<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------
FORM 10-QSB
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 1, 2000
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
COMMISSION FILE NUMBER 0-20845
BIG BUCK BREWERY & STEAKHOUSE, INC.
(Exact Name of Registrant as Specified in Its Charter)
MICHIGAN 38-3196031
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
550 SOUTH WISCONSIN STREET
GAYLORD, MICHIGAN 49734
(517) 731-0401
(Address of Principal Executive Offices and Registrant'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 X No .
----- -----
As of November 15, 2000, there were outstanding 5,454,748 shares of
common stock, $0.01 par value, of the registrant.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION...........................................................................2
ITEM 1 Financial Statements............................................................................2
Consolidated Balance Sheets as of October 1, 2000 and January 2, 2000..................2
Consolidated Statements of Operations for the three months ended
October 1, 2000 and October 3, 1999 and for the nine months ended
October 1, 2000 and October 3, 1999 ...................................................3
Consolidated Statements of Cash Flows for the nine months ended
October 1, 2000 and October 3, 1999....................................................4
Consolidated Condensed Notes to Financial Statements...................................5
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations..............................................................6
PART II OTHER INFORMATION..............................................................................12
ITEM 2 Changes in Securities and Use of Proceeds......................................................12
ITEM 5 Other Information..............................................................................12
ITEM 6 Exhibits and Reports on Form 8-K...............................................................12
SIGNATURES.......................................................................................................13
EXHIBIT INDEX....................................................................................................14
</TABLE>
1
<PAGE>
PART I
ITEM 1. Financial Statements
BIG BUCK BREWERY & STEAKHOUSE, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 1, 2000 January 2, 2000
--------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 484,257 $ 369,228
Accounts receivable 308,641 233,273
Inventories 346,469 235,671
Prepaids and other 481,393 318,775
------------------ ----------------
Total current assets 1,620,760 1,156,947
PROPERTY AND EQUIPMENT, net 24,189,421 19,730,766
OTHER ASSETS, net 1,244,995 573,487
------------------ ----------------
$ 27,055,176 $ 21,461,200
================== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,549,295 $ 2,152,242
Accrued expenses 785,016 451,855
Current maturities of long-term debt 2,400,000 2,487,246
------------------ ----------------
Total current liabilities 5,734,311 5,091,343
LONG-TERM DEBT, less current maturities 12,873,848 6,721,083
------------------ ----------------
Total liabilities 18,608,159 11,812,426
================== ================
MINORITY INTEREST 483,151 147,340
SHAREHOLDERS' EQUITY:
Common stock, $0.01 par value, 20,000,000 shares
authorized; 5,454,748 and 5,405,481 shares issued
and outstanding 54,548 54,055
Warrants 153,650 153,650
Additional paid-in capital 14,143,899 13,685,520
Accumulated deficit (6,388,231) (4,391,791)
----------------- ----------------
Total shareholders' equity 7,963,866 9,501,434
------------------ ----------------
$ 27,055,176 $ 21,461,200
================== ================
</TABLE>
The accompanying notes are an integral part of these balance sheets.
