eacoq.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
x Quarterly
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the
Quarterly Period ended April 2,
2008
o Transition report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the
transition period from _______ to _______
Commission
File No. 000-14311
EACO
CORPORATION
(Exact
Name of Registrant as Specified in Its Charter)
|
Florida
|
59-2597349
|
|
(State
of Incorporation)
|
(I.R.S.
Employer Identification No.)
|
1500 NORTH LAKEVIEW
AVENUE
ANAHEIM,
CALIFORNIA 92807
(Address
of Principal Executive Offices)
(714)
876-2490
(Registrant’s
Telephone No.)
Indicate
by check mark whether the registrant has (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act 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
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer o Accelerated
filer o Non-accelerated
filer o Smaller
reporting company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x
|
Title of each class
|
|
Number of shares
outstanding
|
|
|
|
|
|
Common
Stock
|
|
3,910,264
|
|
$.01
par value
|
|
As
of May 2, 2008
|
PART
I
FINANCIAL
INFORMATION
Item
1. Financial Statements
EACO
Corporation
Condensed
Statements of Operations
|
|
|
(Unaudited)
|
|
|
|
|
Quarters
Ended
|
|
|
|
|
April
2, 2008
|
|
|
March
28, 2007
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Rental
Revenue
|
|
$ |
299,000 |
|
|
$ |
234,200 |
|
|
Total
Revenues
|
|
|
299,000 |
|
|
|
234,200 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost
and Expenses:
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
203,100 |
|
|
|
89,300 |
|
|
General
and administrative expenses
|
|
|
499,900 |
|
|
|
344,700 |
|
|
Loss
on disposal of assets
|
|
|
-- |
|
|
|
226,100 |
|
|
Total
costs and expenses
|
|
|
703,000 |
|
|
|
660,100 |
|
|
Loss
from operations
|
|
|
(404,000 |
) |
|
|
(425,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
Investment
gain (loss)
|
|
|
95,700 |
|
|
|
(104,700 |
) |
|
Interest
and other income
|
|
|
62,800 |
|
|
|
29,500 |
|
|
Interest
expense
|
|
|
(216,600 |
) |
|
|
(125,800 |
) |
|
Loss
from continuing operations
|
|
|
(462,100 |
) |
|
|
(626,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
Loss
from discontinued operations, net
of income tax
|
|
|
(596,200 |
) |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(1,058,300 |
) |
|
|
(626,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
Undeclared
cumulative preferred stock dividend
|
|
|
-- |
|
|
|
(19,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to common shareholders
|
|
|
(1,058,300 |
) |
|
|
(646,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share continuing operations
|
|
$ |
(0.12 |
) |
|
$ |
(0.17 |
) |
|
Discontinued
operations
|
|
|
(0.15 |
) |
|
|
0.00 |
|
|
Net
loss
|
|
$ |
(0.27 |
) |
|
$ |
(0.17 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted weighted average common shares outstanding
|
|
|
3,910,264 |
|
|
|
3,906,800 |
|
See
accompanying notes to condensed financial statements.
Condensed
Balance Sheets
|
|
|
April
2, 2008
(Unaudited)
|
|
|
January
2,
2008
|
|
|
ASSETS
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
241,000 |
|
|
$ |
1,030,600 |
|
|
Restricted
cash- short-term
|
|
|
-- |
|
|
|
1,186,500 |
|
| Receivables |
|
|
46,400 |
|
|
|
6,500 |
|
|
Prepaid
and other current assets
|
|
|
175,200 |
|
|
|
145,500 |
|
|
Total
current assets
|
|
|
462,600 |
|
|
|
2,369,100 |
|
|
|
|
|
|
|
|
|
|
|
|
Investments,
trading
|
|
|
-- |
|
|
|
290,700 |
|
|
Certificate
of deposit
|
|
|
1,154,500 |
|
|
|
1,148,500 |
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment:
|
|
|
|
|
|
|
|
|
| Land |
|
|
5,682,800 |
|
|
|
5,682,800 |
|
|
Building
and improvements
|
|
|
7,896,600 |
|
|
|
7,896,600 |
|
|
Equipment
|
|
|
2,398,900 |
|
|
|
2,398,900 |
|
|
|
|
|
15,978,300 |
|
|
|
15,978,300 |
|
|
Accumulated
depreciation
|
|
|
(2,851,400 |
) |
|
|
(2,672,700 |
) |
|
Net
property and equipment
|
|
|
13,126,900 |
|
|
|
13,305,600 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets, principally deferred charges, net of accumulated
amortization
|
|
|
891,100 |
|
|
|
884,400 |
|
|
|
|
$ |
15,635,100 |
|
|
$ |
17,998,300 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
287,600 |
|
|
$ |
341,200 |
|
|
Securities
sold, not yet purchased
|
|
|
-- |
|
|
|
786,500 |
|
|
Accrued
liabilities
|
|
|
668,700 |
|
|
|
2,425,600 |
|
|
Due
to related party
|
|
|
1,423,500 |
|
|
|
-- |
|
|
Current
portion of workers compensation benefit liability
|
|
|
265,600 |
|
|
|
132,100 |
|
|
Current
portion of long-term debt
|
|
|
193,500 |
|
|
|
173,500 |
|
|
Current
portion of obligation under capital lease
|
|
|
2,400 |
|
|
|
700 |
|
|
Current
portion of accrued loss on sublease contract
|
|
|
85,700 |
|
|
|
81,100 |
|
|
Total
current liabilities
|
|
|
2,927,000 |
|
|
|
3,940,700 |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
rent
|
|
|
96,000 |
|
|
|
120,000 |
|
|
Deposit
liability
|
|
|
165,900 |
|
|
|
156,900 |
|
|
Workers
compensation benefit liability
|
|
|
3,478,700 |
|
|
|
3,669,900 |
|
|
Long-term
debt
|
|
|
6,407,600 |
|
|
|
6,473,100 |
|
|
Obligations
under capital lease
|
|
|
2,876,000 |
|
|
|
2,877,900 |
|
|
Accrued
loss on sublease contract
|
|
|
622,100 |
|
|
|
639,800 |
|
|
Total
liabilities
|
|
|
16,573,300 |
|
|
|
17,878,300 |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity (deficit):
|
|
|
|
|
|
|
|
|
|
Preferred
stock of $0.01 par; authorized 10,000,000 shares;
|
|
|
|
|
|
|
|
|
outstanding
36,000 shares at April 2, 2008 and
January 2, 2008
(liquidation value $900,000)
|
|
|
400 |
|
|
|
400 |
|
|
Common
stock of $.01 par; authorized 8,000,000 shares;
|
|
|
|
|
|
|
|
|
outstanding 3,910,264
shares at April 2, 2008 and January 2, 2008
|
|
|
39,000 |
|
|
|
39,000 |
|
|
Additional
paid-in capital
|
|
|
10,932,600 |
|
|
|
10,932,300 |
|
|
Accumulated
deficit
|
|
|
(11,910,200 |
) |
|
|
(10,851,700 |
) |
|
Total
shareholders' equity (deficit)
|
|
|
(938,200 |
) |
|
|
120,000 |
|
|
|
|
$ |
15,635,100 |
|
|
$ |
17,998,300 |
|
See
accompanying notes to condensed financial statements.
