FAMOUS DAVE S OF AMERICA INC, POS AM, 1997-05-15

FAMOUS DAVE S OF AMERICA INC
POS AM, 1997-05-15
EATING PLACES

Previous: TRENDWEST RESORTS INC, S-1/A, 1997-05-15

Next: VITECH AMERICA INC, 10-Q, 1997-05-15

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1997

REGISTRATION NO. 333-10675
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

POST-EFFECTIVE

AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

FAMOUS DAVE'S OF AMERICA, INC.
(Name of Small Business Issue in its Charter)

<TABLE>
<C> <C> <C>
MINNESOTA 5812 41-1782300
(State or other jurisdiction (Primary standard industrial (I.R.S. Employer
of classification code number) Identification Number)
incorporation)
</TABLE>

12700 INDUSTRIAL PARK BOULEVARD, SUITE 60
MINNEAPOLIS, MINNESOTA 55441
(612) 557-5798
(Address and Telephone Number of Principal Executive Offices)

MARK A. PAYNE, PRESIDENT

FAMOUS DAVE'S OF AMERICA, INC.
12700 INDUSTRIAL PARK BOULEVARD, SUITE 60
MINNEAPOLIS, MINNESOTA 55441
(612) 557-5798
(Name, Address, and Telephone Number of Agent For Service)

Copies to:

RUSSELL F. LEDERMAN, ESQ.

MASLON EDELMAN BORMAN & BRAND,

A PROFESSIONAL LIMITED LIABILITY PARTNERSHIP
3300 NORWEST CENTER
MINNEAPOLIS, MINNESOTA 55402
(612) 672-8200
FAX (612) 672-8397

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after the
effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
<PAGE> 2

famous dave's logo

2,645,000 SHARES

FAMOUS DAVE'S OF AMERICA, INC.

COMMON STOCK

-------------------------

Famous Dave's of America, Inc. (the "Company") is offering 2,645,000 shares
of Common Stock issuable upon exercise of the Company's outstanding Class A
Warrants. The Class A Warrants are immediately exercisable. Each Class A Warrant
entitles the holder to purchase at any time until October 21, 2000, one share of
Common Stock at an exercise price of $8.50 per warrant, subject to adjustment.
The Class A Warrants are subject to redemption by the Company for $.01 per
warrant on 30 days' written notice. The Class A Warrants were originally issued
by the Company in the Company's October 1996 initial public offering ("IPO") as
a part of a unit (a "Unit") consisting of one share of the Company's Common
Stock and one Class A Warrant. See "Description of Securities."

The Common Stock, Class A Warrants and Units are listed on the Nasdaq
SmallCap Market under the symbols DAVE, DAVEW, and DAVEU, respectively. On May
13, 1997, the last sale price of the Common Stock as reported by Nasdaq was
$12.50. See "Price Range of Common Stock and Dividend Policy."

-------------------------

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION. SEE
"RISK FACTORS" COMMENCING ON PAGE 6 AND "DILUTION" ON PAGE 11. THESE ARE
SPECULATIVE SECURITIES.

-------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=============================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
WARRANT HOLDERS DISCOUNT COMPANY(1)(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share......................... $8.50 -- $8.50
- -------------------------------------------------------------------------------------------------------------
Total............................. $22,482,500 -- $22,482,500
=============================================================================================================
</TABLE>

(1) Assumes all Class A Warrants are exercised.

(2)Before deducting expenses estimated at $50,000.

The date of this Prospectus is May 15, 1997.

<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes no exercise of Class A Warrants. This Prospectus
contains forward-looking statements that involve significant risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such differences include, but are not limited to, those discussed under the
heading "Risk Factors", which prospective investors should carefully consider.

THE COMPANY

Famous Dave's of America, Inc. (the "Company") develops, owns and operates
American roadhouse-style barbeque restaurants under the name "Famous Dave's".
The Company presently owns and operates four restaurants, one located in the
Linden Hills neighborhood of Minneapolis (the "Linden Hills Unit"), one in
Roseville, Minnesota (the "Roseville Unit"), one in Maple Grove, Minnesota (the
"Maple Grove Unit") and the fourth in Calhoun Square in Minneapolis (the
"Calhoun Blues Club"). The Calhoun Blues Club features live blues music during
certain evenings and an authentic Chicago blues decor. The Company currently has
five additional units in development in the Minneapolis/St. Paul area, to be
located in St. Paul, Stillwater, Apple Valley, Forest Lake and Minnetonka, and
two units in development in Wisconsin, to be located in Madison and Grand Chute
(Green Bay/Appleton area). These seven additional units are expected to open
before the end of 1997.