2
<PAGE>
BIG BUCK BREWERY & STEAKHOUSE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -------------------
October 1, 2000 October 3, 1999 October 1, 2000 October 3, 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUE:
Restaurant sales $ 4,336,353 $ 3,696,898 $ 11,292,609 $ 9,990,429
Wholesale beer and gift shop sales 124,067 154,666 297,609 403,220
----------------- ---------------- --------------- --------------
Total revenue 4,460,420 3,851,564 11,590,218 10,393,649
----------------- ---------------- --------------- --------------
COSTS AND EXPENSES:
Cost of sales 1,537,874 1,300,148 3,884,330 3,446,216
Restaurant salaries and benefits 1,389,193 1,115,275 3,560,081 3,124,969
Operating expenses 1,073,641 789,173 2,639,505 2,050,496
Depreciation 214,969 202,089 594,946 606,267
----------------- ---------------- --------------- --------------
Total costs and expenses 4,215,677 3,406,685 10,678,862 9,227,948
----------------- ---------------- --------------- --------------
Restaurant operating income 244,743 444,879 911,356 1,165,701
Preopening expenses 438,151 - 484,483 226,043
General and administrative expenses 350,520 276,214 1,094,979 1,208,858
----------------- ---------------- --------------- --------------
Income (loss) from operations (543,928) 168,665 (668,106) (269,200)
OTHER INCOME (EXPENSE):
Interest expense (379,012) (224,385) (1,113,199) (646,878)
Amortization and other (109,416) 66 (282,074) 5,615
----------------- ---------------- --------------- ---------------
Other (expense), net (488,428) (224,319) (1,395,273) (641,263)
Minority interest share of joint venture 57,763 - 66,938 3,295
----------------- ---------------- --------------- ---------------
NET LOSS $ (974,593) $ (55,654) $ (1,996,441) $ (907,168)
================= ================ =============== ===============
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ (0.18) $ (0.01) $ (0.37) $ (0.17)
================= ================ =============== ===============
WEIGHTED AVERAGE
SHARES OUTSTANDING 5,421,972 5,405,481 5,410,978 5,308,390
================= ================ =============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
BIG BUCK BREWERY & STEAKHOUSE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
October 1,2000 October 3,1999
----------------------- -----------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,996,441) $ (907,514)
Adjustments to reconcile net loss to cash flows used in
operating activities-
Depreciation and amortization 983,025 606,267
Change in operating assets and liabilities:
Accounts receivable (75,368) 113,164
Inventories (110,798) 69,805
Prepaids and other (162,618) (90,756)
Accounts payable (202,947) 962,699
Accrued expenses 333,161 (281,293)
----------------- --------------
Net cash provided by (used in) operating activities (1,231,986) 472,718
----------------- --------------
INVESTING ACTIVITIES:
Purchases of property and equipment, net (4,453,601) (984,041)
Decrease (increase) in other assets (70,683) 67,605
----------------- --------------
Net cash used in investing activities (4,524,284) (916,436)
----------------- --------------
FINANCING ACTIVITIES:
Proceeds from long-term debt and capital lease obligations 9,200,000 -
Proceeds from sale of common stock 22,258 249,998
Payments on long-term debt and capital lease obligations (3,084,482) (206,042)
Proceeds from minority partner 335,811 -
Payment of deferred financing costs (602,288) -
------------------ --------------
Net cash provided by financing activities 5,871,299 43,956
----------------- --------------
INCREASE (DECREASE) IN CASH 115,029 (399,762)
CASH, beginning of period 369,228 500,236
----------------- --------------
CASH, end of period $ 484,257 $ 100,474
================= ==============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 1,047,885 $ 664,851
Income taxes paid - -
NONCASH TRANSACTION:
Issuance of common stock, stock options and
warrants for property and services 386,614 -
Conversion of long-term debt to common stock 50,000 -
Accounts payable assumed for purchase of equipment 600,000 -
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
BIG BUCK BREWERY & STEAKHOUSE, INC.
Consolidated Condensed Notes to Financial Statements
October 1, 2000
(1) Basis of Financial Statement Presentation
The accompanying unaudited financial statements included herein have been
prepared by Big Buck Brewery & Steakhouse, Inc. in accordance with
generally accepted accounting principles for interim financial information
and pursuant to the rules and regulations of the SEC. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures made are adequate to make the
information not misleading.
The financial statements for the three and nine months ended October 1,
2000 include the results of operations for the joint venture described in
Big Buck's Form 10-KSB for the fiscal year ended January 2, 2000.
The unaudited balance sheet as of October 1, 2000 and the unaudited
statements of operations and cash flows for the three and the nine months
ended October 1, 2000 and October 3, 1999 include, in the opinion of
management, all adjustments, consisting solely of normal recurring
adjustments, necessary for a fair presentation of the financial results for
the respective interim periods and are not necessarily indicative of
results of operations to be expected for the entire fiscal year ending
December 31, 2000. The accompanying interim financial statements have been
prepared under the presumption that users of the interim financial
information have either read, or have access to, the audited financial
statements and notes in Big Buck's Form 10-KSB for the fiscal year ended
January 2, 2000. Accordingly, footnote disclosures which would
substantially duplicate the disclosures contained in the January 2, 2000
audited financial statements have been omitted from these interim financial
statements except for the disclosures below. It is suggested that these
interim financial statements should be read in conjunction with the
financial statements and the notes thereto included in Big Buck's Form
10-KSB for the fiscal year ended January 2, 2000.