EACO
Corporation
Condensed
Statements of Cash Flows
|
|
|
(Unaudited)
|
|
|
|
|
Quarters
Ended
|
|
|
|
|
April
2, 2008
|
|
|
March
28, 2007
|
|
|
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(1,058,300 |
) |
|
$ |
(626,900 |
) |
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
203,100 |
|
|
|
89,200 |
|
|
Net
(gain) loss on investments
|
|
|
(95,800 |
) |
|
|
104,700 |
|
|
Loss
on disposal of equipment
|
|
|
-- |
|
|
|
226,100 |
|
|
Amortization
of deferred rent
|
|
|
(24,000 |
) |
|
|
(22,700 |
) |
|
Amortization
of loss on sublease contracts
|
|
|
(13,100 |
) |
|
|
-- |
|
|
Decrease
(increase) in:
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(39,900 |
) |
|
|
436,300 |
|
|
Prepaids
and other current assets
|
|
|
(29,700 |
) |
|
|
1,900 |
|
|
Investments
|
|
|
(150,300 |
) |
|
|
414,800 |
|
|
Other
assets
|
|
|
(31,100 |
) |
|
|
(125,200 |
) |
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(53,600 |
) |
|
|
(118,200 |
) |
|
Securities
sold, not yet purchased
|
|
|
(255,700 |
) |
|
|
638,500 |
|
|
Accrued
liabilities
|
|
|
(1,732,900 |
) |
|
|
(47,600 |
) |
|
Deposit
liability
|
|
|
9,000 |
|
|
|
34,400 |
|
|
Workers
compensation benefit liability
|
|
|
(57,700 |
) |
|
|
(153,200 |
) |
|
Net
cash (used in) provided by operating activities
|
|
|
(3,330,000 |
) |
|
|
852,100 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
Reduction
(increase) in restricted cash
|
|
|
1,186,500 |
|
|
|
(638,300 |
) |
|
Net
cash (used in) provided by investing activities
|
|
|
1,186,500 |
|
|
|
(638,300 |
) |
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
Payments
on long-term debt
|
|
|
(45,500 |
) |
|
|
(26,300 |
) |
|
Preferred
stock dividend
|
|
|
-- |
|
|
|
(19,100 |
) |
|
Payment
on capital lease
|
|
|
(200 |
) |
|
|
(4,000 |
) |
|
Proceeds
from issuance of related party debt
|
|
|
1,824,600 |
|
|
|
-- |
|
|
Payment
on related party debt
|
|
|
(425,000 |
) |
|
|
-- |
|
|
Net
cash (used in) provided by financing activities
|
|
|
1,353,900 |
|
|
|
(49,400 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
|
|
(789,600 |
) |
|
|
164,400 |
|
|
Cash
and cash equivalents- beginning of year
|
|
|
1,030,600 |
|
|
|
1,196,900 |
|
|
Cash
and cash equivalents- end of period
|
|
$ |
241,000 |
|
|
$ |
1,361,300 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash
paid during the three months for interest
|
|
$ |
191,800 |
|
|
$ |
125,800 |
|
See
accompanying notes to condensed financial statements.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
April 2,
2008
(Unaudited)
Note
1. Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America (“GAAP”) and the interim financial information instructions to Form
10-Q, and do not include all the information and notes required by GAAP for
complete financial statements. In the opinion of management, all
adjustments necessary to present fairly, in accordance with GAAP, the financial
position of Eaco Corporation (the “Company”) as of April 2, 2008 and the results
of operations and cash flows for the interim periods presented, have been made
(consisting of normal recurring accruals and reclassifications of assets held
for sale to assets held and used). The result of operations for the
three months ended April 2, 2008 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31,
2008. For further information, refer to the financial statements and
notes thereto included in the Company’s Annual Report on Form 10-K for the
fiscal year ended January 2, 2008.
Note
2. Investments
Prior to
April 2, 2008, investments consisted of trading securities and securities sold,
not yet purchased. The Company holds no such investments at April 2,
2008.
