UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(AMENDMENT NO. 1)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 28, 2007 or
[ ] 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 No. 59-2597349
State of Incorporation Employer Identification No.
1500 NORTH LAKEVIEW AVENUE
ANAHEIM, CALIFORNIA 92807
Address of Principal Executive Offices
Issuer's Telephone No. (714) 876-2490
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes ___X___ No______
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes _______ No __X___
As of March 28, 2007, the latest practicable date, 3,906,800
shares of the issuer's common stock, $.01 par value, were issued
and outstanding.
Explanatory Note
This Amendment No. 1 to our original report on Form 10-QSB filed
on May 21, 2007 is being filed to correct typographical and other
errors, both in the financial statements and in the text of the
original Form 10-QSB, which arose in the process of converting
the Company's original Form 10-QSB to electronic form suitable
for filing with the Securities and Exchange Commission. Further,
Item 6 of Part II of the original Form 10-QSB has been amended to
contain currently-dated certifications as required by Section 302
and 906 of the Sarbanes-Oxley Act of 2002. The certifications are
attached to this Amendment No. 1 as Exhibits 31.01 and 31.02.
Items not being amended are presented for the convenience of the
reader only.
Item 1. Financial Statements.
EACO CORPORATION
Condensed Consolidated Statements of Operations
(UNAUDITED)
Quarters Ended
March 28, 2007 March 29, 2006
-------------- --------------
REVENUE
RENTAL REVENUE $234,200 $231,900
-------- --------
TOTAL REVENUE 234,200 231,900
-------- --------
COSTS AND EXPENSES:
Depreciation and amortization (89,300) (73,400)
General and administrative (344,700) (368,200)
Loss on disposal of assets (226,100) (17,000)
--------- ---------
Total costs and expenses (660,100) (458,600)
--------- ---------
Loss from operations (425,900) (226,700)
Investment loss (104,700) (165,300)
Interest and other income 29,500 320,300
Interest expense (125,800) (121,100)
--------- ----------
Loss before income taxes (626,900) (192,800)
Benefit for income taxes - 72,100
--------- ----------
Net loss (626,900) (120,700)
Undeclared cumulative preferred stock
dividend (19,100) (19,100)
--------- ---------
Net loss attributable to common
shareholders $(646,000) $(139,800)
=========== ==========
Loss per share - basic and diluted $ (0.17) $ (0.04)
Weighted average common shares
outstanding - basic and diluted 3,906,800 3,906,800
--------- ----------
See accompanying notes to condensed consolidated financial statements
EACO Corporation
Condensed Consolidated Balance Sheets
March 28, 2007
(Unaudited) December 27, 2006
-------------- -----------------
ASSETS
Current assets
Cash and cash equivalents $1,361,300 $1,196,900
Restricted cash-short term 1,741,100 1,102,600
Receivables, net -- 436,300
Prepaid and other current assets 97,800 99,700
---------- ----------
Total current assets 3,200,200 2,835,500
Restricted cash 400,000 400,000
Investments, trading 264,500 784,000
Certificate of deposit 376,500 376,500
Note receivable, net 69,200 69,200
Property and equipment
Land 4,800,000 4,800,000
Buildings and improvements 7,722,100 8,592,900
Equipment 2,143,900 2,707,400
---------- ----------
14,666,000 16,100,300
Accumulated depreciation (3,398,200) (4,541,100)
----------- -----------
Net property and equipment 11,267,800 11,559,200
Other assets, net 587,500 486,400
---------- ----------
$16,165,700 $16,510,800
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 368,500 $ 486,700
Securities sold, not yet
purchased 1,741,100 1,102,600
Accrued liabilities 69,000 116,600
Current portion of workers
compensation liability 303,700 303,700
Current portion of long term debt 81,000 95,700
Current portion of obligation
under capital lease 24,100 20,300
----------- ----------
Total current liabilities 2,587,500 2,125,600
Deferred rent 248,400 271,100
Deposit liability 123,900 89,500
Workers compensation liability 3,682,400 3,835,600
Long-term debt 2,526,300 2,537,900
Obligations under capital lease 2,431,100 2,438,900
----------- -----------
Total liabilities 11,599,500 11,298,600
Shareholders' equity:
Preferred stock of $.01 par;
authorized 10,000,000 shares;
outstanding 36,000 at March 28,
2007 and December 27, 2006
(liquidation value $900,000
plus accrued dividends) 400 400
Common stock of $.01 par;
authorized 8,000,000 shares;
outstanding 3,906,800 as of March
28, 2007 and December 27, 2006 39,000 39,000
Additional paid-in capital 10,932,300 10,932,300
Accumulated Deficit (6,405,500) (5,759,500)
----------- -----------
Total shareholders' equity 4,566,200 5,212,200
----------- -----------
$16,165,700 $16,510,800
=========== ===========
See accompanying notes to condensed consolidated financial
statements
EACO CORPORATION
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
Quarters Ended
March 28, 2007 March 29, 2006
-------------- --------------
Operating activities
Net loss $ (626,900) $ (120,700)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 89,200 91,000
Net losses on investments 104,700 165,300
Loss on disposition of equipment 226,100 17,000
Amortization of deferred rent (22,700) (23,900)
Amortization of note receivable
discount - (18,600)
Decrease (increase) in:
Receivables 436,300 (3,600)
Deferred tax assets - (72,100)
Inventories - 300
Prepaids and other current assets 1,900 (53,900)
Investments 414,800 93,500
Other assets (125,200) 7,900
Increase (decrease) in:
Accounts payable (118,200) 1,000
Securities sold, not yet
purchased 638,500 185,100
Accrued liabilities (47,600) (178,400)
Deposit liability 34,400 (5,000)
Workers compensation liability (153,200) (312,100)
--------- ---------
Net cash provided by (used in)
operating activities 852,100 (227,200)
========= ==========
