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Final Prospectus
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-34052
PROSPECTUS
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3,351,287 SHARES
BIG BUCK BREWERY & STEAKHOUSE, INC.
COMMON STOCK
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The shareholders listed on page 12 below are offering and selling up to
3,351,287 shares of our common stock under this prospectus. We will not receive
any of the proceeds from this offering.
Our common stock is quoted on the Nasdaq SmallCap Market and trades
under the ticker symbol "BBUC." On March 31, 2000, the closing sale price of one
share of our common stock on the Nasdaq SmallCap Market was $2.03125.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE SHARES INVOLVE CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 3.
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THE DATE OF THIS PROSPECTUS IS APRIL 14, 2000
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PROSPECTUS SUMMARY
BECAUSE THIS IS A SUMMARY, IT DOES NOT CONTAIN ALL THE INFORMATION THAT
MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY,
INCLUDING THE OTHER DOCUMENTS TO WHICH WE REFER YOU, BEFORE YOU DECIDE TO
INVEST.
BIG BUCK
Big Buck develops and operates microbrewery/restaurants under the
name "Big Buck Brewery & Steakhouse-SM-." 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 in the second half of 2000, 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.L.C., a premier retailer of
outdoor sports equipment.
Big Buck Brewery & Steakhouses offer a casual dining atmosphere
featuring moderately priced steaks, ribs, chicken, fish, pasta and other food
and a distinctive selection of beers which are microbrewed on site. Each unit
features a two-story stainless and copper microbrewery, contained behind glass
walls, which serves as an integral part of the restaurant "theme." Big Buck
features over ten beers ranging from a light golden ale to a dark full-bodied
stout, designed to satisfy the tastes of a broad spectrum of customers.
THIS OFFERING
We issued two secured promissory notes, convertible into an aggregate
of 3,099,172 of the shares covered by this prospectus, to Wayne County
Employees' Retirement System in connection with a private placement in February
2000. We also issued a warrant, exercisable for 200,000 of the shares covered by
this prospectus, to Wayne County as part of the same transaction. We issued a
subordinated promissory note, convertible into 52,115 of the shares covered by
this prospectus, to the landlord of our Auburn Hills unit pursuant to a
subscription and investment representation agreement dated January 2000.
The selling shareholders may offer their shares through public or
private transactions, on or off the Nasdaq SmallCap Market, at prevailing market
prices or privately negotiated prices. No period of time has been fixed within
which the shares may be offered or sold.
GENERAL
Big Buck was incorporated under the Michigan Business Corporation Act
in November 1993, as Michigan Brewery, Inc. All references to Big Buck herein
include our subsidiaries, unless otherwise noted. Our executive office is
located at 550 South Wisconsin Street, Gaylord, Michigan 49734. Our telephone
number is (517) 731-0401.
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RISK FACTORS
BEFORE YOU INVEST IN OUR SHARES, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY
THESE RISK FACTORS, THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS AND THE
OTHER INFORMATION TO WHICH WE REFER YOU, BEFORE YOU DECIDE TO PURCHASE OUR
SHARES.
WE HAVE A SHORT OPERATING HISTORY UPON WHICH YOU CAN EVALUATE US.
Big Buck incurred net losses of $1,288,925 and $1,359,754 during the
fiscal years ended January 2, 2000 and January 3, 1999, respectively. To date,
Big Buck has opened three Big Buck Brewery & Steakhouses in the following
Michigan cities: Gaylord, Grand Rapids and Auburn Hills. Prior to the opening of
the Gaylord unit in May 1995, Big Buck had no operations or revenues.
Accordingly, Big Buck's operations are subject to all of the risks inherent in
the establishment of a new business enterprise, including a short operating
history. The likelihood of success of Big Buck must be evaluated in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with the establishment of a business. We cannot assure
you that future operations of any unit will be profitable. Future revenues and
profits, if any, will depend upon various factors, including the quality of
restaurant operations, the acceptance of Big Buck's beer and general economic
conditions. In general, restaurants experience a decline in revenue growth or in
actual revenues following a period of excitement which accompanies their
opening. We cannot assure you that Big Buck will operate profitably or that it
will successfully implement its plans to open additional units, in which case
Big Buck will continue to depend on the revenues of the Gaylord, Grand Rapids
and Auburn Hills units.
WE MAY BE UNABLE TO FUND OUR SIGNIFICANT CAPITAL NEEDS AND WE MAY NEED
ADDITIONAL FUNDS SOONER THAN ANTICIPATED.
Big Buck's ability to execute its business strategy depends on its
ability to obtain substantial financing for the development of additional units.