These
securities were carried at fair market value, with unrealized gains and losses
reported in the statement of operations as a component of other income
(expense). Gains or losses on securities sold were based on the
specific identification method. The results for the quarters ended April 2, 2008
and March 28, 2007 included realized gains from the sale of marketable
securities of $12,500 and $7,000, respectively and unrealized losses of $447,500
and $111,700, respectively.
A primary
investment strategy used by the Company in 2008 and 2007 consisted of the
short-selling of securities, which resulted in obligations to purchase
securities at a later date. As of April 2, 2008, the Company had no
obligation for these securities sold and not yet purchased compared to $786,500
at January 2, 2008. The Company recognized net gains on securities
sold, not yet purchased of $530,800 and net losses of $32,000 for the quarters
ended April 2, 2008 and March 28, 2007, respectively.
Note
3. Other Assets
Other
assets are summarized as follows:
|
|
|
April
2, 2008 (unaudited)
|
|
|
January
2, 2008
|
|
|
Leasehold
origination costs
|
|
$ |
321,300 |
|
|
$ |
318,100 |
|
|
Loan
fees
|
|
|
172,100 |
|
|
|
172,100 |
|
|
Tenant
improvements
|
|
|
210,700 |
|
|
|
210,700 |
|
|
Deferred
commissions and fees
|
|
|
232,400 |
|
|
|
232,500 |
|
|
Deferred
rent
|
|
|
241,300 |
|
|
|
203,100 |
|
|
Other
assets
|
|
|
-- |
|
|
|
10,000 |
|
|
|
|
|
1,177,800 |
|
|
|
1,146,500 |
|
|
Less
accumulated amortization
|
|
|
(286,700 |
) |
|
|
(262,400 |
) |
|
|
|
$ |
891,100 |
|
|
$ |
884,400 |
|
Amortization
expense was $24,300 and $25,000 for the quarters ended April 2, 2008 and March
28, 2007, respectively.
Note
4. Fowler Property, located in Tampa, Florida
On March
19, 2008, the Company signed a sublease agreement with a third party for the
sublease of the Fowler Property, which was vacant at fiscal
year-end. The Company obtained the landlord’s consent to the sublease
subsequent to quarter-end, at which time the sublease became
effective. The rental income is $22,500 monthly which escalates at 6%
every two years. The sublease term is for two years with a twelve
year renewal option. The monthly sublease income will be
approximately $8,000 less than the monthly lease payments. The
sublease allows for a $100,000 rent credit to be given to the subtenant in order
for the subtenant to perform necessary repairs on the property, specifically to
replace the roof and air conditioning.
On March
21, 2008, the Company entered into a purchase agreement to purchase the Fowler
Property from the current landlord for $3.13 million. The agreement
calls for the purchase transaction to close on or before June 20,
2008. The Company believes it can finance 60% of the purchase
price. The Company is currently exploring several options at its
disposal with regards to raising capital for the required down
payment.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
April 2,
2008
(Unaudited)
Note
5. Accrued Liabilities
Accrued
Liabilities are summarized as follows:
|
|
|
April
2, 2008 (unaudited)
|
|
|
January
2,
2008
|
|
|
Property
taxes
|
|
$ |
-- |
|
|
$ |
15,700 |
|
|
Accrued
settlements with broker
|
|
|
550,000 |
|
|
|
2,317,700 |
|
|
Legal
and accounting
|
|
|
39,300 |
|
|
|
52,600 |
|
|
Unearned
rental revenue
|
|
|
76,000 |
|
|
|
36,300 |
|
|
Other
|
|
|
3,400 |
|
|
|
3,300 |
|
|
|
|
$ |
668,700 |
|
|
$ |
2,425,600 |
|
Note
6. Workers’ Compensation Liability
The
Company self-insures workers’ compensation losses up to certain
limits. The liability for workers’ compensation claims represents an
estimate of the present value of the ultimate cost of uninsured losses which are
unpaid as of the balance sheet dates. The estimate is continually
reviewed and adjustments to the Company’s estimated claim liability, if any, are
reflected in current operations. The workers’ compensation benefit
liability was $3,744,300 and $3,802,000 at April 2, 2008 and January 2, 2008,
respectively.
After the
sale of substantially all of the Company’s restaurant assets (the “Asset Sale”)
to Banner Buffets, LLC (“Banner”) pursuant to that certain Asset Purchase
Agreement dated February 22, 2005, the Company terminated its self-insurance
program, and no further claims were incurred after June 29, 2005.
The State
of Florida Division of Workers’ Compensation (“the Division”) requires
self-insured companies to pledge collateral in favor of the Division in an
amount sufficient to cover the Company’s projected outstanding
liability. In compliance with this requirement, in July 2004, the
Company provided the Division with a $1 million letter of credit from a bank
with an expiration date of May 30, 2008. Based upon the bank’s
evaluation of the Company’s credit and to avoid collateralization requirements,
the letter of credit is guaranteed on behalf of the Company by Bisco Industries,
Inc. (“Bisco”). The Company’s Chief Executive Officer and Chairman of
the Board of Directors, Glen F. Ceiley, is the President of Bisco. In
addition, the Company pledged another $3,139,000 in letters of credit from
various banks with expirations in 2008 and 2009. These letters of credit are
collateralized by the equity the Company holds in its Sylmar property of $2
million and certificates of deposit totaling $1,139,000.
Note
7. Related Party Transactions
In
January 2008, the Company borrowed, on a short-term basis, $1,824,600 from Bisco
to fund operations. The note accrues interest monthly at 7.5% per
annum and is due in June 2008. The Company made a repayment of
$425,000 during the quarter. The balance on the note was $1,423,500
as of April 2, 2008. Subsequent to quarter end, the Company repaid
another $1,150,000 with funds received from the financing of its Brooksville
Property. See discussion in Note 10, Subsequent Events.
