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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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



For the quarterly period ended June 30, 2004



OR



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



Commission file number 000-24711



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EBS LITIGATION, L.L.C.

(Exact name of registrant as specified in its charter)



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



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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 August 1, 2004 there were 10,000,000 Class A Membership Units outstanding and no Class B Membership Units outstanding.



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PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



EBS LITIGATION, L.L.C.

Statements of
Operations

For the Three and Six Month Periods

Ended June 30, 2004 and 2003



|                                                  |  |                                     |           |             |                                   |          |             |  |             |           |  |   |        
|------------------------------------------------- |  | ----------------------------------- | --------- | ----------- | --------------------------------- | -------- | ----------- |  | ----------- | --------- |  | - | -------
|                                                  |  | For the three months ended June 30, |           |             | For the six months ended June 30,
|                                                  |  | 2004                                |           | 2003        |                                   |          | 2004        |  | 2003       
|                                                  |  | (unaudited)                         |           | (unaudited) |                                   |          | (unaudited) |  | (unaudited)
|Income                                            |  |                                     |           |             |                                   |          |             |  |             |           |  |   |        
|Interest                                          |  | $                                   | 2,732     |             | $                                 | 2,346    |             |  | $           | 3,871     |  | $ | 4,298  
|Defendant payment income                          |  |                                     | 2,490,580 |             |                                   |         |             |  |             | 2,490,580 |  |   | 615,940
|                                                  |  |                                     |           |             |                                   |          |             |  |             |           |  |   |        
|Total income                                      |  |                                     | 2,493,302 |             |                                   | 2,346    |             |  |             | 2,494,441 |  |   | 620,238
|                                                  |  |                                     |           |             |                                   |          |             |  |             |           |  |   |        
|Expenses                                          |  |                                     |           |             |                                   |          |             |  |             |           |  |   |        
|Legal fees                                        |  |                                     | 75,447    |             |                                   | 85,163   |             |  |             | 99,188    |  |   | 89,366 
|Insurance                                         |  |                                     | 17,500    |             |                                   | 17,500   |             |  |             | 53,458    |  |   | 35,051 
|Transfer agent and settlement administration fees |  |                                     | 4,000     |             |                                   | 11,000   |             |  |             | 8,000     |  |   | 20,500 
|Accounting fees                                   |  |                                     | 8,580     |             |                                   | 12,893   |             |  |             | 16,080    |  |   | 13,786 
|Manager fees                                      |  |                                     | 1,497     |             |                                   | 1,313    |             |  |             | 15,979    |  |   | 4,360  
|Other                                             |  |                                     | 2,205     |             |                                   | 4,360    |             |  |             | 2,275     |  |   | 4,360  
|                                                  |  |                                     |           |             |                                   |          |             |  |             |           |  |   |        
|Total expenses                                    |  |                                     | 109,229   |             |                                   | 132,229  |             |  |             | 194,980   |  |   | 191,487
|                                                  |  |                                     |           |             |                                   |          |             |  |             |           |  |   |        
|Net (loss) income                                 |  | $                                   | 2,384,073 |             | $                                 | (129,883 | )           |  | $           | 2,299,461 |  | $ | 428,751
|                                                  |  |                                     |           |             |                                   |          |             |  |             |           |  |   |        
|Net (loss) income per unit - basic and diluted    |  | $                                   | 0.238     |             | $                                 | (0.013   | )           |  | $           | 0.230     |  | $ | 0.043  
|                                                  |  |                                     |           |             |                                   |          |             |  |             |           |  |   |        



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



2



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EBS LITIGATION, L.L.C.