The failure of Big Buck to raise capital when needed could have a material
adverse effect on Big Buck's business, operating results and financial
condition. No assurance can be given that Big Buck will be able to secure
additional financing when required, if at all. If Big Buck is able to obtain
financing, we cannot assure you that it will be on terms favorable or acceptable
to Big Buck. To obtain additional financing, Big Buck anticipates that it will
be required to sell additional equity securities. New investors may seek and
obtain substantially better terms than those available to investors purchasing
shares of Big Buck's common stock in this offering and Big Buck's issuance of
securities in the future may result in substantial dilution. Big Buck's
agreement with Wayne County imposes certain limitations on Big Buck's ability to
incur additional indebtedness. These restrictions may impede Big Buck's ability
to secure financing for future expansion and operations. Ultimately, if
additional capital does not become available to Big Buck when required, it will
be required to scale back or eliminate its expansion plans and it may be
required to scale back its operations.
WE MAY NOT BE ABLE TO ACHIEVE AND MANAGE PLANNED EXPANSION.
Development is currently underway for the fourth Big Buck Brewery &
Steakhouse in Grapevine, Texas, a suburb of Dallas. Through March 1, 2000, Big
Buck had contributed approximately $1.8 million to the limited partnership to
fund construction of the Grapevine unit. In addition to the availability of
adequate financing, successful expansion of Big Buck's operations will be
largely dependent upon a variety of factors, some of which are currently unknown
or beyond Big Buck's control, including customer acceptance of Big Buck Brewery
& Steakhouses and Big Buck Beer(R); the ability of management to identify
suitable sites and to negotiate purchases of such sites; the ability of
management to secure future joint venture agreements or other methods of
financing; timely and economic development and construction of units; timely
approval from local governmental authorities; the hiring of skilled management
and other personnel; the ability of management to apply its policies and
procedures to a larger number of units; the general ability to successfully
manage
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growth; and the general state of the economy. We cannot assure you that Big
Buck will be able to open the Grapevine unit or any additional units.
Big Buck's strategy includes operating a brewery at each unit.
Successful operation of separate breweries will require Big Buck to overcome
various organizational challenges such as increasing and maintaining production
and establishing and maintaining quality control over numerous geographically
separated units. In attempting to expand beer distribution, Big Buck will be
required to establish and manage relationships with wholesale distributors,
retailers and consumers in new markets. Big Buck is the sole promoter of sales
of its beer in new markets. Consumer tastes and preferences may vary from market
to market. We cannot assure you that Big Buck will be successful in entering new
markets.
WE MAY BE UNABLE TO OBTAIN AND MAINTAIN THE LICENSES AND PERMITS REQUIRED FOR
BREWING OF BEER AND THE SALE OF BEER AND WINE.
Big Buck is licensed under Michigan law as a "microbrewery." A
microbrewery in Michigan is limited to the production of not more than 30,000
barrels of beer per year by all breweries owned or controlled by the same
entity, whether within or outside Michigan. Without a change in current law, Big
Buck intends to limit its sales of beer off-site so as to reserve its brewing
capacity for sales of beer on-site, which provide Big Buck substantially higher
margins, but do not reach the same customer base. We cannot assure you that
legislation raising the barrelage ceiling will pass, that any such legislation
will pass in a form which would facilitate Big Buck's expansion plans, or that
if such legislation is not passed, Big Buck will be able to become licensed to
brew in excess of 30,000 barrels of beer per year.
WE MAY BE UNABLE TO MAINTAIN OR EXPAND OUR JOINT VENTURE WITH BASS PRO; WE MAY
BE UNABLE TO RETAIN OUR INTEREST IN THE GRAPEVINE UNIT.
Big Buck plans to operate the Grapevine unit, which is currently under
construction, pursuant to a joint venture agreement with Bass Pro. 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 made all required capital
contributions and satisfied all subcontractors' liens and claims. In March 2000,
Big Buck and Bass Pro agreed in writing to the reinstatement of the limited
partnership agreement and the sublease.
During 1999 and 1998, Big Buck contributed $218,000 and $891,000,
respectively, to the limited partnership which will own and operate the
Grapevine unit. Big Buck may be required to contribute up to an additional $4.5
million, upon ten business days' notice, to complete construction of the
Grapevine unit. Big Buck has available approximately $3.8 million from the Wayne
County financing to fund the construction of the Grapevine unit. Additionally,
the Buck & Bass limited partnership agreement allows for leasing of equipment
for the facility, not to exceed $1.5 million. Therefore, 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, the
Company 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%.