The
Company’s accounting functions are performed by Bisco’s accounting personnel and
independent contract workers pursuant to a lease and facilities
agreement. The amounts paid to Bisco were $39,300 and $26,900
for the three months ended April 2, 2008 and March 28, 2007,
respectively.
Note
8. Earnings (Loss) Per Share
The
following is a quarterly reconciliation of the numerators and denominators of
the basic and diluted earnings per share (EPS) computations for net loss from
continuing operations attributable to common shareholders:
|
|
|
Quarters
Ended
|
|
|
|
|
(Unaudited)
|
|
|
|
|
April
2, 2008
|
|
|
March
28, 2007
|
|
|
|
|
|
|
|
|
|
EPS
from continuing operations - basic and diluted:
|
|
|
|
|
|
|
|
Loss
from continuing operations
|
|
$ |
(462,100 |
) |
|
$ |
(626,900 |
) |
|
Less
preferred stock dividends
|
|
|
-- |
|
|
|
(19,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations
|
|
|
|
|
|
|
|
|
|
for
basic and diluted
|
|
|
|
|
|
|
|
|
|
EPS
Computation
|
|
$ |
(462,100 |
) |
|
$ |
(646,000 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding for basic and diluted EPS
computation
|
|
|
3,910,264 |
|
|
|
3,906,800 |
|
|
|
|
|
|
|
|
|
|
|
Loss
per common share from continuing operations - basic and
diluted
|
|
$ |
(0.12 |
) |
|
$ |
(0.17 |
) |
NOTES
TO CONDENSED FINANCIAL STATEMENTS
April 2,
2008
(Unaudited)
Note
9. Commitments and Contingencies
Legal
Matters
In
connection with the Asset Sale, a broker demanded a commission payment of $3.5
million. The Company filed suit against the broker in an effort to
expedite a resolution of the claim. The Company agreed to place
$400,000 in escrow in connection with the lawsuit. In December 2007,
a final judgment was made by the court in favor of the broker for approximately
$2,317,000. As a result of the judgment and subsequent settlement
agreement between the Company and the broker, the $400,000 in escrow was
returned to the Company in January 2008. On January 22, 2008, the Company and
the broker, among others, entered into a written settlement agreement whereby
the Company, without admitting liability, agreed to pay the broker the amount of
$2.317 million in satisfaction of the final judgment. The settlement
amount was paid in January 2008. In March 2008, the court ruled the
Company owed an additional $46,200 in reimbursements related to legal costs
incurred by the broker. That amount was paid during the quarter and
is included in discontinued operations in the accompanying condensed statement
of operations for the quarter ended April 2, 2008.
In August
2005, the Company was sued by another broker who claimed that a commission of
$749,000 was payable to him as a result of the Asset Sale. On May 9,
2008, the Company reached a settlement agreement with the broker. The
Company, without admitting liability, agreed to pay the broker
$550,000. Such amount is included in accrued liabilities at April 2,
2008 and recorded as discontinued operations in the accompanying condensed
statement of operations for the quarter ended April 2, 2008.
Note
10. Subsequent Events
In April
2008, the Company completed the financing of its Brooksville Property, which had
been purchased in December 2007 for $2,027,000 in cash. The Company
received $1,180,000 from the financing. The note is to be repaid over
10 years at an annual interest rate of 6.65%. Proceeds from the
financing were used to pay the note due to Bisco, a related party.
On May
13, 2008, the Company borrowed $550,000 from Bisco to satisfy the settlement
with a broker, see Note 9 – Legal Proceedings. The amount accrues
interest at 7.5% per annum and is due no later than November 13,
2008.
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Critical
Accounting Policies
Revenue
Recognition
The
Company leases its properties to tenants under operating leases with terms of
over one year. Some of these leases contain scheduled rent
increases. We record rent revenue for leases which contain scheduled rent
increases on a straight-line basis over the term of the lease, in accordance
with SFAS No. 13, “Accounting for Leases.”
Receivables
are carried net of an allowance for uncollectible receivables. An
allowance is maintained for estimated losses resulting from the inability of any
tenant to meet their contractual obligations under their lease
agreements. We determine the adequacy of this allowance by
continually evaluating individual tenants’ receivables considering the tenant’s
financial condition and security deposits, and current economic
conditions. An allowance for uncollectible accounts of approximately
$27,400 was determined to be necessary with regards to the outstanding rent
amount due the Company from the tenant of one of its stores that has declared
bankruptcy. It is unclear whether any of these funds will be
collected during the bankruptcy proceedings.
Long
Lived Assets
The
Company’s accounting policy for the recognition of impairment losses on
long-lived assets is considered critical. The Company’s policy is to
review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. For the purpose of the impairment review, assets tested
on an individual basis. The recoverability of the assets are measured
by a comparison of the carrying value of each asset to the future net
undiscounted cash flows expected to be generated by such asset. If
such assets are considered impaired, the impairment recognized is measured by
the amount by which the carrying value of the assets exceeds the fair
value.
Worker’s
Compensation Liability
The
Company’s policy for estimating its workers’ compensation liability is
considered critical. The Company self-insures workers’ compensation
claims losses up to certain limits. The liability for workers’
compensation represents an estimate of the present value of the ultimate cost of
uninsured losses which are unpaid as of the balance sheet dates. The
estimate is continually reviewed and adjustments to the Company’s estimated
claim liability, if any, are reflected in current operations. On an
annual basis, the Company obtains an actuarial report which estimates its
overall exposure based on historical claims and an evaluation of future
claims. The Company pursues recovery of certain claims from an
insurance carrier. Recoveries, if any, are recognized when
realization is reasonably assured.