Each restaurant features an assortment of menu items, such as
hickory-smoked St. Louis-style ribs, Texas beef brisket, herb-roasted chicken,
barbeque sandwiches, and char-grilled burgers, as well as honey-buttered corn
bread, potato salad, cole slaw and "Wilbur"(TM) beans. Homemade desserts,
including Famous Dave's homemade bread pudding and Kahlua(TM) brownies, are a
specialty. The Company's Famous Dave's BBQ Sauces, which are provided in four
regional variations (Rich-N-Sassy(TM), Texas Pit(TM), Georgia Mustard(TM) and
Hot Stuff(TM)), represent signature items for the Company.

The Company opened the Linden Hills Unit, a 2,900-square-foot facility with
approximately 50 indoor and 40 patio seats, in June 1995 in the primarily
residential Linden Hills neighborhood of south Minneapolis. The Company opened
its second restaurant, a 4,800-square-foot facility with approximately 100
indoor seats, in suburban Roseville, Minnesota, in June 1996. The Calhoun Blues
Club, an approximately 350 seat, 10,500-square-foot full-service restaurant with
live blues music, opened in Calhoun Square in the Uptown area of Minneapolis in
September 1996. The Company opened the Maple Grove Unit, a 5,200-square-foot
facility with approximately 120 indoor seats, in suburban Maple Grove, Minnesota
in April 1997.

The Company was incorporated in March 1994 as a Minnesota corporation. Its
executive offices are located at 12700 Industrial Park Boulevard, Suite 60,
Minneapolis, Minnesota 55441 and its telephone number is 612-557-5798.
3
<PAGE> 4

THE OFFERING

Securities Offered............ 2,645,000 shares of Common Stock issuable upon
exercise of outstanding Class A Warrants. Each
Class A Warrant is immediately exercisable and
entitles the holder to purchase, at any time
until October 21, 2000, one share of Common
Stock at an exercise price of $8.50 per
Warrant, subject to adjustment. The Class A
Warrants are subject to redemption by the
Company for $.01 per Warrant on 30 days'
written notice.

Common Stock Outstanding
Before this Offering........ 6,024,250 shares

Common Stock Outstanding
After this Offering Assuming
All
Class A Warrants are
Exercised..................... 8,669,250 shares(1)

Nasdaq SmallCap Market
Symbols:

Common Stock................ DAVE

Warrants.................... DAVEW(2)

Units....................... DAVEU(2)

Use of Proceeds............... Development of additional units, working
capital and general corporate purposes.

- -------------------------

(1) Does not include 894,500 shares issuable upon exercise of outstanding
options.

(2) Upon completion of the exercise, redemption, and/or expiration of all
outstanding Class A Warrants, trading in these securities will cease.

FOR OREGON INVESTORS

THE COMPANY WILL OFFER AND SELL SECURITIES TO: ANY PERSON WHO (A) HAS AN
INCOME OF $65,000 AND A NET WORTH OF $250,000, OR (B) HAS A NET WORTH OF
$500,000 (IN EACH CASE, EXCLUDING HOME, HOME FURNISHINGS AND PERSONAL
AUTOMOBILES).

4
<PAGE> 5

SUMMARY FINANCIAL INFORMATION

<TABLE>
<CAPTION>
YEAR ENDED THIRTEEN WEEKS ENDED
--------------------------- -----------------------
DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1995 1996 1996 1997
------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales, net................................... $ 481,510 $4,751,835 $ 290,388 $2,240,683
Restaurant costs and expenses................ 489,015 4,006,997 251,993 1,931,916
---------- ---------- ---------- ----------
Income (loss) from restaurant operations... (7,505) 744,838 38,395 308,767
General and administrative expenses.......... 298,685 1,558,115 285,947 1,067,010
Other (income) expense, net.................. 0 (106,679) 2,896 (138,956)
---------- ---------- ---------- ----------
Net loss................................... $ (306,190) $ (706,598) $ (250,448) $ (619,287)
========== ========== ========== ==========
Net loss per common share.................... $ (0.14) $ (0.21) $ (0.11) $ (0.10)
========== ========== ========== ==========
Weighted average common shares outstanding... 2,214,423 3,293,716 2,214,423 6,217,422
========== ========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
MARCH 30, 1997
----------------------------
ACTUAL AS ADJUSTED(1)
------ --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $12,282,623 $34,715,123
Total assets................................................ 21,171,840 43,604,340
Total liabilities........................................... 2,456,760 2,456,760
Accumulated deficit......................................... (950,948) (950,948)
Shareholders' equity........................................ 18,715,080 41,147,580
</TABLE>