Investing activities:
Restricted cash (638,300) (403,500)
Principal receipts on note
receivable - 187,000
Expenses from closing of
restaurants - (6,400)
--------- ----------
Net cash used in investing activities (638,300) (222,900)
========= ==========
Financing activities:
Payments on long-term debt (26,300) (38,600)
Preferred stock dividend (19,100) (19,100)
Payment on capital leases (4,000) (4,400)
--------- ---------
Net cash used in financing activities (49,400) (62,100)
--------- ---------
Net increase (decrease) in cash and cash
equivalents unrestricted 164,400 (512,200)
Cash and cash equivalents
unrestricted-beginning of period 1,196,900 3,044,700
--------- ---------
Cash and cash equivalents
unrestricted-end of periods $1,361,300 $2,532,500
========== ==========
Supplemental disclosures of cash flow
information:
cash paid during the quarter for
interest $ 125,800 $ 84,900
========== ==========
See accompanying notes to condensed consolidated financial statements
EACO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
March 28, 2007
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared in
accordance with accounting principles
generally accepted in the United States of
America and the interim financial information
instructions to Form 10-QSB, and do not include
all the information and footnotes required by
generally accepted accounting principles for
complete financial statements. In the opinion
of management, all adjustments (consisting
of normal recurring accruals) considered
necessary for a fair presentation of the results
for the interim periods have been included.
Operating results for the quarter ended March
28, 2007 are not necessarily indicative of
the results that may be expected for the fiscal
year ending January 2, 2008. For further
information, refer to the financial statements
and footnotes included in the Company's Annual
Report on Form 10-K for the fiscal year ended
December 27, 2006.
The condensed consolidated financial statements
include the accounts of the Company and its
wholly-owned subsidiary. All significant
intercompany profits, transactions and balances
have been eliminated.
Certain items in the prior interim financial
statements have been reclassified to conform to
the 2007 presentation.
Note 2. Investments
Investments consist of trading securities and
securities sold, not yet purchased. These
securities are 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 are based on the specific identification
method. The results for the first quarter of
2007 included realized losses from the sale of
marketable securities of $112,000 and unrealized
gains of $7,000. The first quarter of 2006
included unrealized losses of $163,000 and
realized losses of $2,000.
A primary investment strategy used by the Company
in 2007 and 2006 consisted of short-selling of
securities, which results in obligations to
purchase securities at a later date. As of March
28, 2007, the Company's total obligation for
these securities sold and not yet purchased was
$1,741,000, compared to $1,103,000 at December
27, 2006. The Company recognized net losses on
securities sold, not yet purchased of $105,000
and $32,000 for the quarters ended March 28, 2007
and March 29, 2006, respectively.
Note 3. Other Assets
Other assets consist of the following:
March 28, 2007
(Unaudited) December 27, 2006
-------------- -----------------
Leasehold origination costs $310,000 $310,000
Loan fees 72,000 72,000
Tenant improvements 210,000 210,000
Deferred commissions 189,000 59,000
-------- --------
781,000 651,000
Less accumulated amortization (193,000) (165,000)
--------- ---------
$588,000 $486,000
========= =========
Amortization expense was approximately $25,000
for the quarter ended March 28, 2007 and March
29, 2006, respectively.
Note 4. Disposal of Assets
One of the Company's vacant properties has the
first renewal option under a lease agreement
dated December 30, 1981 expiring in April 2007,
after which the Company has the option to either
terminate the lease or exercise the second
renewal option as defined in such lease
agreement. During the quarter ended March 28,
2007, management decided to terminate the lease.
As such, the Company recorded a loss on disposal
of equipment and write-off of leasehold
improvements of approximately $226,000, which is
included in the accompanying condensed
consolidated statement of operations for the
quarter ended March 28, 2007.
Note 5. Stock-Based Compensation
Effective January 1, 2006, the Company adopted
the provisions of SFAS No. 123(R), "Share-Based
Payments." SFAS No. 123(R) requires employee
stock options and rights to purchase shares under
stock participation plans to be accounted for
under the fair value method and requires the use
of an option pricing model for estimating fair
value. Accordingly, share-based compensation is
measured at grant date, based on the fair value
of the award.
During the three months ended March 28, 2007, the
Company awarded no stock options, nor were there
any unvested option awards as of December 28,
2006, and thus, the Company recorded no
compensation expense related to stock options
after the adoption of SFAS No. 123(R). In
addition, there were no option awards modified,
repurchased or cancelled after December 27, 2006.
Note 6. Accrued Liabilities
Accrued liabilities are summarized as follows:
March 28, 2007 December 27, 2006
(Unaudited)
_____________ -----------------
Property taxes $16,000 $ --
Legal and accounting 30,000 48,000
Unearned rental revenue -- 20,000
Unearned CAM charges 16,000 21,000
Other 7,000 27,000
------- --------
$69,000 $117,000
======= ========
Note 7. 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 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 July 1, 2006. 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 Chairman
of the Company's Board of Directors, Glen F.