Deferred
Tax Assets
In
addition, the Company’s policy for recording a valuation allowance against
deferred tax assets is considered critical. A valuation allowance is
provided for deferred tax assets if it is more likely than not these items will
either expire before the Company is able to realize their benefit, or that
future deductibility is uncertain. In accordance with SFAS No. 109,
the Company records net deferred tax assets to the extent the Company believes
these assets will more likely than not be realized. In making such
determination, the Company considers all available positive and negative
evidence, including scheduled reversals of deferred tax liabilities, projected
future taxable income, tax planning strategies and recent financial
performance. SFAS No. 109 further states that forming a conclusion
that a valuation allowance is not required is difficult when there is negative
evidence, such as significant decreases in operations. As a result of
the Company’s recent disposal of significant business operations, the Company
concluded that a valuation allowance should be recorded against federal and
state net operating losses and certain federal and state tax
credits. The utilization of these items requires sufficient taxable
income.
Loss
on Sublease Contracts
The
Company’s policy for recording a loss on sublease contracts is to evaluate the
costs expected to be incurred under an operating sublease in relation to the
anticipated revenue in accordance with FTB 79-15, Section L-10; if such costs
exceed anticipated revenue on the operating sublease, the Company recognizes a
loss equal to the present value of the shortfall over the term of the
sublease.
New
Accounting Pronouncements
None.
Use
of Estimates
The
preparation of the condensed consolidated financial statements of the Company
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. These estimates
include the Company’s workers’ compensation liability, the depreciable lives of
assets, estimated loss on or impairment of long-lived assets and the valuation
allowance against deferred tax assets. Actual results could differ
from those estimates. For a full description of the Company’s
critical accounting policies, see Management’s Discussion and Analysis of
Financial Condition and Results of Operations in the Company’s Annual Report on
Form 10-K for the year ended January 2, 2008.
Results
of Operations
Comparison
of Quarters Ended April 2, 2008 and March 28, 2007
At April
2, 2008, the company owns two restaurant properties, one located in Orange Park,
Florida (the “Orange Park Property”) and one in Brooksville, Florida (the
“Brooksville Property”). Both of these properties were vacant at the
fiscal year end January 2, 2008. A tenant was found for the
Brooksville Property with the lease period commencing on January 9,
2008. The Orange Park Property remains vacant at April 2,
2008. The Company is obligated for leases of two restaurant
locations, one located in Tampa, Florida (the “Fowler Property”) and another
located in Deland, Florida (the “Deland Property”). The Deland
Property is subleased to a restaurant operator while the Fowler Property was
vacant at April 2, 2008. A subtenant was found subsequent to
quarter-end. In addition, the Company owns an income producing real
estate property held for investment in Sylmar, California (the “Sylmar
Property”) with two industrial tenants.
The
Company experienced an increase of $64,800 or 28% in rental revenue during the
first quarter of 2008 compared to the first quarter of 2007, due to having a
tenant in the Company’s Brooksville Property for most of the first quarter of
2008, which was vacant during the first quarter of 2007. The
additional rent income was offset by the loss of the tenant in the Company’s
Orange Park Property, due to that tenant filing for bankruptcy at the end of
2007.
Depreciation
and amortization expenses increased $113,800 or 127% primarily due to two
properties, the Fowler Property and Deland Property, returned to the Company
following the Banner bankruptcy. The Fowler Property was returned to
the Company in December 2007 and not depreciated during the first quarter of
2007. The Deland Property was held for sale in the first quarter of
2007 and not depreciated.
General
and administrative expenses consist mainly of rent and related property
insurance expense, legal and other professional fees. General and administrative
expenses increased $155,200 or 45% during the first quarter of 2008 as compared
to the first quarter of 2007. First, rent expense increased from the
return of the Tampa property in the fourth quarter of 2007 due to the Banner
bankruptcy. Second, the Company paid during the quarter approximately
$115,000 in late property taxes and fees due to Banner not making payments
required under the lease assigned to it during its final months in
operation. Further, the Company saw an increase in bad debt expense
of approximately $28,000 related to the bankruptcy of the tenant in the Orange
Park Property.
During
the quarter ended March 28, 2007, the Company recognized a loss of $226,100
related to the sale of equipment at one of the Company’s
properties. The sale was the result of the expiration of the lease at
that property. The Company did not sell any capitalized property in
the quarter ended April 2, 2008.
In the
quarter ended April 2, 2008, interest and other income increased to $62,800 from
$29,500 in the respective prior year’s quarter due to interest received on
restricted cash, not held in the same quarter of 2007.
The
results for the first quarter of 2008 included unrealized losses from the sale
of marketable securities of $8,700 and realized gains of
$104,400. The first quarter of 2007 included unrealized losses of
$112,000 and realized gains of $7,000.
Interest
expense increased by $90,800 in the quarter ending April 2, 2008 versus the
quarter ending March 28, 2007, mainly due to the refinance of the Company’s
Sylmar property that occurred in the fourth quarter of 2007. The
resulting interest on the higher loan amount was more than the interest paid on
the mortgage in the first quarter of 2007.
Loss from
discontinued operations included the final settlement amount related to the
Lurie trial that was completed in December 2007 and the Horn settlement that was
reached in May 2008. The amount represents costs associated with the
Lurie trial that the Company was required to reimburse Lurie, the
plaintiff. It also includes the settlement amount of $550,000
associated with the Horn trial, that the Company paid on May 14,
2008.
The net
loss was $1,058,300 in the first quarter of 2008 compared to a net loss of
$626,900 in the first quarter of 2007. Loss per share for the quarter
was 27 cents in 2008 compared to 17 cents in 2007. The 2008 first quarter loss
was due primarily to legal fees, property taxes paid on vacant buildings and
increases in rent expense due to properties returned to the Company after the
Banner bankruptcy. The loss in the first quarter of 2007 was
principally due to investment losses and the losses attributable to the
disposition of the equipment at a closed facility.