Balance Sheets

June 30, 2004 and December 31, 2003



|                                                                                                                  |  |              |           |                   |   |          
|----------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ----------------- | - | ---------
|                                                                                                                  |  | June 30,2004 |           | December 31, 2003
|                                                                                                                  |  | (unaudited)  |           |                  
|Assets                                                                                                            |  |              |           |                   |   |          
|Cash and cash equivalents Available for general operations                                                        |  | $            | 3,297,516 |                   | $ | 1,103,644
|Prepaid expenses                                                                                                  |  |              | 16,659    |                   |   | 187      
|Interest receivable                                                                                               |  |              | 1,462     |                   |   | 428      
|                                                                                                                  |  |              |           |                   |   |          
|Total assets                                                                                                      |  | $            | 3,315,637 |                   | $ | 1,104,259
|                                                                                                                  |  |              |           |                   |   |          
|Liabilities                                                                                                       |  |              |           |                   |   |          
|Accounts payable                                                                                                  |  | $            | 27,208    |                   | $ | 85,612   
|Accrued expenses                                                                                                  |  |              | 81,165    |                   |   | 110,844  
|                                                                                                                  |  |              |           |                   |   |          
|Total liabilities                                                                                                 |  |              | 108,373   |                   |   | 196,456  
|                                                                                                                  |  |              |           |                   |   |          
|Commitments and Contingencies (Note 5)                                                                            |  |              |           |                   |   |          
|                                                                                                                  |  |             
|Members equity                                                                                                   |  |              |           |                   |   |          
|Membership Units (Class A - 10,000,000 authorized, issued and outstanding at June 30, 2004 and December 31, 2003) |  |              |          |                   |   |         
|Retained earnings                                                                                                 |  |              | 3,207,264 |                   |   | 907,803  
|                                                                                                                  |  |              |           |                   |   |          
|Total members equity                                                                                             |  |              | 3,207,264 |                   |   | 907,803  
|                                                                                                                  |  |              |           |                   |   |          
|Total liabilities and members equity                                                                             |  | $            | 3,315,637 |                   | $ | 1,104,259
|                                                                                                                  |  |              |           |                   |   |          



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



3



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EBS LITIGATION, L.L.C.

Statements of Changes in Members Equity

For the Periods Ended

June 30, 2004 and December 31, 2003



|                                   |  |                        |  |                  |           |       |   |          
|---------------------------------- |  | ---------------------- |  | ---------------- | --------- | ----- | - | ---------
|                                   |  | Class AMembershipUnits |  | RetainedEarnings |           | Total
|Balance, December 31, 2002         |  | 10,000,000             |  | $                | 647,643   |       | $ | 647,643  
|Net income                         |  |                       |  |                  | 260,160   |       |   | 260,160  
|                                   |  |                        |  |                  |           |       |   |          
|Balance, December 31, 2003         |  | 10,000,000             |  |                  | 907,803   |       |   | 907,803  
|Net income (unaudited)             |  |                       |  |                  | 2,299,461 |       |   | 2,299,461
|                                   |  |                        |  |                  |           |       |   |          
|Balance, June 30, 2004 (unaudited) |  | 10,000,000             |  | $                | 3,207,264 |       | $ | 3,207,264
|                                   |  |                        |  |                  |           |       |   |          



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



4



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EBS LITIGATION, L.L.C.

Statements of Cash Flows

For the Six Months Ended

June 30, 2004 and 2003



|                                                                                             |  |                                  |           |   |             |   |           |  
|-------------------------------------------------------------------------------------------- |  | -------------------------------- | --------- | - | ----------- | - | --------- | -
|                                                                                             |  | For the six months endedJune 30, |          
|                                                                                             |  | 2004                             |           |   | 2003        |  
|                                                                                             |  | (unaudited)                      |           |   | (unaudited) |  
|Cash flows from operating activities:                                                        |  |                                  |           |   |             |   |           |  
|Net income                                                                                   |  | $                                | 2,299,461 |   |             | $ | 428,701   |  
|Reconciliation of net (loss) income to cash flows (used in) provided by operating activities |  |                                  |           |   |             |   |           |  
|(Increase) decrease in prepaid insurance                                                     |  |                                  | (16,472   | ) |             |   | 35,102    |  
|(Decrease) increase in interest receivable                                                   |  |                                  | (1,034    | ) |             |   | (21       | )
|(Decrease) increase in accounts payable                                                      |  |                                  | (58,404   | ) |             |   | 80,971    |  
|(Decrease) increase in accrued expenses                                                      |  |                                  | (29,679   | ) |             |   | 11,470    |  
|                                                                                             |  |                                  |           |   |             |   |           |  
|Cash flows from operations                                                                   |  |                                  | 2,193,872 |   |             |   | 556,223   |  
|                                                                                             |  |                                  |           |   |             |   |           |  
|Net increase in cash and cash equivalents                                                    |  |                                  | 2,193,872 |   |             |   | 556,223   |  
|                                                                                             |  |                                 
|Cash and cash equivalents at beginning of period                                             |  |                                  | 1,103,644 |   |             |   | 777,938   |  
|                                                                                             |  |                                  |           |   |             |   |           |  
|Cash and cash equivalents at end of period                                                   |  | $                                | 3,297,516 |   |             | $ | 1,334,161 |  
|                                                                                             |  |                                  |           |   |             |   |           |  



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



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EBS Litigation, L.L.C.

