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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-K



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



For the fiscal year ended December 31, 2004



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 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 incorporation) |  | (I.R.S. Employer Identification Number)



c/o Foley &
Lardner LLP

90 Park Avenue

New York, New York 10016

Attn: Peter N. Wang

(Address of principal executive offices)



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



Securities registered pursuant to Section 12(b) of the Act:



None



Securities registered pursuant to Section 12(g) of the Act:



Class A Membership Units

(Title of
class)



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 ̈



Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K. x



There is no
aggregate market value of the registrants Class A Membership Units held by nonaffiliates of the registrant as of December 31, 2004. Book value of the registrants Class A Membership Units as of December 31, 2004 was approximately $3.2
million.



There were 10,000,000 Class A Membership Units
outstanding as of March 15, 2005.



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PART I



ITEM 1BUSINESS



Unless otherwise noted, all references to the Company shall mean EBS Litigation, L.L.C., a Delaware limited
liability company.



BACKGROUND



On September 9, 1997, the United States Bankruptcy Court for the District of
Delaware (the Bankruptcy Court) entered an order in accordance with section 1129 of the Bankruptcy Code, 11 U.S.C. §§ 101-1330, et seq., (the Bankruptcy Code) confirming the Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code (the Plan) filed by Edison Brothers Stores, Inc. (Edison) and its affiliated debtors in possession (collectively with Edison, the Debtors). The Plan became
effective on September 26, 1997 (the Effective Date).



The Company was established pursuant to the Plan and the EBS Litigation, L.L.C. Members Agreement (the Members Agreement). Pursuant to the Plan, each holder of an Allowed General Unsecured Claim (as defined in the Plan) against
Edison was entitled to receive a distribution on account of such claim which included, among other consideration, the holders pro rata share of the Companys Class A Membership Units in the Company. The initial distribution date under the
Plan occurred on or about December 12, 1997 (the Initial Distribution Date). Accordingly, in late December of 1997, holders of Allowed General Unsecured Claims began receiving membership certificates evidencing their ownership of Class A
Membership Units in the Company. As of December 31, 1999, 2000, 2001, 2002, 2003 and 2004 there were 10,000,000 Class A Membership Units and no Class B Membership Units of the Company issued and outstanding.



The Plan further provided for the Debtors transfer to the Company of
their right, title and interest in and to all of the Debtors potential fraudulent transfer causes of action under the Bankruptcy Code or applicable state law, arising in connection with (a) the June 29, 1995 distribution by Edison of
approximately 4,404,560 shares of common stock (the D&B Common Stock) in Dave & Busters Inc., a Missouri corporation (Dave & Busters), to holders of Edison common stock (the D&B Spinoff
Stockholders) in the form of a dividend; and (b) all related transactions (the D&B Spinoff). The causes of action relating to the D&B Spinoff are referred to herein as the Unresolved Avoidance Claims. Following
transfer of the Unresolved Avoidance Claims to the Company, the Plan provided for the appointment of the Company as the representative of the Debtors estates for the purpose of retaining and enforcing the Unresolved Avoidance Claims in
accordance with section 1123(b)(3)(B) of the Bankruptcy Code and the Members Agreement.



The Plan further obligated the Debtors to transfer the L.L.C. Funding Amount, in an amount designated by the Official Committee of Unsecured Creditors appointed in the Debtors Chapter 11 cases (the
Creditors Committee), to the Company on the Effective Date. The Creditors Committee designated $2 million as the L.L.C. Funding Amount payable to the Company; such L.L.C. Funding Amount was paid to the Company on October 16,
1997.



FORMATION OF THE
COMPANY AND SUMMARY OF CERTAIN PROVISIONS OF THE MEMBERS AGREEMENT



Formation



In accordance with the Plan, the Certificate of Formation of the Company was
filed on September 24, 1997, with the office of the Delaware Secretary of State for the purpose of forming the Company as a limited liability company under the provisions and subject to the requirements of the State of Delaware, and in particular
the Delaware Limited Liability Company Act, Del. Code Ann. tit.6, ch. 18 (the Delaware Act). The Certificate of Formation became effective on September 25, 1997 (the Inception Date).



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Purposes



The Company was organized solely for the purposes of (a) prosecuting, settling and/or liquidating the Unresolved Avoidance Claims; (b) receiving and
administering all assets of the Company (i.e., the cash proceeds of the Unresolved Avoidance Claims or Avoidance Claim Proceeds as well as other property or proceeds received by the Company); and (c) distributing the net Avoidance
Claim Proceeds to holders of Membership Units in the Company pursuant to the terms of the Members Agreement. The Company has no objective to engage in the conduct of any trade or business. In essence, the Company constitutes a vehicle for (a)
converting the Unresolved Avoidance Claims to cash, whether by means of the D&B Spinoff Settlement (as defined in the Plan) or other settlement, or enforcement of a judgment ultimately obtained; and then (b) distributing all net cash to holders
of Membership Units in the Company.



Administration and the
Manager



The Company has no employees. The affairs of the
Company are managed by the Manager. The Manager of the Company, as duly designated by the Creditors Committee, is Peter N. Wang (in such capacity, the Manager). The principal office of the Company is maintained at the office of the
Manager, which is the law office of Foley & Lardner LLP (Foley & Lardner), 90 Park Avenue, New York, New York 10016. The telephone number is (212) 682-7474.



