UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
|
ý |
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 28, 2004 |
|
o |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 000-29643
GRANITE CITY FOOD & BREWERY LTD.
(Exact Name of Small Business Issuer as Specified in Its Charter)
|
Minnesota |
|
41-1883639 |
|
(State or Other Jurisdiction |
|
(I.R.S. Employer |
|
|
|
|
|
5831 Cedar Lake Road |
||
|
(Address of Principal Executive Offices and
Issuer’s |
||
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 April 26, 2004, the issuer had outstanding 4,262,745 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 issuer’s initial public offering.
Transitional Small Business Disclosure Format:
Yes o No ý.
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
GRANITE CITY FOOD & BREWERY LTD.
(Unaudited)
|
|
|
March 28, 2004 |
|
|
|
ASSETS: |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash |
|
$ |
504,483 |
|
|
Inventory |
|
200,297 |
|
|
|
Prepaids and other |
|
185,962 |
|
|
|
Total current assets |
|
890,742 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
17,850,612 |
|
|
|
Intangible assets and other |
|
395,769 |
|
|
|
Total assets |
|
$ |
19,137,123 |
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
328,901 |
|
|
Accrued expenses |
|
1,031,493 |
|
|
|
Long-term debt, current portion |
|
215,294 |
|
|
|
Capital lease obligations, current portion |
|
408,427 |
|
|
|
Total current liabilities |
|
1,984,115 |
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion |
|
2,675,135 |
|
|
|
Capital lease obligations, net of current portion |
|
8,400,506 |
|
|
|
Total liabilities |
|
13,059,756 |
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
Common stock, $0.01 par value, 90,000,000 shares authorized; 4,193,331 shares issued and outstanding |
|
41,933 |
|
|
|
Preferred stock, $0.01 par value, 10,000,000 authorized; 54,855 Series A Convertible Preferred shares issued and outstanding |
|
549 |
|
|
|
Additional paid-in capital |
|
12,515,410 |
|
|
|
Stock dividends distributable |
|
694 |
|
|
|
Accumulated deficit |
|
(6,481,219 |
) |
|
|
Total shareholders’ equity |
|
6,077,367 |
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
19,137,123 |
|
See notes to condensed financial statements.
1
GRANITE CITY FOOD & BREWERY LTD.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Thirteen Weeks Ended |
|
||||
|
|
|
March 30, 2003 |
|
March 28, 2004 |
|
||
|
|
|
|
|
|
|
||
|
Restaurant revenues |
|
$ |
2,870,160 |
|
$ |
6,292,871 |
|
|
|
|
|
|
|
|
||
|
Cost of sales: |
|
|
|
|
|
||
|
Food, beverage and retail |
|
818,882 |
|
1,876,115 |
|
||
|
Labor |
|
985,833 |
|
2,043,221 |
|
||
|
Direct and occupancy |
|
663,267 |
|
1,264,862 |
|
||
|
Total cost of sales |
|
2,467,982 |
|
5,184,198 |
|
||
|
|
|
|
|
|
|
||
|
Pre-opening |
|
— |
|
264,974 |
|
||
|
General and administrative |
|
293,617 |
|
588,584 |
|
||
|
Depreciation and amortization |
|
193,036 |
|
330,040 |
|
||
|
|
|
|
|
|
|
||
|
Operating loss |
|
(84,475 |
) |
(74,925 |
) |
||
|
|
|
|
|
|
|
||
|
Interest: |
|
|
|
|
|
||
|
Income |
|
23,301 |
|
3,971 |
|
||
|
Expense |
|
(123,448 |
) |
(232,173 |
) |
||
|
Net other expense |
|
(100,147 |
) |
(228,202 |
) |
||
|
|
|
|
|
|
|
||
|
Net loss |
|
(184,622 |
) |
(303,127 |
) |
||
|
Less preferred stock dividends declared |
|
(96,349 |
) |
(347,106 |
) |
||
|
Net loss available to common shareholders |
|
$ |
(280,971 |
) |
$ |
(650,233 |
) |
|
|
|
|
|
|
|
||
|
Loss per common share, basic and diluted |
|
$ |
(0.07 |
) |
$ |
(0.16 |
) |
|
|
|
|
|
|
|
||
|
Weighted average shares outstanding, basic and diluted |
|
3,845,315 |
|
4,132,933 |
|
||
See notes to condensed financial statements.