Pursuant to a separate commercial sublease agreement, the limited
partnership created by the joint venture leases the Grapevine site from Bass Pro
over a 15-year term. The lease may be extended at the option of Bass Pro for
seven additional five-year terms. The sublessee is obligated to pay an annual
percentage rent
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in the amount of 5.5% on gross sales less than $11.0 million per year and
6.5% on gross sales in excess of $11.0 million per year (with a minimum
annual base rent of $385,000). Bass Pro may terminate in the event of a
default which is not cured within the applicable grace period. In March 2000,
Big Buck and Bass Pro agreed in writing to revise the definition of default
under the sublease. As amended, the sublease provides that a default
includes, but is not limited to, (a) the sublessee's failure to remain open
during all business days, (b) the sublessee's failure to maintain on duty a
fully trained service staff, (c) the sublessee's failure to provide high
quality food of the type provided at the Gaylord unit, (d) the sublessee's
failure to achieve gross sales in the first full calendar year immediately
following the opening and for each calendar year thereafter of $7.0 million,
(e) the sublessee encumbering in any manner any interest in the subleased
premises, or (f) the sublessee's failure to conduct full and complete
customer surveys no less frequently than each calendar quarter.
The minimum annual base rent is required whether the Grapevine unit is
profitable or not. In the event that the sublessee is required to pay in excess
of the minimum annual base rent, the funds available to Big Buck for working
capital and development plans will be reduced. In the event of a default and
termination of the joint venture agreement, Big Buck's interest in the Grapevine
unit would be eliminated. This would have a material adverse impact on Big
Buck's business, operating results and financial condition.
WE MAY BE REQUIRED TO REPURCHASE SITES WE HAVE SOLD PURSUANT TO SALE/LEASEBACKS.
In April 1997, Big Buck sold the Grand Rapids site, including all
improvements thereto, to an entity owned by a shareholder of Big Buck, Eyde
Brothers Development Co., pursuant to a real estate purchase and leaseback
agreement for $1.4 million. Pursuant to a separate lease agreement, Big Buck
leases the Grand Rapids site at a minimum annual base rent of $140,000 and a
maximum annual base rent of $192,500 over a ten-year term. The lease may be
extended at the option of Big Buck for two additional five-year terms. In
addition to the annual base rent, Big Buck is obligated to pay an annual
percentage rent in the amount of 5% on gross sales at the site in excess of
$2.9 million per year. In March 2000, the lease was amended to adjust the
gross sales level over which annual percentage rent is payable to $1.5
million per year. As amended, the lease further provides that, commencing
April 2000, in the event annual gross sales do not exceed $1.5 million for
any year of the lease term, the lessor could require Big Buck to repurchase
the Grand Rapids site for $1.4 million, plus $70,000 for each lease year on a
pro rata basis. Big Buck has the option to purchase the Grand Rapids site
from the lessor after the seventh full lease year for $1.4 million, plus
$70,000 for each lease year on a pro rata basis. The lessor also has the
option to require Big Buck to repurchase the Grand Rapids site after the
seventh full lease year for the same price. Should a repurchase be required,
Big Buck believes that it would be able to obtain mortgage financing
sufficient to pay the required purchase price. We cannot assure you that such
mortgage financing, in the event repurchase were required, would be available
on terms acceptable to Big Buck or at all.
In August 1997, Big Buck entered into a real estate purchase and
leaseback agreement providing for the sale of the Auburn Hills site to a
shareholder of Big Buck, Michael G. Eyde, for $4.0 million. In connection with
this transaction, Big Buck granted a five-year stock option, exercisable at
$5.00 per share, for 50,000 shares of its common stock to Mr. Eyde. Big Buck
leases the Auburn Hills site pursuant to a separate lease agreement which
provides for a minimum annual base rent of $400,000, and a maximum annual base
rent of $550,000. The lease has a 25-year term and Big Buck is able to extend
such term for two additional ten-year terms. In addition to the annual base
rent, Big Buck is obligated to pay an annual percentage rent of 5.25% of gross
sales at the site in excess of $8.0 million per year. In the event that such
annual gross sales do not exceed $8.0 million for any two consecutive years
during the lease term, the lessor could require Big Buck to repurchase the
Auburn Hills site for $4.0 million, plus $200,000 for each lease year on a pro
rata basis. Big Buck was required to pay Mr. Eyde annual percentage rent of
$46,000 based upon annual gross sales for the first year of the lease term.
Annual gross sales for the second year of the lease term did not exceed $8.0
million. Independent of annual gross sales, the lessor has the option to require
Big Buck to repurchase the Auburn Hills site for $4.0 million, plus $200,000 for
each lease year on a pro rata basis, for a limited period of time. In February
2000, the lessor and Big Buck amended the lease agreement to provide that such
right may be exercised by the lessor prior to the expiration of the fourth full
lease year and that the lessor may require
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Big Buck to issue its common stock (valued at $4.00 per share) in payment of
such repurchase price. Big Buck also has the option to purchase the Auburn
Hills site from the lessor after the seventh full lease year for the same
price.
The Grand Rapids and Auburn Hills lessors may terminate in the event of
a default which is not cured within the applicable grace period. A default is
defined as (a) Big Buck's failure to make a rental payment within 30 days after
receipt of written notice that a payment is past due or (b) Big Buck's failure
to perform its obligations under the lease (other than rent payments) within 30
days after written notice of a curable violation; provided, however, that if
such default cannot be cured within the 30-day period, a default will be deemed
to have occurred only if Big Buck has failed to commence a cure within such
30-day period.
