
    Decrease (increase) in interest receivable              3,815          (2,851)
    (Decrease) increase in accrued expenses               (70,123)         34,471
                                                       ----------     ----------- 
                                                      
       Cash flows provided by operating activities        (69,578)        230,968
                                                       ----------     -----------
                                                      
Cash flows from financing activities:                 
  Capital distribution                                   (787,722)             - 
                                                       ----------     ----------- 
                                                                                 
       Cash flows (used for) financing activities        (787,722)             - 
                                                       ----------     ----------- 

Net (decrease) increase in cash and cash equivalents     (857,300)        230,968                           
                                                                                 
Cash and cash equivalents at beginning of period        2,972,041      12,021,196
                                                       ----------     ----------- 
                                                                                 
Cash and cash equivalents at end of period             $2,114,741     $12,252,164
                                                       ==========     =========== 
</TABLE>

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

                                       5
<PAGE>
 
EBS LITIGATION, L.L.C.
Notes to Financial Statements
March 31, 1999 and December 31, 1998
--------------------------------------------------------------------------------


1. Description of business

   EBS Litigation, L.L.C. (the "Company") is governed by a Members Agreement,
   dated as of September 25, 1997 (the "Members Agreement"). Pursuant to the
   Members Agreement, the Company's purposes are to (a) prosecute, settle and/or
   liquidate the Unresolved Avoidance Claims relating to the distribution by
   Edison Brothers Stores, Inc. ("Edison") of approximately 4.4 million shares
   of common stock of Dave & Busters, Inc. to holders of Edison common stock in
   the form of a dividend and all related transactions (the "Unresolved
   Avoidance Claims"), (b) receive and administer the cash proceeds of the
   Unresolved Avoidance Claims, and (c) distribute the net proceeds to the
   appropriate holders of Membership Units (the "Members") in accordance with
   the Members Agreement.

2. Summary of significant accounting policies

   This summary of significant accounting policies is presented to assist in
   evaluating the Company's financial statements included in this report. These
   principles conform to generally accepted accounting principles. The
   preparation of financial statements in conformity with generally accepted
   accounting principles requires that management make estimates and assumptions
   that impact the reported amounts of assets and liabilities at the date of the
   financial statements and the reported amounts of revenues and expenses during
   the reporting period. Actual results could differ from those estimates.

   Basis of presentation

   These financial statements include the accounts of the Company as of and for
   the periods from January 1, 1998 through December 31, 1998, January 1, 1998
   through March 31, 1998 (unaudited) and January 1, 1999 through March 31, 1999
   (unaudited).

   Cash and cash equivalents

   Cash consists of funds held in an account in the Company's name at a highly-
   rated financial institution, which funds are invested in an institutional
   money market fund investing solely in direct obligations of the United States
   Government.

   Accrued expenses

   Accrued expenses includes amounts payable to service providers and other
   vendors.  Amounts are payable within one year.

   Defendant payment revenue

   Defendant payment revenue is determined on an accrual basis and represents
   settlements with individual defendants of Avoidance Claims during the period.

   Interest

   Interest income is determined on the accrual basis.  Interest receivable is
   due to be received within one year.

   Expenses

   All expenses of the Company are recorded on the accrual basis of accounting.

   Income taxes

   The Company is not subject to income taxes. Instead, the Members report their
   distributive share of the Company's profits and losses on their respective
   income tax returns.

                                       6
<PAGE>
 
EBS LITIGATION, L.L.C.
Notes to Financial Statements
March 31, 1999 and December 31, 1998
--------------------------------------------------------------------------------

3. Members' equity

   On September 25, 1997, Edison transferred its rights, title and interest in
   the Unresolved Avoidance Claims to the Company. In addition, as of September
   25, 1997, Edison became obligated to provide cash funding to the Company of
   $2.0 million (the "LLC Funding Amount"), which was subsequently paid to the
   Company on October 16, 1997. Such transfer and funding were in exchange for
   10,000,000 Class B Membership Units of the Company, which represented all of
   the outstanding Membership Units of the Company. On December 12, 1997, in
   accordance with the Company's Members Agreement and the Plan of
   Reorganization, Edison exchanged 9,064,140 Class B Membership Units for
   9,064,140 Class A Membership Units of the Company and simultaneously
   distributed such Class A Membership Units to holders of Allowed General
   Unsecured Claims (as defined in the Plan).

   During 1998, Edison exchanged 936,138 Class B Membership Units for 936,138
   Class A Membership Units of the Company and simultaneously distributed such
   Class A units to holders of Allowed General Unsecured Claims.