5
<PAGE>
ITEM 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
THE FOLLOWING DISCUSSION CONTAINS VARIOUS FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 21E OF THE EXCHANGE ACT. ALTHOUGH WE BELIEVE THAT, IN MAKING
ANY SUCH STATEMENT, OUR EXPECTATIONS ARE BASED ON REASONABLE ASSUMPTIONS, ANY
SUCH STATEMENT MAY BE INFLUENCED BY FACTORS THAT COULD CAUSE ACTUAL OUTCOMES AND
RESULTS TO BE MATERIALLY DIFFERENT FROM THOSE PROJECTED. WHEN USED IN THE
FOLLOWING DISCUSSION, THE WORDS "ANTICIPATES," "BELIEVES," "EXPECTS," "INTENDS,"
"PLANS," "ESTIMATES" AND SIMILAR EXPRESSIONS, AS THEY RELATE TO US OR OUR
MANAGEMENT, ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO NUMEROUS RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED. FACTORS
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED,
CERTAIN OF WHICH ARE BEYOND OUR CONTROL, ARE SET FORTH AT EXHIBIT 99 TO OUR
ANNUAL REPORT ON FORM 10-KSB, FILED ON MARCH 31, 2000, UNDER THE CAPTION
"CAUTIONARY STATEMENT."
OUR ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS COULD DIFFER MATERIALLY FROM
THOSE EXPRESSED IN, OR IMPLIED BY, FORWARD-LOOKING STATEMENTS. ACCORDINGLY, WE
CANNOT BE CERTAIN THAT ANY OF THE EVENTS ANTICIPATED BY FORWARD-LOOKING
STATEMENTS WILL OCCUR OR, IF ANY OF THEM DO OCCUR, WHAT IMPACT THEY WILL HAVE ON
US. WE CAUTION YOU TO KEEP IN MIND THE CAUTIONS AND RISKS DESCRIBED IN OUR
CAUTIONARY STATEMENT AND TO REFRAIN FROM ATTRIBUTING UNDUE CERTAINTY TO ANY
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE OF THE DOCUMENT IN
WHICH THEY APPEAR.
OVERVIEW
Big Buck develops and operates microbrewery/restaurants under the name "Big Buck
Brewery & Steakhouse." Big Buck currently operates one unit in each of the
following cities in Michigan: Gaylord, Grand Rapids and Auburn Hills. Big Buck
opened a fourth unit in Grapevine, Texas, a suburb of Dallas, on August 31,
2000. This unit is operated by Buck & Bass, L.P. pursuant to a joint venture
agreement between Big Buck and Bass Pro Outdoor World, L.P., a premier retailer
of outdoor sports equipment.
Future revenue and profits will depend upon various factors, including market
acceptance of the Big Buck Brewery & Steakhouse concept and general economic
conditions. Big Buck's present sources of revenue are the Gaylord, Grand Rapids,
Auburn Hills and Grapevine units. Big Buck cannot assure you that it will
successfully implement its expansion plans, in which case Big Buck will continue
to depend on the revenue from the existing units. Big Buck also faces all of the
risks, expenses and difficulties frequently encountered in connection with the
expansion and development of a new business. Furthermore, to the extent that Big
Buck's expansion strategy is successful, it must manage the transition to
multiple site, higher volume operations, control increased overhead expenses and
hire additional personnel.
Big Buck's sales and results of operations are expected to fluctuate based on
seasonal patterns. Big Buck anticipates that its highest earnings will occur in
the second and third quarters. Quarterly results in the future are likely to be
substantially affected by the timing of new unit openings. Because of the
seasonality of Big Buck's business and the impact of new unit openings, results
for any quarter are not necessarily indicative of the results that may be
achieved for a full fiscal year and cannot be used to indicate financial
performance for the entire year.
