EX-99.1 2 v115004_ex99-1.htm
 
 
 
 
 
EXHIBIT 99.1

Marta Araujo
Eaco Corporation
(714) 876-2490       May 16, 2008


EACO CORPORATION ANNOUNCES SETTLEMENT AND REPORTS CORRECTED FIRST QUARTER RESULTS


ANAHEIM, CALIFORNIA - Eaco Corporation (OTCBB:EACO), today announced the settlement between the Company and Horn Capital Realty, with regards to litigation arising from the Company’s sale of substantially all of its restaurant assets (the “Asset Sale”) in June 2005.

In August 2005, the Company was sued in Miami-Dade County Circuit Court by a broker who claimed that a commission was payable to him in connection with 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.

The settlement agreement will be reported in the results of the Company for the quarter ended April 2, 2008 to be filed with the U.S. Securities and Exchange Commission on or around May 19, 2008. As a result, the Company’s previously reported earnings have been revised to reflect an increase in the loss from discontinued operations. Following are the revised earnings for the quarter ended April 2, 2008:

EACO CORPORATION
Unaudited Consolidated Statements of Operations
  
   
 For the Quarters Ended
  
   
Apr 2,
  
Mar 28,
  
   
2008
  
2007
  
Revenues:
           
Rental revenue
  
$
299,000
  
$
234,200
  
Total revenues
    
299,000
    
234,200
  
               
Costs 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
  
 
 
 
EACO CORPORATION
Unaudited Consolidated Balance Sheets  

   
Apr 2,
 
 Jan 2,
 
 
 
2008
 
 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
              
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 parties
    
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
  
               
Stockholders’ equity:
              
Preferred stock of $.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
    
(938,200
)
  
120,000
  
   
$
15,635,100
  
$
17,998,300
  
 

Any statements that are not based on historical fact are forward-looking statements. Although such statements are based on management’s current estimates and expectations, and currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain. We, therefore, caution the reader that there are a variety of factors that could cause business conditions and results to differ materially from what is contained in our forward-looking statements. For a description of some of the factors which may occur that could cause actual results to differ from our forward-looking statements please refer to our 2007 Form 10-K.