UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-QSB/A

Commission File Number 000-29643

GRANITE CITY FOOD & BREWERY LTD.

(Exact Name of Small Business Issuer as Specified in Its Charter)

5831 Cedar Lake Road

St. Louis Park, MN 55416

(952) 525-2070

(Address of Principal Executive Offices and Issuer’s

Telephone Number, including Area Code)

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 18, 2004, the issuer had outstanding 4,911,640 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.

CONDENSED BALANCE SHEETS

See notes to condensed financial statements.

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GRANITE CITY FOOD & BREWERY LTD.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

See notes to condensed financial statements.

2

GRANITE CITY FOOD & BREWERY LTD.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

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 28, 2003 and September 26, 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; West Des Moines, Cedar Rapids and Davenport, Iowa, Lincoln, Nebraska and Minneapolis, Minnesota.

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 and thirty-nine weeks ended September 28, 2003 and September 26, 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 September 26, 2004 and the results of operations and cash flows for the periods ended September 28, 2003 and September 26, 2004 have been made. Those adjustments consist only of normal and recurring adjustments.

The balance sheet at December 28, 2003 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements.  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 and thirty-nine weeks ended September 26, 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 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.  Diluted earnings also assumes convertible preferred stock is converted to common stock and increases the outstanding common shares, and net income available to common shareholders is increased by dividends payable on that convertible preferred

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stock.  Calculations of the Company’s net income (loss) per common share for the thirteen and thirty-nine weeks ended September 28, 2003 and September 26, 2004 are set forth in the following table:

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 income (loss) and net income (loss) per common share would have been changed to the following pro forma amounts:

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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:

3.              Change in capitalization:

Exercise of warrants and options:

During the first quarter of 2004, the Company issued an aggregate of 40,822 shares of common stock to accredited investors upon the conversion of 645 shares of Series A Convertible Preferred Stock originally issued on October 1, 2002.  The convertible preferred stock was converted at $1.58 per share.

During the first quarter of 2004, the Company issued an aggregate of 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 upon the issuance of 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.  During the first quarter of 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 September 26, 2004, the number of units purchasable under these warrants was 87,670 and the exercise price was $4.61 per unit.

During the second quarter of 2004, the Company issued 15,822 shares of common stock to an accredited investor 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.

During the second quarter of 2004, the Company issued 31,645 shares of common stock to an accredited investor upon the conversion of 500 shares of Series A Convertible Preferred Stock originally issued on October 1, 2002.  The convertible preferred stock was converted at $1.58 per share.

As part of the Company’s initial public offering, the Company sold 1,000,000 units, each unit consisting of one share of common stock and one redeemable Class A warrant.  Each Class A warrant entitles the holder to purchase one share of common stock at an exercise price of $5.00 per share.  The agreement that set forth the terms and conditions of the Class A 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 upon the issuance of common stock in lieu of cash dividends to the holders of the Company’s Series A Convertible Preferred Stock. As a result of these adjustments and the issuance, pursuant to Registration File No. 333-93459, of 1,072 shares of common stock upon the exercise of such warrants in May 2004 at an exercise price of $4.66, the number of shares

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purchasable under these warrants at September 26, 2004 was 1,071,889 and the exercise price was $4.66 per share.  The warrants expire on June 6, 2005.

On August 18, 2004, one of the Company’s directors exercised a stock option for the purchase of 5,000 shares of common stock at an exercise price of $1.25 per share.  These options were issued pursuant to the 1997 Director Stock Option Plan.

On September 20, 2004, one of the Company’s employees exercised a stock option for the purchase of 3,000 shares of common stock at an exercise price of $1.65 per share.  These options were issued pursuant to the 1997 Stock Option Plan.

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.

On June 15, 2004, the Company authorized cash payment of dividends to holders of its preferred stock as of June 23, 2004.  Such dividends aggregated $108,710 and were paid on June 30, 2004.

On September 9, 2004, the Company authorized cash payment of dividends to holders of its preferred stock as of September 23, 2004.  Such dividends aggregated $108,710, were included in accrued expenses on the Company’s balance sheet at September 26, 2004 and were paid on September 30, 2004.

Issuance of common stock and warrants to purchase common stock:

On September 17, 2004, the Company entered into a securities purchase agreement with accredited investors for the sale of approximately $8.5 million of common stock and warrants to purchase common stock.  The agreement provided for securities to be sold at an offering price of $3.25 per share of common stock, with one warrant for every 2.5 shares of common stock sold.  The warrants have a term of five years and are exercisable at $5.00 per share, subject to certain anti-dilution adjustments.  The Company completed the initial closing of this private placement, generating gross proceeds of $1,925,157 with the sale of 592,356 shares of common stock and issuance of warrants to purchase 236,944 shares of common stock.  In connection with the initial closing, the Company issued its agent a warrant to purchase 29,618 shares of common stock at an exercise price of $5.00 per share, paid its agent cash commission of $96,258 and paid expenses related to the transaction of $125,341.  Completion of the sale of the remaining shares and warrants is subject to approval by the Company’s shareholders in compliance with Nasdaq Marketplace Rules.

4.              Line of credit:

In April 2004, the Company entered into a revolving line of credit agreement with maximum availability of $750,000 with an independent financial institution.  The Company paid annual interest at a rate of 6.75% on amounts it borrowed, which interest payments aggregated approximately $5,307.  This line of credit expired September 1, 2004, at which time the Company renewed the line at an annual interest rate of 7.00%.  This line of credit is secured by substantially all the personal property of the Company, is guaranteed by one of the Company’s directors and expires September 15, 2005.  As of September 26, 2004, the Company had $199,102 outstanding on this line.

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5.              Provision for income taxes:

A provision for income taxes was not recorded in the third quarter of 2004 because a provision for income tax is not anticipated for the entire fiscal year 2004.

6.              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 sheets presented herein have been restated to reflect this change.

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SIGNATURES

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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INDEX TO EXHIBITS

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