<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 September 30, 2000

                                       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 November 1, 2000 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 Operations
                     For the Three and Nine Month Periods
                       Ended September 30, 2000 and 1999
                       ---------------------------------

<TABLE>
<CAPTION>
                                        For the three months           For the nine months
                                         ended September 30,           ended September 30,
                                         2000           1999           2000           1999
                                     (unaudited)    (unaudited)    (unaudited)    (unaudited)
<S>                                  <C>            <C>            <C>            <C>
Income:
   Interest                           $  25,041      $  22,299      $  74,368      $  69,313
   Defendant payment revenue              2,349             --          3,708             --
                                      ---------      ---------      ---------      ---------

    Total income                      $  27,390      $  22,299      $  78,076      $  69,313
                                      =========      =========      =========      =========

Expenses:
   Legal and accounting fees          $  95,736      $  67,248      $ 211,542      $  72,592
   Insurance                             22,685         21,452         67,315         66,082
   Transfer agent and settlement
      administration fees                11,000         30,000         26,000         68,000
   Manager fees                           6,452         12,150         18,681         30,980
   Other                                    600            382          5,600            482
                                      ---------      ---------      ---------      ---------

    Total expenses                      136,473        131,232        329,138        238,136
                                      ---------      ---------      ---------      ---------

Net loss                              $(109,083)     $(108,933)     $(251,062)     $(168,823)
                                      =========      =========      =========      =========
</TABLE>

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

                                       2
<PAGE>

                            EBS LITIGATION, L.L.C.
                                 Balance Sheet
                   September 30, 2000 and December 31, 1999
                   ----------------------------------------


<TABLE>
<CAPTION>
                                                                      September 30,   December 31,
                                                                          2000            1999
                                                                       (Unaudited)
<S>                                                                   <C>             <C>
Assets

Cash and cash equivalents
  Available for general operations                                       $1,734,331     $1,902,954
Prepaid insurance                                                                --         67,315
Interest receivable                                                           8,332          7,953
Miscellaneous receivable                                                      5,000         18,261
                                                                         ----------     ----------
    Total assets                                                         $1,747,663     $1,996,483
                                                                         ==========     ==========

Liabilities

Accrued expenses                                                         $  104,656     $  102,414
                                                                         ----------     ----------
    Total liabilities                                                       104,656        102,414
                                                                         ----------     ----------

Members' equity:

  Membership Units (Class A - 10,000,000 authorized,
  issued and outstanding at September 30, 2000 and
  December 31, 1999, Class B - 0 authorized, issued
  and outstanding at September 30, 2000 and
  December 31, 1999)
Retained earnings                                                         1,643,007      1,894,069
                                                                         ----------     ----------
    Total members' equity                                                 1,643,007      1,894,069
                                                                         ----------     ----------
    Total liabilities and members' equity                                $1,747,663     $1,996,483
                                                                         ==========     ==========
</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 Nine Months Ended September 30, 2000 and
                     For the Year Ended December 31, 1999
                     ------------------------------------


<TABLE>
<CAPTION>
                                   Class A        Class B
                                 Membership     Membership       Retained
                                   Units          Units          Earnings       Total
<S>                              <C>            <C>            <C>           <C>
Balance, January 1, 1999          10,000,000            --     $2,888,122    $2,888,122

Capital distribution                      --            --       (787,722)     (787,722)

Current year loss                         --            --       (206,331)     (206,331)
                                  ----------    ----------     ----------    ----------

Balance, December 31, 1999        10,000,000            --      1,894,069     1,894,069

Year-to-date loss (unaudited)             --            --       (251,062)     (251,062)
                                  ----------  ------------     ----------    ----------

Balance, September 30, 2000
 (unaudited)                      10,000,000            --     $1,643,007    $1,643,007
                                  ==========  ============     ==========    ==========
</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 Nine Months Ended September 30, 2000 and 1999
             -----------------------------------------------------

<TABLE>
<CAPTION>
                                                               For the nine months ended
                                                                      September 30,
                                                                 2000              1999
                                                             (unaudited)       (unaudited)
<S>                                                          <C>               <C>
Cash flows from operating activities:

  Net loss                                                   $ (251,062)       $ (168,823)

  Reconciliation of net loss to cash flows used in
  operating activities:

    Decrease in prepaid insurance                                67,315            66,082