Annual percentage rent is required whether the Grand Rapids and Auburn
Hills units are profitable or not. If Big Buck is required to pay annual
percentage rent, the funds available to Big Buck for working capital and
development plans will be reduced. If annual percentage rent is not required
over two consecutive years, Big Buck may be forced to repurchase such sites at a
premium over their respective sale prices. If the lessor of the Auburn Hills
unit elected to exercise his option to require Big Buck to repurchase the site
independent of annual gross sales, Big Buck would be forced to repurchase such
site at a premium over its sale price. We cannot assure you that Big Buck will
have sufficient funds to repurchase the Grand Rapids site or the Auburn Hills
site. In the event of a default and termination of either lease, Big Buck would
be unable to continue to operate the related unit, which would have a material
adverse impact on Big Buck's business, operating results and financial
condition.
WE MAY BE UNABLE TO REPAY EXISTING INDEBTEDNESS.
Big Buck had a working capital deficit of $3,934,396 at January 2,
2000, and a working capital deficit of $1,978,841 at January 3, 1999. In the
past, Big Buck obtained working capital through its credit facility with NBD
Bank and obtained additional working capital pursuant to a promissory note with
Crestmark Bank. In February 2000, Big Buck refinanced such indebtedness through
the issuance of 10% convertible secured promissory notes to Wayne County
aggregating $7.5 million in principal. Of such amount, approximately $1.6
million must be repaid in full by October 2000. The remaining $5.9 million must
be repaid in full by February 2003.
Big Buck granted the following security interests to Wayne County 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 interests, 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 Wayne County, except that Wayne County will approve any indebtedness incurred
to repay Big Buck's obligation to Wayne County so long as such payment does not
materially and adversely affect Wayne County. Big Buck also granted to Wayne
County a right of first refusal pursuant to which Wayne County may, for so long
as the convertible note is outstanding or Wayne County owns more than 15% of Big
Buck's common stock, elect to purchase securities offered by Big Buck, within 45
days of the receipt of notice by Wayne County, at the same price and on the same
terms and conditions as are offered to a third party.
In the event of a default which is not waived under Big Buck's
agreement with Wayne County, Big Buck's assets would be at risk. We cannot
assure you that Big Buck will be able to repay or refinance its
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indebtedness to Wayne County. Without additional financing, Big Buck's
leveraged position and requirements for payments to Wayne County may require
Big Buck to liquidate all or a portion of its assets.
WE MAY BE UNABLE TO COMPETE WITH LARGER, BETTER ESTABLISHED COMPETITORS.
The restaurant industry is highly competitive with respect to price,
service, food quality (including taste, freshness, and nutritional value) and
location. New restaurants have a high failure rate. The restaurant industry is
also generally affected by changes in consumer preferences, national, regional
and local economic conditions, and demographic trends. The performance of
individual restaurants may also be affected by factors such as traffic patterns,
demographic considerations, and the type, number and location of competing
restaurants. In addition, factors such as inflation, increased food, labor and
employee benefit costs, and the lack of availability of experienced management
and hourly employees may also adversely affect the restaurant industry in
general and Big Buck's units in particular. Restaurant operating costs are
further affected by increases in the minimum hourly wage, unemployment tax rates
and similar matters over which Big Buck has no control. There are numerous
well-established competitors, including national, regional and local restaurant
chains, possessing substantially greater financial, marketing, personnel and
other resources than Big Buck. Big Buck also competes with a large variety of
locally owned restaurants, diners and other establishments that offer moderately
priced food to the public and with other microbrewery/restaurants in a highly
competitive and developing microbrewery and brewpub restaurant market. Other
restaurants and companies could utilize the Big Buck Brewery & Steakhouse format
or a related format. We cannot assure you that Big Buck will be able to respond
to various competitive factors affecting the restaurant industry.
The domestic beer market is highly competitive due to the enormous
advertising and marketing expenditures by national and major regional brewers;
the continuing proliferation of microbreweries, regional craft breweries,
brewpubs and other small craftbrewers; the introduction of fuller-flavored
products by certain major national brewers; and a general surplus of domestic
brewing capacity, which facilitates existing contract brewer expansion and the
entry of new contract brewers. Although domestic demand for craftbrewed beers
has increased dramatically over the past decade, we cannot assure you that this
demand will continue. Big Buck anticipates intensifying competition in the
craftbrewed and fuller-flavored beer markets. Most of Big Buck's brewing
competitors possess financial, marketing, personnel and other resources
substantially greater than those of Big Buck, and we cannot assure you that Big
Buck will be able to succeed against intensified competition in the craftbrewed
and fuller-flavored beer markets.
OUR BREWING OPERATIONS ARE SUBJECT TO THE RISK OF CONTAMINATION.
