----

----

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

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

| Maryland                                                       |   | 52-2081138                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

| Class                                     |   | Outstanding at March 15, 2010 |
|-------------------------------------------|--------|-------------------------------|
| Common Stock, par value $0.0001 per share |   | 7,954,928 shares              |

----

----

----

I N D E X

|                               |                                                                                        |     |
|------------------------------------|---------------------------------------------------------------------------------------------|----------|
|                               |                                                                                        | Page No. |
| PART I—FINANCIAL INFORMATION |                                                                                        |     |   |
|                               |                                                                                        |     |   |
| Item 1.                            | Interim Consolidated Financial Statements (Unaudited):                                      |     |   |   |
|                               |                                                                                        |     |   |   |
|                               | Consolidated Statements of Financial Condition                                              |     | 3 |   |
|                               |                                                                                        |     |   |   |
|                               | Consolidated Statements of Operations                                                       |     | 4 |   |
|                               |                                                                                        |     |   |   |
|                               | Consolidated Statement of Stockholders’ Equity (Deficiency)                           |     | 5 |   |
|                               |                                                                                        |     |   |   |
|                               | Consolidated Statements of Cash Flows                                                       |     | 6 |   |
|                               |                                                                                        |     |   |   |
|                               | Notes to Consolidated Financial Statements                                                  |     | 7 |   |
|                               |                                                                                        |     |   |   |
| Item 2.                            | Management’s Discussion and Analysis of Financial Condition and Results of Operations |     | 14 |   |
|                               |                                                                                        |     |   |   |
| Item 3.                            | Quantitative and Qualitative Disclosures about Market Risk                                  |     | 22 |   |
|                               |                                                                                        |     |   |   |
| Item 4.T                           | Controls and Procedures                                                                     |     | 22 |   |
|                               |                                                                                        |     |   |   |
| PART II—OTHER INFORMATION    |                                                                                        |     |   |
|                               |                                                                                        |     |   |
| Item 1.                            | Legal Proceedings                                                                           |     | 23 |   |
|                               |                                                                                        |     |   |   |
| Item 1A.                           | Risk Factors                                                                                |     | 23 |   |
|                               |                                                                                        |     |   |   |
| Item 3.                            | Defaults Upon Senior Securities                                                             |     | 23 |   |
|                               |                                                                                        |     |   |   |
| Item 6.                            | Exhibits                                                                                    |     | 24 |   |
|                               |                                                                                        |     |   |   |
| Signatures                         |                                                                                        | 25       |   |