6
<PAGE>
QUARTERS ENDED OCTOBER 1, 2000 AND OCTOBER 3, 1999
The following table is derived from Big Buck's statements of operations and
expresses the results from operations as a percent of total revenue:
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
October 1, October 3, October 1, October 3,
2000 1999 2000 1999
---------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUE:
Restaurant sales 97.2% 96.0% 97.4% 96.1%
Wholesale beer and gift shop sales 2.8 4.0 2.6 3.9
---------- -------- -------- --------
Total revenue 100.0 100.0 100.0 100.0
---------- -------- -------- --------
COST AND EXPENSES:
Cost of sales 34.5 33.8 33.5 33.2
Restaurant salaries and benefits 31.1 29.0 30.7 30.1
Operating expenses 24.1 20.5 22.8 19.7
Depreciation and amortization 4.8 5.2 5.1 5.8
---------- -------- -------- --------
Total costs and expenses 94.5 88.4 92.1 88.8
---------- -------- -------- --------
Restaurant operating income 5.5 11.6 7.9 11.2
Preopening expenses 9.8 - 4.2 2.2
General and administrative expenses 7.9 7.2 9.4 11.6
---------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS (12.2) 4.4 (5.8) (6.8)
OTHER INCOME (EXPENSE):
Interest expense (8.5) (5.8) (9.6) (6.2)
Amortization and other (2.5) - (2.4) 0.1
---------- -------- -------- --------
Total other income (expense) (11.0) (5.8) (12.0) (6.2)
Minority interest share of joint venture 1.3 - 0.6 -
NET LOSS (21.8)% (1.4)% (17.2)% (8.7)%
========== ======== ======== ========
</TABLE>
7
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED OCTOBER 1, 2000 AND
OCTOBER 3, 1999
REVENUE
Revenue increased 15.8% to $4,460,420 in third quarter 2000 from $3,851,564
in third quarter 1999 and increased 11.5% to $11,590,218 for the first nine
months of 2000 from $10,393,649 for the first nine months of 1999. The
increases were due to the increased marketing efforts and unit level
promotions during 2000 and the additional revenues from the Grapevine unit,
which opened on August 31, 2000.
COST OF SALES
Cost of sales, which consists of food, merchandise and brewery supplies,
increased 18.3% to $1,537,874 in third quarter 2000 compared to third quarter
1999, and increased 12.7% to $3,884,330 for the first nine months of 2000
compared to the first nine months of 1999. The increases were due mainly to
higher revenue from existing units and the additional revenue from the Grapevine
unit. As a percentage of revenue, costs of sales increased to 34.5% in third
quarter 2000 compared to 33.8% in third quarter 1999, and increased to 33.5% for
the first nine months of 2000 compared to 33.2% for the same period in 1999. As
a percentage of revenue, the increases were the result of the opening of the
Grapevine unit, which is licensed to sell liquor, which has a higher cost of
sales than beer or wine.
RESTAURANT SALARIES AND BENEFITS
Restaurant salaries and benefits, which consist of restaurant management and
hourly employee wages and benefits, payroll taxes and workers' compensation
insurance, increased 24.6% to $1,389,193 in third quarter 2000 compared to
same quarter 1999, and increased 13.9% to $3,560,081 for the first nine
months of 2000 compared to the first nine months of 1999. The increases were
due to higher staffing needs for hourly employees in existing units as a
result of higher sales volume, as well as the opening of the Grapevine unit.
As a percentage of revenue, restaurant salaries and benefits increased to
31.1% for third quarter 2000 compared to 29.0% for third quarter 1999, and
increased to 30.7% for the first nine months of 2000 compared to 30.1% for
the same period in 1999. The increases were due to the added costs of hiring
and training new staff and retaining current staff in existing units in a
competitive labor market, and the opening of the Grapevine unit with higher
hourly labor costs due to inefficiencies associated with a newly trained
service and kitchen staff.
OPERATING EXPENSES
Operating expenses, which include supplies, utilities, repairs and maintenance,
advertising and occupancy costs, increased 36.0% to $1,073,641 in third quarter
2000 compared to third quarter 1999, and increased 28.7% to $2,639,505 for the
first nine months of 2000 compared to the first nine months of 1999. As a
percentage of revenue, operating expenses increased to 24.1% in third quarter
2000 as compared to 20.5% for third quarter 1999, and increased to 22.8% for the
first nine months of 2000 compared to 19.7% for the same period in 1999. The
increases were due to the additional expenses of unit level promotions and
marketing for the purposes of increasing revenue and building customer loyalty,
and the rent expense for the Grapevine unit which opened on August 31, 2000.