Big Buck's brewing operations are subject to certain hazards and
liability risks faced by all brewers, such as potential contamination of
ingredients or products by bacteria or other external agents that may be
wrongfully or accidentally introduced into products or packaging. Big Buck's
products are not pasteurized. While Big Buck has never experienced a
contamination problem in its products, the occurrence of such a problem could
result in a costly product recall and serious damage to Big Buck's reputation
for product quality. Big Buck's operations are also subject to certain injury
and liability risks normally associated with the operation and possible
malfunction of brewing and other equipment. Although Big Buck maintains
insurance against certain risks under various general liability and product
liability insurance policies, we cannot assure you that Big Buck's insurance
will be adequate.
OUR OPERATIONS DEPEND UPON GOVERNMENTAL LICENSES OR PERMITS AND WE MAY FACE
LIABILITY UNDER DRAM SHOP STATUTES.
A significant percentage of Big Buck's revenue is derived from beer and
wine sales. On-site sales of beer and wine, including gift shop sales, accounted
for 19.3% of revenues and off-site sales of beer accounted for an additional
0.8% of revenues during 1999. Big Buck must comply with federal licensing
requirements imposed by the Bureau of Alcohol, Tobacco and Firearms of the
United States Department of Treasury, as
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well as the licensing requirements of states and municipalities where its
units are or will be located. Failure to comply with federal, state or local
regulations could cause Big Buck's licenses to be revoked and force it to
cease brewing and selling its beer or producing and selling its wine.
Typically, licenses must be renewed annually and may be revoked or suspended
for cause at any time. Additionally, state liquor laws may prevent or impede
the expansion of Big Buck into certain markets. While Big Buck has not
experienced and does not anticipate any significant problems in obtaining
required licenses, permits or approvals, any difficulties, delays or failures
in obtaining such required licenses, permits or approvals could delay or
prevent the opening of a unit in a particular area. In addition, changes in a
jurisdiction's legislation, regulations or administrative interpretations of
liquor laws after the opening of a unit may prevent or hinder Big Buck's
expansion or operations in that jurisdiction or increase operating costs.
The restaurant industry is subject to numerous federal, state and local
government regulations, including those relating to the preparation and sale of
food and to building and zoning requirements. Big Buck is subject to regulation
by air and water pollution control divisions of the Environmental Protection
Agency of the United States and by certain states and municipalities in which
its units are or will be located. Big Buck is also subject to laws governing its
relationship with employees, including minimum wage requirements, overtime,
working and safety conditions and citizenship requirements. Restaurant operating
costs are affected by increases in the minimum hourly wage, unemployment tax
rates, sales taxes and similar matters, such as any government mandated health
insurance, over which Big Buck has no control.
Big Buck is subject to "dram-shop" laws in Michigan and will be subject
to such statutes in other states into which it expands. These laws generally
provide someone injured by an intoxicated person the right to recover damages
from the establishment which wrongfully served alcoholic beverages to such
person. Big Buck carries liquor liability coverage as part of its existing
comprehensive general liability insurance. However, a judgment against Big Buck
under a dram-shop statute in excess of Big Buck's liability coverage could have
a material adverse effect on Big Buck.
WE MUST PAY FEDERAL AND STATE EXCISE TAXES ON OUR BEER AND WINE; WE MAY BE
UNABLE TO RETAIN OUR SMALL BREWER'S TAX CREDITS.
The federal government imposes an excise tax of $18.00 on each barrel
of beer produced for domestic consumption in the United States. However, each
brewer with production under 2,000,000 barrels per year is granted a small
brewer's excise tax credit in the amount of $11.00 per barrel on its first
60,000 barrels produced annually. No assurance can be given that the federal
government will not reduce or eliminate this credit. To the extent Big Buck's
production increases to amounts over 60,000 barrels per year, there will be an
increase in the average federal excise tax rate of Big Buck. Michigan imposes an
excise tax of $6.30 per barrel on each barrel of beer sold in Michigan. However,
each brewer which is a "microbrewery" under Michigan law (presently with
production of not more than 30,000 barrels per year) is granted a microbrewer's
excise tax credit in the amount of $2.00 per barrel. To the extent Big Buck's
production increases to amounts over 30,000 barrels per year, there will be an
increase in the average Michigan excise tax rate of Big Buck. Upon opening of
the Grapevine unit, Buck & Bass, L.P. will become subject to exercise taxes
under Texas law. Excise taxes in Texas are $6.14 per barrel for ale and malt
liquor, and $6.00 per barrel for beer. However, Texas grants a 25% tax exemption
for manufacturers of beer whose annual production in Texas does not exceed
75,000 barrels of beer per year. As a result, Buck & Bass, L.P. believes it will
face an effective excise tax of $4.50 per barrel for beer. To the extent
production of beer increases to an amount over 75,000 barrels per year in Texas,
there will be an increase in the average Texas excise tax rate of Buck & Bass,
L.P. Big Buck held an effective 89.9% interest in Buck & Bass, L.P. as of March
1, 2000. Big Buck is also subject to federal and state excise taxes on the wine
it sells in its Michigan units. See "Business - Restaurant Regulation."