In furtherance of the Companys purposes and subject to the retained jurisdiction of the Bankruptcy Court as provided
for in the Plan, the Manager is obligated to make continuing efforts to (1) prosecute, settle and/or liquidate the Unresolved Avoidance Claims, based upon the assessment of the Manager, with the advice of counsel and consultants retained by the
Manager, of (A) the likelihood that the Company will prevail on the merits, (B) the possible recovery on such litigation, (C) the estimated cost (and attendant delay) of such litigation, (D) the offer of settlement, (E) the resources of the Company
that are available for prosecuting the Unresolved Avoidance Claims, and (F) any other matters that the Manager deems to be relevant to such assessment, and (2) make distributions of Avoidance Claim Proceeds; in each case in an expeditious but
orderly manner intended reasonably to maximize the value of such distributions to the Members, but subject to the judgment and discretion of the Manager and the provisions of the Members Agreement. The Manager is not liable or accountable, in
damages or otherwise, to the Company or to any Member for any action or inaction, except in the case of his willful breach of a material provision of the Members Agreement or gross negligence in connection with the performance of his duties under
the Members Agreement.



The Manager is empowered to retain such
independent experts and advisors (including, but not limited to, law firms, tax advisors, consultants or other professionals) as the Manager may select to aid in the performance of his duties and responsibilities and to perform such other functions
as may be appropriate in furtherance of the intent and purpose of the Members Agreement.



The Members Agreement also requires the Manager to designate one of the Members as the Tax Matters Partner (as defined in the Section 6231 of the Internal Revenue Code). The Tax Matters Partner is required
to represent the Company (at the Companys expense) in connection with all examinations of the Companys affairs by tax authorities and to expend Company funds for professional services associated therewith. The Tax Matters Partner also
arranges for the preparation and timely filing of all returns required to be filed by the Company and the distribution of Form K-1 or other similar forms to all Members. In accordance with the Members Agreement, the Manager has designated Citibank,
N.A., through its authorized representative, to serve as the Tax Matters Partner of the Company.



The Manager has selected the law firm of Jones Day (Jones Day) to serve as counsel to the Company. Jones Days principal duties as
counsel for the Company involve the prosecution of the D&B Spinoff Litigation (as defined below) and related negotiations. Prior to the Effective Date, Jones Day served as counsel to the Creditors Committee. The Manager has selected
PricewaterhouseCoopers LLP to provide the Company with financial reporting and consulting services as well as tax-related services. Wells Fargo Bank, N.A. (formerly known as Wells Fargo Bank Minnesota, N.A.), which serves as the Companys
Transfer Agent and as the Companys Disbursing Agent under the Plan, maintains the Companys funds and ownership registers, coordinates distributions to Members



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of the Company, and performs related administrative duties. Rubin, Brown, Gornstein & Co., LLP serves as the Companys independent auditors.



Subject to the retained jurisdiction of the Bankruptcy Court
as provided for in the Plan, but without prior or further authorization, the Manager may control and exercise authority over the Companys assets, over the acquisition, management and disposition thereof and over the management and conduct of
the Company to the extent necessary to enable the Manager to fulfill the intent and purposes of the Members Agreement. No person dealing with the Company is obligated to inquire into the authority of the Manager in connection with the acquisition,
management or disposition of the Companys assets. In connection with the administration of the Companys assets and the management of the Companys affairs, the Manager has the power to take any and all actions as, in the
Managers sole discretion, are necessary or advisable to effectuate the purposes of the Company. The Manager may not, however, at any time, on behalf of the Company or the Members, enter into or engage in any trade or business, and no part of
the Companys assets will be used or disposed of by the Manager in furtherance of any such trade or business. All decisions and actions taken by the Manager under the authority of the Members Agreement are binding upon all of the Members and
the Company. Without the consent of all of the Members, the Manager may not (1) take any action in contravention of the Members Agreement; (2) take any action which would make it impossible to carry on the activities of the Company; or (3) possess
property of the Company or assign the Companys rights in specific property for other than Company purposes.



Term of the Company; Dissolution



The Companys existence was originally scheduled to terminate (unless dissolved earlier) on September 26, 2000 (the third anniversary of the
Effective Date). However, the Manager (with the approval of Bankruptcy Court) extended the Companys existence until September 2002. In September 2002, the Manager (with the approval of the Bankruptcy Court) extended the Companys
existence until September 2004. In September 2004, the Manager (with the approval of the Bankruptcy Court) once again extended the term of the Companys existence, until September 2006. If the Companys Assets have not been fully
liquidated and distributed or all Disputed General Unsecured Claims (as defined in the Plan) have not been resolved then the Companys existence may be extended for another two year period. The Company may also be earlier dissolved because of
an adjudication of the Bankruptcy Court or because of the unanimous written consent of all Members. In the event of the Companys dissolution, following the payment of, or provision for, all debts and liabilities of the Company and all expenses
of liquidation, and subject to the right of the Liquidating Agent (as defined in the Members Agreement) to set up reasonable cash reserves for any contingent or unforeseen liabilities or obligations of the Company, all assets of the Company (or the
proceeds thereof) will be distributed to holders of Class A Membership Units in accordance with their respective Capital Account (as defined in the Members Agreement) balances. No Member will have any recourse against Edison or any other Member for
any distributions with respect to such Members Capital Account balances.