----

Index

PART I — FINANCIAL INFORMATION

ITEM 1.  INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                                                                                                                                                                                   |   | March 31,2009 (unaudited) |     |   | December 31,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|----------|--------|------------------|--------|
| Assets                                                                                                                                                                                                                 |   |                      |     |   |             |   |
| Current Assets:                                                                                                                                                                                                        |   |                      |     |   |             |   |
| Cash and cash equivalents                                                                                                                                                                                              |   | $                         | 515      |   |             | $      | 390 |   |
| Accounts receivable                                                                                                                                                                                                    |   |                      | 1,922    |   |             |   | 2,712 |   |
| Notes receivable, current portion                                                                                                                                                                                      |   |                      | 18       |   |             |   | 18 |   |
| Inventories                                                                                                                                                                                                            |   |                      | 2,886    |   |             |   | 2,964 |   |
| Other current assets                                                                                                                                                                                                   |   |                      | 157      |   |             |   | 294 |   |
| Total current assets                                                                                                                                                                                                   |   |                      | 5,498    |   |             |   | 6,378 |   |
|                                                                                                                                                                                                                   |   |                      |     |   |             |   |   |   |
| Notes receivable                                                                                                                                                                                                       |   |                      | 24       |   |             |   | 34 |   |
| Property, plant and equipment, net                                                                                                                                                                                     |   |                      | 7,763    |   |             |   | 8,253 |   |
| Intangible assets, net                                                                                                                                                                                                 |   |                      | 4,021    |   |             |   | 4,068 |   |
| Goodwill                                                                                                                                                                                                               |   |                      | 8,028    |   |             |   | 8,028 |   |
| Other assets                                                                                                                                                                                                           |   |                      | 927      |   |             |   | 812 |   |
| Total assets                                                                                                                                                                                                           |   | $                         | 26,261   |   |             | $      | 27,573 |   |
|                                                                                                                                                                                                                   |   |                      |     |   |             |   |   |   |
| Liabilities and Stockholders’ Equity (Deficiency)                                                                                                                                                                |   |                      |     |   |             |   |   |   |
| Liabilities:                                                                                                                                                                                                           |   |                      |     |   |             |   |   |   |
| Accounts payable and accrued liabilities                                                                                                                                                                               |   | $                         | 18,019   |   |             | $      | 17,486 |   |
| Borrowings and notes payable, current portion                                                                                                                                                                          |   |                      | 14,144   |   |             |   | 14,330 |   |
| Obligations under capital leases, current portion                                                                                                                                                                      |   |                      | 1,819    |   |             |   | 1,927 |   |
| Total current liabilities                                                                                                                                                                                              |   |                      | 33,982   |   |             |   | 33,743 |   |
|                                                                                                                                                                                                                   |   |                      |     |   |             |   |   |   |
| Deferred income                                                                                                                                                                                                        |   |                      | 3,227    |   |             |   | 2,572 |   |
| Total liabilities                                                                                                                                                                                                      |   |                      | 37,209   |   |             |   | 36,315 |   |
|                                                                                                                                                                                                                   |   |                      |     |   |             |   |   |   |
| Commitments and contingencies                                                                                                                                                                                          |   |                      |     |   |             |   |   |   |
| Minority interests in consolidated subsidiaries                                                                                                                                                                        |   |                      | 289      |   |             |   | 365 |   |
|                                                                                                                                                                                                                   |   |                      |     |   |             |   |   |   |
| Stockholders’ Equity (Deficiency):                                                                                                                                                                               |   |                      |     |   |             |   |   |   |
| Preferred stock, $.0001 par value; 25,000,000 shares authorized; no shares issued and outstanding                                                                                                                      |   |                      | -        |   |             |   | - |   |
| Common stock, $.0001 par value; 200,000,000 shares authorized; 11,757,073 shares issued as of March 31, 2009 and December 31, 2008;  7,954,928 shares outstanding as of March 31, 2009 and December 31, 2008 |   |                      | 172,243  |   |             |   | 172,102 |   |
| Accumulated deficit                                                                                                                                                                                                    |   |                      | (171,469 | )      |             |   | (169,198 | ) |
| Treasury stock, 3,802,145 common shares as of March 31, 2009 and December 31, 2008, at cost                                                                                                                            |   |                      | (12,011  | )      |             |   | (12,011 | ) |
| Total stockholders’ equity (deficiency)                                                                                                                                                                          |   |                      | (11,237  | )      |             |   | (9,107 | ) |
| Total liabilities and stockholders’ equity                                                                                                                                                                       |   | $                         | 26,261   |   |             | $      | 27,573 |   |

----

Index

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Quarter Ended |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | March 31,     |      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2009          |      |   | 2008 |   |
| Revenue:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          |      |   |   |   |
| Restaurant and manufacturing sales                                                                                                                      |   | $             | 8,797     |   |   | $ | 10,166 |   |
| Restaurant franchise and royalty fees                                                                                                                   |   |          | 581       |   |   |   | 645 |   |
| Total revenue                                                                                                                                                               |   |          | 9,378     |   |   |   | 10,811 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| Operating costs and expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |          |      |   |   |   |   |   |
| Restaurant and manufacturing cost of sales                                                                                                                   |   |          | 5,132     |   |   |   | 6,014 |   |
| Engineering and development                                                                                                                                  |   |          | 293       |   |   |   | 281 |   |
| Depreciation and amortization                                                                                                                                |   |          | 427       |   |   |   | 479 |   |
| Total operating costs and expenses                                                                                                                                               |   |          | 5,852     |   |   |   | 6,774 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| General and administrative expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| Compensation and employee benefits                                                                                                                           |   |          | 1,804     |   |   |   | 4,053 |   |
| Professional fees                                                                                                                                            |   |          | 288       |   |   |   | 860 |   |
| Other                                                                                                                                                        |   |          | 3,184     |   |   |   | 3,838 |   |
| Total general and administrative expenses                                                                                                                                        |   |          | 5,276     |   |   |   | 8,751 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| Non-operating income (expense):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |          |      |   |   |   |   |   |
| Interest income                                                                                                                                              |   |          | 12        |   |   |   | 37 |   |
| Interest expense                                                                                                                                             |   |          | (676      | ) |   |   | (440 | ) |
| Other income, net                                                                                                                                            |   |          | 84        |   |   |   | 447 |   |
| Total non-operating  income (expense)                                                                                                                                  |   |          | (580      | ) |   |   | 44 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| Loss before provision for income taxes, minority interests, and equity in income of equity investees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          | (2,330    | ) |   |   | (4,670 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| Minority interest in earnings                                                                                                            |   |          | 75        |   |   |   | 83 |   |
| Equity in income of equity investees                                                                                                     |   |          | -         |   |   |   | 200 |   |
| Income tax (expense) benefit                                                                                                             |   |          | (3        | ) |   |   | 52 |   |
| Loss from continuing operations                                                                                                          |   |          | (2,258    | ) |   |   | (4,335 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| Income (loss) from discontinued operations (including gain on sale of $4,217 in 2008)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          | (13       | ) |   |   | 3,898 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| Net loss                                                                                                                                 |   | $             | (2,271    | ) |   | $ | (437 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| Basic loss per share from continuing operations                                                                                          |   | $             | (0.28     | ) |   | $ | (0.54 | ) |
| Basic earnings (loss) per share from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $             | (0.01     | ) |   | $ | 0.49 |   |
| Basic loss per share                                                                                                                     |   | $             | (0.29     | ) |   | $ | (0.05 | ) |
| Basic weighted average shares outstanding                                                                                                |   |          | 7,954,928 |   |   |   | 7,954,928 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |   |   |   |   |   |
| Dividends declared per share                                                                                                             |   | $             | -         |   |   | $ | - |   |