PREOPENING EXPENSES
Preopening expenses consist of expenses incurred prior to the opening of a new
unit, including but not limited to wages and benefits, relocation costs,
supplies, advertising expenses and training costs. Preopening expenses for the
Grapevine unit were $438,483 for third quarter 2000. There were no preopening
expenses in the third quarter of 1999. Preopening expenses were $484,483 for the
first nine months of 2000 compared to $226,043 for the first nine months of
1999. The increase was due to the opening of the Grapevine unit on August 31,
2000.
8
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased 26.9% to $350,520 in third quarter
2000 compared to third quarter 1999, and decreased 9.4% to $1,094,979 for the
first nine months of 2000 compared to the first nine months of 1999. As a
percentage of revenue, these expenses increased to 7.9% in third quarter 2000
compared to 7.2% for third quarter 1999, and decreased to 9.4% for the first
nine months of 2000 compared to 11.6% for the same period in 1999. The increase
in third quarter 2000 was due to the training of additional managers to replace
managers who were transferred to the Grapevine unit, as well as the additional
general and administrative expenses from the Grapevine unit. The decrease for
the nine months reflected the elimination of certain corporate positions, the
implementation of a salary reduction for corporate staff, a decrease in
professional fees and higher sales volume.
DEPRECIATION
Depreciation expense increased $12,880 to $214,969 in third quarter 2000
compared to third quarter 1999, and decreased $11,321 to $594,946 for the first
nine months of 2000 compared to the same period in 1999. As a percentage of
revenue, depreciation decreased to 4.8% in third quarter 2000 as compared to
5.2% for the same period in 1999, and decreased to 5.1% for the first nine
months of 2000 from 5.8% for the first six months of 1999. The decreases in
depreciation as a percentage of revenue reflected the increase in sales volume.
INTEREST EXPENSE
Interest expense increased 68.9% to $379,012 in third quarter 2000 compared to
third quarter 1999, and increased 72.1% to $1,113,199 for the first nine months
of 2000 as compared to the same period in 1999. As a percentage of revenue,
interest expense increased to 8.5% for third quarter 2000 compared to 5.8% for
third quarter 1999, and increased to 9.6% for the first nine months of 2000
compared to 6.2% for the same period in 1999. The increases reflected the
interest paid on the outstanding convertible subordinated promissory notes, as
well as the interest paid on the convertible secured promissory notes issued to
Wayne County Employees' Retirement System ("WCERS").
OTHER INCOME AND EXPENSE
Other income and expense includes interest income, miscellaneous income and
amortization expense. Other expenses increased $109,482 during third quarter
2000 as compared to third quarter 1999, and increased $287,689 during the first
nine months of 2000 as compared to the first nine months of 1999. The increases
were primarily the result of the amortization of costs from the WCERS financing
and warrants issued during 2000.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Big Buck used $1,231,986 in cash for the first nine months of 2000 for
operating activities and generated $472,718 from operating activities for the
first nine months of 1999. At October 1, 2000, Big Buck had a working capital
deficit of $4,163,551. In order to fund operations in the short-term, Big
Buck intends to use cash provided by the operations of its existing units.
FINANCING ACTIVITIES
During first quarter 2000, Big Buck generated $195,000 in net proceeds from the
private placement of $200,000 principal amount of convertible subordinated
promissory notes. In February 2000, Big Buck generated $7,017,000 in net
proceeds from the private placement of $7,500,000 principal amount of
convertible secured promissory notes to WCERS. In August 2000, Big Buck
generated $1,425,000 from the private placement of $1,500,000 principal amount
of a secured promissory note to WCERS. The NBD Bank and Crestmark Bank notes,
aggregating $2,945,000, were repaid with the net proceeds from the February
WCERS financing. In August 2000, Big Buck loaned $1,500,000 to Buck & Bass,
L.P. with the net proceeds from the August WCERS financing and certain
working capital.
9
<PAGE>
CAPITAL EXPENDITURES
Since inception, Big Buck's principal capital requirements have been the funding
of (a) its operations and promotion of the Big Buck Brewery & Steakhouse format
and (b) the construction of units and the acquisition of furniture, fixtures and
equipment for such units. Total capital expenditures for the Gaylord, Grand
Rapids and Auburn Hills units were approximately $6.2 million, $3.2 million and
$10.2 million, respectively.