Notes to Financial Statements

June 30, 2004 and December 31, 2003



|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.



Section 1.4 of the Companys Members Agreement originally limited the Companys existence to three years, subject
to extension(s) approved by the Bankruptcy Court for good cause shown. In September 2000, the Bankruptcy Court granted the Companys motion to extend the existence of the Company for an additional two-year term. In September 2002, the Company
filed a motion with the Bankruptcy Court to reopen the Edison bankruptcy case for the limited purpose of extending the term of the Company. The Court approved the motion at that time, extending the existence of the company for an additional two-year
term.



|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 policies 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 and 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, 2003 through December 31, 2003, January 1, 2003 through June 30, 2003 (unaudited), January 1, 2004 through June 30, 2004 (unaudited), April 1, 2003 through June 30, 2003 (unaudited), and April 1, 2004 through June 30, 2004
(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.



The Companys cash and cash equivalents represent the sum of the aggregate Dave and Busters, Inc. Spinoff
Settlement Proceeds and the L.L.C. Funding Amount. These funds will be used for general operations. Any amounts not used in general operations will be made available for future distributions to Class A Membership Unit holders.



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.



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EBS Litigation, L.L.C.

Notes to Financial Statements

June 30, 2004 and December 31, 2003



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.



|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 distributions to holders of Class A Membership Units. At December 31, 1999, Edison had 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.



During 2003 and the first and
second quarters of 2004, the Company did not make any distributions to holders of Class A Membership units.



At June 30, 2004, the Company has no Class B membership units outstanding.



|4. | Settlement Proceeds
|-- | -------------------



On January 10, 2003, the Court approved a settlement with Trust Company of the West and its related entities in the amount of $615,940. The Company
received payment on February 18, 2003.



On March 31, 2004, the
Court approved a settlement of all claims in the matter of EBS Litigation, L.L.C. V. Barclays Global Investors, et.al.As a result of this settlement, the Company received proceeds in the



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EBS Litigation, L.L.C.

Notes to Financial Statements

June 30, 2004 and December 31, 2003



amount of $2,490,570 on May 13, 2004. There can be no assurances that other members of the class will settle, what the terms
of any other potential settlements may be or that the Company will recover any amounts on the judgement against class members who have not already paid.



|5. | Commitments and Contingencies
|-- | -----------------------------



On March 31, 2004 the District Court granted the motion to approve the settlement of all claims in the matter of EBS Litigation, L.L.C. v. Barclays
Global Investors, et. al(the case). The settlement allowed for members of the defendant class to opt out of the portion of the settlement addressing the claims of the Company against Barclays Global Investors, et. al. (the
defendant class). The District Courts Order and Final Judgment provides for releases of all Third-party claims and Fourth-party claims resulting from the case. The Order and Final Judgment requires members of the defendant class to pay
$5.00 per Dave & Busters share received in the dividend, with $0.50 per share going to defray the litigation costs and fees incurred by the class representatives (Barclays Global Investors, N.A., Greenway Partners, L.P., and Greentree
Partners, L.P.) of the defendant class, and the remaining $4.50 per share being paid to the Company. The Order and Final Judgment was subject to various contingencies, including the receipt by counsel for the defendant class of settlement payments
by members of the class in excess of $1,800,000. To the Companys knowledge, the contingencies have been met and no members of the defendant class have opted out of the settlement. On May 13, 2004, the Company received a wire of $2,490,570 in
settlement proceeds from counsel for the defendant class. Pursuant to the Order and Final Judgment, the Company will have a judgment in the amount of $5.00 per share against class members who have not already paid to settle claims, with $0.50 per
share being paid to the defendant class representatives in satisfaction of their defense expenses. The Company is in the process of determining what steps, if any, should be taken as to these remaining class members.