Ceiley, is the President of Bisco. In addition,
the Company pledged certificates of deposit
totaling $376,500 to the Division, to meet the
Division's collateral requirement of $1,376,500.
The Company believes there is a strong likelihood
that the Division will require an increase in the
Company's collateral due to the increase in the
worker's compensation reserve in 2006. The
Company is unable to estimate the amount of that
increase at this time.
On June 30, 2005, the Company completed the sale
of substantially all of its operating restaurants
(the "Asset Sale") to Banner Buffets, LLC
("Banner" or "the Buyer"). The sale of sixteen
restaurant businesses, premises, equipment and
other assets used in restaurant operations was
made pursuant to an asset purchase agreement
dated February 22, 2005. After the Asset Sale,
the Company terminated its self-insurance
program, and no further claims were incurred
after June 29, 2005. Subsequent to year end, the
Company reached a $430,000 cash settlement
pursuant to an agreement with its reinsurance
carrier, which is in receivership, for its
largest workers' compensation claim. This amount
was received during the first quarter ended March
28, 2007. As a result of that settlement, the
remaining discounted estimated payments with
relationship to that claim increased to
approximately $2,926,000. As such, the Company
accrued the additional liability and recorded an
expense of $2,926,000 in the fourth quarter of
2006 related to this claim. This workers'
compensation liability claim was $2,899,000 at
March 28, 2007.
Note 8. Income Taxes
We adopted the provisions of Financial Standards
Accounting Board Interpretation No. 48 Accounting
for Uncertainty in Income Taxes ("FIN 48") an
interpretation of FASB Statement No. 109 ("SFAS
109") on January 1, 2007. As a result of the
implementation of FIN 48, we recognized no
material adjustment in the liability for
unrecognized income tax benefits. At the adoption
date of January 1, 2007, we had $1,780,000 of
unrecognized tax benefits, all of which would
affect our effective tax rate if recognized. At
March 28, 2007, we have $1,780,000 of
unrecognized tax benefits.
We recognize interest and penalties related to
uncertain tax positions in income tax expense. As
of March 28, 2007, we have no accrued interest
related to uncertain tax positions.
The tax years 2003 - 2006 remain open to
examination by the major taxing jurisdictions to
which we are subject.
Note 9. Earnings (Loss) Per Share
The following is a reconciliation of the
numerators and denominators of the basic and
diluted EPS computations for net loss and net
loss attributable to common shareholders:
March 28, 2007 March 29, 2006
(Unaudited)
EPS - basic and diluted:
Net loss $ (627,000) $ (121,000)
Less: preferred stock
dividends (19,000) (19,000)
----------- -----------
Net Loss for basic
and diluted
EPS computation $ (646,000) $ (140,000)
=========== ===========
Weighted average shares
outstanding for basic and
diluted EPS computation 3,906,800 3,906,800
=========== ===========
Loss per common share - basic
and diluted $ (0.17) $ (0.04)
=========== ============
Due to the Company's net losses for the quarters
ended March 28, 2007 and March 29, 2006,
potentially dilutive securities were antidilutive
and have been excluded from the computation of
diluted earnings per share for these periods.
Note 10. Commitments and Contingencies
Legal Matters
In connection with the Asset Sale, a broker has
demanded a commission payment of $3.5 million.
The Company has 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 addition, in
August 2005, the Company was sued by another
broker who claims that a commission of $749,000
is payable to him as a result of the Asset Sale.
The Company plans to vigorously defend both of
these claims. Due to the fact that management
cannot determine the probability of a loss or
estimate the amount of possible payments awarded
under these legal proceedings, no loss accrual
has been recorded.
Leases
The monthly sub-lease payments due from one of
the Company's sub-tenants are less than the
monthly rent due from the Company to its
landlord. The sub-lease term of ten years, which
commenced on March 1, 2007, provides for monthly
payments due to the Company of $16,600
with a 4% escalation clause every two years. The master
lease term has a remaining term of eighteen years
at March 28, 2007, and provides for monthly
payments of $23,000, with a 3% escalation clause
every December. It is management's intention to
exercise the purchase option under the master
lease agreement at a future time when it deems a
possible sale might be more beneficial.
Note 11. Subsequent Event
The Company has a potential litigation with the
landlord on store 130. The Company has submitted
what it deems are acceptable tenants for
sublease. The landlord has denied these
applications, and the Company intends to
aggressively pursue damages from the landlord for
its actions.
Item 2. Management's Discussion and Analysis or
Plan of Operation
Overview
EACO Corporation (the "Company") was incorporated
under the laws of the State of Florida in
September of 1985. In 1986, the Company completed
its initial public offering of 900,000 shares of
its common stock, par value $.01 per share
("Common Stock") resulting in net proceeds to the
Company of approximately $4,145,000.
In April 1986, the Company issued 853,200 shares
of Common Stock in exchange for the assets and
liabilities of six limited partnerships each of
which owned and operated a restaurant pursuant to
a franchise agreement with Ryan's and 1,134,000
shares of Common Stock to Eddie L. Ervin, Jr., in
consideration for Mr. Ervin assigning to the
Company all of his rights under such franchise
agreement.
From the inception of the Company through June
2005, the Company's business consisted of
operating restaurants in the state of Florida. On
June 29, 2005, the Company sold all of its
operating restaurants (the "Asset Sale") to
Banner Buffets LLC ("Banner"). The Company's
remaining operations consist mainly of managing
rental properties it owns in Florida and
California.