- -------------------------

(1) As adjusted for the exercise of all of the Class A Warrants and the
anticipated application of the net proceeds therefrom. Does not include (i)
230,000 shares of Common Stock issuable at $9.10 per share upon exercise of
the Underwriter's Warrant granted to the underwriter of the Company's
Initial Public Offering; (ii) 900,000 shares of Common Stock reserved for
issuance under the Company's Stock Option and Compensation Plan, of which
819,500 have been granted and remain outstanding; and (iii) 75,000 shares of
Common Stock issuable upon exercise of Director's stock options.

5
<PAGE> 6

RISK FACTORS

An investment in the shares of Common Stock offered hereby is speculative
and involves a high degree of risk. Prospective investors should carefully
consider the following factors, along with the other information set forth in
this Prospectus, in evaluating the Company, its business and prospects before
exercising their Class A Warrants.

LACK OF PROFITABILITY; LACK OF SIGNIFICANT OPERATING HISTORY

The Company opened its first restaurant in June 1995 and currently operates
four restaurants. The Company had a net loss of $619,287 during the 13 weeks of
operations ended March 30, 1997, and a net loss of $706,598 for the year ended
December 29, 1996. The Company had an accumulated deficit of $950,948 at March
30, 1997. Prior to the opening of the first unit, the Company had no operations
or revenues. Accordingly, the Company's operations are subject to all of the
risks inherent in the establishment and development of a new business
enterprise, including the lack of significant operating history. The likelihood
of success of the Company must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in connection with
the establishment and development of any company. There can be no assurance that
future operations of the Company will be profitable. Future revenues and
profits, if any, will depend upon various factors, including additional market
acceptance of the Famous Dave's concept, the quality of restaurant operations,
the ability to expand to multi-unit operations and general economic conditions.
Frequently, restaurants, particularly theme-oriented restaurants, experience a
decline of revenue growth or of actual revenues as the restaurant's "initial
honeymoon" period expires and consumers tire of the related theme. There is no
assurance that the Company will successfully implement its expansion plans, in
which case the Company will continue to be dependent on the revenues of its
existing operating units. Furthermore, to the extent that the Company's
expansion strategy is successful, the Company must manage the transition to
multiple site operations, higher volume operations, the control of overhead
expenses and the addition of necessary personnel.

NEED FOR ADDITIONAL QUALIFIED OPERATING PERSONNEL

The success of the Company will depend upon the Company's ability to
continue to attract and retain highly qualified operating personnel to help
implement its expansion plans and operate new and existing units. The failure to
obtain, or delays in obtaining, key employees could have a material adverse
effect on the Company.

LIMITED BASE OF OPERATIONS

The Company currently operates four restaurants and plans to open at least
nine additional restaurants in 1997. The combination of the relatively small
number of locations and the investment associated with each new unit may cause
the operating results of the Company to fluctuate significantly and adversely
affect the profitability of the Company. Due to this relatively small number of
current and planned locations, poor operating results at any one unit or a delay
in the planned opening of a unit could materially affect the profitability of
the entire Company. Future growth in revenues and profits will depend to a
substantial extent on the Company's ability to increase the number of its
restaurants. Additionally, the Company's history does not provide any basis for
prediction as to whether individual units will tend to show increases or
decreases in comparable unit sales.

LIMITED FINANCIAL RESOURCES; NEED FOR ADDITIONAL FINANCING

The Company's ability to execute its business strategy depends to a
significant degree on its ability to obtain additional equity capital to finance
the development of additional restaurants. However, there can be no assurance
that any additional funds will be available on terms acceptable to the Company
or its shareholders. New investors may seek and obtain substantially better
terms than were granted its present investors and the issuance of such
securities would result in dilution to the existing shareholders. Furthermore,
as the Company

6
<PAGE> 7

prepares to open additional units, it will expend a relatively higher amount on
administrative expenses than would a mature Company with such operations.