Other states and municipalities into which Big Buck may expand also
impose excise or other taxes or special charges on alcoholic beverages in
varying amounts, which amounts are subject to change. It is
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possible that in the future the rate of excise taxation could be increased by
either federal or state governments, or both. Increased excise taxes on
alcoholic beverages have been considered by the federal government as an
additional source of tax revenue in connection with various proposals and
could be included in future legislation. Future increases in excise taxes on
alcoholic beverages, if enacted, could adversely affect Big Buck's business,
operating results and financial condition.
THE LOSS OF KEY PEOPLE, INCLUDING WILLIAM F. ROLINSKI, GARY J. HEWETT AND
ANTHONY P. DOMBROWSKI, COULD ADVERSELY AFFECT US.
Big Buck's future success will depend in large part upon the continued
service of its key management personnel including William F. Rolinski, Gary J.
Hewett and Anthony P. Dombrowski. Given Big Buck's limited operating history,
Big Buck is dependent on its ability to identify, hire, train and motivate
qualified personnel necessary to enable it to continue operations. Big Buck does
not have key person life insurance policies on any of its employees. The
departure of key employees could have a material adverse effect on Big Buck's
business, operating results and financial condition. Big Buck's success will
also be dependent upon its ability to attract and retain qualified people,
including additional management personnel. While it has been successful to date
in attracting a management team and a restaurant staff, no assurance can be
given that Big Buck's current employees will continue to work for Big Buck or
that Big Buck will be able to obtain the services of additional personnel
necessary for Big Buck's growth. To date, Big Buck has not entered into any
agreements providing for the continued employment of its personnel.
IF WE DO NOT MAINTAIN OUR NASDAQ LISTING, YOU MAY HAVE DIFFICULTY RESELLING YOUR
SHARES.
Big Buck's common stock, Class A Warrants and units (each consisting of
one share of common stock and one Class A Warrant) are currently listed on the
Nasdaq SmallCap Market. We cannot assure you that an active public market will
develop or be sustained for Big Buck's securities. In addition, if Big Buck's
securities do not continue to trade on the Nasdaq SmallCap Market, the
securities would become subject to certain rules of the SEC relating to "penny
stocks." Such rules require broker-dealers to make a suitability determination
for purchasers and to receive the purchaser's prior written consent for a
purchase transaction, thus restricting the ability to purchase or sell the
securities in the open market.
WE MAY REDEEM THE OUTSTANDING CLASS A WARRANTS.
Big Buck's Class A Warrants, which were sold in connection with Big
Buck's initial public offering, are subject to redemption at any time by Big
Buck at $0.01 per warrant, on 30 days' prior written notice, if the high closing
bid price of Big Buck's common stock exceeds $9.00 per share (subject to
adjustment) for 20 consecutive trading days. If the Class A Warrants are
redeemed, those warrantholders will lose their right to exercise such warrants
except during such 30-day redemption period. Redemption of the Class A Warrants
could force the holders to exercise such warrants at a time when it may be
disadvantageous for the holders to do so or to accept the redemption price of
$0.01 per warrant.
MICHIGAN LAW LIMITS YOUR ABILITY TO PURCHASE SHARES OF OUR STOCK.
The Michigan Liquor Control Act and Big Buck's Restated Articles of
Incorporation prohibit the acquisition of ten percent or more of Big Buck's
outstanding common stock without the prior approval of the Michigan Liquor
Control Commission. A person seeking to acquire ten percent or more of Big
Buck's outstanding common stock must (a) provide Liquor Control information
regarding such person, including without limitation thereto, information
regarding other alcoholic liquor business management experience, in such form,
and with such updates, as may be required by Liquor Control; (b) respond to
written or oral questions from Liquor Control; and (c) consent to the
performance of any background investigation that may be required by Liquor
Control, including without limitation thereto, an investigation of certain past
criminal convictions of such person. Further, no person shall acquire any of Big
Buck's outstanding common stock in
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violation of the Michigan Liquor Control Act, as it may be amended from time
to time. If a person holds Big Buck's outstanding common stock in violation
of either of the above restrictions, such person's securities holdings are
subject to redemption at any time by Big Buck by action of the Board of
Directors. Redemption could force such disqualified holders to sell their
shares back to Big Buck at a time when it may be disadvantageous for the
holders to do so.
OUR MANAGEMENT POSSESSES SIGNIFICANT CONTROL WHICH COULD REDUCE YOUR ABILITY TO
RECEIVE A PREMIUM FOR YOUR SHARES THROUGH A CHANGE IN CONTROL
As of March 1, 2000, the current officers and directors of Big Buck
beneficially owned approximately 46% of Big Buck's outstanding common stock.