During the third quarter of 2005, the Company sold
all of its operating restaurants to Banner. In September
2006, Banner declared bankruptcy and, subsequently,
rejected four of the leases of the stores previously
assigned to Banner. As a result, the leases of two
of the four stores have reverted back to the Company.
As of December 27, 2006, those two stores remained
vacant. During the quarter ended March 28, 2007,
these stores were sublet, with the sublease periods
beginning March 1, 2007 and April 16, 2007. The landlord
denied the sublease that was set to commence on
April 16, 2007, and the Company intends to
aggressively pursue damages from the landlord for
its actions.
In addition, the Company owns an income-producing
real estate property in Sylmar, California with
two industrial tenants, which it purchased in the
fourth quarter of 2005.
Critical Accounting Policies and Use of Estimates
Income Taxes
We adopted the provisions of Financial Standards
Accounting Board Interpretation NO. 48 Accounting
for Uncertainty in Income Taxes ("FIN 48"), an
interpretation of FASB Statement No. 109("SFAS
109") on January 1, 2007. As a result of the
implementation of FIN 48, we recognized no
material adjustment in the liability for
unrecognized income tax benefits. At the
adoption date of January 1, 2007, we had
$1,780,000 of unrecognized tax benefits, all of
which would affect our effective tax rate if
recognized. At March 28, 2007, we have
$1,780,000 unrecognized tax benefits.
We recognize interest and penalties related to
uncertain tax positions in income tax expense.
As of March 28, 2007, we have no accrued interest
related to uncertain tax positions.
The tax years 2003-2006 remain open to
examination by the major taxing jurisdictions to
which we are subject.
Use of Estimates
The preparation of the Company's condensed
consolidated financial statements requires
management to make estimates, assumptions and
judgments that affect the Company's assets,
liabilities, revenues and expenses and disclosure
of contingent assets and liabilities. Management
bases these estimates and assumptions on
historical data and trends, current fact
patterns, expectations and other sources of
information it believes are reasonable. Actual
results may differ from these estimates under
different conditions. 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 2006 Annual Report on Form 10-K.
Results of Operations
Quarter Ended March 28, 2007 versus March 29, 2006
The Company experienced a decrease of 1% in
rental revenue during the first quarter of 2007
compared to the first quarter of 2006, due to the
loss of one tenant which was substantially offset
by an increase in rental income of another
property.
Depreciation and amortization expenses increased
19% primarily from tenant improvements to the
Sylmar property. General and administrative
expenses, such as payroll, payroll related costs,
and insurance remained the same overall from 2006
to 2007, however there were significant increases
in legal fees due to continuing actions from
Banner's bankruptcy which were offset by the
elimination of all payroll and related costs
during the first quarter of 2007.
In 2007 interest and other income decreased to
$30,000 from $320,000 in 2006 due to interest
received on the $4,000,000 note receivable from
Banner and income from the settlement made with a
tenant from one of the Company's properties who
vacated the premises prior to the completion of
their lease term.
The Company recognized income tax benefits of $0
and $72,000 for the quarter ended March 28, 2007
and March 29, 2006, respectively. The Company has
a full valuation allowance as of December 27,
2006, and therefore no tax benefit was recorded
for losses incurred during the quarter ended
March 28, 2007.
The Company invests a large portion of its
available cash in marketable securities. The
Company maintains an investment account to effect
these transactions. Investments are made based
on a combination of fundamental and technical
analysis primarily using a value-based investment
approach. The holding period for investments
usually ranges from 30 days to 24 months.
Management also purchases marketable securities
using margin debt. In determining whether to
engage in transactions on margin, the Company's
Chairman evaluates the risk of the proposed
transaction and the relative returns offered
thereby and executes such transactions. If the
market value of securities purchased on margin
were to decline below certain levels, the Company
would be required to use additional cash from its
operating account to fund a margin call in its
investment account. The Company's Chairman
reviews the status of the investment account on a
regular basis and analyzes such margin positions
and adjusts purchase and sale transactions as
necessary to ensure such margin calls are not
likely. The results for the first quarter of
2007 included realized losses from the sale of
marketable securities of $112,000 and realized
gains of $7,000. The first quarter of 2006
included unrealized losses of $163,000 and
realized losses of $2,000.
The net loss was $627,000 in the first quarter of
2007, compared to a net loss of $121,000 in the
first quarter of 2006. The 2007 first quarter
loss was due, primarily, to investment losses,
legal fees and the disposal of property # 101.
The first quarter of 2006 loss was principally
losses from investment trading and operating
costs in closing the Company's corporate office
in Florida.
Effective April 1, 2006, the Company's corporate
office was moved from Neptune Beach, Florida to
Anaheim, California. The Company is leasing
space from Bisco Industries, Inc. ("Bisco"), the
wholly owned company of the Company's Chairman of
the Board of Directors and Chief Executive
Officer, Glen Ceiley. The Company has also
entered into an agreement with Bisco whereas
Bisco will provide accounting and other
administrative services to the Company in
exchange for a fee. Through March 28, 2007,
Bisco billed the Company $50,000.
Liquidity and Capital Resources
Historically, substantially all of the Company's
revenues were derived from cash sales.
Inventories were purchased on credit and were
converted rapidly to cash. Therefore, the Company
has not carried significant receivables or
inventories and, other than the repayment of
debt, working capital requirements for continuing
operations have not been significant. In 2006,
due to the increase in worker's compensation
liability, working capital requirements have been
significant.