----

Index

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

|                               |   | Common Stock |      |   | Treasury Stock |   |    | Accumulated |   |   |      |   |
|------------------------------------|--------|--------------|-----------|--------|----------------|--------|---------|-------------|--------|--------|-----------|--------|
|                               |   | Shares (1)   |      |   | Amount         |   |    | Shares      |   |   | Amount    |   |   | Deficit |   |   | Total |   |
| Balance at January 1, 2009         |   |         | 7,954,928 |   |           | $      | 172,102 |        |   |   | 3,802,145 |   |   | $ | (12,011 | ) |   | $ | (169,198 | ) |   | $ | (9,107 | ) |
| Comprehensive income (loss):       |   |         |      |   |           |   |    |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                           |   |         | -         |   |           |   | -       |        |   |   | -         |   |   |   | - |   |   |   | (2,271 | ) |   |   | (2,271 | ) |
| Stock options expensed in net loss |   |         | -         |   |           |   | 141     |        |   |   | -         |   |   |   | - |   |   |   | - |   |   |   | 141 |   |
| Balance at March 31, 2009          |   |         | 7,954,928 |   |           | $      | 172,243 |        |   |   | 3,802,145 |   |   | $ | (12,011 | ) |   | $ | (171,469 | ) |   | $ | (11,237 | ) |

----

----

Index

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                    |   | Quarter Ended |   |
|---------------------------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                                                    |   | March 31,     |   |
|                                                                                                    |   | 2009          |   |   | 2008 |   |
| Cash flows from operating activities:                                                                   |   |          |   |   |   |   |   |   |
| Net loss                                                                                                |   | $             | (2,271 | ) |   | $ | (437 | ) |
| Loss (income) from discontinued operations                                                              |   |          | 13     |   |   |   | (3,898 | ) |
| Loss from continuing operations                                                                         |   |          | (2,258 | ) |   |   | (4,335 | ) |
|   Adjustments to reconcile net loss to net cash provided (used) by operating activities: |   |          |   |   |   |   |   |   |
| Equity in income of equity investees                                                                    |   |          | -      |   |   |   | (200 | ) |
| Depreciation and amortization                                                                           |   |          | 525    |   |   |   | 607 |   |
| Foreign currency gain                                                                                   |   |          | -      |   |   |   | (580 | ) |
| Share based compensation                                                                                |   |          | 141    |   |   |   | 330 |   |
| Market value impairment reserve                                                                         |   |          | -      |   |   |   | 153 |   |
| Other                                                                                                   |   |          | 62     |   |   |   | (48 | ) |
| Change in:                                                                                              |   |          |   |   |   |   |   |   |
| Other assets                                                                                            |   |          | 944    |   |   |   | (138 | ) |
| Deferred income                                                                                         |   |          | 655    |   |   |   | (15 | ) |
| Accounts payable and accrued liabilities                                                                |   |          | 533    |   |   |   | 27 |   |
| Net cash provided (used) by operating activities                                                        |   |          | 602    |   |   |   | (4,199 | ) |
|                                                                                                    |   |          |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                   |   |          |   |   |   |   |   |   |
| Principal repayments on notes receivable, including loans to senior executives                          |   |          | 10     |   |   |   | 1,149 |   |
| Investments in property, plant, and equipment                                                           |   |          | (42    | ) |   |   | (396 | ) |
| Net cash provided by (used in) investing activities                                                     |   |          | (32    | ) |   |   | 753 |   |
|                                                                                                    |   |          |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                   |   |          |   |   |   |   |   |   |
| Proceeds from borrowings                                                                                |   |          | -      |   |   |   | 500 |   |
| Repayments on borrowings                                                                                |   |          | (323   | ) |   |   | (4,653 | ) |
| Repayments under capital leases                                                                         |   |          | (109   | ) |   |   | (13 | ) |
| Investments by minority interests, net                                                                  |   |          | -      |   |   |   | 350 |   |
| Net cash used in financing activities                                                                   |   |          | (432   | ) |   |   | (3,816 | ) |
| Net change in cash and cash equivalents from continuing operations                                      |   |          | 138    |   |   |   | (7,262 | ) |
|                                                                                                    |   |          |   |   |   |   |   |   |
| Net change in cash and cash equivalents from discontinued operations:                                   |   |          |   |   |   |   |   |   |
| Net cash used in operating activities                                                                   |   |          | (13    | ) |   |   | (715 | ) |
| Net cash provided by investing activities                                                               |   |          | -      |   |   |   | 7,879 |   |
| Net cash used in financing activities                                                                   |   |          | -      |   |   |   | (79 | ) |
| Net change in cash and cash equivalents                                                                 |   |          | 125    |   |   |   | (177 | ) |
| Cash and cash equivalents at beginning of period                                                        |   |          | 390    |   |   |   | 1,131 |   |
| Cash and cash equivalents at end of period                                                              |   | $             | 515    |   |   | $ | 954 |   |
|                                                                                                    |   |          |   |   |   |   |   |   |
| Supplemental disclosures of cash flow information:                                                      |   |          |   |   |   |   |   |   |
| Cash paid for interest                                                                                  |   | $             | 218    |   |   | $ | 903 |   |