    Decrease in miscellaneous receivables                        13,261                --

    Increase (decrease) in accrued expenses                       2,242           (81,368)

    Increase (decrease) in interest receivable                     (379)            4,001
                                                             ----------        ----------

       Cash flows used in operating activities                 (168,623)         (180,108)
                                                             ----------        ----------

Cash flows from financing activities:
  Capital distribution, net                                          --          (787,722)
                                                             ----------        ----------

    Cash flows used in financing activities                          --          (787,722)
                                                             ----------        ----------

Net decrease in cash and cash equivalents                      (168,623)         (967,830)

Cash and cash equivalents at beginning of period              1,902,954         2,972,040
                                                             ----------        ----------

Cash and cash equivalents at end of period                   $1,734,331        $2,004,210
                                                             ==========        ==========
</TABLE>

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

                                       5
<PAGE>

EBS LITIGATION, L.L.C.
Notes to Financial Statements
September 30, 2000 and December 31, 1999
--------------------------------------------------------------------------------

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 which 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. Adjustments are of a normal
     recurring nature. Actual results could differ from those estimates.

     Basis of Presentation
     These financial statements include the accounts of the Company for the
     periods from January 1, 1999 through December 31, 1999, January 1, 1999
     through September 30, 1999 (unaudited) and January 1, 2000 through
     September 30, 2000 (unaudited), July 1, 1999 through September 30, 1999
     (unaudited), and July 1, 2000 through September 30, 2000 (unaudited).

     Cash and Cash Equivalents
     Cash consists of amounts 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 include 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
September 30, 2000 and December 31, 1999
--------------------------------------------------------------------------------

3.   Members' Equity

     On September 25, 1997, Edison transferred its rights, title and interest in
     the Unresolved Avoidance Claims. In addition, as of September 25, 1997,
     Edison was 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 future distribution to holders of Class A Membership Units. At December
     31, 1999, Edison has no Class B Membership Units outstanding.

     On February 1, 1999, the Company distributed the $0.8 million of reserved
     amounts of D&B Spinoff Settlement Proceeds (as defined in the Plan) 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 October 31, 2000
     As of October 31, 2000, the Company had approximately $1.7 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 September 30, 2000, less disbursements through October 31, 2000.
     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 years ended December
31, 1999 and 1998 and as of and for the periods ended December 31, 1997, January
1, 2000 through September 30, 2000 (unaudited) and January 1, 1999 through
September 30, 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 and included in
the Company's Annual Report and Form 10-K for the year ended December 31, 1999.
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 Amended Joint Plan of
Reorganization Under Chapter 11 of the U.S. Bankruptcy Code filed by the Debtors
(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 for the year ended December 31, 1998 and none for the year ended
December 31, 1999.  The Company recovered $3,708 for the nine month period ended
September 30, 2000.  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 years ended December 31, 1999 and 1998, and the period
ended December 31, 1997, the Company recognized approximately $92,000, $388,000
and $106,000 of interest income, respectively.  During the nine month periods
ended September 30, 2000 and 1999, the Company recognized approximately $74,000
and $69,000 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 Company's
lawyers and accountants, insurance expenses, the Transfer Agent and the Manager.
The Company had expenses of approximately

                                       8
<PAGE>

$299,000, $671,000 and $176,000 for the years ended December 31, 1999 and 1998,
and the period ended December 31, 1997, respectively. During the nine month
periods ended September 30, 2000 and 1999, the Company had expenses of
approximately $329,000 and $238,000, respectively. These expenses are expected
to fluctuate in future periods primarily based on activity in any period in the
D & B Spinoff Litigation.

     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, 1999, 1998 and 1997, the Company had cash and cash
equivalents of approximately $1.9 million, $3.0 million and $12.0 million,
respectively.  At September 30, 2000, the Company had cash and cash equivalents
of approximately $1.7 million.  During 1999, the Company distributed an
aggregate amount of $0.8 million to holders of Class A Membership Units.  The
amount and timing of any future distributions of Avoidance Claim Proceeds will
be determined by the Manager in accordance with the term of the Members
Agreement.  There can be no assurance as to the amount (if any) of any further
distributions that will be made.