   During 1998, the Company distributed $13.7 million to holders of Class A
   Membership Units.  In addition, $0.8 million was retained for holders of the
   Class A Membership Units that were distributed in December 1998.

   Also during 1998, certain Class A Membership Unit holders returned 278 Class
   A Membership Units to Edison as such Membership Units had been distributed in
   error. The distribution proceeds relating to these returned Membership Units
   are included in retained earnings and were made available for distribution to
   holders of Class A Membership Units in December 1998. At December 31, 1998
   and March 31, 1999, Edison has no Class B Membership Units.

   (The information below has not been subjected to an audit.)

   On February 1, 1999, the Company distributed $0.8 million of reserved amounts
   to the holders of the Class A Membership Units that were distributed in
   November and December 1998. This represents the entire amount of funds
   reserved for future holders of Class A Membership Units.

4. Subsequent events (unaudited)

   Cash on deposit as of April 16, 1999

   As of April 16, 1999, the Company had approximately $2.1 million in cash and
   cash equivalents. This amount represents the sum of aggregate D&B Spinoff
   Settlement Proceeds, the L.L.C. Funding Amount and accrued interest through
   March 31, 1999, less disbursements through April 16, 1999. These proceeds
   will be used for general operations. Any amounts not used will be made
   available for future distributions to Class A Membership Unit holders.

                                       7
<PAGE>
 
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The following is a discussion and analysis of the financial condition and
the results of operations of the Company as of and for the periods from January
1, 1998 through December 31, 1998, January 1, 1998 through March 31, 1998
(unaudited) and January 1, 1999 through March 31, 1999 (unaudited), and of
certain factors that may affect the Company's prospective financial condition
and results of operations. This discussion and analysis should be read in
conjunction with the Company's Financial Statements and Notes thereto included
elsewhere herein. This discussion contains certain forward-looking statements
that involve risks and uncertainties. The Company's actual results could differ
materially from the results expressed in, or implied by, such statements.

Results of Operations/Overview

     The Company, which was formed pursuant to the Plan and the Members
Agreement, is a limited purpose entity organized solely for the purposes of (a)
prosecuting, settling and/or liquidating the Unresolved Avoidance Claims, (b)
receiving and administering the Proceeds from the Unresolved Avoidance Claims
(the "Avoidance Claim Proceeds"), and (c) distributing the net Avoidance Claim
Proceeds to holders of the Company's Class A Membership Units pursuant to the
terms of the Members Agreement. The Company commenced its activities on
September 25, 1997.

     On October 16, 1997, the Company received the L.L.C. Funding Amount of $2
million. The Company recognizes income from amounts received from the
prosecution, settlement and liquidation of the Unresolved Avoidance Claims. To
date, the Company has only received settlement amounts. During the period ended
December 31, 1997, the Company received approximately $10.0 million in D&B
Spinoff Settlement Proceeds. The D&B Spinoff Settlement Period was to initially
expire on October 27, 1997, at which time the Company had received approximately
$7.8 million in D&B Spinoff Settlement Proceeds. However, many defendants were
not able to accept the D&B Spinoff Settlement by the initial deadline for
reasons including, without limitation, (a) the time lag attendant to the
transmission of settlement-related documents from record holders to their
beneficial holders, and (b) the desire of certain D&B Spinoff Stockholders to
consult with counsel or other advisors prior to participating in the D&B Spinoff
Settlement. The Manager therefore decided that an extension of the D&B Spinoff
Settlement Period was in the best interests of the Company. The extension
permitted the recovery of additional D&B Settlement Proceeds of approximately
$2.2 million between October 27, 1997 and December 31, 1997, approximately $5.0
million in the twelve month period ended December 31, 1998 and none in the three
months ended March 31, 1999. The Company expects to recognize defendant payment
revenue in future periods as the Unresolved Avoidance Claims are prosecuted,
settled further, or both. However, there can be no assurance that the Company
will recognize any further defendant payment revenue.

     The Company also recognizes income from interest earned on Avoidance Claim
Proceeds. The Company invests Avoidance Claim Proceeds in a money market fund
investing solely in direct obligations of the United States Government. The
Members Agreement permits all funds received by the Company to be temporarily
invested in United States treasury bills and notes with maturities of 12 months
or less, institutional money market funds, and demand or time deposits with U.S.
federal or state commercial banks having primary capital of not less than $500
million. During the period ended December 31, 1997, the twelve month period
ended December 31, 1998, and the three month period ended March 31, 1999 the
Company recognized approximately $106,000, $388,000 and $24,797 of interest
income, respectively. The amount of interest income recognized by the Company in
future periods will be dependent on, among other things, (1) fluctuations in
interest rates, (2) the amounts and timing of any Avoidance Claims Proceeds
received in the future, (3) the amounts and timing of any distributions to
holders of Class A Membership Units, and (4) the amount and timing of the
Company's expenses.