----

Index

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

----

Index

----

Index

|                           |   | Shares |      |   | Weighted AverageExercisePrice |   |
|--------------------------------|--------|--------|-----------|--------|-------------------------------|--------|
| Outstanding at January 1, 2009 |   |   | 2,980,833 |   |                          | $      | 1.51 |   |
| Granted                        |   |   | 4,500     |   |                          | $      | 0.12 |   |
| Exercised                      |   |   | -         |   |                          | $      | - |   |
| Cancelled/forfeited            |   |   | -         |   |                          | $      | - |   |
| Outstanding at March 31, 2009  |   |   | 2,985,333 |   |                          | $      | 1.51 |   |

| Range ofExercise Prices |   |   | Shares |      |   | Weighted AverageRemainingLife |   |   | Weighted AverageExercisePrice |   |
|-------------------------|--------|--------|--------|-----------|--------|-------------------------------|--------|--------|-------------------------------|--------|
| $0.01 – 2.00      |   |   |   | 2,484,500 |   |                          |   | 7.7    |                          |   | $ | 1.32 |   |
| $2.01 – 4.00      |   |   |   | 500,833   |   |                          |   | 8.3    |                          |   | $ | 2.47 |   |
| Total                   |   |   |   | 2,985,333 |   |                          |   | 7.8    |                          |   | $ | 1.51 |   |

|                                |   | March 31, 2009         |   |   | December 31, 2008 |   |
|-------------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                                |   | (dollars in thousands) |   |
|                                |   |                   |   |   |              |   |
| Raw materials                       |   | $                      | 1,499  |   |              | $      | 2,097 |   |
| Work in progress                    |   |                   | 637    |   |              |   | 366 |   |
| Finished goods                      |   |                   | 750    |   |              |   | 501 |   |
|    Total inventories |   | $                      | 2,886  |   |              | $      | 2,964 |   |

|                                           |   | March 31, 2009         |   |   | December 31, 2008 |   |
|------------------------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                                           |   | (dollars in thousands) |   |
| Accounts payable                               |   | $                      | 8,005  |   |              | $      | 8,439 |   |
| Sales deposits                                 |   |                   | 1,173  |   |              |   | 1,228 |   |
| Accrued wages, bonus and commissions           |   |                   | 862    |   |              |   | 693 |   |
| Other                                          |   |                   | 7,979  |   |              |   | 7,126 |   |
| Total accounts payable and accrued liabilities |   | $                      | 18,019 |   |              | $      | 17,486 |   |

----

Index

|                                     |   | Three months ended March 31, |   |
|------------------------------------------|--------|------------------------------|--------|
|                                     |   | 2009                         |   |   | 2008 |   |
|                                     |   | (dollars in thousands)       |   |
|                                     |   |                         |   |   |   |   |
| Company-owned restaurant sales           |   | $                            | 7,154  |   |   | $ | 7,933 |   |
| Royalty revenue                          |   |                         | 528    |   |   |   | 541 |   |
| Franchise fee revenue                    |   |                         | 54     |   |   |   | 104 |   |
| Total revenue                            |   |                         | 7,736  |   |   |   | 8,578 |   |
|                                     |   |                         |   |   |   |   |   |   |
| Cost of sales                            |   |                         | (4,058 | ) |   |   | (4,687 | ) |
| Depreciation and amortization            |   |                         | (441   | ) |   |   | (536 | ) |
| Other general & administrative costs |   |                         | (3,406 | ) |   |   | (3,992 | ) |
| Interest expense                         |   |                         | (210   | ) |   |   | (196 | ) |
| Management allocation                    |   |                         | (526   | ) |   |   | (526 | ) |
| Minority interest in losses              |   |                         | 75     |   |   |   | 83 |   |
| Segment loss                             |   | $                            | (830   | ) |   | $ | (1,276 | ) |
|                                     |   |                         |   |   |   |   |   |   |
| Capital expenditures                     |   | $                            | 84     |   |   | $ | 145 |   |
| Segment assets                           |   | $                            | 18,582 |   |   | $ | 21,856 |   |
| Minority interests                       |   | $                            | 289    |   |   | $ | 567 |   |