EXPANSION STRATEGY

The Company's ability to open and successfully operate additional units
will also depend upon the hiring and training of skilled restaurant management
personnel and the general ability to successfully manage growth, including
monitoring restaurants and controlling costs, food quality and customer service.
The Company anticipates that the opening of additional units will give rise to
additional expenses associated with managing operations located in multiple
markets. Furthermore, the Company believes that competition for unit-level
management has become increasingly intense as additional restaurant chains
expand to new markets. Achieving consumer awareness and market acceptance will
require substantial efforts and expenditures by the Company. An extraordinary
amount of management's time may be drawn to such matters and negatively impact
operating results. There can be no assurance that the Company will be able to
enter into any other contracts for development of additional units, including
franchise agreements, on terms satisfactory to the Company. Accordingly, there
can be no assurance that the Company will be able to open new units or that, if
opened, those units can be operated profitably. See "Business -- Expansion
Strategy."

THE RESTAURANT INDUSTRY AND COMPETITION

The restaurant industry is highly competitive with respect to price,
service, quality and location and, as a result, has a high failure rate. There
are numerous well-established competitors, including national, regional and
local restaurant chains, possessing substantially greater financial, marketing,
personnel and other resources than the Company. Furthermore, to the extent that
barbeque restaurants are frequently viewed as "local," the Company may
experience intense competition or lack of consumer acceptance if it expands into
areas with existing barbeque restaurants. There can be no assurance that the
Company will be able to respond to various competitive factors affecting the
restaurant industry. The restaurant industry is also generally affected by:
changes in consumer preferences, national, regional and local economic
conditions, and demographic trends. The performance of restaurant facilities may
also be affected by factors such as traffic patterns, demographic
considerations, and the type, number and location of competing facilities. In
addition, factors such as inflation, increased labor and employee benefit costs,
and a lack of availability of experienced management and hourly employees may
also adversely affect the restaurant industry in general and the Company's
restaurants in particular. Restaurant operating costs are further affected by
increases in the minimum hourly wage, unemployment tax rates and similar matters
over which the Company has no control. Finally, by the nature of its business,
the Company would be subject to potential liability from serving contaminated or
improperly prepared food.

CONCEPT EVOLUTION

The Company presently intends that most of its future restaurants will
feature the roadhouse theme similar to the Linden Hills, Roseville and Maple
Grove Units. However, the Famous Dave's concept continues to evolve and a number
of factors could change this theme as applied in different locations. These
factors include demographic and regional differences, locations that have more
or less traffic than the areas in which those units are located, type of
available floor space, and the availability of specialty items such as antiques.
Accordingly, future units could be larger or smaller than those units, could
vary in the mix of retail/restaurant operations, and could have differences in
the application of the Famous Dave's theme.

LONG-TERM, NON-CANCELABLE LEASES

The Company has entered into four long-term leases or subleases with S&D
Land Holdings, Inc., a Minnesota corporation which is wholly-owned by David W.
Anderson, Chairman and founding Shareholder of the Company, relating to certain
existing units and certain planned units. These leases and subleases are non-
cancelable by the Company (except in limited circumstances) and range in term
from seven to ten years. The leases and subleases do not permit assignment or
subleasing without the prior approval of S&D Land Holdings. Additional
facilities developed by the Company are likely to be subject to similar
long-term,

7
<PAGE> 8

non-cancelable leases, although the Company currently expects, subject to
available financial resources, that such leases will be entered into with
unrelated parties. If an existing or future unit does not perform at a
profitable level, and the decision is made to close the restaurant, the Company
may nonetheless be committed to perform its obligations under the applicable
lease or sublease, which would include, among other things, payment of the
respective base rent for the balance of the respective lease term. If such a
restaurant closing were to occur at one of these locations, the Company would
lose a unit without necessarily receiving an adequate return on its investment.
See "Business -- Property and "Certain Transactions."

TRANSACTIONS WITH MANAGEMENT; CONFLICTS OF INTEREST

There are several transactions between the Company and David W. Anderson,
its Chairman, that present a conflict of interest. See "Certain Transactions."
Martin J. O'Dowd, a director of the Company, is also a director of Elephant &
Castle Group. Elephant & Castle may potentially compete against the Company when
and if one of the Company's restaurants are developed in a market that contains
a restaurant operated by Elephant & Castle or vice versa. Therefore, the
directorship of Mr. O'Dowd could constitute a conflict of interest.