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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
results of operations of the Company as of and for the years ended December 31,2003, 2002, 2001, 2000, 1999 and 1998 and as of and for the periods ended December 31, 1997, January 1, 2003 through June 30, 2003 (unaudited), January 1, 2004 through
June 30, 2004 (unaudited), and of certain factors that may affect the Companys prospective financial condition and results of operations. The following 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, 2003. 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 years ended December 31, 2001, 2000 and 1999. For the year ended December 31, 2002, the
Company received approximately $211,000 in D&B Settlement Proceeds. The Company did not receive any defendant payment revenue during the three months ended June 30, 2003. During the three months ended June 30, 2004, the Company recognized
additional defendant payment revenue in the amount of $2,490,570. For the six month periods ended June 30, 2003 and 2004, the Company received defendant payment revenue of $615,940 and $2,490,570, respectively. 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 income.



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, 2003, 2002, 2001, 2000, 1999 and 1998, and the period ended December 31, 1997, the Company recognized approximately $7,000, $13,000, $51,000, $98,000, $92,000, $388,000 and $106,000 of interest income, respectively. During
the three month periods ended June 30, 2004 and 2003, the Company recognized approximately $2,732 and $2,346 of interest income, respectively. During the six month periods ended June 30, 2004 and 2003, the Company recognized approximately $3,871 and
$4,298 of interest income, respectively. The amount of interest income recognized by the Company in future periods will be



9



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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 $363,000, $691,000, $442,000, $489,000, $299,000, $671,000 and $176,000, for the years ended December 31, 2003, 2002, 2001, 2000, 1999 and 1998, and the period
ended December 31, 1997, respectively. During the three month periods ended June 30, 2004 and 2003, the Company had expenses of approximately $109,229 and $132,229, respectively. During the six month periods ended June 30, 2004 and 2003, the Company
had expenses of approximately $194,980 and $191,487, respectively. These expenses are expected to fluctuate in future periods primarily based on activity in any period in the D & B Spinoff Litigation.



Pursuant to Section 5.1(f) of the Plan, the Company and EBS Pension 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 (the Reserve) established by EBS Pension L.L.C. (EBS Pension). As is
discussed below, the former and current directors of Dave & Busters, Inc. (the D&B Third-party Defendants) have filed an indemnification claim seeking recovery from the Reserve. There can be no assurance of the merits of such
claim or the amount, if any, that the D&B Third-party Defendants will be able to recover. There can be no assurance that additional such claims 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, 2003, 2002, 2001, 2000, 1999, 1998 and 1997, the Company had cash and cash equivalents of approximately $1.1 million, $778,000, $ 1.2 million, $1.5 million, $1.9 million, $3.0 million and $12.0
million, respectively. At June 30, 2004, the Company had cash and cash equivalents of approximately $3,297,516. During 2003, 2002, 2001 and 2000, the Company did not make any distributions to holders of Class A Membership Units. During 1999, the
Company distributed an aggregate amount of $0.8 million to holders of Class A Membership Units. During 1998, the Company distributed an aggregate amount of $13.7 million to holders of Class A Membership Units. During 1997, the Company did not make
any distributions to holders of Class A Membership Units. The Company made no distributions during the three and six month periods ending June 30, 2004. 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) and against the D&B Third-party Defendants (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.



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



10



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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 granted the motion for interlocutory appeal.



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 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 (the Bankruptcy Court) 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.



On January 22 and 23, 2002, the D&B Spinoff Litigation was tried before Judge Robinson in the United States District Court for the district of Delaware. The Company is evaluating the options and costs associated
with pursuing further recoveries from the D&B Spinoff Litigation.



In September 2002, the Company filed a motion with the Bankruptcy Court to reopen the bankruptcy case of Edison Brothers Stores, Inc. for the limited purpose of extending the term of the Company. As mentioned above,
Section 1.4 of the Companys Members Agreement originally limited the Companys existence to three years subject to extension(s) approved by the Bankruptcy Court for good cause shown. In September 2002, the Bankruptcy Court granted the
Companys motion to extend the existence of the Company for an additional two-year term.



After the January 2002 trial, on September 18, 2002, the United States Court of Appeals for the Third Circuit (the Third Circuit) issued a decision of the Classs interlocutory appeal on Judge
Robinsons decision dismissing their third party claims against the Third-party Defendants. The Third Circuit reversed Judge Robinsons dismissal and remanded that portion of the case back to the District Court. No decision from that trial
has been rendered.