2
GRANITE CITY FOOD & BREWERY LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Thirteen Weeks Ended |
|
||||
|
|
|
March 30, 2003 |
|
March 28, 2004 |
|
||
|
|
|
|
|
|
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
||
|
Net loss |
|
$ |
(184,622 |
) |
$ |
(303,127 |
) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
||
|
Depreciation and amortization |
|
193,036 |
|
330,040 |
|
||
|
Stock option/warrant compensation |
|
— |
|
6,390 |
|
||
|
Decrease (increase) in: |
|
|
|
|
|
||
|
Inventory |
|
9,990 |
|
(23,121 |
) |
||
|
Prepaids and other |
|
(93,492 |
) |
(40,105 |
) |
||
|
Increase (decrease) in: |
|
|
|
|
|
||
|
Accounts payable |
|
94,155 |
|
(179,970 |
) |
||
|
Accrued expenses |
|
(175,235 |
) |
(261,748 |
) |
||
|
Net cash used in operating activities |
|
(156,168 |
) |
(471,641 |
) |
||
|
|
|
|
|
|
|
||
|
Cash flows from investing activities: |
|
|
|
|
|
||
|
Purchase of: |
|
|
|
|
|
||
|
Property and equipment |
|
(385,908 |
) |
(1,100,170 |
) |
||
|
Intangible assets and other |
|
— |
|
(18,366 |
) |
||
|
Net cash used in investing activities |
|
(385,908 |
) |
(1,118,536 |
) |
||
|
|
|
|
|
|
|
||
|
Cash flows from financing activities: |
|
|
|
|
|
||
|
Payments on capital lease obligations |
|
(64,642 |
) |
(106,339 |
) |
||
|
Payments on long term-debt |
|
(7,567 |
) |
(38,907 |
) |
||
|
Payment of dividends |
|
(71,999 |
) |
(36 |
) |
||
|
Proceeds from: |
|
|
|
|
|
||
|
Issuance of long-term debt |
|
— |
|
750,000 |
|
||
|
Issuance of stock |
|
1,280,408 |
|
49,982 |
|
||
|
Net cash provided by financing activities |
|
1,136,200 |
|
654,700 |
|
||
|
|
|
|
|
|
|
||
|
Net increase (decrease) in cash |
|
594,124 |
|
(935,477 |
) |
||
|
Cash, beginning |
|
3,521,842 |
|
1,439,960 |
|
||
|
Cash, ending |
|
$ |
4,115,966 |
|
$ |
504,483 |
|
See notes to condensed financial statements.
3
GRANITE CITY FOOD & BREWERY LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Thirteen weeks ended March 30, 2003 and March 28, 2004
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-premise 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 made on-premise. 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. Subsequently, the Company opened restaurants in Sioux Falls, South Dakota; Fargo, North Dakota; and West Des Moines, Cedar Rapids and Davenport, Iowa.
The Company’s current expansion strategy focuses on development of restaurants in markets where management believes the Company’s concept will have broad appeal and attractive restaurant-level economics.
Interim financial statements:
The Company has prepared the condensed financial statements for the thirteen weeks ended March 30, 2003 and March 28, 2004 without audit by the Company’s independent auditors. In the opinion of the Company’s management, all adjustments necessary to present fairly the financial position of the Company at March 28, 2004 and the results of operations and cash flows for the periods ended March 30, 2003 and March 28, 2004 have been made. Those adjustments consist only of normal and recurring adjustments.
Certain information and note disclosures normally included in the Company’s 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 Company’s Annual Report on Form 10-KSB for the fiscal year ended December 28, 2003, filed with the Securities and Exchange Commission on March 29, 2004, as amended on December 21, 2004.
The results of operations for the thirteen weeks ended March 28, 2004 are not necessarily indicative of the results to be expected for the entire year.