Liquidity
and Capital Resources
The
accompanying condensed financial statements of the Company have been prepared
assuming that the Company will continue in its present form. The Company
incurred significant losses and had negative cash flow from operations for the
year ended January 2, 2008, and had a working capital deficit of approximately
$1,571,800 at that date. During the quarter ended April 2, 2008, the
Company incurred further losses and had a working capital deficit of
approximately $2,465,000. The cash balance at April 2, 2008 is
$241,000.
The cash
outflows through March 2009 are estimate to total approximately $647,700, which
will generate a negative cash balance of $406,700 in the next twelve
months.
The
Company currently has estimated equity of $4 to $7 million in its three owned
properties, of which $2,000,000 is encumbered by a standby letter of credit to
the Florida Self Insurers Guaranty Association (“FSIGA”) as collateral for its
workers compensation liability. The Company has the ability of
selling any or all of these properties to fund operations; however, there can be
no assurance that improvement in operating results will occur or that the
Company will successfully implement its plans.
It is
likely the Company will require additional funds in order to maintain its
current operations. In the past, short term funds have been provided
by Bisco and the option to continue that process is available. In the
long term, the Company expects any capital requirements to be provided through
the sale or refinance of property currently held. Additional sources
of financing may include public or private offerings of equity or debt
securities. Whereas management believes it will have access to these financing
sources, no assurance can be given that such additional sources of financing
will be available on acceptable terms, on a timely basis or at all.
The
accompanying financial statements do not include any adjustments that might be
necessary if the Company is unable to continue in its present form.
In
January 2008, the Company received a bridge loan from Bisco in the amount of
approximately $1,825,000, of which $425,000 was repaid in the same month and an
additional $1,150,000 was paid subsequent to quarter end. Bisco’s
sole shareholder and President is Glen F. Ceiley, the Company’s Chief Executive
Officer and Chairman of the Board. The note agreement does not provide for
regularly scheduled payments; however, any remaining outstanding principal
balance plus accrued interest is due six months from the date of the note,
although the Company has the ability to extend the loan through March
2009.
Subsequent
to year end, the Company financed the Brooksville Property, which was purchased
in December 2007 with cash proceeds from the refinance of the Sylmar
Property. The cash paid for the Brooksville Property was
approximately $2,027,000, and the Company financed approximately $1,200,000
during the quarter ending April 2, 2008. Proceeds from the financing
were used to pay down the Bisco loan by approximately $1,150,000.
On May
13, 2008, due to the Horn settlement, the Company borrowed an additional
$550,000 from Bisco to pay the settlement amount. The loan accrues
interest at 7.5% per annum and is due no later than November 13,
2008.
Substantially
all of the Company’s revenues are derived from rental
income. Therefore, the Company has not carried significant
receivables or inventories and the primary working capital requirements are the
repayment of debt, legal expenses and payment on the workers’ compensation
liability.
As stated
above, at April 2, 2008, the Company had a working capital deficit of $2,465,000
compared to a working capital deficit of $1,571,600 at January 2,
2008. The decrease was due to the payment of the Lurie settlement and
cash outlays for operating expenses, such as legal costs and
rents. Cash used in operating activities was $3,330,000 in the three
months ended April 2, 2008, compared to cash provided by operations of $852,100
in the three months ended March 28, 2007, primarily due to the payment of the
Lurie settlement.
Cash
provided by investing activities was $1,186,500 for the first quarter of 2008
versus cash used of $638,300 in the first quarter of 2007. During the
first quarter of 2008, the Company received $400,000 of previously restricted
cash in escrow related to the Lurie litigation. Also, during the
quarter, the Company liquidated all of its equity holdings, including securities
sold, not yet purchased resulting in a further decrease reduction of restricted
cash of $786,500. Cash related to these securities sold, not yet
purchased was considered restricted as it was required to repurchase the
stock. During the first quarter of 2007, the Company increased its
securities sold, not yet purchased approximately $638,000.
Net cash
provided by financing activities increased approximately $1,400,000 in the first
quarter of 2008 due to the proceeds received from the related party loan from
Bisco of $1,825,000, offset by the repayment during the quarter of
$425,000.
In
connection with the Convertible Preferred Stock owned by the Company’s Chief
Executive Officer and Chairman of the Board, Glen Ceiley, dividends are paid
quarterly when declared by the Company’s Board of Directors. The
Company did not pay any quarterly dividends in the three months ended April 2,
2008. There were no undeclared dividends as of April 2,
2008.
The
Company is required to pledge collateral for its Workers’ Compensation
Self-Insurance Liability with FSIGA. The Company has a total of $1.37
million pledged collateral. Bisco Industries, Inc. (“Bisco”) provides
$1 million of this collateral. As previously mentioned, the Company’s
Chief Executive Officer and Chairman of the Board of Directors, Glen F. Ceiley,
is the President of Bisco. During 2007, the Company received a demand
from the Florida Division of Workers’ Compensation to post further collateral in
the amount of $2,769,500. The Company pledged the amount by posting a
standby letter of credit. The letter of credit is collateralized by a
certificate of deposit of $769,500 and the equity the Company holds in the
Sylmar building. The Company may be required to increase this
collateral pledge from time to time in the future, based on its workers’
compensation claim experience and various FSIGA requirements for self-insured
companies. Despite the sale of the Company’s restaurants, the
workers’ compensation will remain an ongoing liability for the Company until all
claims are paid, which will likely take many years.