As of March 28, 2007, the Company had total cash
and cash equivalents of $3,102,000. Of this
total, $2,999,000 was invested in brokerage money
market accounts. However, $1,741,000 of the
brokerage accounts cash resulted from the sale of
securities sold, not yet purchased ("short
sales"), which is included as a liability on the
Company's balance sheet at March 28, 2007.
Accordingly, the Company will require this cash
to cover the short sales liability, and therefore
the $1,741,000 is not available for the Company's
use. The balance of the cash in the brokerage
accounts is available for use by the Company.
At March 28, 2007, the Company had a working
capital surplus of $613,000 compared to a working
capital surplus of $710,000 at December 27, 2006.
The decrease was due to cash outlays for workers
compensation claims, investment losses and other
operating expenses, such as legal costs. Cash
provided by operating activities was $852,000 in
the quarter ended March 28, 2007, compared to
cash used by operations of $227,000 in the
quarter ended March 29, 2006 primarily due to
changing of operations from restaurant management
to real estate management.
In June 2004, the Company sold 145,833 shares of
its Common Stock directly to Bisco Industries,
Inc. Profit Sharing and Savings Plan for a total
purchase price of $175,000 in cash. In September
2004, the Company sold 36,000 shares of the
Company's newly authorized Series A Cumulative
Convertible Preferred Stock at a price of $25 per
share, for a total purchase price of $900,000
cash. The Preferred Stock was sold to the
Company's Chairman. Dividends are paid quarterly
when declared by the Company's Board of
Directors. The Company paid four quarterly
declared dividends totaling $77,000 during 2006.
Undeclared dividends as of March 28, 2007 were
$19,000.
The Company is required to pledge collateral for
its workers' compensation self insurance
liability with the Florida Self Insurers Guaranty
Association ("FSIGA"). The Company has a total of
$1.37 million pledged collateral. Bisco
Industries, Inc. ("Bisco") provides $1 million of
this collateral. EACO Corporation's Chairman of
the Board of Directors, Glen F. Ceiley, is the
President of Bisco. 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.
After the Asset Sale, the Company terminated its
self-insurance program, and no further claims
were incurred after June 29, 2005. Subsequent to
year end, the Company reached a $430,000 cash
settlement pursuant to an agreement with its
reinsurance carrier, which is in receivership,
for its largest worker's compensation claim.
This amount was received during the first quarter
ended March 28, 2007. As a result of that
settlement, the remaining discounted estimated
payments with relationship to that claim
increased to approximately $2,926,000. As such,
the Company accrued the additional liability and
recorded an expense of $2,926,000 in the fourth
quarter of 2006 related to this claim. This
workers' compensation liability claim was
$2,899,000 at March 28, 2007.
The Company entered into a loan agreement with GE
Capital for one restaurant property still owned
by the Company. As of March 28, 2007, the
outstanding balance due under the Company's loan
with GE Capital was $850,000. The Company also
assumed a loan with Citizen's Bank of California
in connection with the California Property
purchase in November 2005. As of March 28, 2007,
the outstanding balance due on this loan was
$1,757,000. The weighted average interest rate
for the Company's loans is 8.67%.
A further contingency of the Company continues to
be the litigation with two brokers claiming
commissions totaling approximately $4.25 million.
While the Company continues to defend its
position and management continues to believe in a
favorable outcome, the Company has available
borrowing capacity on the two California
properties, if required, to cover any capital
requirements associated with this case or those
of any other normal operating expenditures.
The preceding discussion of liquidity and capital
resources contains certain forward-looking
statements. Forward-looking statements involve a
number of risks and uncertainties, and in
addition to the factors discussed herein, 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, Citizen's 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 Company's SEC reports,
registration statements and public announcements.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet instruments
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 which are disclosed in the Company's 2006
Annual Report on Form 10-K.
Contractual Financial Obligations
The monthly sub-lease payments due from one of
the Company's sub-tenants are less than the
monthly rent due from the Company to its
landlord. The sub-lease term of ten years, which
commenced on March 1, 2007, provides for monthly
payments due to the Company of $16,600 with a 4%
escalation clause every two years. The master
lease term has a remaining term of eighteen years
at March 28, 2007, and provides for monthly
payments of $23,000, with a 3% escalation clause
every December. It is management's intention to
exercise the purchase option under the master
lease agreement at a future time when it deems a
possible sale might be more beneficial.
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 in the Company's 2006 Annual Report on
Form 10-K.
Item 3. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The term "disclosure controls and procedures" is
defined in Rules 13a-15(e) and 15d-15(e) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"). This term refers to the controls
and procedures of a company that are designed to
ensure that information required to be disclosed
by a company in the reports that it files under
the Exchange Act is recorded, processed,
summarized, and reported within the required time
periods. Our Principal Executive Officer and our
Principal Financial Officer have evaluated the
effectiveness of our disclosure controls and
procedures as of the end of the period covered by
this Quarterly Report on Form 10-QSB. They have
concluded that, as of March 28, 2007, our
disclosure controls and procedures were effective
at ensuring that required information will be
disclosed on a timely basis in our reports filed
under the Exchange Act.
Changes in Internal Control over Financial
Reporting
No change in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-
15(f) under the Exchange Act) occurred during the
period covered by this report that has materially
affected, or is reasonably likely to materially
affect, our internal control over financial
reporting.
