UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES |
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES |
Commission File Number 000-29643
GRANITE CITY FOOD & BREWERY LTD.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Minnesota |
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41-1883639 |
(State or Other Jurisdiction |
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(I.R.S. Employer |
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5831 Cedar Lake Road |
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(Address of Principal Executive Offices and
Issuers |
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 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 ý No o.
As of October 28, 2003, the issuer had outstanding 4,027,298 shares of common stock and 1,000,000 Class A Warrants. The number of outstanding shares of common stock includes the shares issuable upon separation of the units, each consisting of one share of common stock and one redeemable Class A Warrant, sold in the issuers initial public offering.
Transitional Small Business Disclosure Format:
Yes o No ý.
GRANITE CITY FOOD & BREWERY LTD.
(Unaudited)
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September 28, |
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ASSETS: |
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Current assets: |
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Cash |
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$ |
2,625,559 |
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Inventory |
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201,739 |
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Prepaids and other |
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273,816 |
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Total current assets |
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3,101,114 |
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Property and equipment, net |
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12,437,067 |
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Intangible assets and other |
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373,756 |
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Total assets |
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$ |
15,911,937 |
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LIABILITIES AND SHAREHOLDERS EQUITY: |
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Current liabilities: |
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Accounts payable |
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$ |
874,472 |
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Accrued expenses |
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792,681 |
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Long-term debt, current portion |
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65,235 |
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Capital lease obligations, current portion |
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315,396 |
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Total current liabilities |
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2,047,784 |
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Long-term debt, net of current portion |
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1,814,480 |
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Capital lease obligations, net of current portion |
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5,093,502 |
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Total liabilities |
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8,955,766 |
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Shareholders equity: |
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Common stock, $0.01 par value, 90,000,000
shares authorized; |
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39,504 |
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Preferred stock, $0.01 par value,
10,000,000 authorized; |
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556 |
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Additional paid-in capital |
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11,724,125 |
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Stock dividends distributable |
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704 |
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Accumulated deficit |
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(4,808,718 |
) |
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Total shareholders equity |
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6,956,171 |
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Total liabilities and shareholders equity |
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$ |
15,911,937 |
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See notes to condensed financial statements.
1
GRANITE CITY FOOD & BREWERY LTD.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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Thirteen Weeks Ended |
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Thirty-nine Weeks Ended |
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September 29, |
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September 28, |
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September 29, |
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September 28, |
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Restaurant revenues |
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$ |
3,159,837 |
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$ |
3,786,885 |
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$ |
9,436,453 |
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$ |
9,768,071 |
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Cost of sales: |
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Food, beverage and retail |
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895,748 |
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1,094,291 |
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2,711,118 |
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2,822,489 |
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Labor |
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1,046,846 |
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1,274,087 |
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3,198,404 |
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3,320,948 |
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Direct and occupancy |
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661,931 |
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804,760 |
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1,954,940 |
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2,121,687 |
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Total cost of sales |
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2,604,525 |
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3,173,138 |
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7,864,462 |
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8,265,124 |
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Pre-opening |
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270,729 |
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270,729 |
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General and administrative |
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254,380 |
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449,833 |
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673,778 |
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1,156,256 |
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Depreciation and amortization |
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192,053 |
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206,276 |
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574,373 |
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596,471 |
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Operating income (loss) |
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108,879 |
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(313,091 |
) |
323,840 |
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(520,509 |
) |
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Interest: |
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Income |
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17 |
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15,266 |
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487 |
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62,148 |
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Expense |
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(132,091 |
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(133,685 |
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(404,366 |
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(378,860 |
) |
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Other income, net |
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32,355 |
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Net other expense |
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(132,074 |
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(118,419 |
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(371,524 |
) |
(316,712 |
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Net loss |
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$ |
(23,195 |
) |
$ |
(431,510 |
) |
$ |
(47,684 |
) |
$ |
(837,221 |
) |
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Loss per common share, basic and diluted |
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$ |
(0.01 |
) |
$ |
(0.15 |
) |
$ |
(0.01 |
) |
$ |
(0.33 |
) |
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Weighted average shares outstanding, basic and diluted |
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3,819,825 |
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3,947,700 |
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3,812,108 |
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3,888,038 |
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See notes to condensed financial statements.