THE COMPANYS OPERATIONS SINCE INCEPTION



Commencement of Litigation



On September 29, 1997, the Company, as the assignee of the Unresolved Avoidance Claims, filed a complaint (the Complaint) with the Bankruptcy
Court, commencing the prosecution of all Unresolved Avoidance Claims against the D&B Spinoff Stockholders, Dave & Busters, and their current management. The lawsuit is pending before the Bankruptcy Court as Adversary Proceeding No. A-97-171
(the D&B Spinoff Litigation). The Complaint filed by the Company alleged, among other things, that Edison had not received reasonably equivalent value for the D&B Common Stock and certain realty holdings valued at approximately
$7.3 million in connection with the D&B Spinoff, and thus sought to recover the D&B Common Stock, or the value thereof, from the D&B Spinoff Stockholders.



The Company also filed a Motion to Certify Defendant Class, requesting that the Bankruptcy Court permit the Company to
prosecute the D&B Spinoff Litigation as a defendant class action. A defendant class action is a procedural device whereby the plaintiff, in this case the Company, can identify a limited number of qualified defendants to represent the interests
of a larger number of similarly situated defendants and upon prevailing, can take judgment against all defendants. Certification of a defendant class and designation of class representatives



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permits the plaintiff to obtain uniform relief from all defendants by removing the inefficiencies and risks of inconsistent or varying adjudications with
respect to individual members of the class. The Company initially identified 11 parties to serve as class representatives.



In addition to seeking recovery of the D&B Spinoff Stock or its value from the D&B Spinoff Stockholders, the Complaint sought to recover
approximately $7.3 million transferred to insiders of Dave & Busters by subsidiaries of Edison. Specifically, the Complaint alleged that Edison paid a $3.75 million dividend to one subsidiary, and satisfied an antecedent debt of $3.55 million to
another subsidiary, for the sole purpose of providing cash to pay advances to certain individual defendants. The Complaint sought recovery of these cash transfers from defendants Dave & Busters, D&B Realty Holding, Inc., and the named
individuals (collectively, the Spinoff-Related Defendants). On October 30, 1997, the Spinoff-Related Defendants filed a joint answer, generally denying the relevant allegations of the Complaint, setting forth certain affirmative defenses
and demanding a trial by jury. The Spinoff-Related Defendants also filed a Motion for a Determination that the proceeding is a Core Proceeding (which is a proceeding over which a bankruptcy court may preside in accordance with 28 U.S.C.§
157(d)), which was granted without objection, as well as a Motion for Withdrawal of Reference, seeking withdrawal of the D&B Spinoff Litigation to the United States District Court for the District of Delaware (the District Court). On
August 10, 1998, the Company entered into a Settlement Agreement with the Spinoff-Related Defendants and certain other interested parties, wherein the Company released these parties from all Spinoff-Related claims in return for a payment of $2.1
million. The action against the Spinoff-Related Defendants was dismissed August 20, 1998, and the money was paid into the Disbursing Agents account on August 26, 1998.



The D&B Spinoff Settlement



Notwithstanding commencement of the D&B Spinoff Litigation, each D&B Spinoff Stockholder had the right to obtain a
release of all Unresolved Avoidance Claims against it by participating in the D&B Spinoff Settlement provided for in the Plan. In order to participate in the D&B Spinoff Settlement, a D&B Spinoff Stockholder was obligated to exercise one
of three settlement options outlined in the Plan. The three settlement options permitted D&B Spinoff Stockholders to participate by means of (a) exercising a specified number of rights granted to Edison stockholders under the Plan; (b) paying
cash to the Company in an amount equal to the D&B Spinoff Release Minimum Purchase Price described below; or (c) a combination of rights exercised and cash paid, all as determined in accordance with formulas set forth in the Plan. Most of the
D&B Spinoff Stockholders who elected to participate in the D&B Spinoff Settlement elected the settlement option (the Direct Purchase Option) involving the payment of the D&B Spinoff Release Minimum Purchase Price,
which was equal to the product of (a) $5.6593, and (b) the number of shares of D&B Common Stock that such D&B Spinoff Stockholder received in connection with the D&B Spinoff.



The Plan provided for the expiration of the D&B Spinoff Settlement Period on the 30th day after the Effective Date. The
Company elected to extend such period for the Direct Purchase Option until March 30, 1998. It was determined that such an extension was in the best interests of the Company, as it permitted the recovery of approximately $4.5 million in D&B
Spinoff Settlement Proceeds from defendants who were not able to accept the D&B Spinoff Settlement Offer 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.



At December 31, 1998, the D&B Spinoff Settlement Proceeds that had been
received by the Company aggregated approximately $15.0 million. This sum represents the aggregate settlement amount paid by D&B Spinoff Stockholders of approximately 2.4 million shares of D&B Common Stock. Holders of approximately 2 million
remaining shares did not participate in the D&B Spinoff Settlement. For procedural reasons, the Company is only seeking recovery against D&B Spinoff Stockholders who received more than 55 shares of D&B Common Stock in the D&B
Spinoff.



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



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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.



The Defendant Class Motion to Withdrawal Reference was assigned in the district court in late September 1998. The Motion was fully briefed, and the Company requested oral argument.