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 the Company's Chairman and Chief Executive
Officer.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
From time to time we 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 our management, could reasonably be
expected to have a material adverse effect on our
business or financial condition, except as
discussed below. In connection with the Asset
Sale, a broker has demanded a commission payment
of $3.5 million. The Company filed suit against
the broker on July 11, 2005 in Duval County
Circuit Court 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 addition, in August 2005, the Company
was sued in Miami-Dade County Circuit Court by
another broker who claims that a commission of
$749,000 is payable to him as a result of the
Asset Sale. The Company plans to vigorously
defend both of these claims. Due to the fact that
management cannot predict the outcome or the
possible payments awarded under these legal
proceedings, no loss accrual has been recorded.
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
(a) The following exhibits are filed as part of the report
on Form 10-QSB.
No. Exhibits
--- --------
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, 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,
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,
Registration No. 33-1887, is incorporated herein by
reference.)
3.04 Amended and Restated Bylaws of Family Steak Houses of
Florida, Inc. (Exhibit 4 to the Company's Form 8-A,
filed with the Commission on March 19, 1997, is
incorporated herein by reference.)
3.05 Articles of Amendment to the Articles of Incorporation
of Family Steak Houses of Florida, Inc. (Exhibit 3 to
the Company's Form 8-A filed with the Commission on
March 19, 1997, is incorporated herein by reference.)
3.06 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
Commission on March 31, 1998, is incorporated herein by
reference.)
3.07 Amendment to Bylaws of Family Steak Houses of Florida,
Inc. (Exhibit 3.08 to the Company's Annual Report on
Form 10-K filed with the Commission on March 15, 2000,
is incorporated herein by reference.)
3.08 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
Commission on March 29, 2004 is incorporated herein by
reference.)
3.09 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 Commission on September 3, 2004, is
incorporated herein by reference.)
3.10 Amendment of Articles of Incorporation of EACO
Corporation for the purpose of issuance of Preferred
Stock to Glen Ceiley, its Chairman and CEO. (Form 8-K
filed with the Commission September 8, 2004 is
incorporated herein by reference.)
10.01 Amended Franchise Agreement between Family Steak Houses
of Florida, Inc. and Ryan's Family Steak Houses, Inc.,
dated September 16, 1987. (Exhibit 10.01 to the
Company's Registration Statement on Form S-1, filed with
the Commission on October 2, 1987, Registration No. 33-
17620, is incorporated herein by reference.)
10.02 Lease regarding the restaurant located at 3549 Blanding
Boulevard, Jacksonville, Florida (Exhibit 10.03 to the
Company's Registration Statement on Form S-1,
Registration No. 33-1887, is incorporated herein by
reference.)
10.03 Amendment of Franchise Agreement between Ryan's Family
Steak Houses, Inc. and the Company dated July 11, 1994.
(Exhibit 10.17 to the Company's Annual Report on Form 10-
K, filed with the Commission on March 28, 1995, is
incorporated herein by reference.)
10.04 Lease Agreement between the Company and CNL American
Properties Fund, Inc., dated as of September 18, 1996.
(Exhibit 10.02 to the Company's Quarterly Report on Form
10-Q, filed with the Commission on November 18, 1996 is
hereby incorporated by reference.)
10.05 Rent Addendum to Lease Agreement between the Company and
CNL American Properties Fund, Inc., dated as of
September 18, 1996. (Exhibit 10.04 to the Company's
Quarterly Report on Form 10-Q, filed with the Commission
on November 18, 1996 is hereby incorporated by
reference.)
10.06 Amendment of Franchise Agreement between the Company and
Ryan's Family Steak Houses, Inc. dated October 3, 1996.
(Exhibit 10.15 to the Company's Annual Report on Form 10-
K, filed with the Commission on April 1, 1997 is hereby
incorporated by reference.)
10.07 $15.36m Loan Agreement, between the Company and FFCA
Mortgage Corporation, dated December 18, 1996. (Exhibit
10.18 to the Company's Annual Report on Form 10-K, filed
with the Commission on April 1, 1997 is hereby
incorporated by reference.)
10.08 $4.64m Loan Agreement, between the Company and FFCA
Mortgage Corporation, dated December 18, 1996. (Exhibit
10.19 to the Company's Annual Report on Form 10-K, filed
with the Commission on April 1, 1997 is hereby
incorporated by reference.)
10.09 Form of Promissory Note between the Company and FFCA
Mortgage Corporation, dated December 18, 1996. (Exhibit
10.20 to the Company's Annual Report on Form 10-K, filed
with the Commission on April 1, 1997 is hereby
incorporated by reference.)
10.10 Form of Mortgage between the Company and FFCA Mortgage
Corporation, dated December 18, 1996 (Exhibit 5 to the
Company's Schedule 14D-9, filed with the Commission on
March 19, 1997 is hereby incorporated by reference.)
10.11 Lease agreement dated January 29, 1998 between the
Company and Excel Realty Trust, Inc. (Exhibit 10.19 to
the Company's Annual Report on Form 10-K, filed with the
Commission on March 31, 1998 is hereby incorporated by
reference.)
10.12 Amendment of Franchise Agreement between the Company and
Ryan's Family Steak Houses, Inc. dated August 31, 1999.
(Exhibit 10.19 to the Company's Annual Report on Form 10-
K filed with the Commission on March 15, 2000 is
incorporated herein by reference.)
10.13 Amendment to Franchise Agreement between the Company and
Ryan's Properties, Inc. dated January 30, 2002. (Exhibit
10.19 to the Company's Annual Report on Form 10-K filed
with the Commission on March 29, 2002 is incorporated
herein by reference.)
