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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 JULY 2, 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 August 16, 2000, there were outstanding 5,420,855 shares of
common stock, $0.01 par value, of the registrant.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S><C> <C>
PART I FINANCIAL INFORMATION...........................................................................2
ITEM 1 Consolidated Financial Statements...............................................................2
Consolidated Balance Sheets as of July 2, 2000 and January 2, 2000.....................2
Consolidated Statements of Operations for the three months ended July 2, 2000
and July 4, 1999 and for the six months ended July 2, 2000 and July 4, 1999 ...........3
Consolidated Statements of Cash Flows for the six months ended July 2, 2000
and July 4, 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..............................................................................11
ITEM 6 Exhibits and Reports on Form 8-K......................................................11
SIGNATURES.......................................................................................................12
EXHIBIT INDEX....................................................................................................13
</TABLE>
1
<PAGE>
PART I
ITEM 1 Financial Statements
BIG BUCK BREWERY & STEAKHOUSE, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 2, 2000 January 2, 2000
-------------------- --------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 349,892 $ 369,228
Short-term investments 1,000,000 -
Accounts receivable 154,887 233,273
Inventories 230,549 235,671
Prepaids and other 278,913 318,775
------------------ ----------------
Total current assets 2,014,241 1,156,947
PROPERTY AND EQUIPMENT, net 21,941,736 19,730,766
OTHER ASSETS, net 1,727,956 573,487
------------------ ----------------
$ 25,683,933 $ 21,461,200
================== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,100,867 $ 2,152,242
Accrued expenses 448,631 451,855
Current maturities of long-term debt 2,618,401 2,487,246
------------------ ----------------
Total current liabilities 5,167,899 5,091,343
LONG-TERM DEBT, less current maturities 11,212,939 6,721,083
------------------ ----------------
Total liabilities 16,380,838 11,812,426
================== ================
MINORITY INTEREST 436,884 147,340
SHAREHOLDERS' EQUITY:
Common stock, $0.01 par value, 20,000,000 shares
authorized; 5,405,481 shares issued and outstanding 54,055 54,055
Warrants 153,650 153,650
Additional paid-in capital 14,072,136 13,685,520
Accumulated deficit (5,413,630) (4,391,791)
------------------ ----------------
Total shareholders' equity 8,866,211 9,501,434
------------------ ----------------
$ 25,683,933 $ 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 SIX MONTHS ENDED
------------------ ----------------
JULY 2, 2000 JULY 4, 1999 JULY 2, 2000 JULY 4, 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE:
Restaurant sales $ 3,396,724 $ 3,128,104 $ 6,956,256 $ 6,293,531
Wholesale beer and gift shop sales 92,310 127,311 73,542 248,554
------------- ---------------- ------------- --------------
Total revenue 3,489,034 3,255,415 7,129,807 6,542,085
------------- ---------------- ------------- --------------
COSTS AND EXPENSES:
Cost of sales 1,165,479 1,078,486 2,346,456 2,146,068
Restaurant salaries and benefits 1,117,884 1,020,323 2,170,888 2,009,694
Operating expenses 794,303 630,156 1,565,864 1,261,323
Depreciation 189,969 202,089 379,977 404,178
------------ ---------------- ------------- --------------
Total costs and expenses 3,267,635 2,931,054 6,463,185 5,821,263
------------- ---------------- ------------- --------------
Restaurant operating income 221,399 324,361 666,622 720,822
Preopening expenses 46,332 98,892 46,332 226,043
General and administrative expenses 347,547 401,507 744,459 932,644
------------ -------------- ------------- --------------
Loss from operations (172,480) (176,038) (124,169) (437,865)
OTHER INCOME (EXPENSE):
Interest expense (372,488) (206,881) (734,187) (422,493)
Amortization and other (133,390) 5,191 (172,658) 5,549
------------- ---------------- ------------- --------------
Other (expense), net (505,878) (201,690) (906,845) (416,944)
Minority interest share of joint venture 9,175 5 9,175 3,295
------------- ---------------- ------------- --------------
NET LOSS $ (669,183) $ (377,723) $ (1,021,839) $ (851,514)
=============== ============== ============= ==============
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ (0.12) $ (0.07) $ (0.19) $ (0.16)
=============== ============== ============= ==============
WEIGHTED AVERAGE
SHARES OUTSTANDING 5,405,481 5,335,170 5,405,481 5,305,085
=============== ============== ============= ==============
</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>
Six Months Ended Six Months Ended
July 2, 2000 July 4, 1999
----------------------- -----------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,021,839) $ (851,514)
Adjustments to reconcile net loss to cash flows used in
operating activities-
Depreciation and amortization 652,302 404,178
Change in operating assets and liabilities:
Accounts receivable 78,386 92,331
Inventories 5,122 43,107
Prepaids and other 39,862 (126,869)
Accounts payable (51,375) 1,145,370
Accrued expenses (3,211) (287,261)
---------------- ---------------
Net cash provided by (used in) operating activities (300,753) 419,342
------------- --------------
INVESTING ACTIVITIES:
Purchases of property and equipment, net (2,590,947) (977,966)
Decrease (increase) in other assets (519,945) 67,605
Purchase of short-term investments, net (1,000,000) -
---------------- --------------
Net cash used in investing activities (4,110,892) (910,361)
---------------- ---------------
FINANCING ACTIVITIES:
Proceeds from long-term debt and capital lease obligations 7,700,000 -
Proceeds from sale of common stock - 249,998
Payments on long-term debt and capital lease obligations (3,076,989) (124,493)
Proceeds from minority partner 289,544 -
Payment of deferred financing costs (520,246) -
---------------- --------------
Net cash provided by financing activities 4,392,309 125,505
--------------- --------------
DECREASE IN CASH (19,336) (365,514)
CASH, beginning of period 369,228 500,236
--------------- --------------
CASH, end of period $ 349,892 $ 134,722
=============== ==============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 749,488 $ 423,412
Income taxes paid - -
</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
July 2, 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 six months ended July 2, 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 July 2, 2000 and the unaudited statements
of operations and cash flows for the three and the six months ended July 2,
2000 and July 4, 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 plans to open a fourth unit in Grapevine, Texas, a suburb of Dallas.