In May 1999 the United States District court for the District of Delaware
heard arguments on, and in July 1999 denied, the Defendant Class Motion to Dismiss, the Defendant Class Motion to Decertify the Defendant Class and Named Representative Wilshire Associates, Inc.s (Wilshires)
Motion to Dismiss.



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 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.



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



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its opposition. The Court ruled on the Motion for Reconsideration on January 12, 2001 dismissing all third party claims, and entered judgment under Rule
54(b) on March 13, 2001. The Class sought and received leave to appeal this interlocutory order.



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 parties thereafter agreed that additional named Class Representatives may be added. The Court granted that motion on
November 28, 2001.



As mentioned above, in September 2000, the
Company filed a motion with the United States Bankruptcy Court, District of Delaware to reopen the bankruptcy case of the Debtors 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 District Court. The Company continues 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.



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 or what the terms of any other potential settlements may be.



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.



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



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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.



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 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 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 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. Additional proceeds of $161,370 related to this settlement were received on August 27, 2004. 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. There can be no assurances that the Company will recover any amounts on the judgement against class members who have not already paid.



In September 2004, 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 2004, the Bankruptcy Court granted the Companys motion to extend the existence of the Company for an additional two-year term.



ITEM 2PROPERTIES



The Company does not own or lease any property.



ITEM 3LEGAL PROCEEDINGS



Other than the D&B Spinoff Litigation described throughout this Annual Report on Form 10-K, the Company is not involved in any legal proceedings.



ITEM 4SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS



No matters were submitted to holders of Membership Units
for vote during the fiscal year ended December 31, 2004.



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PART II



ITEM 5MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS



There is no established public trading market for the
Companys Class A Membership Units. As of December 31, 2004, there were 2,060 certificated holders of record of the Class A Membership Units. See Item 12  Security Ownership of Certain Beneficial Owners and Management for more
information.



ITEM 6SELECTED FINANCIAL DATA



The following summary operating and balance sheet data sets forth selected
financial information of the Company as of and for the years ended December 31, 2004, 2003, 2002, 2001, 2000, 1999 and 1998 and the period ended December 31, 1997 since the Inception Date. The selected financial data as of and for the years ended
December 31, 2004, 2003, 2002, 2001, 2000, 1999 and 1998 has been derived from the Companys financial statements, which were audited by Rubin, Brown, Gornstein & Co., LLP. The following information should be read in conjunction with the
Companys financial statements and notes thereto included elsewhere herein and Managements Discussion and Analysis of Financial Condition and Results of Operations, presented below.



|                                         |  |                            |  |                            |  |                            |   |  |                            |   |  |                            |           |   |                            |           |     |                            |   |           |                                 |  |   |           
|---------------------------------------- |  | -------------------------- |  | -------------------------- |  | -------------------------- | - |  | -------------------------- | - |  | -------------------------- | --------- | - | -------------------------- | --------- | --- | -------------------------- | - | --------- | ------------------------------- |  | - | ----------
|                                         |  | Year endedDecember 31,2004 |  | Year endedDecember 31,2003 |  | Year endedDecember 31,2002 |   |  | Year endedDecember 31,2001 |   |  | Year endedDecember 31,2000 |           |   | Year endedDecember 31,1999 |           |     | Year endedDecember 31,1998 |   |           | Period endedDecember 31,1997(1)
|Operating Statement Data:                |  |                            |  |                            |  |                            |   |  |                            |   |  |                            |           |   |                            |           |     |                            |   |           |                                 |  |   |           
|Defendant payment revenue                |  | 2,651,940                  |  | 615,940                    |  | 210,626                    |   |  |                           |   |  | $                          | 3,708     |   |                            |          |     |                            | $ | 4,981,595 |                                 |  | $ | 9,991,975 
|                                         |  |                            |  |                            |  |                            |   | 
|Interest income                          |  | 21,616                     |  | 7,131                      |  | 12,901                     |   |  | 50,741                     |   |  |                            | 98,160    |   |                            | 92,376    |     |                            |   | 388,168   |                                 |  |   | 106,048   
|                                         |  |                            |  |                            |  |                            |   | 
|Expenses                                 |  | 337,939                    |  | 362,911                    |  | 691,305                    |   |  | 442,495                    |   |  |                            | 488,762   |   |                            | 298,707   |     |                            |   | 671,438   |                                 |  |   | 175,587   
|                                         |  |                            |  |                            |  |                            |   | 
|Net (loss) income                        |  | 2,335,617                  |  | 260,160                    |  | (467,778                   | ) |  | (391,754                   | ) |  |                            | (386,894  | ) |                            | (206,331  | )   |                            |   | 4,698,325 |                                 |  |   | 9,922,436 
|                                         |  |                            |  |                            |  |                            |   | 
|Distribution per Class A Membership Unit |  |                           |  |                           |  |                           |   |  |                           |   |  |                            |          |   |                            | 1.49      | (3) |                            |   | 1.45      | (2)                             |  |   |          
|                                         |  |                            |  |                            |  |                            |   | 
|Balance Sheet Data (at period end):      |  |                            |  |                            |  |                            |   |  |                            |   |  |                            |           |   |                            |           |     |                            |   |           |                                 |  |   |           
|Total assets                             |  | 3,324,735                  |  | 1,104,259                  |  | 830,308                    |   |  | 1,263,294                  |   |  |                            | 1,610,146 |   |                            | 1,996,483 |     |                            | $ | 3,049,682 |                                 |  | $ | 12,069,695
|                                         |  |                            |  |                            |  |                            |   | 
|Accrued expenses                         |  | 80,822                     |  | 110,844                    |  | 169,763                    |   |  | 147,873                    |   |  |                            | 102,971   |   |                            | 102,414   |     |                            |   | 161,560   |                                 |  |   | 147,259   
|                                         |  |                            |  |                            |  |                            |   | 
|Members equity                          |  | 3,243,420                  |  | 907,803                    |  | 647,643                    |   |  | 1,115,421                  |   |  |                            | 1,507,175 |   |                            | 1,894,069 |     |                            |   | 2,888,122 |                                 |  |   | 11,922,436