2
GRANITE CITY FOOD & BREWERY LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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Thirty-nine Weeks Ended |
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September 29, |
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September 28, |
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Cash flows from operating activities: |
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Net loss |
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$ |
(47,684 |
) |
$ |
(837,221 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
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574,373 |
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596,471 |
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Stock option/warrant compensation |
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9,762 |
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Decrease (increase) in: |
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Inventory |
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23,328 |
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(99,364 |
) |
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Prepaids and other |
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(72,046 |
) |
(167,159 |
) |
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Increase (decrease) in: |
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Accounts payable |
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91,961 |
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187,107 |
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Accrued expenses |
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(190,109 |
) |
(6,704 |
) |
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Net cash provided by (used in) operating activities |
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379,823 |
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(317,108 |
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Cash flows from investing activities: |
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Purchase of: |
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Property and equipment |
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(448,556 |
) |
(1,950,915 |
) |
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Intangible assets and other |
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(3,809 |
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(38,578 |
) |
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Net cash used in investing activities |
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(452,365 |
) |
(1,989,493 |
) |
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Cash flows from financing activities: |
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Payments on capital lease obligations |
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(179,896 |
) |
(208,952 |
) |
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Payments on long term-debt |
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(21,458 |
) |
(22,907 |
) |
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Other non-current assets |
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(208,141 |
) |
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Payment of dividends |
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(168,384 |
) |
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Proceeds from: |
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Long-term debt |
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428,572 |
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Related parties |
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200,000 |
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Issuance of stock |
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20,087 |
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1,381,989 |
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Net cash provided by (used in) financing activities |
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(189,408 |
) |
1,410,318 |
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Net decrease in cash |
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(261,950 |
) |
(896,283 |
) |
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Cash, beginning |
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384,394 |
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3,521,842 |
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Cash, ending |
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$ |
122,444 |
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$ |
2,625,559 |
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See notes to condensed financial statements.
3
GRANITE CITY FOOD & BREWERY LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Thirteen and thirty-nine weeks ended September 29, 2002 and September 28, 2003
1. Nature of business and basis of presentation:
Nature of business:
Granite City Food & Brewery Ltd. (the Company) was formed to develop and operate casual dining restaurants featuring on-premises breweries. The Company is developing these restaurant-microbreweries, known as Granite City Food & Brewery®, in selected markets throughout the United States. The theme is casual dining with a wide variety of menu items that are prepared fresh daily, combined with freshly brewed hand-crafted beers. The Company produces its beer using a process called Fermentus Interruptus, which is intended to maintain high beer quality while enhancing overall profitability by reducing unit-level brewing costs. The first facility, located in St. Cloud, Minnesota, opened in July 1999, a second facility opened in Sioux Falls, South Dakota, in December 2000, and a third facility, located in Fargo, North Dakota, opened in November 2001. Our fourth facility opened in September 2003 in West Des Moines, Iowa. Construction for new restaurants is currently underway in Cedar Rapids and Davenport, Iowa.
The Companys current expansion strategy focuses on development of restaurants in markets where management believes the Companys concept will have broad appeal and attractive restaurant-level economics.
Interim financial statements:
The Company has prepared the condensed financial statements for the thirteen and thirty-nine weeks ended September 29, 2002 and September 28, 2003 without audit by the Companys independent auditors. In the opinion of the Companys management, all adjustments necessary to present fairly the financial position of the Company at September 28, 2003 and the results of operations and cash flows for the periods ended September 29, 2002 and September 28, 2003 have been made. Those adjustments consist only of normal and recurring adjustments.
Certain information and note disclosures normally included in the Companys annual financial statements have been condensed or omitted. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Companys Annual Report on Form 10-KSB for the fiscal year ended December 29, 2002, filed with the Securities and Exchange Commission on March 28, 2003, as amended on December 21, 2004.
The results of operations for the thirteen and thirty-nine weeks ended September 28, 2003 are not necessarily indicative of the results to be expected for the entire year.
4
Earnings (loss) per share:
Basic earnings (loss) per common share is calculated by dividing net income (loss) less preferred stock dividends declared by the weighted average number of common shares outstanding. Diluted earnings (loss) per common share assumes that outstanding common shares were increased by shares issuable upon exercise of stock options and warrants for which market price exceeds exercise price, less shares which could have been purchased by the Company with the related proceeds. Calculations of the Companys net loss per common share for the thirteen and thirty-nine weeks ended September 29, 2002 and September 28, 2003 are set forth in the following table:
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Thirteen Weeks Ended |
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Thirty-nine Weeks Ended |
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September 29, |
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September 28, |
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September 29, |
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September 28, |
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Net loss |
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$ |
(23,195 |
) |
$ |
(431,510 |
) |
$ |
(47,684 |
) |
$ |
(837,221 |
) |
Less dividends declared |
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(168,854 |
) |
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(433,935 |
) |
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Net loss available to common shareholders |
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$ |
(23,195 |
) |
$ |
(600,364 |
) |
$ |
(47,684 |
) |
$ |
(1,271,156 |
) |