     The Company's expenses consist primarily of fees payable to the Transfer
Agent, the Manager, and the Company's lawyers and accountants and insurance
expenses. The Company had expenses of approximately $176,000 for the period
ended December 31, 1997, approximately $671,000 for the twelve month period
ended December 31, 1998 and approximately $50,258 for the three month period
ended March 31, 1999. These expenses are expected to fluctuate in future periods
primarily based on the activity in any period in the D&B Spinoff Litigation.

                                       8
<PAGE>
 
     The Company and EBS Pension, L.L.C. (another limited liability company
formed pursuant to the Plan) have agreed to indemnify the Debtors (as defined in
the Plan) and their present or former officers, directors and employees from and
against any losses, claims, damages or liabilities by reason of any actions
arising from or relating to the Company and any actions taken or proceeding
commenced by the Company (other than with respect to any Unresolved Avoidance
Claims that the Company may have against such persons other than in their
capacities as officers, directors or employees of the Debtors). Indemnification
must first be sought from any applicable officers' and directors' insurance
policy, and then from the $1.5 million reserve established by EBS Pension L.L.C.
Although to date there has not been any indemnification claim, there can be no
assurance such a claim will not be made in the future. All liabilities of the
Company, including the foregoing indemnification obligations, will be satisfied
from the Company's assets.

     At December 31, 1997 and 1998 and for the three months ended March 31,
1999, the Company had cash and cash equivalents of approximately $12.0 million,
$3.0 million and $2.1 million, respectively. During 1998, the Company
distributed an aggregate amount of $13.7 million to holders of Class A
Membership Units. The Company reserved approximately $0.8 million for holders of
Class A Membership Units that were distributed in November and December 1998.
The $0.8 million was distributed to the holders of Class A Membership Units in
February 1999. The amount and timing of any future distributions of Avoidance
Claim Proceeds will be determined by the Manager in accordance with the terms of
the Members Agreement. There can be no assurance as to the amount (if any) of
any further distributions that will be made.

     On November 21, 1997, the Company temporarily withdrew its Motion to
Certify Defendant Class, in light of the fact that each of the proposed class
representatives had elected to participate in the D&B Spinoff Settlement.
Following efforts to identify adequate class representatives to replace the
initial proposed class representatives, on March 6, 1998, the Company filed (a)
its Motion to File Amended Class Complaint, requesting leave to file an amended
complaint (the "Amended Complaint") substantively similar to the Complaint but
identifying new proposed class representatives; and (b) a Renewed Motion to
Certify Defendant Class. On March 30, 1998, the Bankruptcy Court granted each of
these motions. The Bankruptcy Court's Order Certifying Defendant Class Action
(the "Class Certification Order") certified the following defendant class (the
"Defendant Class") as a mandatory defendant class pursuant to Rule 23(b)(1) of
the Federal Rules of Civil Procedure:

     All persons or entities who were the beneficial or legal recipients of at
least 55 shares of the June 1995 transfer of 4,404,560 shares of Dave and
Busters stock from Edison except those persons or entities who have obtained a
release of Unresolved Avoidance Claims, as defined in the Plan, that was
confirmed on September 9, 1997.

     The Class Certification Order designated the following entities
(collectively, the "Class Representatives") to represent the Defendant Class:
Barclays Global Investors, N.A.; Greentree Partners; Greenway Partners; Wilshire
Associates, Inc; and WKW Asset Management.

     On May 22, 1998, Class Representative Wilshire Associates, Inc. filed a
motion under Federal Rule of Civil Procedure 12(b)(6), seeking the Bankruptcy
Court's determination that Wilshire Associates, Inc. is not a proper party to
the D&B Spinoff Litigation. Wilshire Associates, Inc. asserts that it merely
serves as the nominee record holder of D&B Spinoff Stock, for the benefit of a
number of persons who have not thus far been identified. The Company has filed a
response to such motion, indicating that it will consent to dismissal of
Wilshire Associates, Inc. from the D&B Spinoff Litigation if Wilshire
Associates, Inc. adequately identifies, voluntarily or in accordance with an
order of the Bankruptcy Court, the persons for whose benefit it holds D&B
Spinoff Stock.