---

|(1) | The Companys inception date was September 25, 1997.
|--- | ----------------------------------------------------



|(2) | This represents an average distribution made per Class A Membership Unit during the year. Actual distributions to Class A Membership Unit holders may differ. The
following includes a detailed discussion of the distributions made during the year. During April 1998, the Company distributed approximately $7.0 million to the holders of 9,342,874 Class A Membership Units that were outstanding at the date of
distribution. During June 1998, the Company distributed approximately $0.1 million to holders of the 127,507 Class A Membership Units that were distributed in June 1998. During October 1998, the Company distributed approximately $6.6 million to the
9,470,381 holders of Class A Membership Units.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | This represents an average distribution made per Class A Membership Unit during the year. Actual distributions to Class A Membership Unit holders may differ. During
February 1999, the company distributed approximately $0.8 million to holders of the 86,871 and 442,748 Class A Membership Units that were distributed in November and December 1998, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



9



---

ITEM 7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, 2004, 2003, 2002, 2001, 2000, 1999 and 1998 and as of and for the period ended December 31, 1997, 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 which 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



The Company, which was formed pursuant to the Plan and the Members
Agreement, is a limited purpose entity which may not engage in any trade or business. The Company was organized solely for the purposes of (a) prosecuting, settling and/or liquidating the Unresolved Avoidance Claims, (b) receiving and administering
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 and approximately $5.0 million in the twelve month period ended December 31, 1998. For the year ended December 31, 1999, the Company did not receive any proceeds. For the year ended December 31, 2000, the Company received
approximately $3,700. For the year ended December 31, 2001, the Company did not receive any proceeds. For the year ended December 31, 2002, the Company received approximately $211,000. For the year ended December 31, 2003, the Company received
approximately $616,000. For the year ended December 31, 2004, the Company received approximately $2.7 million. 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, 2004, 2003, 2002, 2001, 2000, 1999 and 1998 and the
period ended December 31, 1997, the Company recognized approximately $22,000, $7,000, $13,000, $51,000, $98,000, $92,000, $388,000 and $106,000 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 Transfer Agent, the Manager, and the Companys lawyers, accountants and auditors and insurance expenses. The Company had expenses of
approximately $338,000, $363,000, $691,000, $442,000, $489,000, $299,000, $671,000 and $176,000 for the years



10



---

ended December 31, 2004, 2003, 2002, 2001, 2000, 1999 and 1998 and the period ended December 31, 1997, respectively. The Companys expenses decreased
during fiscal year 2004 due primarily to a decrease in Transfer Agent and settlement administration fees, accounting fees and management fees. These expenses are expected to fluctuate in future periods primarily based on the 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), pursuant to the Plan, will indemnify the Debtors 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,
2004, 2003, 2002, 2001, 2000, 1999, 1998 and 1997, the Company had cash and cash equivalents of approximately $3.3 million, $1.1 million, $778,000, $ 1.2 million, $1.5 million, $1.9 million, $3.0 million and $12.0 million, respectively. During 2004,
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 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.



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.



11



---

ITEM 8FINANCIAL STATEMENTS



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Members

EBS Litigation, L.L.C.

St. Louis, Missouri



We have audited the accompanying balance sheets of EBS Litigation, L.L.C., a limited liability company, as of December 31, 2004 and 2003, and the related statements of operations, changes in members equity and
cash flows for the years ended December 31, 2004, 2003 and 2002. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above represent fairly, in all material respects, the financial position of EBS Litigation, L.L.C. as of December 31, 2004 and 2003, and the results of its operations and its cash flows
for the years ended December 31, 2004, 2003 and 2002, in conformity with accounting principles generally accepted in the United States of America.



/s/ Rubin, Brown, Gornstein & Co., LLPRubin, Brown, Gornstein & Co., LLP




March 1, 2005

St. Louis, Missouri



12



---



EBS Litigation, L.L.C.