CONTROL OF THE COMPANY; DEPENDENCE ON KEY PERSONNEL

If all of the Class A Warrants are exercised, David W. Anderson will
control approximately 20.5% of the Company's Common Stock. Therefore, Mr.
Anderson will have the ability to direct its operations and financial affairs
and to substantially influence the election of members of the Board of Directors
of the Company. The Company is also presently highly dependent upon the personal
efforts and abilities of its Chairman, David W. Anderson, and its Chief
Executive Officer and Chief Operating Officer, Douglas S. Lanham. The Company
has a two-year employment agreement with Mr. Anderson and a four-year employment
agreement with Mr. Lanham. The loss of the services of Mr. Anderson or Mr.
Lanham could have a substantial adverse effect on the Company's ability to
achieve its objectives. The Company currently has no key man insurance on Mr.
Anderson. The Company is in the process of obtaining key man insurance on Mr.
Lanham.

DISCRETIONARY USE OF PROCEEDS

The proceeds from the exercise of Class A Warrants will be used to develop
additional units and for working capital and general corporate purposes.

GOVERNMENT REGULATION

The restaurant business is subject to various federal, state and local
government regulations, including those relating to the sale of food and
alcoholic beverages. The failure to maintain food and liquor licenses would have
a material adverse effect on the Company's operating results. In addition,
restaurant operating costs are affected by increases in the minimum hourly wage,
unemployment tax rates, sales taxes and similar costs over which the Company has
no control. Many of the Company's restaurant personnel will be paid at rates
based on the federal minimum wage. Recent increases in the minimum wage are not
expected to materially impact the Company's labor costs. The Company will be
subject to "dram shop" statutes in certain states, including Minnesota, which
generally allow a person injured by an intoxicated person to recover damages
from an establishment that served alcoholic beverages to such intoxicated
person. The Company has obtained liability insurance against such potential
liability.

TRADEMARKS

The Company's ability to successfully implement its Famous Dave's concept
will depend in part upon its ability to protect its trademarks. The Company has
filed a trademark application with the United States Patent and Trademark Office
to register the "Famous Dave's" mark and design. There can be no assurance that
the Company will be granted trademark registration for any or all of the
proposed uses in the Company's applications. In the event the Company's mark is
granted registration, there can be no assurance that the

8
<PAGE> 9

Company can protect such mark and design against prior users in areas where the
Company conducts operations. There is no assurance that the Company will be able
to prevent competitors from using the same or similar marks, concepts or
appearance.

SUBSTANTIAL DILUTION

Purchasers of the securities offered hereby will experience immediate
substantial dilution of $3.77 per Share in the net tangible book value per share
of Common Stock assuming all of the Class A Warrants are exercised. See
"Dilution."

ABSENCE OF DIVIDENDS

At the present time, the Company intends to use any earnings which may be
generated to finance further growth of the Company's business. Accordingly,
investors should not purchase the shares with a view towards receipt of cash
dividends from any Shares.

CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS;
POSSIBLE REDEMPTION OF WARRANTS

Holders of Class A Warrants will be able to exercise the Class A Warrants
only if a current prospectus relating to the shares of Common Stock underlying
the Class A Warrants is then in effect and only if such securities are qualified
for sale or exempt from qualification under the applicable securities laws of
the states in which the various holders of Class A Warrants reside. Although the
Company will use its best efforts to (i) maintain the effectiveness of a current
prospectus covering the shares of Common Stock underlying the Class A Warrants
and (ii) maintain the registration of such Common Stock under the securities
laws of the states in which the Company initially qualified the Units for sale
in the IPO, there can be no assurance that the Company will be able to do so.
The Company will be unable to issue shares of Common Stock to those persons
desiring to exercise their Class A Warrants if a current prospectus covering the
shares issuable upon the exercise of the Class A Warrants is not kept effective
or if such shares are not qualified nor exempt from qualification in the states
in which the holders of the Warrants reside. The Class A Warrants are subject to
redemption at any time by the Company at $.01 per Warrant on 30 days prior
written notice, provided a current prospectus covering the shares is then
effective under federal securities laws. If the Class A Warrants are redeemed,
Warrant holders will lose their right to exercise the Warrants except during
such 30-day redemption period. Redemption of the Class A Warrants could force
the holders to exercise the Class A Warrants at a time when it may be
disadvantageous for the holders to do so or to sell the Class A Warrants at the
then market price or accept the redemption price, which is likely to be
substantially less than the market value of the Class A Warrants at the time of
redemption. See "Description of Securities -- Class A Warrants."