Accordingly, such persons can exert substantial influence over the composition
of Big Buck's Board of Directors and generally direct the affairs of Big Buck
and may have the power to control the outcome of shareholder approvals of
business acquisitions, mergers and combinations and other actions. Big Buck is
also subject to Michigan statutes regulating business combinations and
restricting voting rights of certain persons acquiring shares of common stock
which may hinder or delay a change in control of Big Buck.
FLUCTUATIONS IN OUR OPERATING RESULTS MAY RESULT IN DECREASES IN OUR STOCK
PRICE.
Big Buck's sales and earnings are expected to fluctuate based on
seasonal patterns. Based on its existing units, Big Buck anticipates that its
highest earnings will occur in the second and third calendar quarters due to the
milder climate during those quarters in Michigan. Big Buck believes, however,
that future expansion into markets outside Michigan, if any, will mitigate the
effect of seasonality on its business. Quarterly results in the future are also
likely to be substantially affected by the timing of new unit openings. Because
of the effect of seasonality on Big Buck's business and the impact of new unit
openings, results for any quarter are not necessarily indicative of the results
for a full fiscal year.
YOU MAY NOT BE ABLE TO SELL OUR STOCK AT THE SAME PRICE AT WHICH YOU PURCHASE IT
DUE TO SIGNIFICANT VOLATILITY IN OUR STOCK PRICE.
The market price of Big Buck's common stock has been subject to
significant fluctuations in response to numerous factors, including variations
in the annual or quarterly financial results of Big Buck or its competitors,
changes by financial research analysts in their estimates of the earnings of Big
Buck or its competitors, conditions in the economy in general or in the brewing
industry in particular, unfavorable publicity or changes in applicable laws and
regulations (or judicial or administrative interpretations thereof) affecting
Big Buck or the brewing industry. During 1998, Big Buck's common stock ranged
from a high of $5.875 on March 2, 1998, to a low of $2.125 on October 8, 1998.
During 1999, Big Buck's common stock ranged from a high of $3.1875 on January
27, 1999 and January 28, 1999, to a low of $1.25 on October 12, 1999 and
December 29, 1999. We cannot assure you that purchasers of Big Buck's securities
will be able to sell such securities at or above the prices at which they were
purchased.
THE SALE OF ADDITIONAL SHARES MAY BE DILUTIVE TO EXISTING SHAREHOLDERS.
Big Buck had 5,405,481 shares of common stock outstanding as of March
1, 2000, and had warrants, stock options, convertible debt and other rights
outstanding to purchase an additional 9,730,282 shares of common stock,
exercisable at prices ranging from approximately $1.47 to $8.00 per share. Big
Buck has also registered certain shares of its common stock for resale on the
public market. The sale of such shares, and the sale of additional shares which
may become eligible for sale in the public market from time to time upon the
exercise of warrants and stock options, may be dilutive to existing shareholders
and could have the effect of depressing the market price of Big Buck's common
stock.
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FAILURE TO ACHIEVE YEAR 2000 COMPLIANCE COULD NEGATIVELY AFFECT US.
As of March 1, 2000, Big Buck has not experienced and does not
anticipate any material adverse effects on its systems and operations as a
result of Year 2000 issues. However, the failure of Big Buck, its vendors,
suppliers or service providers to achieve Year 2000 compliance on a timely basis
could materially adversely affect Big Buck's business, operating results,
financial condition and cash flows.
SPECIAL NOTE REGARDING OUR FORWARD-LOOKING STATEMENTS.
This document and the documents incorporated herein by reference
contain various forward-looking statements within the meaning of Section 21E of
the Exchange Act. Although we believe that, in making any such statements, 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 this document and the
documents incorporated herein by reference, 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 herein
under the caption "Risk Factors."
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 herein and
to refrain from placing undue reliance on any forward-looking statements, which
speak only as of the date of the document in which they appear.
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SELLING SHAREHOLDERS
The following table presents information regarding the selling
shareholders. The shares covered by this prospectus represent shares that each
selling shareholder is able to receive upon the conversion of convertible debt
or the exercise of warrants within 60 days of March 1, 2000. In the following
table, percentage of beneficial ownership is based on 5,405,481 outstanding
shares of common stock.