In September 1999, Bass Pro declared the limited partnership agreement of Buck &
Bass, L.P. and the commercial sublease agreement for the Grapevine site to be
breached and in default due to among other things, Big Buck's failure to make
its required capital contribution. In February 2000, Big Buck obtained financing
from WCERS which enabled it (a) to repay NBD Bank and Crestmark Bank in full and
(b) to make all required capital contributions and satisfy all subcontractors'
liens and claims in connection with the Grapevine unit. In March 2000, Big Buck
and Bass Pro agreed in writing to the reinstatement of the limited partnership
agreement and the sublease.
Big Buck spent approximately $4.5 million during the first nine months of 2000
for construction and equipment for the Grapevine unit. As of October 1, 2000,
Big Buck had contributed approximately $4.9 million to the limited partnership
which will own and operate the Grapevine unit. Big Buck may be required to
contribute up to an additional $1.0 million, upon ten business days' notice, to
complete construction of the Grapevine unit. Big Buck plans to seek short-term
debt financing to cover any required capital contribution in excess of available
cash. Additionally, the Buck & Bass limited partnership agreement allows for
leasing of equipment for the facility, not to exceed $1.5 million. Big Buck
anticipates that it will be able to meet the contribution requirements of the
agreement. However, if funds are not available when required by the joint
venture, Big Buck may be in material default under the joint venture agreement.
A material default by Big Buck under the joint venture agreement entitles Bass
Pro to purchase Big Buck's interest in the joint venture at 40% of book value,
thereby eliminating Big Buck's interest in the Grapevine unit. Further, Bass Pro
has the right to purchase up to 15% of Big Buck's interest in the joint venture,
at 100% of Big Buck's original cost, by August 31, 2002; provided, however, that
Big Buck's interest in the joint venture may not be reduced below 51%.
Big Buck expects that it will continue to require significant capital resources
to fund new unit development and construction. The development of any additional
units will require Big Buck to obtain additional financing. The amount of
financing required for new units depends on the definitive locations, site
conditions, construction costs and size and type of units to be built. There can
be no assurance that financing will be available on terms acceptable or
favorable to Big Buck, or at all. Without such financing, Big Buck's development
plans will be slower than planned or even unachievable.
RESTRICTIONS ON FUTURE FINANCING
Big Buck granted the following security interests to WCERS in connection with
the debt financing: (a) a pledge of Big Buck's limited partnership
interest in Buck & Bass, L.P., (b) a pledge of Big Buck's shares of the issued
and outstanding common stock of BBBP Management Company, and (c) a security
interest, assignment or mortgage, as applicable, in Big Buck's interest in all
assets (now or hereafter owned), ownership interest, licenses, and permits,
including, without limitation, a mortgage encumbering the Gaylord site and
Auburn Hills site. Big Buck also agreed in connection with such financing that
it would not create, incur, assume, guarantee or be or remain liable,
contingently or otherwise, with respect to any indebtedness, except for
indebtedness incurred in the ordinary course of business not to exceed at any
time more than $1.5 million in the aggregate. Any such indebtedness, not in the
ordinary course of business or in excess of $1.5 million, requires the approval
of WCERS, except that WCERS will approve any indebtedness incurred to repay Big
Buck's obligation to WCERS so long as such payment does not materially and
adversely affect WCERS. Big Buck also granted to WCERS a right of first refusal
pursuant to which WCERS may, for so long as the convertible note is outstanding
or WCERS owns more that 15% of Big Buck's common stock, elect to purchase
securities offered by Big Buck, within 45 days of the receipt of notice by
WCERS, at the same price and on the same terms and conditions as are offered to
a third party. In addition, Big Buck assigned the note it received from Buck
& Bass, L.P. to WCERS as security for the indebtedness evidenced by the note Big
Buck issued to WCERS in August 2000.
10
<PAGE>
EXTENSION OF WCERS NOTE
Pursuant to the original terms of the amended, restated and consolidated
convertible note in the principal amount of $1,623,885, issued by Big Buck to
WCERS on February 4, 2000, Big Buck would have been required to repay such
principal amount to WCERS on October 1, 2000. On October 20, 2000, Big Buck
and WCERS agreed to extend the maturity date of such note through October 1,
2002.