On April 10, 2003, the Bankruptcy Court
approved a settlement with another member of the Class in the amount of $615,940. The Company received payment on February 18, 2003.



In February 2003, the District Court referred the D&B Spinoff Litigation to mediation before a magistrate judge. Mediation began on March 28, 2003.
The mediation involved all claims: the Companys claim against the Class, the Classs third party claims against the Third-party Defendants, as well as the fourth party indemnification claims brought by the D&B Third-party Defendants
against the Company.



On March 28, 2003, the Company and EBS
Pension were served with a Fourth Party Complaint brought by the D&B Third-party Defendants. The Fourth Party Complaint asserts that if the D&B Third-party Defendants are found liable in the Third Party claim, then pursuant to Section 5.1(f)
of the Plan establishing the Indemnification Reserve mentioned above, the Company and EBS Pension are liable to the Third-party Defendants for all costs and expenses they have incurred or will incur in connection with the defense of the Third Party
claim and with the prosecution of their Fourth Party Complaint.



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Prior to the Litigation being filed, in February 2003, the District Court hearing the Litigation referred
the matter to mediation before a magistrate judge. The mediation took place on March 28, 2003. The mediation involves all claims involved in the Litigation, as well as, the Fourth Party Complaint indemnification claims brought by the Edison
Directors against the Company and EBS Pension pursuant to indemnification provisions in the Debtors Amended Joint Plan or Reorganization.



On March 31, 2004 the District Court granted the motion to approve the settlement of all claims in the Litigation. The settlement allowed for members of
the defendant class to opt out of the portion of the settlement addressing the claims of the Company against the defendant class. The District Courts Order and Final Judgment provides for releases of all Third-party claims and Fourth-party
claims brought in the Litigation. The Order and Final Judgment requires members of the defendant class to pay $5.00 per Dave & Buster share received in the dividend, with $.50 per share going to defray the litigation costs and fees incurred by
the Class Representatives on behalf of the defendant class, and the remaining $4.50 per share being paid to the Company. The Order and Final Judgment was subject to various contingencies, including the receipt by counsel for the defendant class of
settlement payments by members of the Class in excess of $1.8 million dollars. To our knowledge, the contingencies have been met and no members of the defendant class have opted out of the settlement. On May 13, 2004, the Company received a wire of
$2,490,570 in settlement proceeds from counsel for the defendant class. Pursuant to the Order and Final Judgment, the Company will have a judgment in the amount of $5.00 per share against Class members who have not already paid to settle claims,
with $.50 per share being paid to the defendant class representatives in satisfaction of their defense expenses. The Company is in the process of determining what steps, if any, should be taken as to these remaining Class members. In June and July
2002, the Company settled with two members of the Class. As a result of the settlements the Company collected approximately $210,626. There can be no assurances that other members of the class will settle, what the terms of any other potential
settlements may be or that the Company will recover any amounts on the judgement against class members who have not already paid.



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



Six Months Ended June 30, 2004 Compared to
the Six Months Ended June 30, 2003



Total income for
the six months ended June 30, 2004 and 2003, was $2,494,441 and $620,238, respectively. This increase is due primarily to the increase in defendant payment income while the Company pursued the settlement discussed above.



Total expenses increased for the six months ended June 30, 2004, as compared
to the six months ended June 30, 2003, by $3,493 due primarily to an increase in legal fees associated with pursuing the settlement discussed above and an increase in accounting fees.



Item 4. Controls and Procedures



The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports
that it files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported with the time periods specified in the Securities and Exchange Commission rules and forms. As of June 30, 2004, an evaluation was
carried out under the supervision and with the participation of the Companys management of the effectiveness of the Companys disclosure controls and procedures. Based on that evaluation, the Companys management has concluded that
the Companys disclosure controls and procedures are effective.



Subsequent to the date of their evaluation, there have been no significant changes in the Companys internal controls or in other factors that could significantly affect these controls.



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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                         
|    |  |         
|    |  | 31       |  | Certifications                                                      

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|* | 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



On August 6, 2004, the Company filed a current report on Form
8-K under Item 5 (Other Events and Regulation FD Disclosure) providing for disclosure of the combination of the law firms of Friedman, Wang & Bleiberg, P.C. and Foley & Lardner LLP.



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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. WANGPeter N. Wang, Manager


Date: August 13 , 2004



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