<TABLE>
<CAPTION>
PERCENTAGE
OF
PERCENTAGE OF OUTSTANDING
OUTSTANDING SHARES SHARES
SHARES SHARES BENEFICIALLY BENEFICIALLY
BENEFICIALLY BENEFICIALLY OWNED IF OWNED IF
OWNED OWNED ALL SHARES ALL SHARES
BEFORE BEFORE SHARES ARE SOLD IN ARE SOLD IN
SELLING SHAREHOLDER OFFERING OFFERING OFFERED THE OFFERING THE OFFERING
- ------------------------------------------- ------------ ------------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Wayne County Employees' Retirement
System............................... 3,299,172 37.9% 3,299,172 0 0%
400 Monroe Street, Suite 230
Detroit, Michigan 48226
Michael G. Eyde........................... 1,447,596 21.5% 52,115 1,395,481 20.9%
6250 West Michigan Avenue
Lansing, Michigan 48917
</TABLE>
SALES TO SELLING SHAREHOLDERS
We issued two secured promissory notes, convertible into an aggregate
of 3,099,172 of the shares covered by this prospectus, to Wayne County in
connection with a private placement in February 2000. We also issued a warrant,
exercisable for 200,000 of the shares covered by this prospectus, to Wayne
County as part of the same transaction. We issued a subordinated promissory
note, convertible into 52,115 of the shares covered by this prospectus, to the
landlord of our Auburn Hills unit pursuant to a subscription and investment
representation agreement dated January 2000.
SELLING SHAREHOLDERS' REGISTRATION RIGHTS
Under our agreements with the selling shareholders, we agreed to use
our best efforts to register the shares of common stock covered by this
prospectus. Our registration of the shares does not necessarily mean that the
selling shareholders will sell all or any of the shares covered by this
prospectus.
USE OF PROCEEDS
All net proceeds from the sale of the shares will go to the
shareholders who offer and sell their shares. Accordingly, we will not receive
any proceeds from the sale of the shares.
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PLAN OF DISTRIBUTION
The selling shareholders may offer their shares at various times in one
or more of the following transactions:
- on the Nasdaq SmallCap Market;
- in transactions other than on such market;
- in privately negotiated transactions; or
- in a combination of any of the above transactions.
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prices, or at
negotiated prices. We are indemnifying Wayne County and Wayne County is
indemnifying us against certain liabilities, including liabilities under the
Securities Act.
The selling shareholders may use broker-dealers to sell their shares.
If this happens, such broker-dealers will either receive discounts or
commissions from the selling shareholders, or they will receive commissions from
purchasers of shares for whom they acted as agent.
The selling shareholders and any persons who participate in the sale of
the shares from time to time, may be deemed to be "underwriters" within the
meaning of the Securities Act. Any commissions paid or discounts or concessions
allowed to any such persons, and any profits received on resale of the shares,
may be deemed to be underwriting compensation under the Securities Act.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available.
LEGAL MATTERS
For purposes of this offering, Briggs and Morgan, Professional
Association, is giving its opinion on the validity of the shares.
EXPERTS
The financial statements as of January 2, 2000, and for the fiscal year
then ended, incorporated by reference in this prospectus, have been audited by
Plante & Moran, LLP, independent public accountants, as indicated in their
report with respect thereto. Such financial statements are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing.
The financial statements as of January 3, 1999, and for the year then
ended, incorporated by reference in this prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the public from the
SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to documents we file with the SEC. The information incorporated by
reference is considered to be part of this prospectus. Information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act until the selling shareholders sell all of the shares covered by this
prospectus:
- Annual report on Form 10-KSB for the year ended January 2, 2000;
- Description of our common stock contained in our registration
statement on Form SB-2 (No. 333-3548) filed on April 15, 1996
(as amended);
- Current report on Form 8-K filed on January 4, 2000; and
- Definitive Schedule 14A proxy statement filed on October 26, 1999.
This prospectus is part of a registration statement we filed with the
SEC. You may request a copy of the registration statement or any of the above
filings, at no cost, by writing or telephoning our Chief Financial Officer at
the following address:
Big Buck Brewery & Steakhouse, Inc.
550 South Wisconsin Street
Gaylord, Michigan 49734
(517) 731-0401
You should rely only on the information and representations provided in
this prospectus. We have not authorized anyone else to provide you with
different information. No selling shareholder will make an offer of these shares
in any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of this document.
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======================================== ==============================
YOU SHOULD RELY ON THE INFORMATION
CONTAINED IN THIS DOCUMENT OR THAT TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. YOU SHOULD 3,351,287 SHARES
NOT ASSUME THAT THE INFORMATION IN THIS
DOCUMENT IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE ON THE FRONT OF THIS
3,351,287 SHARES DOCUMENT. THIS PROSPECTUS
IS NOT AN OFFER TO SELL NOR IS IT SEEKING
AN OFFER TO BUY ANY SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
BIG BUCK BREWERY &
STEAKHOUSE, INC.
----------------------
TABLE OF CONTENTS COMMON STOCK
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Page
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Prospectus Summary..................... 2
Risk Factors........................... 3 PROSPECTUS
Selling Shareholders................... 12
Use of Proceeds........................ 12 --------------------
Plan of Distribution................... 13
Legal Matters.......................... 13
Experts................................ 13
Where You Can Find More Information.... 14
APRIL 14, 2000
======================================== ==============================