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 Company’s net loss per common share for the thirteen weeks ended March 30, 2003 and March 28, 2004 are set forth in the following table:
4
|
|
|
Thirteen Weeks Ended |
|
||||
|
|
|
March 30, 2003 |
|
March 28, 2004 |
|
||
|
|
|
|
|
|
|
||
|
Net loss |
|
$ |
(184,622 |
) |
$ |
(303,127 |
) |
|
Less dividends declared |
|
(96,349 |
) |
(347,106 |
) |
||
|
Net loss available to common shareholders |
|
$ |
(280,971 |
) |
$ |
(650,233 |
) |
|
|
|
|
|
|
|
||
|
Loss per common share, basic and diluted |
|
$ |
(0.07 |
) |
$ |
(0.16 |
) |
|
|
|
|
|
|
|
||
|
Weighted average shares outstanding, basic and diluted |
|
3,845,315 |
|
4,132,933 |
|
||
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 Company’s net loss and net loss per common share would have been changed to the following pro forma amounts:
|
|
|
Thirteen Weeks Ended |
|
||||
|
|
|
March 30, 2003 |
|
March 28, 2004 |
|
||
|
Net income (loss): |
|
|
|
|
|
||
|
As reported |
|
$ |
(184,622 |
) |
$ |
(303,127 |
) |
|
Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |
|
$ |
(141,543 |
) |
$ |
(153,692 |
) |
|
Pro forma |
|
$ |
(326,165 |
) |
$ |
(456,819 |
) |
|
|
|
|
|
|
|
||
|
Net income (loss) per common share |
|
|
|
|
|
||
|
Basic and diluted as reported |
|
$ |
(0.07 |
) |
$ |
(0.16 |
) |
|
Basic and diluted pro forma |
|
$ |
(0.11 |
) |
$ |
(0.19 |
) |
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:
|
|
|
2003 |
|
2004 |
|
|
Dividend yield |
|
None |
|
None |
|
|
Expected volatility |
|
89.4% |
|
72.9% |
|
|
Expected life of option |
|
5-10 years |
|
5-10 years |
|
|
Risk-free interest rate |
|
4.0% |
|
3.8% |
|
5
3. Change in capitalization:
Exercise of warrants and options:
During the first quarter of 2004, we issued an aggregate of 40,822 shares of common stock to accredited investors, upon the conversion of 645 shares of our Series A Convertible Preferred Stock originally issued on October 1, 2002. The convertible preferred stock was converted at $1.58 per share.
During March 2004, we issued 31,645 shares of common stock to accredited investors upon the exercise for cash of warrants originally issued on October 1, 2002, in connection with a private placement of Series A Convertible Preferred Stock and warrants. Each warrant was exercised at $1.58 per share.
As part of the Company’s initial public offering, the Company sold to the underwriter, for $100, stock purchase warrants for the purchase of an aggregate of 100,000 units exercisable at $4.95 per unit after June 6, 2001. Each unit consists of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $5.00 per share, subject to adjustment. The agreement that set forth the terms and conditions of these warrants contains certain anti-dilution provisions. Pursuant to these provisions, the number of shares purchasable upon exercise of these warrants and the related purchase price both required adjustment each time the Company issues common stock in lieu of cash dividends to the holders of the Company’s Series A Convertible Preferred Stock. These warrants also provide for a cashless exercise provision and expire on June 6, 2005. In March 2004, the Company issued 6,514 units upon the cashless exercise of 19,368 of such warrants. As a result of these exercises and the anti-dilution adjustments, as of March 28, 2004, the number of units purchasable under this agreement was 86,175 and the exercise price was $4.69.
Dividends:
On December 10, 2003, the Company authorized payment of dividends to holders of its preferred stock as of December 23, 2003. Such dividends were paid on December 31, 2003 through the issuance of an aggregate of 70,230 shares of common stock valued at $1.58 per share. The closing price of the stock on December 23, 2003 was $3.97 per share. Additionally, $37 cash in lieu of fractional shares was distributed.
On March 11, 2004, the Company authorized payment of dividends to holders of its preferred stock as of March 23, 2004. Such dividends were paid on March 31, 2004 through the issuance of an aggregate of 69,414 shares of common stock valued at $1.58 per share. The closing price of the stock on March 23, 2004 was $5.00 per share. Additionally, $36 cash in lieu of fractional shares was distributed.
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.
|
|
|
GRANITE CITY FOOD & BREWERY LTD. |
|
|
|
|
|
|
|
|
|
|
|
|
Date: December 21, 2004 |
By: |
/s/ Monica A. Underwood |
|
|
|
|
Monica A. Underwood |
|
|
|
|
Interim Chief Financial Officer and |
|
|
|
|
Corporate Controller |
|
7
|
Exhibit Number |
|
Description |
|
|
|
|
|
10.1 |
|
Business Loan Agreement between Granite City Food & Brewery Ltd. and First National Bank, dated April 14, 2004.* |
|
|
|
|
|
10.2 |
|
Promissory Note for the principal sum of $750,000 issued by Granite City Food & Brewery Ltd., Borrower, to First National Bank, Lender, dated April 14, 2004.* |
|
|
|
|
|
10.3 |
|
Commercial Guarantee Agreement between Granite City Food & Brewery Ltd., Borrower, First National Bank, Lender, and Steven J. Wagenheim, Guarantor, dated April 14, 2004.* |
|
|
|
|
|
31.1 |
|
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. |
|
|
|
|
|
31.2 |
|
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. |
|
|
|
|
|
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. |
|
|
|
|
|
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