     The Company's lawyers completed third-party discovery, including
depositions of former officers and directors of Edison, and third-party
discovery closed on March 31, 2000, pursuant to court order.  On or about March
29, 2000, the Class Representatives (D&B Stock is held by approximately 2,500
different individuals and entities (the "Class"). The Class includes Barclays
Global Investors, N.A., Greentree Partners, and Greenway Partners, which are
referred to herein as the "Class Representatives.") filed a third-party
complaint against former directors of Edison (the "Edison Third-party
Defendants"), former and current directors of Dave & Busters, Inc. and against
Dave & Busters, Inc. (the "D&B Third-party Defendants" and collectively with
Edison Third Party Defendants, the "Third-party Defendants"). The complaint
purports to allege claims for breach of fiduciary duties, aiding and abetting
breaches of fiduciary duties, and for contribution or "subrogation."  Because
these claims might have implicated the indemnification provisions described
above, the claims were reviewed in detail by the Company's lawyers, and found to
be without substantial merit.  While there can be no assurances of the Company's
success, the Company intends to oppose joinder of these claims in the D & B
Spin-off Litigation (as defined in the Plan).

     In June 2000, the Third-party Defendants each filed a motion to dismiss the
third-party complaints against them ("Motions to Dismiss").  The Company filed a
joinder in those Motions to Dismiss.  On August 21, 2000, the Court held a
hearing on the Motions to Dismiss and other matters.  By Order dated as of
August 28, 2000, the Court granted the Motions to Dismiss in part, and denied
them in part.  The Court dismissed the breach of fiduciary duty claims and the
related claims for aiding and abetting breach of fiduciary duty, finding the
claims, if any, barred by the statute of limitations.  However, the Court denied
the Motion to Dismiss the purported contribution and/or "subrogation" claim.
Because of certain inconsistencies in the Court's rulings, the Third-party
Defendants moved for clarification, reconsideration, or in the alternative,
interlocutory (immediate) appeal ("Motions for Reconsideration").  The Company
filed a limited joinder in those Motions for Reconsideration, and the Class
filed its opposition.  The Court has not set a date for deciding these Motions
for Reconsideration.

     In July 2000, the Class Representatives also filed a Motion to Amend the
Order Certifying the Defendant Class ("Motion to Amend").  In this Motion to
Amend, the Class Representatives seek to add absent class members as named class
representatives.  The Company opposed this Motion to Amend on the grounds that:
(i) the Class Representatives should not have been represented by Class Counsel
in the Motion to Amend against absent class members; (ii) there was no showing
of need to add named class representatives; and (iii) the adding of certain
absent class members as named class representatives could create unnecessary
conflicts for the Company's lawyers to the substantial prejudice of the Company.
Two of the proposed named class representatives, Mellon Bank and Boston Safe
Deposit, related entities, filed substantive objections to the Motion to Amend
on similar grounds.  On August 21, 2000, the Court heard argument

                                       9
<PAGE>

on the issues presented by the Motion to Amend and took the matter under
advisement. The Court has not indicated when it will rule on the Motion to
Amend.

     In September 2000, the Company filed a motion with the United States
Bankruptcy Court, District of Delaware to reopen the bankruptcy case of Edison
Brothers Stores, Inc. for the limited purpose of extending the term of the
Company.  Section 1.4 of the Company's Members Agreement limits the Company's
existence to three years subject to extension(s) approved by the Bankruptcy
Court for good cause shown.  Therefore, the Company's existence was set to
expire on September 26, 2000 unless extended by the Bankruptcy Court.  In its
motion, the Company argued that the Company's members would be best served by
permitting the Company to remain a going concern.  The Bankruptcy Court granted
the Company's motion to extend the existence of the Company for an additional
two-year term.

     The Company continues vigorously to pursue the litigation, and is working
to preserve the current trial schedule that the Company believes is important to
its efforts to collect the value of the D&B Spin-off shares.

     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

Nine Months Ended September 30, 2000 Compared to the Nine Months Ended September
30, 1999

   Total revenues for the nine months ended September 30, 2000 and 1999 were
$78,706 and $69,313, respectively. This increase is due to the receipt of D & B
Spinoff Settlement Proceeds and an increase in interest rates.

   Total expenses increased $91,000 due primarily to an increase in legal and
accounting fees due to the increase in litigation activity during the period and
efforts to resolve settlement issues.

                                       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: November 13, 2000                               Peter N. Wang, Manager

                                       12