10.14 Form of Amended and Restated Mortgage Agreement between
the Company and GE Capital Franchise Finance Corporation
dated October 21, 2002. (Exhibit 10.01 to the Company's
Quarterly Report on Form 10-Q filed with the Commission
on November 15, 2002 is incorporated herein by
reference.)
10.15 Form of Promissory Note between the Company and GE
Capital Franchise Finance Corporation dated October 21,
2002. (Exhibit 10.02 to the Company's Quarterly Report
on Form 10-Q filed with the Commission on November 15,
2002 is incorporated herein by reference.)
10.16 Form of Loan Agreement between the Company and GE
Capital Franchise Finance Corporation dated October 21,
2002. (Exhibit 10.03 to the Company's Quarterly Report
on Form 10-Q filed with the Commission on November 15,
2002 is incorporated herein by reference.)
10.17 Lease Agreement between the Company and Barnhill's
Buffet, Inc. for a restaurant property in Orange Park,
Florida. (Exhibit 10.04 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on
November 15, 2002 is incorporated herein by reference.)
10.18 Amendment to Franchise Agreement between the Company and
Ryan's Properties, Inc. dated December 17, 2003.
(Exhibit 10.25 to the Company's Annual Report on Form 10-
K filed with the Commission on March 29, 2004 is
incorporated herein by reference.)
10.19 Asset Purchase Agreement between the Company and Banner
Buffets, LLC ("Buyer") for the sale of 16 of the
Company's restaurants, subject to Buyer's due diligence
and shareholder approval, dated February 22, 2005.
(Form 8-K filed with the Commission on February 22, 2005
is incorporated herein by reference.)
31.01 Certification of Chief Operating 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.
32.01 Certification of Chief Operating Officer and Principal
Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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)
/s/ Glen Ceiley
-----------------------
Date: May 25, 2007 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, 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,
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,
Registration No. 33-1887, is incorporated herein by
reference.)
3.04 Amended and Restated Bylaws of Family Steak Houses of
Florida, Inc. (Exhibit 4 to the Company's Form 8-A,
filed with the Commission on March 19, 1997, is
incorporated herein by reference.)
3.05 Articles of Amendment to the Articles of Incorporation
of Family Steak Houses of Florida, Inc. (Exhibit 3 to
the Company's Form 8-A filed with the Commission on
March 19, 1997, is incorporated herein by reference.)
3.06 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
Commission on March 31, 1998, is incorporated herein by
reference.)
3.07 Amendment to Bylaws of Family Steak Houses of Florida,
Inc. (Exhibit 3.08 to the Company's Annual Report on
Form 10-K filed with the Commission on March 15, 2000,
is incorporated herein by reference.)
3.08 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
Commission on March 29, 2004 is incorporated herein by
reference.)
3.09 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 Commission on September 3, 2004, is
incorporated herein by reference.)
3.10 Amendment of Articles of Incorporation of EACO
Corporation for the purpose of issuance of Preferred
Stock to Glen Ceiley, its Chairman and CEO. (Form 8-K
filed with the Commission September 8, 2004 is
incorporated herein by reference.)
10.01 Amended Franchise Agreement between Family Steak Houses
of Florida, Inc. and Ryan's Family Steak Houses, Inc.,
dated September 16, 1987. (Exhibit 10.01 to the
Company's Registration Statement on Form S-1, filed with
the Commission on October 2, 1987, Registration No. 33-
17620, is incorporated herein by reference.)
10.02 Lease regarding the restaurant located at 3549 Blanding
Boulevard, Jacksonville, Florida (Exhibit 10.03 to the
Company's Registration Statement on Form S-1,
Registration No. 33-1887, is incorporated herein by
reference.)
10.03 Amendment of Franchise Agreement between Ryan's Family
Steak Houses, Inc. and the Company dated July 11, 1994.
(Exhibit 10.17 to the Company's Annual Report on Form 10-
K, filed with the Commission on March 28, 1995, is
incorporated herein by reference.)
10.04 Lease Agreement between the Company and CNL American
Properties Fund, Inc., dated as of September 18, 1996.
(Exhibit 10.02 to the Company's Quarterly Report on Form
10-Q, filed with the Commission on November 18, 1996 is
hereby incorporated by reference.)
10.05 Rent Addendum to Lease Agreement between the Company and
CNL American Properties Fund, Inc., dated as of
September 18, 1996. (Exhibit 10.04 to the Company's
Quarterly Report on Form 10-Q, filed with the Commission
on November 18, 1996 is hereby incorporated by
reference.)
10.06 Amendment of Franchise Agreement between the Company and
Ryan's Family Steak Houses, Inc. dated October 3, 1996.
(Exhibit 10.15 to the Company's Annual Report on Form 10-
K, filed with the Commission on April 1, 1997 is hereby
incorporated by reference.)
10.07 $15.36m Loan Agreement, between the Company and FFCA
Mortgage Corporation, dated December 18, 1996. (Exhibit
10.18 to the Company's Annual Report on Form 10-K, filed
with the Commission on April 1, 1997 is hereby
incorporated by reference.)
10.08 $4.64m Loan Agreement, between the Company and FFCA
Mortgage Corporation, dated December 18, 1996. (Exhibit
10.19 to the Company's Annual Report on Form 10-K, filed
with the Commission on April 1, 1997 is hereby
incorporated by reference.)