CONVERTIBLE SUBORDINATED PROMISSORY NOTES
Big Buck must repay the holders of its outstanding convertible subordinated
promissory notes. As of November 15, 2000, such securities had the following
terms and conditions:
<TABLE>
<CAPTION>
Principal Date of Maturity Shares Issuable Conversion
Amount Issuance Date Upon Conversion Price
----------------- ----------------- ----------------- ----------------------- ------------------
<S> <C> <C> <C> <C>
$100,000 10-08-99 10-07-00 65,565 $1.5252
$250,000 10-11-99 10-01-00 169,468 $1.4752
$250,000 10-11-99 10-01-00 169,468 $1.4752
$100,000 11-17-99 11-01-00 41,233 $2.4252
$100,000 01-19-00 01-01-01 52,115 $1.9188
$ 50,000 01-27-00 01-01-01 26,143 $1.9125
$ 25,000 01-27-00 01-01-01 13,071 $1.9125
</TABLE>
On September 29, 2000, Big Buck issued 33,893 shares of common stock pursuant
to the conversion of a $50,000 convertible subordinated promissory note
issued on October 11, 1999. On October 5, 2000, Big Buck repaid $25,000 of
principal on a $50,000 convertible subordinated promissory note issued on
January 27, 2000.
To fund the maturity of the outstanding convertible subordinated promissory
notes, including the $700,000 of principal due and payable as of November 15,
2000, Big Buck will be required to obtain additional financing or refinance
the notes. However, no assurance can be given that Big Buck will be able to
obtain the required funds or refinance the notes, which could materially
adversely affect Big Buck's business, financial condition, operating results
and cash flows.
11
<PAGE>
PART II OTHER INFORMATION
ITEM 2 Changes in Securities and Use of Proceeds
(c) On September 29, 2000, Big Buck issued 33,893 shares
of common stock pursuant to the conversion of a
$50,000 convertible subordinated promissory note
issued to an accredited investor on October 11, 1999.
Big Buck described the issuance of the note itself in
its Annual Report on Form 10-KSB for the year ended
January 2, 2000.
The foregoing issuance was made in reliance upon the
exemption provided in Section 4(2) of the Securities
Act. Such securities are restricted as to sale or
transfer, unless registered under the Securities Act,
and the certificate representing such securities
contains a restrictive legend preventing sale,
transfer or other disposition unless registered under
the Securities Act. In addition, the recipient of
such securities received, or had access to, material
information concerning Big Buck, including, but not
limited to, Big Buck's reports on Form 10-KSB, Form
10-QSB and Form 8-K, as filed with the SEC. Other
than as described in Big Buck's Annual Report on Form
10-KSB for the year ended January 2, 2000, no
underwriting commission or discounts were paid with
respect to the issuance of such securities.
ITEM 5 Other Information
On November 3, 2000, Gary J. Hewett, Chief Operating Officer,
Executive Vice President and a director of Big Buck, resigned
from the foregoing positions. Big Buck is currently seeking a
replacement for the position of Chief Operating Officer.
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.1 Promissory Note and Security Agreement by
and between Big Buck and Buck & Bass,
L.P., dated August 23, 2000.
10.2 Promissory Note in the principal amount of
$1,500,000.00, issued by Big Buck, Maker, to
Wayne County Employees' Retirement System,
dated August 21, 2000.
27 Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K
Big Buck filed the following Current Report on Form
8-K during the quarter ended October 1, 2000: Current
Report on Form 8-K filed on September 1, 2000,
relating to the opening of the Grapevine unit.
12
<PAGE>
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.
BIG BUCK BREWERY & STEAKHOUSE, INC.
Date: November 15, 2000 By /s/ Anthony P. Dombrowski
-------------------------------
Anthony P. Dombrowski
Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- --------------
<S> <C>
10.1 Promissory Note and Security Agreement by and between Big Buck and Buck & Bass, L.P., dated
August 23, 2000.
10.2 Promissory Note in the principal amount of $1,500,000.00, issued by Big Buck, Maker, to Wayne
County Employees' Retirement System, dated August 21, 2000.
27 Financial Data Schedule.
</TABLE>
14