UNDESIGNATED STOCK

The Company's authorized capital consists of 100,000,000 shares of capital
stock. The Board of Directors, without any action by the Company's stockholders,
is authorized to designate and issue shares in such classes or series (including
classes or series of preferred stock) as it deems appropriate and to establish
the rights, preferences and privileges of such shares, including dividends,
liquidation and voting rights. The Company currently has 6,024,250 shares of
Common Stock outstanding. A further 3,625,000 shares of Common Stock have been
authorized for the following: (i) 2,645,000 shares issuable upon the exercise of
the Class A Warrants, (ii) 230,000 shares issuable upon the exercise of warrants
to the Underwriter of the IPO, (iii) 900,000 shares for issuance under the
Company's 1995 Stock Option and Compensation Plan, of which 819,500 have been
granted and remain outstanding, and (iv) 75,000 shares of Common Stock issuable
upon exercise of Directors' Stock Options. No other class of common stock or
preferred stock is currently designated and there is no current plan to
designate or issue any such securities. The rights of holders of preferred stock
and other classes of common stock that may be issued may be superior to the
rights granted to the holders of the Shares. Further, the ability of the Board
of Directors to designate and issue such undesignated shares could impede or
deter an unsolicited tender offer or takeover proposal regarding the

9
<PAGE> 10

Company and the issuance of additional shares having preferential rights could
adversely affect the voting power and other rights of holders of Common Stock.
See "Description of Securities."

SHARES ELIGIBLE FOR FUTURE SALE

The sale, or availability for sale, of substantial amounts of Common Stock
in the public market subsequent to this offering may adversely affect the
prevailing market price of Common Stock and may impair the Company's ability to
raise additional capital by the sale of its equity securities. David W.
Anderson, Chairman of the Company, has agreed that he will not sell, grant any
option for the sale of, or otherwise dispose of any equity securities of the
Company (or any securities convertible into or exercisable or exchangeable for
equity securities of the Company) until October 21, 1997 without the prior
written consent of the IPO Underwriter. In connection with the IPO, certain
officers and directors of the Company escrowed a portion of their shares until
October 1999 or until (i) the Company meets certain earnings requirements
established by the State of Minnesota, or (ii) the State of Minnesota determines
that the escrow agreement is no longer necessary. A total of 2,028,000 shares of
Common Stock are subject to escrow. See "Description of Securities -- Shares
Eligible for Future Sale." 1,356,250 shares of the Company's Common Stock which
were sold in reliance on "private placement" exemptions under the Securities Act
of 1933, as amended (the "Act") will become eligible for sale in July 1997. See
"Description of Securities -- Shares Eligible for Future Sale."

MINNESOTA ANTI-TAKEOVER LAW

The Company is subject to Minnesota statutes regulating business
combinations and restricting voting rights of certain persons acquiring shares
of the Company, which may hinder or delay a change in control of the Company.
See "Description of Securities."

USE OF PROCEEDS

The net proceeds to be received by the Company from this Offering, after
deducting estimated costs and expenses of the Offering, are estimated to be
approximately $22,432,500, assuming all of the Class A Warrants are exercised.
The net proceeds from the exercise of Class A Warrants will be used to develop
additional units and for working capital and general corporate purposes.

10
<PAGE> 11

DILUTION

At March 30, 1997, the Company's net tangible book value was $18,532,624 or
approximately $3.08 per share of Common Stock. "Net tangible book value"
represents the tangible assets of the Company less all liabilities. Without
taking into account any further changes in net tangible book value after March
30, 1997, other than to give effect to (i) the exercise of the Class A Warrants
and (ii) the application of the net proceeds therefrom, (assuming the exercise
of all Class A Warrants and after deduction of estimated offering expenses) the
proforma net tangible book value as of such date would have been $40,965,124 or
approximately $4.73 per share. This represents an immediate increase to existing
shareholders in net tangible book value of approximately $1.65 per share and an
immediate dilution to new Shareholders of $3.77 per share. "Dilution" represents
the difference between the amount per share paid by purchasers in this Offering
and proforma net tangible book value per share of the Common Stock after this
Offering. The following table illustrates the dilution in net tangible book
value per share to new investors as of March 30, 1997.

<TABLE>
<CAPTION>
AMOUNT
------
<S> <C> <C>
Warrant exercise price...................................... $8.50
Net tangible book value before offering..................... $3.08
Increase in net tangible book value attributable to new
investors................................................. 1.65
-----
Proforma net tangible book value after offering............. 4.73
-----
Dilution in net tangible book value to new investors(1)..... $3.77
=====
</TABLE>

- -------------------------

(1) Does not give effect to the potential future issuance of (i) 230,000 shares
of Common Stock issuable at $9.10 per share upon exercise of the
Underwriter's Warrant granted to the underwriter of the Company's Initial
Public Offering; (ii) 900,000 shares of Common Stock reserved for issuance
under the Company's Stock Option and Compensation Plan, of which 819,500
have been granted and remain outstanding; and (iii) 75,000 shares of Common
Stock issuable upon exercise of Director's stock options.