|                                     |   | Three months ended March 31, |   |
|------------------------------------------|--------|------------------------------|--------|
|                                     |   | 2009                         |   |   | 2008 |   |
|                                     |   | (dollars in thousands)       |   |
|                                     |   |                         |   |   |   |   |
| Manufacturing sales                      |   | $                            | 1,643  |   |   | $ | 2,233 |   |
| Cost of sales                            |   |                         | (1,073 | ) |   |   | (1,327 | ) |
| Engineering and development              |   |                         | (293   | ) |   |   | (281 | ) |
| Depreciation and amortization            |   |                         | (37    | ) |   |   | (23 | ) |
| Other general & administrative costs |   |                         | (707   | ) |   |   | (786 | ) |
| Interest expense                         |   |                         | (10    | ) |   |   | (8 | ) |
| Other non-operating income               |   |                         | 4      |   |   |   | 18 |   |
| Segment loss                             |   | $                            | (473   | ) |   | $ | (174 | ) |
|                                     |   |                         |   |   |   |   |   |   |
| Capital expenditures                     |   | $                            | 2      |   |   | $ | 193 |   |
| Segment assets                           |   | $                            | 5,922  |   |   | $ | 5,754 |   |

----

Index

|                                     |   | Three months ended March 31, |   |
|------------------------------------------|--------|------------------------------|--------|
|                                     |   | 2009                         |   |   | 2008 |   |
|                                     |   | (dollars in thousands)       |   |
|                                     |   |                         |   |   |   |   |
| Rental income                            |   | $                            | -      |   |   | $ | - |   |
| Operating expenses                       |   |                         | -      |   |   |   | - |   |
| Depreciation and amortization            |   |                         | -      |   |   |   | - |   |
| Other general & administrative costs |   |                         | -      |   |   |   | (1 | ) |
| Interest income                          |   |                         | 2      |   |   |   | 32 |   |
| Interest expense                         |   |                         | -      |   |   |   | (527 | ) |
| Other non-operating income               |   |                         | -      |   |   |   | 587 |   |
| Market value impairment reserves         |   |                         | -      |   |   |   | (153 | ) |
| Equity in loss of equity investees       |   |                         | -      |   |   |   | 200 |   |
| Segment income                           |   | $                            | 2      |   |   | $ | 138 |   |
|                                     |   |                         |   |   |   |   |   |   |
| Capital expenditures                     |   | $                            | -      |   |   | $ | - |   |
| Segment assets                           |   | $                            | 42     |   |   | $ | 12,034 |   |
| Investment in equity investees           |   | $                            | -      |   |   | $ | 200 |   |
| Minority interests                       |   | $                            | -      |   |   | $ | 434 |   |

|                                       |   | Three months ended March 31, |   |
|--------------------------------------------|--------|------------------------------|--------|
|                                       |   | 2009                         |   |   | 2008 |   |
|                                       |   | (dollars in thousands)       |   |
|                                       |   |                         |   |   |   |   |
| Segment loss from operations               |   | $                            | (1,301 | ) |   | $ | (1,312 | ) |
| Corporate expenses                         |   |                         | (1,502 | ) |   |   | (3,892 | ) |
| Elimination of intercompany charges        |   |                         | 548    |   |   |   | 817 |   |
| Income tax (expense) benefit               |   |                         | (3     | ) |   |   | 52 |   |
| Income (loss) from discontinued operations |   |                         | (13    | ) |   |   | 3,898 |   |
|    Net loss                 |   | $                            | (2,271 | ) |   | $ | (437 | ) |

|                                                   |   | Three months ended March 31, |   |
|--------------------------------------------------------|--------|------------------------------|--------|
|                                                   |   | 2009                         |   |   | 2008 |   |
|                                                   |   | (dollars in thousands)       |   |
| Operating revenue                                      |   | $                            | -      |   |   | $ | 610 |   |
| Operating expenses                                     |   |                         | -      |   |   |   | (240 | ) |
| Depreciation and amortization                          |   |                         | -      |   |   |   | (39 | ) |
| Operating margin                                       |   |                         | -      |   |   |   | 331 |   |
|                                                   |   |                         |   |   |   |   |   |   |
| General and administrative expenses                    |   |                         | -      |   |   |   | (7 | ) |
| Interest expense                                       |   |                         | -      |   |   |   | (157 | ) |
| Other non-operating income (expense)                   |   |                         | (13    | ) |   |   | 8 |   |
| Gain on sale of discontinued real estate operations    |   |                         | -      |   |   |   | 4,217 |   |
| Income (loss) from discontinued real estate operations |   | $                            | (13    | ) |   | $ | 4,392 |   |