The
Company entered into a loan agreement with GE Capital for the Orange Park
Property in 1996. As of April 2, 2008, the outstanding balance due
under the Company’s loan with GE Capital was $798,100. In December
2007, the Company refinanced its Sylmar property with Community
Bank. The cash proceeds were used i) to fund the collateral required
by the Division for the projected outstanding worker’s compensation liability,
ii) for down payment on the purchase of the restaurant property located in
Brooksville, Florida, and iii) for payment of the Lurie settlement in January
2008. As of April 2, 2008, the outstanding balance due on the
Community Bank loan was $5,802,500. The weighted average interest
rate on the Company’s loans is 6.17%.
The
preceding discussion of liquidity and capital resources contains certain
forward-looking statements. Forward-looking statements involve a
number of risks and uncertainties. Among the other factors that could cause
actual results to differ materially are the following: failure of
facts to conform to necessary management estimates and assumptions; the
willingness of GE Capital, Community Bank or other lenders to extend financing
commitments; repairs or similar expenditures required for existing properties
due to weather or acts of God; the Company’s success in selling properties
listed for sale; the economic conditions in the new markets into which the
Company expands, if any; business conditions, such as inflation or a recession,
and growth in the general economy; and other risks identified from time to time
in the reports filed by the Company with the Securities and Exchange Commission
(the “SEC”), registration statements and public announcements.
Off-Balance
Sheet Arrangements
The
Company has no off-balance sheet arrangements that are reasonably likely to have
a current or future effect on the financial position, revenues, results of
operations, liquidity or capital expenditures, except for the land leases on the
restaurant properties treated as operating leases.
Contractual
Financial Obligations
In
addition to using cash flow from operations, the Company finances its operations
through the issuance of debt, and previously by entering into
leases. These financial obligations are recorded in accordance with
accounting rules applicable to the underlying transactions, with the result that
some are recorded as liabilities in the balance sheet while others are required
to be disclosed in the Notes to the consolidated financial statements and
Management’s Discussion and Analysis of Financial Condition and Results of
Operations in the Company’s Annual Report on Form 10-K for the year ended
January 2, 2008.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
The
Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange
Act and is not required to provide the information required under this
item.
Item
4. Controls and Procedures
Evaluation of disclosure controls and
procedures. As required by Rule 13a-15 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the
period covered by this report, the Company conducted an evaluation of the
effectiveness of the design and operation of the Company’s disclosure controls
and procedures. This evaluation was carried out under the supervision
and with the participation of the Company’s management, including the Chief
Executive Officer. Based upon that evaluation, the Company’s Chief
Executive Officer has concluded that the Company’s disclosure controls and
procedures are not effective in alerting them to material information regarding
the Company’s financial statement and disclosure obligation in order to allow
the Company to meet its reporting requirements under the Exchange Act in a
timely manner.
At
January 2, 2008 and April 2, 2008, management has identified a lack of
sufficient oversight and review as well as a lack of the appropriate number of
resources to ensure the complete and proper application of generally accepted
accounting principles related to certain routine accounting
transactions. Specifically, this material weakness resulted in errors
in the preparation of the Company’s financial statements and related
disclosures.
This
material weakness, if not remediated, has the potential to cause material
misstatements in the future, with regard to routine and complex accounting
transactions.
The
Company is in the process of developing and implementing remediation plans to
address its material weaknesses. Management has identified specific
remedial actions to address the material weakness described above:
|
·
|
Improve
the effectiveness of the accounting group by continuing to augment
existing Company resources with consultants that have the technical
accounting capabilities to assist in the analysis and recording of complex
accounting transactions.
|
|
·
|
Improve
period-end closing procedures by establishing a monthly hard close process
by implementing a process that ensures the timely review and approval of
routing and complex accounting
estimates.
|
Due to
its inherent limitations, internal control over the financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
Changes in internal
control. There have been no changes in internal control over
financial reporting that occurred in the Company’s last fiscal quarter that
have materially
affected, or are reasonably likely to materially affect internal controls over
financial reporting.
As
previously disclosed in the Company’s reports filed with the SEC, effective
April 2006, the accounting functions for the Company are performed by Bisco’s
accounting personnel and independent contract workers pursuant to a lease and
facilities agreement. Bisco is an affiliated company owned by Glen Ceiley, the
Company’s Chairman and Chief Executive Officer.
PART
II
OTHER
INFORMATION
Item
1. Legal Proceedings
From time
to time, the Company may be named in claims arising in the ordinary course of
business. Currently, no legal proceedings or claims are pending
against us or involve us that, in the opinion of the Company’s management, could
reasonably be expected to have a material adverse effect on the Company’s
business or financial condition, except as discussed below.
As
previously disclosed in the Company’s reports filed with the SEC, in August
2005, the Company was sued in Miami-Dade County Circuit Court by Jonathan Horn
of Horn Capital Realty, who claimed that a commission of $749,000 was payable to
him as a result of the Asset Sale. On May 9, 2008, the Company, Horn
Capital Realty and Jonathan Horn, individually and as President of Horn Capital
Realty, entered into a written settlement agreement whereby the Company, without
admitting liability, agreed to pay Horn Capital Realty the amount of $550,000
and Horn Capital Realty agreed to dismiss the lawsuit. Also under the
settlement agreement, all parties mutually released each other with respect to
claims arising out of or relating to the lawsuit.