Statements of Operations

For the Years Ended December 31, 2004, 2003 and 2002



|                                                  |  |                                  |           |      |   |         |  |   |          |  
|------------------------------------------------- |  | -------------------------------- | --------- | ---- | - | ------- |  | - | -------- | -
|                                                  |  | For the years ended December 31, |          
|                                                  |  | 2004                             |           | 2003 |   | 2002    | 
|Income:                                           |  |                                  |           |      |   |         |  |   |          |  
|Interest                                          |  | $                                | 21,616    |      | $ | 7,131   |  | $ | 12,901   |  
|Defendant payment revenue                         |  |                                  | 2,651,940 |      |   | 615,940 |  |   | 210,626  |  
|                                                  |  |                                  |           |      |   |         |  |   |          |  
|Total income                                      |  | $                                | 2,673,556 |      | $ | 623,071 |  | $ | 223,527  |  
|                                                  |  |                                  |           |      |   |         |  |   |          |  
|Expenses:                                         |  |                                  |           |      |   |         |  |   |          |  
|Legal fees                                        |  | $                                | 134,897   |      | $ | 172,107 |  | $ | 501,412  |  
|Insurance                                         |  |                                  | 88,199    |      |   | 51,528  |  |   | 69,869   |  
|Transfer agent and settlement administration fees |  |                                  | 16,001    |      |   | 26,663  |  |   | 40,013   |  
|Accounting fees                                   |  |                                  | 59,580    |      |   | 45,938  |  |   | 40,959   |  
|Manager fees                                      |  |                                  | 32,712    |      |   | 61,302  |  |   | 35,175   |  
|Other                                             |  |                                  | 6,550     |      |   | 5,373   |  |   | 3,877    |  
|                                                  |  |                                  |           |      |   |         |  |   |          |  
|Total expenses                                    |  |                                  | 337,939   |      |   | 362,911 |  |   | 691,305  |  
|                                                  |  |                                  |           |      |   |         |  |   |          |  
|Net income (loss)                                 |  | $                                | 2,335,617 |      | $ | 260,160 |  | $ | (467,778 | )
|                                                  |  |                                  |           |      |   |         |  |   |          |  
|Net income (loss) per unit  basic and diluted    |  | $                                | 0.234     |      | $ | 0.026   |  | $ | (0.047   | )
|                                                  |  |                                  |           |      |   |         |  |   |          |  



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



13



---



EBS Litigation, L.L.C.

Balance Sheets

December 31, 2004 and 2003



|                                                                                                         |  |              |           |      |   |          
|-------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ---- | - | ---------
|                                                                                                         |  | December 31,
|                                                                                                         |  | 2004         |           | 2003
|Assets                                                                                                   |  |              |           |      |   |          
|Cash and cash equivalents                                                                                |  |              |           |      |   |          
|Available for general operations                                                                         |  | $            | 3,320,404 |      | $ | 1,103,644
|Prepaid insurance                                                                                        |  |              | 187       |      |   | 187      
|Interest receivable                                                                                      |  |              | 4,144     |      |   | 428      
|                                                                                                         |  |              |           |      |   |          
|Total assets                                                                                             |  | $            | 3,324,735 |      | $ | 1,104,259
|                                                                                                         |  |              |           |      |   |          
|                                                                                                         |  |             
|Liabilities                                                                                              |  |              |           |      |   |          
|Accounts payable                                                                                         |  | $            | 493       |      | $ | 85,612   
|Accrued expenses                                                                                         |  |              | 80,822    |      |   | 110,844  
|                                                                                                         |  |              |           |      |   |          
|Total liabilities                                                                                        |  |              | 81,315    |      |   | 196,456  
|                                                                                                         |  |              |           |      |   |          
|Commitments and Contingencies (Note 5)                                                                   |  |              |           |      |   |          
|                                                                                                         |  |             
|Members equity:                                                                                         |  |              |           |      |   |          
|Membership Units (Class A  10,000,000 authorized, issued and outstanding at December 31, 2004 and 2003) |  |              |          |      |   |         
|Retained earnings                                                                                        |  |              | 3,243,420 |      |   | 907,803  
|                                                                                                         |  |              |           |      |   |          
|Total members equity                                                                                    |  |              | 3,243,420 |      |   | 907,803  
|                                                                                                         |  |              |           |      |   |          
|Total liabilities and members equity                                                                    |  | $            | 3,324,735 |      | $ | 1,104,259
|                                                                                                         |  |              |           |      |   |          



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



14



---



EBS
LITIGATION, L.L.C.

Statements of Changes in Members Equity

For the Years Ended December 31, 2004, 2003 and 2002



|                           |  |                        |  |                  |           |   |       |   |           |  
|-------------------------- |  | ---------------------- |  | ---------------- | --------- | - | ----- | - | --------- | -
|                           |  | Class AMembershipUnits |  | RetainedEarnings |           |   | Total |  
|Balance, December 31, 2001 |  | 10,000,000             |  | $                | 1,115,421 |   |       | $ | 1,115,421 |  
|Net loss                   |  |                       |  |                  | (467,778  | ) |       |   | (467,778  | )
|                           |  |                        |  |                  |           |   |       |   |           |  
|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                 |  |                       |  |                  | 2,335,617 |   |       |   | 2,335,617 |  
|                           |  |                        |  |                  |           |   |       |   |           |  
|Balance, December 31, 2004 |  | 10,000,000             |  | $                | 3,243,420 |   |       | $ | 3,243,420 |  
|                           |  |                        |  |                  |           |   |       |   |           |  



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



15



---



EBS
LITIGATION, L.L.C.