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Loss per common share, basic and diluted |
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$ |
(0.01 |
) |
$ |
(0.15 |
) |
$ |
(0.01 |
) |
$ |
(0.33 |
) |
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Weighted average shares outstanding, basic and diluted |
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3,819,825 |
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3,947,700 |
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3,812,108 |
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3,888,038 |
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2. Stock compensation:
The Company accounts for its stock-based compensation awards using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees. No compensation cost has been recognized for options issued to employees when the exercise price of the options granted is at least equal to the fair value of the common stock on the date of grant. Had compensation cost been determined consistent with Statement of Financial Accounting Standard (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, the Companys net loss and net loss per common share would have been changed to the following pro forma amounts:
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Thirteen Weeks Ended |
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Thirty-nine Weeks Ended |
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September 29, |
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September 28, |
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September 29, |
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September 28, |
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Net income (loss): |
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As reported |
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$ |
(23,195 |
) |
$ |
(431,510 |
) |
$ |
(47,684 |
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$ |
(837,221 |
) |
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Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |
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$ |
(34,703 |
) |
$ |
(58,272 |
) |
$ |
(100,680 |
) |
$ |
(273,285 |
) |
Pro forma |
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$ |
(57,898 |
) |
$ |
(489,782 |
) |
$ |
(148,364 |
) |
$ |
(1,110,506 |
) |
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Net income (loss) per common share |
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Basic and diluted as reported |
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$ |
(0.01 |
) |
$ |
(0.15 |
) |
$ |
(0.01 |
) |
$ |
(0.33 |
) |
Basic and diluted pro forma |
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$ |
(0.02 |
) |
$ |
(0.17 |
) |
$ |
(0.04 |
) |
$ |
(0.40 |
) |
5
The fair value of each option grant for the pro forma disclosure required by SFAS No. 123, as amended by SFAS No. 148, is estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions for the grants:
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2002 |
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2003 |
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Dividend yield |
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None |
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None |
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Expected volatility |
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101.4 |
% |
75.0 |
% |
Expected life of option |
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5 years |
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5-10 years |
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Risk-free interest rate |
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3.9 |
% |
4.2 |
% |
3. Change in capitalization:
Issuance of preferred stock and warrants to purchase common stock:
During the fourth quarter of 2002, the Company conducted a private placement to accredited investors of Series A Convertible Preferred Stock and warrants to purchase common stock. The Company sold 55,600 shares of preferred stock for aggregate gross proceeds of $5,560,000. The outstanding preferred stock is convertible into an aggregate of 3,518,964 shares of common stock at a conversion price of $1.58 per share. The preferred stock pays an 8% cumulative dividend in cash or in the Companys common stock. The Company may require conversion under certain circumstances. The preferred stock was sold with five-year warrants to purchase an aggregate of 1,759,473 shares of common stock at an exercise price of $1.58 per share. In connection with such placement, the Company issued its agents warrants to purchase an aggregate of 288,604 shares of common stock at an exercise price of $1.58 per share and paid its agents cash commissions aggregating $471,000.
Exercise of warrants and options:
As part of the sale of common stock in 1997 and 1998, the Company sold to its private placement agent, for $50, a stock purchase warrant for the purchase of 111,950 shares of common stock at $1 per share. As of December 29, 2002, 78,150 of such warrants remained outstanding. On February 19, 2003, affiliates of the private placement agent exercised 76,450 warrants on a cashless basis. The remaining 1,700 warrants expired February 20, 2003.
On June 10, 2003, 15,822 of the 1,759,473 warrants sold with the Series A Convertible Preferred Stock, were exercised on a cashless basis, resulting in an issuance of 5,854 shares of common stock..
On August 18, 2003, one of our directors exercised a stock option for the purchase of 5,000 shares of common stock at an exercise price of $1.00 per share. These options were issued pursuant to the 1997 Director Stock Option Plan.
Dividends:
On March 21, 2003, the Company authorized payment of dividends to holders of its preferred stock as of that date. Such dividends aggregated $96,349 and were paid in cash on March 31, 2003.
On June 23, 2003, the Company authorized payment of dividends to holders of its preferred stock as of that date. Such dividends were paid on June 30, 2003 through the issuance of an aggregate of 69,724 shares of common stock and $36 cash in lieu of fractional shares.
On September 22, 2003, the Company authorized payment of dividends to holders of its preferred stock as of that date. Such dividends were paid on September 30, 2003 through the issuance of an aggregate of 70,356 shares of common stock and $38 cash in lieu of fractional shares.
4. Restatement:
The financial statements for the year ended December 29,2002 have been restated to record a beneficial conversion feature reducing retained earnings and increasing additional paid-in-capital by $1,958,572. The balance sheet presented herein has been restated to reflect this change.
6
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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GRANITE CITY FOOD & BREWERY LTD. |
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Date: |
December 21, 2004 |
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By: |
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/s/ Monica A. Underwood |
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Monica A. Underwood |
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Interim Chief Financial Officer and |
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7
Exhibit Number |
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Description |
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10.1 |
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Loan Agreement between Granite City Food & Brewery Ltd. and First National Bank, dated August 28, 2003.* |
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10.2 |
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Term Note for the principal sum of $750,000 issued by Granite City Food & Brewery Ltd., Maker, to First National Bank, Payee, dated August 28, 2003.* |
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10.3 |
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Security Agreement between Granite City Food & Brewery Ltd. and First National Bank, dated August 28, 2003.* |
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31.1 |
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Certification by Steven J. Wagenheim, President and Chief Executive Officer of the Company, pursuant to Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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31.2 |
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Certification by Monica A. Underwood, Interim Chief Financial Officer and Corporate Controller of the Company, pursuant to Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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32.1 |
|
Certification by Steven J. Wagenheim, President and Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.2 |
|
Certification by Monica A. Underwood, Interim Chief Financial Officer and Corporate Controller of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* Previously filed.
8