Scheduled to open later this year, this unit will be 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
and Auburn Hills 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 JULY 2, 2000 AND JULY 4, 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 Six Six
Months Months Months Months
Ended Ended Ended Ended
July 2, July 4, July 2, July 4,
2000 1999 2000 1999
--------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
REVENUE:
Restaurant sales 97.4% 96.1% 97.6% 96.2%
Wholesale beer and gift shop sales 2.6 3.9 2.4 3.8
------------ --------- ---------- ------------
Total revenue 100.0 100.0 100.0 100.0
------------ --------- ---------- ------------
COST AND EXPENSES:
Cost of sales 33.4 33.1 32.9 32.8
Restaurant salaries and benefits 32.0 31.3 30.4 30.7
Operating expenses 22.8 19.4 22.0 19.3
Depreciation and amortization 5.4 6.2 5.3 6.2
------------ --------- ---------- ------------
Total costs and expenses 93.7 90.0 90.7 89.0
------------ --------- ---------- ------------
Restaurant operating income 6.3 10.0 9.3 11.0
Preopening expenses 1.3 3.0 0.6 3.5
General and administrative expenses 10.0 12.4 10.4 14.3
------------ --------- ---------- ------------
LOSS FROM OPERATIONS (4.9) (5.4) (1.7) (6.8)
OTHER INCOME (EXPENSE):
Interest expense (10.7) (6.4) (10.3) (6.5)
Interest income and other 3.8 0.2 (2.4) 0.1
------------ --------- ---------- ------------
Total other income (expense) (14.5) (6.2) (12.7) (6.4)
Minority interest share of joint venture 0.3 - 0.1 -
NET LOSS (19.2)% (11.6)% (14.3)% (13.1)%
============ ========= ========== ============
</TABLE>
7
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JULY 2, 2000 AND JULY
4, 1999
REVENUE
Revenue increased 7.2% to $3,489,034 in second quarter 2000 from $3,255,415 in
second quarter 1999 and increased 9.0% to $7,129,807 for the first six months of
2000 from $6,542,085 for the first six months of 1999. The increases were due to
increased marketing efforts and unit level promotions during the first and
second quarters of 2000.
COST OF SALES
Cost of sales, which consists of food, merchandise and brewery supplies,
increased 8.1% to $1,165,479 in second quarter 2000 compared to second quarter
1999, and increased 9.3% to $2,346,456 for the first six months of 2000 compared
to the first six months of 1999. The increases were due mainly to higher
revenue. As a percentage of revenue, costs of sales increased to 33.4% in second
quarter 2000 compared to 33.1% in second quarter 1999, and increased to 32.9%
for the first six months of 2000 compared to 32.8% for the same period in 1999.
As a percentage of revenue, the increases were the result of a higher percentage
of the sales mix coming from food, which has a higher cost than beer and 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 9.6% to $1,117,884 in second quarter 2000 compared to
second quarter 1999, and increased 8.0% to $2,170,888 for the first six months
of 2000 compared to the first six 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 a percentage of revenue, restaurant salaries and
benefits increased to 32.0% for second quarter 2000 compared to 31.3% for second
quarter 1999, and decreased to 30.4% for the first six months of 2000 compared
to 30.7% for the same period in 1999. The increase for the second quarter was
due to the added costs of hiring, training new staff and retaining existing
staff in a tighter labor market. The decrease for the first six months of 2000
was the result of higher revenue and improved fixed labor efficiency.