----

Index

|                                       |   | Three months ended March 31, |   |
|--------------------------------------------|--------|------------------------------|--------|
|                                       |   | 2009                         |   |   | 2008 |   |
|                                       |   | (dollars in thousands)       |   |
|                                       |   |                         |   |   |   |   |
| Software sales                             |   | $                            | -      |   |   | $ | 102 |   |
| Engineering and development                |   |                         | -      |   |   |   | (80 | ) |
| Depreciation and amortization              |   |                         | -      |   |   |   | (109 | ) |
| Other general & administrative costs   |   |                         | -      |   |   |   | (114 | ) |
| Interest expense                           |   |                         | -      |   |   |   | (293 | ) |
| Loss from discontinued software operations |   | $                            | -      |   |   | $ | (494 | ) |

----

Index

----

Index

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

----

Index

| (i)   | Restaurant operations – conducted through our Fatburger subsidiary, |
|-----------------|---------------------------------------------------------------------------|

| (ii)   | Manufacturing operations – conducted through our wholly owned subsidiary, DAC International (“DAC”), and |
|------------------|----------------------------------------------------------------------------------------------------------------------------|

| (iii)   | Real estate and financing operations. |
|-------------------|---------------------------------------|

|     ● | Restaurant openings and closure – During the three months ended March 31, 2009, Fatburger opened one additional franchise location and one franchise location was closed.  In addition, the net assets were acquired for one franchise location and this location was converted to a company-owned restaurant. |
|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|               |   | Three months ended March 31,                 |   |
|--------------------|--------|----------------------------------------------|--------|
|               |   | 2009                                         |   |   | 2008 |   |
|               |   | (dollars in thousands, except pershare data) |   |
| Net loss           |   | $                                            | (2,258 | ) |   | $ | (4,335 | ) |
| Net loss per share |   | $                                            | (0.28  | ) |   | $ | (0.54 | ) |

|                                                             |   | Three months ended March 31,          |   |
|------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                             |   | 2009                                  |   |   | 2008 |   |
|                                                             |   | (% to Company-owned restaurant sales) |   |
| Restaurant sales:                                                |   |                                  |   |   |   |   |
|    Company-owned restaurant sales                 |   |                                  | 100.0  | % |   |   | 100.0 | % |
|    Cost of sales – food, paper, merchandise |   |                                  | (25.1  | %) |   |   | (25.3 | %) |
|    Cost of sales – wages and benefits       |   |                                  | (31.6  | %) |   |   | (33.8 | %) |
|    Restaurant depreciation and amortization       |   |                                  | (9.8   | %) |   |   | (6.0 | %) |
|    Operating margin (restaurant sales only)       |   |                                  | 33.5   | % |   |   | 34.9 | % |

----

Index

|                                                 |   | Three months ended March 31, |   |
|------------------------------------------------------|--------|------------------------------|--------|
|                                                 |   | 2009                         |   |   | 2008 |   |
|                                                 |   | (% to total revenue)         |   |
| Total restaurant operations:                         |   |                         |   |   |   |   |
|    Company-owned restaurant sales     |   |                         | 92.5   | % |   |   | 92.5 | % |
|    Royalty revenue                    |   |                         | 6.8    | % |   |   | 6.3 | % |
|    Franchise fee revenue              |   |                         | 0.7    | % |   |   | 1.2 | % |
|    Total revenue                      |   |                         | 100.0  | % |   |   | 100.0 | % |
|                                                 |   |                         |   |   |   |   |   |   |
|    Cost of sales                      |   |                         | (57.7  | %) |   |   | (60.2 | %) |
|    General & administrative costs |   |                         | (44.5  | %) |   |   | (47.2 | %) |
|    Interest expense                   |   |                         | (2.7   | %) |   |   | (2.3 | %) |
|    Management allocation              |   |                         | (6.8   | %) |   |   | (6.2 | %) |
|    Minority interest in losses        |   |                         | 1.0    | % |   |   | 1.0 | % |
|    Segment loss                       |   |                         | (10.7  | %) |   |   | (14.9 | %) |

|                        |   | Three months ended March 31, |   |
|-----------------------------|--------|------------------------------|--------|
|                        |   | 2009                         |   |   | 2008 |   |
|                        |   | (% to total revenue)         |   |
| Manufacturing sales         |   |                         | 100.0  | % |   |   | 100.0 | % |
| Manufacturing cost of sales |   |                         | (65.3  | %) |   |   | (59.4 | %) |
| Engineering and development |   |                         | (19.4  | %) |   |   | (12.6 | %) |
| Operating margin            |   |                         | 15.3   | % |   |   | 28.0 | % |
|                        |   |                         |   |   |   |   |   |   |
| Compensation expense        |   |                         | (27.3  | %) |   |   | (25.1 | %) |
| Depreciation expense        |   |                         | (0.7   | %) |   |   | (1.0 | %) |
| Other operating expense     |   |                         | (16.1  | %) |   |   | (9.7 | %) |
| Segment income (loss)       |   |                         | (28.8  | %) |   |   | (7.8 | %) |