Statements of Cash Flows

For the Years Ended December 31, 2004, 2003 and 2002



|                                                                                              |  |                                  |           |   |      |   |           |      |  |   |           |  
|--------------------------------------------------------------------------------------------- |  | -------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                                              |  | For the years ended December 31, |          
|                                                                                              |  | 2004                             |           |   | 2003 |   |           | 2002 | 
|Cash flows from operating activities:                                                         |  |                                  |           |   |      |   |           |      |  |   |           |  
|Net income (loss)                                                                             |  | $                                | 2,335,617 |   |      | $ | 260,160   |      |  | $ | (467,778  | )
|Reconciliation of net income (loss) to cash flows provided by (used in) operating activities: |  |                                  |           |   |      |   |           |      |  |   |           |  
|Decrease (increase) in prepaid insurance                                                      |  |                                  |          |   |      |   | 51,477    |      |  |   | (267      | )
|(Increase) decrease in interest receivable                                                    |  |                                  | (3,716    | ) |      |   | 278       |      |  |   | 1,378     |  
|(Decrease) increase in accounts payable                                                       |  |                                  | (85,119   | ) |      |   | 72,710    |      |  |   | 12,902    |  
|(Decrease) increase in accrued expenses                                                       |  |                                  | (30,022   | ) |      |   | (58,919   | )    |  |   | 21,890    |  
|                                                                                              |  |                                  |           |   |      |   |           |      |  |   |           |  
|Cash flows provided by (used in) operating activities                                         |  |                                  | 2,216,760 |   |      |   | 325,706   |      |  |   | (431,875  | )
|Net increase (decrease) in cash and cash equivalents                                          |  |                                  | 2,216,760 |   |      |   | 325,706   |      |  |   | (431,875  | )
|Cash and cash equivalents at beginning of period                                              |  |                                  | 1,103,644 |   |      |   | 777,938   |      |  |   | 1,209,813 |  
|                                                                                              |  |                                  |           |   |      |   |           |      |  |   |           |  
|Cash and cash equivalents at end of period                                                    |  | $                                | 3,320,404 |   |      | $ | 1,103,644 |      |  | $ | 777,938   |  
|                                                                                              |  |                                  |           |   |      |   |           |      |  |   |           |  



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



16



---



EBS Litigation, L.L.C.

Notes to Financial Statements

December 31, 2004 and 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, and once again in September 2002, the Bankruptcy Court granted the Companys motions to extend the existence of the Company for additional two-year terms.
In September 2004, 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 years
ended December 31, 2004, 2003 and 2002.



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.



17



---

EBS Litigation, L.L.C.

Notes to Financial Statements

December 31, 2004 and 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 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.



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



At December 31, 2004, the Company had 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.



18



---

EBS Litigation, L.L.C.

Notes to Financial Statements

December 31, 2004 and 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 amount of $2,490,570 on May 13, 2004. Additional proceeds of $161,370 related to this settlement were received on August 27, 2004.



There can be no assurances that other members of the Class
will settle or what the terms of any other potential settlements may be.



|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. Additional proceeds of $161,370 related to this settlement were received on August 27, 2004. 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.



19



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ITEM 9CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



None.



PART III



ITEM 10DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



The Company has no directors and the Manager, Peter N. Wang, acts as the Companys sole executive officer. Mr. Wang is 55 years old and was a
shareholder and officer of the law firm of Friedman, Wang & Bleiberg, P.C. (FWB) for 23 years. In July 2004, when FWB combined with Foley & Lardner, Mr. Wang became a partner in Foley & Lardner. The Manager may resign at any
time or be removed by the holders (the Requisite Holders) of 65% or more of the outstanding Class A Membership Units (excluding such holders against whom the Company holds Unresolved Avoidance Claims), with or without cause, at any time,
such resignation or removal to be effective upon the appointment of a successor Manager. In the event of the death, resignation, incompetency or removal of the Manager, the Requisite Holders may appoint a successor Manager that is not affiliated
with Edison. If such appointment does not occur within 90 days, the Manager or the Managers representative may petition the Bankruptcy Court for the appointment of a successor Trustee.



ITEM 11EXECUTIVE COMPENSATION



The Members Agreement provides that Foley & Lardner will receive
compensation for the Managers services to the Company at the standard hourly rates charged for the Managers services and the services of other persons at Foley & Lardner who may assist him with his duties. The Company is also
obligated to reimburse Foley & Lardner for reasonable expenses incurred by the Manager and others at Foley & Lardner in connection with the performance of the Managers duties to the Company.



With respect to services rendered during the year ended December 31, 2004,
Foley & Lardner was paid $825.00 on account of the Managers services to the Company and $44,553.34 on account of services of another attorney at Foley & Lardner who assisted him with his duties. The Company also paid Foley &
Lardner $155.84 in expense reimbursement.



With respect to
services rendered during the year ended December 31, 2003, FWB was paid $2,572.50 on account of the Managers services to the Company and $45,450 on account of services of another attorney at FWB who assisted him with his duties. The Company
also paid FWB $1,057.52 in expense reimbursement.



With respect
to services rendered during the year ended December 31, 2002, FWB was paid $1650 on account of the Managers services to the Company and $33,622.50 on account of services of another attorney at FWB who assisted him with his duties. The Company
also paid FWB $210.33 in expense reimbursement.



With respect
to services rendered during the year ended December 31, 2001, FWB was paid $2,437 on account of the Managers services to the Company and $21,620 on account of services of another attorney at FWB who assisted him with his duties. The Company
also paid FWB $158 in expense reimbursement.