10.09 Form of Promissory Note between the Company and FFCA
Mortgage Corporation, dated December 18, 1996. (Exhibit
10.20 to the Company's Annual Report on Form 10-K, filed
with the Commission on April 1, 1997 is hereby
incorporated by reference.)
10.10 Form of Mortgage between the Company and FFCA Mortgage
Corporation, dated December 18, 1996 (Exhibit 5 to the
Company's Schedule 14D-9, filed with the Commission on
March 19, 1997 is hereby incorporated by reference.)
10.11 Lease agreement dated January 29, 1998 between the
Company and Excel Realty Trust, Inc. (Exhibit 10.19 to
the Company's Annual Report on Form 10-K, filed with the
Commission on March 31, 1998 is hereby incorporated by
reference.)
10.12 Amendment of Franchise Agreement between the Company and
Ryan's Family Steak Houses, Inc. dated August 31, 1999.
(Exhibit 10.19 to the Company's Annual Report on Form 10-
K filed with the Commission on March 15, 2000 is
incorporated herein by reference.)
10.13 Amendment to Franchise Agreement between the Company and
Ryan's Properties, Inc. dated January 30, 2002. (Exhibit
10.19 to the Company's Annual Report on Form 10-K filed
with the Commission on March 29, 2002 is incorporated
herein by reference.)
10.14 Form of Amended and Restated Mortgage Agreement between
the Company and GE Capital Franchise Finance Corporation
dated October 21, 2002. (Exhibit 10.01 to the Company's
Quarterly Report on Form 10-Q filed with the Commission
on November 15, 2002 is incorporated herein by
reference.)
10.15 Form of Promissory Note between the Company and GE
Capital Franchise Finance Corporation dated October 21,
2002. (Exhibit 10.02 to the Company's Quarterly Report
on Form 10-Q filed with the Commission on November 15,
2002 is incorporated herein by reference.)
10.16 Form of Loan Agreement between the Company and GE
Capital Franchise Finance Corporation dated October 21,
2002. (Exhibit 10.03 to the Company's Quarterly Report
on Form 10-Q filed with the Commission on November 15,
2002 is incorporated herein by reference.)
10.17 Lease Agreement between the Company and Barnhill's
Buffet, Inc. for a restaurant property in Orange Park,
Florida. (Exhibit 10.04 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on
November 15, 2002 is incorporated herein by reference.)
10.18 Amendment to Franchise Agreement between the Company and
Ryan's Properties, Inc. dated December 17, 2003.
(Exhibit 10.25 to the Company's Annual Report on Form 10-
K filed with the Commission on March 29, 2004 is
incorporated herein by reference.)
10.19 Asset Purchase Agreement between the Company and Banner
Buffets, LLC ("Buyer") for the sale of 16 of the
Company's restaurants, subject to Buyer's due diligence
and shareholder approval, dated February 22, 2005.
(Form 8-K filed with the Commission on February 22, 2005
is incorporated herein by reference.)
31.01 Certification of Chief Operating 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.
32.01 Certification of Chief Operating Officer and Principal
Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.01
Certification
I, Glen Ceiley, certify that:
1. I have reviewed this quarterly report on
Form 10-QSB of EACO Corporation.
2. Based on my knowledge, this quarterly report
does not contain any untrue statement of a
material fact or omit to state a material
fact necessary to make the statements made,
in light of the circumstances under which
such statements were made, not misleading
with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial
statements, and other financial information
included in this quarterly report, fairly
present in all material respects the
financial condition, results of operations
and cash flows of the registrant as of, and
for, the periods presented in this quarterly
report;
4. I am responsible for establishing and
maintaining disclosure controls and
procedures (as defined in exchange Act Rules
13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and
procedures to ensure that material
information relating to the registrant,
including its consolidated
subsidiaries, is made known to us by
others within those entities,
particularly during the period in which
this quarterly report is being
prepared;
b) evaluated the effectiveness of the
registrant's disclosure controls and
procedures as of a date within 90 days
prior to the filing date of this
quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our
conclusions about the effectiveness of
the disclosure controls and procedures
based on our evaluation as of the
Evaluation Date;
5. I have disclosed, based on my most recent
evaluation, to the registrant's auditors and
the audit committee of registrant's board of
directors (or persons performing the
equivalent function):
a) All significant deficiencies in the
design or operation of internal
controls which could adversely affect
the registrant's ability to record,
process, summarize and report financial
data and have identified for the
registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material,
that involves management or other
employees who have a significant role
in the registrant's internal controls;
and
6. I have indicated in this quarterly report
whether or not there were significant
changes in internal controls or in other
factors that could significantly affect
internal controls
subsequent to the date of
my most recent evaluation, including any
corrective actions with regard to
significant deficiencies and material
weaknesses.
Date: May 25, 2007
/s/ Glen Ceiley
-------------------------
Glen Ceiley
Chief Executive Officer
(Principal Executive Officer
& Principal Financial Officer)
Exhibit 32.01
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the EACO Corporation's (the
"Company") Quarterly Report on Form 10-QSB for
the period ending March 28, 2007, as filed with
the Securities and Exchange Commission on the
date hereof (the "Report"), I, Glen Ceiley, Chief
Executive Officer of the Company, certify
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that,:
(1). The Report fully complies with the
requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934,
as amended; and
(2). The information contained in the Report
fairly presents, in all material
respects, the financial condition and
results of operations of the Company.
Date: May 25, 2007
/s/ Glen Ceiley
------------------------
Glen Ceiley
Chief Executive Officer
(Principal Executive Officer
& Principal Financial Officer)