----

Index

|                                |   | Three months ended March 31, |   |
|-------------------------------------|--------|------------------------------|--------|
|                                |   | 2009                         |   |   | 2008 |   |
|                                |   | (dollars in thousands)       |   |
|                                |   |                         |   |   |   |   |
| Real estate operations:             |   |                         |   |   |   |   |
| Operating revenue                   |   | $                            | -      |   |   | $ | - |   |
| Operating expenses                  |   |                         | -      |   |   |   | - |   |
| Depreciation and amortization       |   |                         | -      |   |   |   | - |   |
| Operating margin                    |   |                         | -      |   |   |   | - |   |
|                                |   |                         |   |   |   |   |   |   |
| General and administrative expenses |   |                         | -      |   |   |   | - |   |
| Interest expense                    |   |                         | -      |   |   |   | (136 | ) |
| Other operating income              |   |                         | 2      |   |   |   |   |   |
| Market value impairment reserve     |   |                         | -      |   |   |   | (153 | ) |
| Loss from real estate operations    |   | $                            | 2      |   |   | $ | (289 | ) |

|                               |   | Three months ended March 31, |   |
|------------------------------------|--------|------------------------------|--------|
|                               |   | 2009                         |   |   | 2008 |   |
|                               |   | (dollars in thousands)       |   |
| Compensation and employee benefits |   | $                            | 746    |   |   | $ | 2,730 |   |
| Professional fees                  |   |                         | 11     |   |   |   | 448 |   |
| Travel and entertainment           |   |                         | 90     |   |   |   | 350 |   |
| Insurance                          |   |                         | 78     |   |   |   | 96 |   |
| Directors fees                     |   |                         | 79     |   |   |   | 94 |   |
| Occupancy costs                    |   |                         | 37     |   |   |   | 38 |   |
| Other expenses                     |   |                         | 462    |   |   |   | 136 |   |
| Total operating expenses           |   | $                            | 1,503  |   |   | $ | 3,892 |   |

----

Index

|                                                |   | Three months ended March 31, |   |
|-----------------------------------------------------|--------|------------------------------|--------|
|                                                |   | 2009                         |   |   | 2008 |   |
|                                                |   | (dollars in thousands)       |   |
| Operating revenue                                   |   | $                            | -      |   |   | $ | 610 |   |
| Operating expenses                                  |   |                         | -      |   |   |   | (240 | ) |
| Depreciation and amortization                       |   |                         | -      |   |   |   | (39 | ) |
| Operating margin                                    |   |                         | -      |   |   |   | 331 |   |
|                                                |   |                         |   |   |   |   |   |   |
| General and administrative expenses                 |   |                         | -      |   |   |   | (7 | ) |
| Interest expense                                    |   |                         | -      |   |   |   | (157 | ) |
| Other non-operating income                          |   |                         | -      |   |   |   | 8 |   |
| Gain on sale of discontinued real estate operations |   |                         | -      |   |   |   | 4,217 |   |
| Income from discontinued real estate operations     |   | $                            | -      |   |   | $ | 4,392 |   |
|                                                |   |                         |   |   |   |   |   |   |
|    Capital expenditures              |   | $                            | -      |   |   | $ | 20 |   |
|    Segment assets                    |   |                         | -      |   |   |   | - |   |

|                                       |   | Three months ended March 31, |   |
|--------------------------------------------|--------|------------------------------|--------|
|                                       |   | 2009                         |   |   | 2008 |   |
|                                       |   | (dollars in thousands)       |   |
|                                       |   |                         |   |   |   |   |
| Software sales                             |   | $                            | -      |   |   | $ | 102 |   |
| Engineering and development                |   |                         | -      |   |   |   | (80 | ) |
| Depreciation and amortization              |   |                         | -      |   |   |   | (109 | ) |
| Other general & administrative costs   |   |                         | -      |   |   |   | (114 | ) |
| Interest expense                           |   |                         | -      |   |   |   | (293 | ) |
| Loss from discontinued software operations |   | $                            | -      |   |   | $ | (494 | ) |

|                                          |   | March 31, 2009         |    |   | December 31, 2008 |   |
|-----------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|
|                                          |   | (dollars in thousands) |    |
| Total assets                                  |   | $                      | 26,261  |   |              | $      | 27,573 |   |
| Total liabilities                             |   | $                      | 37,209  |   |              | $      | 36,315 |   |
| Total minority interests                      |   | $                      | 289     |   |              | $      | 365 |   |
| Total stockholders’ equity (deficiency) |   | $                      | (11,237 | )      |              | $      | (9,107 | ) |