With respect to
services rendered during the year ended December 31, 2000, FWB was paid $1,395 on account of the Managers services to the Company and $25,163 on account of services of another attorney at FWB who assisted him with his duties. The Company also
paid FWB $283 in expense reimbursement.



With respect to
services rendered during the year ended December 31, 1999, FWB was paid $2,125 on account of the Managers services to the Company and $29,820 on account of services of another attorney at FWB who assisted him. The Company also paid $90 for the
services of a paralegal at FWB and $260 in expense reimbursement.



20



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With respect to services rendered from the Inception Date to December 31, 1997, FWB was paid $6,903 on
account of the Managers services, $20,995 on account of the services of another attorney at FWB who assisted him, and $218 in expense reimbursement.



21



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ITEM 12SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following table sets forth certain information regarding the certificated
ownership of the Companys Class A Membership Units of persons owning more than five percent of the outstanding Class A Membership Units as of December 31, 2004.



|                                                  |  |                                   |  |                                  |  |         |  
|------------------------------------------------- |  | --------------------------------- |  | -------------------------------- |  | ------- | -
|Name and Address of Certificated Owner            |  | Number of Class AMembership Units |  | Nature of Certificated Ownership |  | Percent |  
|Swiss Bank Corporation                            |  | 1,593,601                         |  | Sole Voting/Investment           |  | 15.9    | %
|Citibank, N.A.                                    |  | 836,070                           |  | Sole Voting/Investment           |  | 8.4     | %
|Loeb Partners Corporation                         |  | 1,176,937                         |  | Sole Voting/Investment           |  | 11.7    | %
|Caspian Capital Partners, LP                      |  | 698,555                           |  | Sole Voting/Investment           |  | 6.9     | %
|Contrarian Capital Advisors, L.L.C.               |  | 740,731                           |  | Sole Voting/Investment           |  | 7.41    | %
|Morgens Waterfall Overseas Partners               |  | 653,314                           |  | Sole Voting/Investment           |  | 6.5     | %
|Morgens, Waterfall, Vintiadis & Co., Inc., et al. |  | 1,024,939                         |  | Sole Voting/Investment           |  | 10.2    | %



ITEM 13CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS



None.



ITEM 14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 within the time periods specified in the Securities
and Exchange Commission rules and forms. Within the 90-day period prior to filing of this report, 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.



PART IV



ITEM
15EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.



|(a)1. | The following financial statements and the report thereon of Rubin, Brown, Gornstein & Co., LLP are included in Item 8 of this report:
|----- | --------------------------------------------------------------------------------------------------------------------------------------



Report of Independent Registered Public Accounting Firm



Balance Sheets as of December 31, 2004 and 2003



Statements of Operations for the Years Ended December 31, 2004, 2003 and
2002



Statements of Changes in Members Equity for the
Years Ended December 31, 2004, 2003 and 2002



Statements of
Cash Flows for the Years Ended December 31, 2004, 2003 and 2002



Notes to Financial Statements



22



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| | 2. | Financial Statement Schedules:
| | -- | ------------------------------



All schedules are omitted since the required information is not present in amounts sufficient to require submission of the schedules or because the
information required is included in the financial statements and notes thereto.



|(b) | Reports on Form 8-K.
|--- | --------------------



On March 24, 2005, the Company filed a current report on Form 8-K under Item 9 (Regulation FD Disclosure) providing for the Companys Managers
certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



|(c) | Exhibits
|--- | --------



|              |  |                                                                     
|------------- |  | --------------------------------------------------------------------
|ExhibitNumber |  | 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                         
|              | 
|32            |  | Certifications                                                      

---

|* | Incorporated by reference to the Companys Form 10 originally filed with the Securities and Exchange Commission on July 29, 1998 (SEC File No. 000-24711).
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



23



---



Exhibit Index



|              |  |                                                                      |  |                         
|------------- |  | -------------------------------------------------------------------- |  | ------------------------
|ExhibitNumber |  | Description                                                          |  | Location                
|              |  |                                                                     
|2.1*          |  | Amended Joint Plan of Reorganization of Edison Brothers Stores, Inc. |  | Incorporatedby reference
|              |  |                                                                     
|3.1*          |  | EBS Litigation, L.L.C. Certificate of Formation                      |  | Incorporatedby reference
|              |  |                                                                     
|3.2*          |  | EBS Litigation, L.L.C. Membership Agreement                          |  | Incorporatedby reference
|              |  |                                                                     
|32            |  | Certifications                                                       |  | Filed herewith          

---

|* | Incorporated by reference to the Companys Form 10 originally filed with the Securities and Exchange Commission on July 29, 1998 (SEC File No. 000-24711).
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



24



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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) 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.



|                     |  |  |  |                        |  |     |  |                     
|-------------------- |  |  |  | ---------------------- |  | --- |  | --------------------
|Dated March 24, 2005 |  |  |  | EBS LITIGATION, L.L.C.
|                     |  |  |  |                       
|                     |  |  |  |                        |  | By: |  | /S/    PETER N.
WANG
|                     |  |  |  |                        |  |     |  | Peter N. Wang       
|                     |  |  |  |                        |  |     |  | Manager             



25