11
<PAGE> 12

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company completed its IPO on October 21, 1996 by issuing units
consisting of one share of Common Stock and one Redeemable Class A Warrant for
$6.50 per unit. Since that date, such units have traded on the over-the-counter
market. The Company's Common Stock has traded on the Nasdaq SmallCap Market
since November 5, 1996. The Company's Units, Common Stock and Warrants are
quoted on the Nasdaq SmallCap Market under the symbol DAVEU, DAVE, and DAVEW,
respectively.

The following table summarizes the high and low sale prices per share of
the Common Stock for the periods indicated, as reported on the Nasdaq SmallCap
Market:

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year 1996
Fourth Quarter (from November 5, 1996)...................... $ 8.75 $6.75
Fiscal Year 1997
First Quarter............................................... 9.13 6.63
Second Quarter (through May 13, 1997)....................... 13.00 9.06
</TABLE>

On May 13, 1997, the last reported sale price for the Common Stock as
reported by Nasdaq was $12.50 per share. As of May 13, 1997, the Company has
approximately 230 record holders of Common Stock.

The Company has never declared or paid any cash dividends on its Common
Stock, and the Board of Directors presently intends to retain all earnings, if
any, for use in the Company's business for the foreseeable future. Any future
determination as to declaration and payment of dividends will be made at the
discretion of the Board of Directors.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 30, 1997, as adjusted to give effect to the exercise of all of the Class A
Warrants and the anticipated application by the Company of the net proceeds
therefrom. See the Consolidated Financial Statements and notes thereto appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF MARCH 30, 1997
-------------------------
AS
ACTUAL ADJUSTED(1)
------ -----------
<S> <C> <C>
Long-term debt, net of current portion...................... $ 702,649 $ 702,649
=========== ===========
Stockholders' equity:
Capital Stock, 100,000,000 shares authorized, 6,015,250
shares Common Stock issued and outstanding, 8,660,250
shares Common Stock as adjusted........................ 60,153 86,603
Additional paid-in capital................................ 19,600,375 42,006,425
Unrealized gain (loss) on securities available-for-sale... 5,500 5,500
Accumulated deficit....................................... (950,948) (950,948)
----------- -----------
Total stockholders' equity........................... 18,715,080 41,147,580
----------- -----------
Total capitalization................................. $19,417,729 $41,850,229
=========== ===========
</TABLE>

- -------------------------

(1) Does not include (i) 230,000 shares of Common Stock issuable at $9.10 per
share upon exercise of the Underwriter's Warrant granted to the underwriter
of the Company's Initial Public Offering; (ii) 900,000 shares of Common
Stock reserved for issuance under the Company's Stock Option and
Compensation Plan, of which 819,500 have been granted and remain
outstanding; and (iii) 75,000 shares of Common Stock issuable upon exercise
of Director's stock options.

12
<PAGE> 13

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Famous Dave's of America, Inc. (the "Company") develops, owns and operates
American roadhouse-style barbeque restaurants under the name "Famous Dave's".
The Company presently owns and operates four restaurants, one located in the
Linden Hills neighborhood of Minneapolis (the "Linden Hills Unit"), one in
Roseville, Minnesota (the "Roseville Unit"), one in Maple Grove, Minnesota and
the fourth in Calhoun Square in Minneapolis (the "Calhoun Blues Club"). The
Calhoun Blues Club features live blues music during certain evenings and an
authentic Chicago blues decor. The Company currently has five additional units
in development in the Minneapolis/St. Paul area, to be located in St. Paul,
Stillwater, Apple Valley, Forest Lake and Minnetonka, and two units in
development in Wisconsin, to be located in Madison and Grand Chute (Green
Bay/Appleton area). These seven additional units are expected to open before the
end of 1997.

Future revenues and profits, if any, will depend upon various factors,
including additional market acceptance of the Famous Dave's concept, the quality
of the restaurant operations, the ability to expand to multi-unit operations and
general economic conditions. The Company's present sources of revenue are
limited to existing operating units. There can be no assurances the Company will
successfully implement its expansion plans, in which case it will continue to be
dependent on the revenues from existing operating units. The Company also faces
all of the risks, expenses and difficulties frequently encountered in connection
with the expansion and development of an expanding business. Furthermore, to the
extent that the Company's expansion strategy is successful, it must manage the
transition to multiple site operations, higher volume operations, the control of
overhead expenses and the addition of necessary personnel.