     The Class Representatives selected Edward McNally and the Wilmington,
Delaware law firm of Morris, James, Hitchens & Williams ("Class Counsel") to
represent the Defendant Class. On June 8, 1998, Class Counsel filed a motion
seeking payment of all fees and costs relating to the D&B Spinoff Litigation.
The Bankruptcy Court has not yet ruled on the motion, which the Company opposes.
Following official appointment of Class Counsel by the Bankruptcy Court, the
Class Counsel, on July 1, 1998, filed a motion requesting decertification of the
Defendant Class and a motion to withdraw reference from the bankruptcy court.
The Company filed its responses opposing the motions on July 14, 1998 and July
28, 1998, respectively. On July 17, 1998, the Defendant Class filed a motion to
dismiss the action. The Company's response opposing this motion was filed on
August 10, 1998.

                                       9
<PAGE>
 
     The Class' Motion to withdraw reference was assigned in the district court
in late September. The Motion is fully briefed, and the Company requested oral
argument. The district court has not yet ruled or asked for oral argument on the
Motion. The remaining Motions stay with the Bankruptcy Court unless and until
the district court decides to withdraw the reference. The Bankruptcy Court may
rule on the pending motions any time before reference is withdrawn, but need not
do so. Each of the remaining Motions is fully briefed and awaiting the
bankruptcy court's ruling or request for oral argument. As of the date of this
filing, the Bankruptcy Court has scheduled a hearing on all outstanding motions
for June 9, 1999.

     The Company intends to prosecute the D&B Spinoff Litigation vigorously, and
to pursue the maximum available recoveries. While there can be no assurances as
to the Company's ultimate total recovery given the uncertainties associated with
litigation, at this juncture it is estimated that such recoveries will exceed
the costs of further prosecuting the D&B Spinoff Litigation.

     The Company is classified as a partnership for federal income tax purposes
and, therefore, does not pay taxes. Instead, the Members pay taxes on their
proportionate share of the Company's income.

Quarterly Results

Three Months Ended March 31, 1999 Compared to the Three Months Ended March 31,
1998

     Total revenues for the three months ended March 31, 1999 and March 31, 1998
were $24,797 and $431,470, respectively. This $406,673 decrease is primarily due
to the significant decline in the receipt of D & B Spinoff Settlement Proceeds.
Interest income decreased from $147,849 in the three months ended March 31, 1998
to $24,797 in the three months ended March 31, 1999 due to the significant
decline in cash balances as a result of the decline in D&B Settlement Proceeds
and due to distributions made during the normal course of operations.

     Total expenses decreased $133,096 due primarily to a decrease in Transfer
Agent fees as a result of the decline in the amount and number of distributions
by the Transfer Agent, and a decrease in legal and accounting fees due to the
lack of activity during the period while the motions discussed above are pending
the June 9, 1999 hearing.

Year 2000 Issues

     In the light of the limited nature of the Company's activities, it does not
believe its operations or financial condition are affected by Year 2000 issues,
except insofar as it would be affected by a general interruption of telephone
and utility services or if its Transfer Agent were unable to process
distributions or transfers of Membership Units. The Company is seeking written
assurances from its Transfer Agent as to Year 2000 compliance. If the Company
does not receive adequate assurances or if, notwithstanding those assurances,
the Transfer Agent were noncompliant, it would replace the Transfer Agent with
one that has systems that are Year 2000 compliant.

                                       10
<PAGE>
 
                          PART II.  OTHER INFORMATION


Item 1.   Legal Proceedings.

     Other than the D&B Spinoff Litigation referenced elsewhere herein, the
Company is not involved in any legal proceedings.


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

     (A)  Exhibits     Description
          --------     -----------
            2.1*       Amended Joint Plan of Reorganization of Edison Brothers
                       Stores, Inc.

            3.1*       EBS Litigation, L.L.C. Certificate of Formation

            3.2*       EBS Litigation, L.L.C. Membership Agreement

            27.1       Financial Data Schedule


*  Incorporated by reference to the same numbered exhibit filed with the
   Registrant's Registration Statement on Form 10 originally filed with the SEC
   on July 29, 1998 (SEC File No. 000-24711)


     (B)  Reports on Form 8-K

          None.



                                       11

<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.


                                        EBS LITIGATION, L.L.C.


                                        /s/ Peter N. Wang
                                        ----------------------------------
Date: May 17, 1999                      Peter N. Wang, Manager




                                       12