----

Index

| ● | $0.6 million of cash provided by operations – comprised primarily of our net loss from continuing operations of $2.3 million adjusted for net non-cash items of $2.9 million; and |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | $0.4 million of cash used in financing activities – includes payments on borrowings of $0.3 million and payments on capital leases of $0.1 million. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                    |   | March 31, 2009         |   |   | December 31, 2008 |   |
|-----------------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                                    |   | (dollars in thousands) |   |
| Goodwill – Fatburger              |   | $                      | 6,563  |   |              | $      | 6,563 |   |
| Goodwill – DAC International      |   |                   | 1,465  |   |              |   | 1,465 |   |
| Total goodwill                          |   | $                      | 8,028  |   |              | $      | 8,028 |   |
|                                    |   |                   |   |   |              |   |   |   |
| Net intangible assets – Fatburger |   | $                      | 4,021  |   |              | $      | 4,068 |   |
| Total net intangible assets             |   | $                      | 4,021  |   |              | $      | 4,068 |   |

|                     |   | March 31, 2009         |   |   | December 31, 2008 |   |
|--------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                     |   | (dollars in thousands) |   |
| Trade receivables        |   | $                      | 1,922  |   |              | $      | 2,712 |   |
|                     |   |                   |   |   |              |   |   |   |
| Inventories              |   | $                      | 2,886  |   |              | $      | 2,964 |   |
|                     |   |                   |   |   |              |   |   |   |
| Other current assets:    |   |                   |   |   |              |   |   |   |
| Prepaid expenses         |   | $                      | 157    |   |              | $      | 294 |   |
|                     |   |                   |   |   |              |   |   |   |
|                     |   |                   |   |   |              |   |   |   |
| Other assets:            |   |                   |   |   |              |   |   |   |
| Security deposits        |   | $                      | 552    |   |              | $      | 471 |   |
| Capitalized finance fees |   |                   | 266    |   |              |   | 202 |   |
| Other                    |   |                   | 109    |   |              |   | 139 |   |
| Total other assets       |   | $                      | 927    |   |              | $      | 812 |   |

----

Index

|                                         |   | March 31, 2009         |   |   | December 31, 2008 |   |
|----------------------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                                         |   | (dollars in thousands) |   |
| Accounts payable                             |   | $                      | 8,005  |   |              | $      | 8,439 |   |
| Sales deposits                               |   |                   | 1,173  |   |              |   | 1,228 |   |
| Accrued wages, bonus and commissions         |   |                   | 862    |   |              |   | 693 |   |
| Other                                        |   |                   | 7,979  |   |              |   | 7,126 |   |
| Total accrued expenses and other liabilities |   | $                      | 18,019 |   |              | $      | 17,486 |   |

| ● | $7.2 million in notes payable and other debt of Fatburger, secured by the assets of Fatburger; |
|---------|------------------------------------------------------------------------------------------------|

| ● | $1.8 million in capital leases maturing on or before 2010 which are secured by an aircraft and various restaurant assets; |
|---------|---------------------------------------------------------------------------------------------------------------------------|

| ● | $6.2 million of notes payable secured by various assets of the Company; and |
|---------|-----------------------------------------------------------------------------|

| ● | $0.8 million of short-term borrowings secured by the assets of DAC International. |
|---------|-----------------------------------------------------------------------------------|

----

Index

----

Index

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4.  CONTROLS AND PROCEDURES

----

Index

PART II — OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

ITEM 1A.  RISK FACTORS

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

----

Index

ITEM 6.  EXHIBITS

| 31.1 | Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|------------------------------------------------------------------------------------------------------|

| 31.2 | Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|------------------------------------------------------------------------------------------------------|

| 32.1 | Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

SIGNATURES

|   |                                              |   |
|--------|---------------------------------------------------|--------|
|   | By: /s/ Andrew A. Wiederhorn                      |   |
|   | Andrew A. Wiederhorn                              |   |
|   | Chief Executive Officer                           |   |
|   | (Principal Executive Officer)                     |   |
|   |                                              |   |
|   | By: /s/ R. Scott Stevenson                        |   |
|   | R. Scott Stevenson                                |   |
|   | Senior Vice President and Chief Financial Officer |   |
|   | (Principal Financial and Accounting Officer)      |   |

----

Index

|   |                                                                                                                                                    |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| 11.1   | Computation of Loss Per Common Share.                                                                                                                   |
|   |                                                                                                                                                    |
| 31.1   | Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                    |
|   |                                                                                                                                                    |
| 31.2   | Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                    |
|   |                                                                                                                                                    |
| 32.1   | Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|   |                                                                                                                                                    |
| 32.2   | Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

----