OPERATING EXPENSES
Operating expenses, which include supplies, utilities, repairs and maintenance,
advertising and occupancy costs, increased 26.0% to $794,303 in second quarter
2000 compared to second quarter 1999, and increased 24.1% to $1,565,864 for the
first six months of 2000 compared to the first six months of 1999. As a
percentage of revenue, operating expenses increased to 22.8% in second quarter
2000 as compared to 19.4% for second quarter 1999, and increased to 22.0% for
the first six months of 2000 compared to 19.3% 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.
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 $46,332 for second quarter 2000 compared to $98,892
for second quarter 1999. Preopening expenses for the Grapevine unit were
$46,332 for first six months of 2000 compared to $226,043 for the first six
months of 1999. The decreases were due to Big Buck's redetermination that most
of the management staff for the Grapevine unit will come from existing units
and hourly staff for the unit will be hired and trained in third quarter 2000.
8
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased 13.4% to $347,547 in second
quarter 2000 compared to second quarter 1999, and decreased 20.2% to $744,459
for the first six months of 2000 compared to the first six months of 1999. As
a percentage of revenue, these expenses decreased to 10.0% in second quarter
2000 compared to 12.3% for second quarter 1999, and decreased to 10.4% for
the first six months of 2000 compared to 14.3% for the same period in 1999.
The decreases reflected management's focus on reducing corporate overhead
costs, including the elimination of certain corporate positions and the
implementation of a salary reduction for corporate staff, as well as
decreased professional fees and higher sales volume.
DEPRECIATION
Depreciation expense decreased $12,120 to $189,969 in second quarter 2000
compared to second quarter 1999, and decreased $24,201 to $379,977 for the first
six months of 2000 compared to the same period in 1999. As a percentage of
revenue, depreciation decreased to 5.4% in second quarter 1999 as compared to
6.2% for the same period in 1999, and decreased to 5.3% for the first six months
of 2000 from 6.2% 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 80% to $372,488 in second quarter 2000 compared to
second quarter 1999, and increased 73.8% to $734,187 for the first six months of
2000 as compared to the same period in 1999. As a percentage of revenue,
interest expense increased to 10.7% for second quarter 2000 compared to 6.4% for
second quarter 1999, and increased to 10.3% for the first six months of 2000
compared to 6.5% for the same period in 1999. The increases reflected the
additional interest expense on the outstanding convertible subordinate
promissory notes.
OTHER INCOME AND EXPENSE
Other income and expense includes interest income, miscellaneous income and
amortization expense. Other expenses increased $138,581 during second quarter
2000 as compared to second quarter 1999, and increased $178,207 during the first
six months of 2000 as compared to the first six months of 1999. The increases
were primarily the result of the amortization of costs from the Wayne County
Employees' Retirement System ("WCERS") financing and warrants issued during
2000.
LIQUIDITY AND CAPITAL RESOURCES
Big Buck used $300,753 in cash for the first six months of 2000 for operating
activities and generated $419,342 from operating activities for the first six
months of 1999. At July 2, 2000, Big Buck had a working capital deficit of
$3,162,833. In order to fund operations in the short-term, Big Buck intends to
use cash provided by the operations of its three existing units.
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. The NBD Bank and
Crestmark Bank notes, aggregating $2,945,000 were repaid with the net
proceeds from the WCERS financing.
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.
9
<PAGE>
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 $2.6 million during the first six months of 2000
for construction and equipment for the Grapevine unit. As of July 2, 2000, Big
Buck had contributed approximately $3.9 million to the limited partnership which
will own and operate the Grapevine unit. Big Buck may be required to contribute
up to an additional $2.0 million, upon ten business days' notice, to complete
construction of the Grapevine unit. Big Buck has available approximately $1.0
million from the WCERS financing to fund the 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, within 24 months of the opening of the
Grapevine unit; provided, however, that Big Buck's interest in the joint venture
may not be reduced below 51%.
Big Buck granted the following security interests to WCERS in connection with
the February 2000 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, (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.
Big Buck will be required to repay approximately $1.6 million in principal to
WCERS in October 2000. To fund the maturity of this debt, Big Buck will be
required to obtain additional financing. Big Buck expects to conduct a
sale-leaseback of its Gaylord unit to facilitate the repayment of this
indebtedness. However, no assurance can be given that Big Buck will be able to
obtain financing through this or any other means. If Big Buck fails to obtain
funds which would permit the repayment of this note, WCERS, as noted above,
would be able to foreclose upon Big Buck's assets. This would materially
adversely affect Big Buck's business, financial condition, operating results and
cash flows.
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.
10
<PAGE>
PART II OTHER INFORMATION
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The registrant filed the following Current Report on
Form 8-K during the quarter ended July 2, 2000:
Current Report on Form 8-K filed on May 26, 2000,
relating to the extension of the expiration date of
the registrant's Class A Warrants from June 13, 2000
to December 13, 2001.
11
<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: August 16, 2000 By /s/ Anthony P. Dombrowski
-------------------------
Anthony P. Dombrowski
Chief Financial Officer
12
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
-------- -------------
27 Financial Data Schedule
13