As
previously reported, the Company was involved in litigation with Florida Growth
Realty, Inc. (“FGR”) involving a claim by FGR for a commission resulting from
the Asset Sale. On December 20, 2007, the Duval County Circuit Court
entered a final judgment in connection with the litigation in the amount of
$2,317,667 with interest accruing at 11% per annum pursuant to Florida
law. On January 22, 2008, the Company, Glen Ceiley, individually and
as Chairman and CEO of the Company, FGR and Robert Lurie, individually and as
President of FGR, entered into a written settlement agreement whereby the
Company, without admitting liability, agreed to pay FGR the amount of $2,317,667
in satisfaction of the final judgment and FGR agreed to immediately execute and
file with the court the Satisfaction of Judgment. Also under the
settlement agreement, all parties mutually released each other with respect to
claims arising out of or relating to the lawsuit except with respect to taxable
costs of FGR arising out of the lawsuit, which totaled approximately
$46,000. These amounts were paid during the first quarter of
2008.
Item
1A. Risk Factors
The
Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange
Act and is not required to provide the information required under this
item.
Item
2. Unregistered Sales of Equity Securities and Use
of Proceeds
None.
Item
3. Defaults upon Senior Securities
None.
Item
4. Submission of Matters to a Vote of Security
Holders
None.
Item
5. Other Information
None.
Item
6. Exhibits
The
following exhibits are filed as part of the report on Form 10-QSB.
|
No.
|
|
Exhibit
|
|
|
|
|
|
3.01
|
|
Articles
of Incorporation of Family Steak Houses of Florida,
Inc. (Exhibit 3.01 to the Company’s Registration Statement on
Form S-1 filed with the SEC on November 29, 1985,
Registration No. 33-1887, is incorporated herein by
reference.)
|
|
3.02
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc. (Exhibit 3.03 to the Company’s Registration
Statement on Form S-1 filed with the SEC on November 29, 1985,
Registration No. 33-1887, is incorporated herein by
reference.)
|
|
3.03
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc. (Exhibit 3.04 to the Company’s Registration Statement on
Form S-1 filed with the SEC on November 29, 1985, Registration No.
33-1887, is incorporated herein by reference.)
|
|
3.04
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc. (Exhibit 3.08 to the Company’s Annual Report on Form 10-K
filed with the SEC on March 31, 1998, is incorporated herein by
reference.)
|
|
3.05
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc. (Exhibit 3.09 to the Company’s Annual Report on Form 10-K
filed with the SEC on March 29, 2004, is incorporated herein by
reference.)
|
|
3.06
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc., changing the name of the corporation to Eaco Corporation
(Exhibit 3.10 to the Company’s Quarterly Report on Form 10-Q filed with
the SEC on September 3, 2004, is incorporated herein by
reference.)
|
|
3.07
|
|
Amendment
of Articles of Amendment Designating the Preferences of Series A
Cumulative Convertible Preferred Stock $0.10 Par Value. of EACO
Corporation. (Exhibit 3.i to the Company’s Current Report on Form 8-K
filed with the SEC on September 8, 2004, is incorporated herein by
reference.)
|
|
3.08
|
|
Amended
and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 4 to
the Company’s Form 8-A filed with the SEC on March 19, 1997, is
incorporated herein by reference.)
|
|
3.09
|
|
Amendment
to Amended and Restated Bylaws of Family Steak Houses of Florida, Inc.
(Exhibit 3.08 to the Company’s Annual Report on Form 10-K filed with the
SEC on March 15, 2000, is incorporated herein by
reference.)
|
|
31.1
|
|
Certification
of Principal Executive Officer and Principal Financial Officer Pursuant to
Securities and Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley
Act.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
EACO
CORPORATION
(Registrant)
Date: May
19,
2008 /s/ Glen
Ceiley
Glen Ceiley
Chief Executive Officer
(Principal Executive Officer &
Principal Financial Officer)
EXHIBIT
INDEX
|
No.
|
|
Exhibit
|
|
|
|
|
|
3.01
|
|
Articles
of Incorporation of Family Steak Houses of Florida,
Inc. (Exhibit 3.01 to the Company’s Registration Statement on
Form S-1 filed with the SEC on November 29, 1985,
Registration No. 33-1887, is incorporated herein by
reference.)
|
|
3.02
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc. (Exhibit 3.03 to the Company’s Registration
Statement on Form S-1 filed with the SEC on November 29, 1985,
Registration No. 33-1887, is incorporated herein by
reference.)
|
|
3.03
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc. (Exhibit 3.04 to the Company’s Registration Statement on
Form S-1 filed with the SEC on November 29, 1985, Registration No.
33-1887, is incorporated herein by reference.)
|
|
3.04
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc. (Exhibit 3.08 to the Company’s Annual Report on Form 10-K
filed with the SEC on March 31, 1998, is incorporated herein by
reference.)
|
|
3.05
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc. (Exhibit 3.09 to the Company’s Annual Report on Form 10-K
filed with the SEC on March 29, 2004, is incorporated herein by
reference.)
|
|
3.06
|
|
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses of
Florida, Inc., changing the name of the corporation to Eaco Corporation
(Exhibit 3.10 to the Company’s Quarterly Report on Form 10-Q filed with
the SEC on September 3, 2004, is incorporated herein by
reference.)
|
|
3.07
|
|
Amendment
of Articles of Amendment Designating the Preferences of Series A
Cumulative Convertible Preferred Stock $0.10 Par Value. of EACO
Corporation. (Exhibit 3.i to the Company’s Current Report on Form 8-K
filed with the SEC on September 8, 2004, is incorporated herein by
reference.)
|
|
3.08
|
|
Amended
and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 4 to
the Company’s Form 8-A filed with the SEC on March 19, 1997, is
incorporated herein by reference.)
|
|
3.09
|
|
Amendment
to Amended and Restated Bylaws of Family Steak Houses of Florida, Inc.
(Exhibit 3.08 to the Company’s Annual Report on Form 10-K filed with the
SEC on March 15, 2000, is incorporated herein by
reference.)
|
|
31.1
|
|
Certification
of Principal Executive Officer and Principal Financial Officer Pursuant to
Securities and Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley
Act.
|