Components of operating expenses include operating payroll and fringe
benefits, occupancy costs, repairs and maintenance, and advertising and
promotion. The majority of these costs are variable and will increase with sales
volume. Management projects that when a new Unit opens, it will incur higher
than normal levels of labor and food costs as Unit personnel complete training.
Management believes, however, that as new staff gain experience, food
preparation and serving procedures and hourly labor schedules over the ensuing
30-60 day period will be gradually adjusted to provide operating efficiencies
similar to those at existing operating units.

General, administrative and development expenses include all corporate and
administrative functions that serve to support existing operations and provide
an infrastructure to support future growth. Management, supervisory and staff
salaries, employee benefits, travel, recruiting, training, professional fees,
rent and office supplies are major items in this category. The Company expects
these costs to continue to grow during 1997.

At January 1, 1996, the Company elected a 52 or 53 week fiscal year ending
on the Sunday nearest December 31. Prior to January 1, 1996, the Company used a
fiscal year ending on December 31. Fiscal 1996 was a 52-week year.

13
<PAGE> 14

OPERATING RESULTS

The operating results of the Company expressed as percentage of net
revenues were as follows:

<TABLE>
<CAPTION>
YEAR ENDED THIRTEEN WEEKS ENDED
---------------------------- ----------------------
DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1995 1996 1996 1997
------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
Sales, Net....................................... 100.0 100.0 100.0 100.0
Costs and Expenses:
Food and Beverage Costs........................ 35.3 35.8 32.6 34.8
Labor and Benefits............................. 34.7 24.0 26.0 25.5
Restaurant Operating Expenses.................. 28.0 19.6 25.4 20.3
Depreciation and Amortization.................. 3.5 4.9 2.8 5.6
----- ----- ----- -----
Total Costs and Expenses......................... 101.5 84.3 86.8 86.2
----- ----- ----- -----
Income (Loss) from Restaurant Operations......... (1.5) 15.7 13.2 13.8
----- ----- ----- -----
Other Income (Expense):
General and Administrative..................... (62.0) (32.8) (98.4) (47.6)
Interest and Other Income (Expense), Net....... 0 2.2 (1.0) 6.2
----- ----- ----- -----
Total Other (Expense)............................ (62.0) (30.6) (99.4) (41.4)
----- ----- ----- -----
Net Loss......................................... (63.5) (14.9) (86.2) (27.6)
===== ===== ===== =====
</TABLE>

THIRTEEN WEEKS ENDED MARCH 30, 1997 COMPARED TO THIRTEEN WEEKS MARCH 31, 1996

NET SALES

Net sales for the thirteen weeks ended March 30, 1997 were $2,240,683
compared to $290,388 for the same period in 1996, a 671% increase. The increase
in sales is primarily due to the opening of the Roseville Unit in June 1996 and
the Calhoun Blues Club in September 1996.

FOOD AND BEVERAGE COSTS

Food and beverage costs for the thirteen weeks ended March 30, 1997 were
$780,026 or 34.8% of sales, compared to $94,743 or 32.6% of sales for the same
period in 1996. The increase in food and beverage costs as a percent of sales
for the thirteen weeks ended March 30, 1997 compared to 1996 was primarily due
to increased pork prices.

LABOR AND BENEFITS

Labor and benefits for the thirteen weeks ended March 30, 1997 were
$572,320 or 25.5% of sales, compared to $75,400 or 26% of sales for the same
period in 1996. The decrease in labor and benefits as a percent of sales for the
thirteen weeks ended March 30, 1997 compared to 1996 was primarily due to
improved operating efficiencies achieved.

RESTAURANT OPERATING EXPENSES

Restaurant operating expenses for the thirteen weeks ended March 30, 1997
were $455,838 or 20.3% of sales, compared to $73,902 or 25.4% of sales for the
same period in 1996. The increase in restaurant operating expenses is primarily
attributable to the opening of two restaurants in 1996. The decrease in
restaurant operating expenses as a percent of sales for the thirteen weeks ended
March 30, 1997 compared to 1996 was due to improved operating efficiencies
achieved and increased sales volume.

DEPRECIATION AND AMORTIZATION

Unit depreciation and amortization for the thirteen weeks ended March 30,
1997 increased to $123,732 or 5.6% of sales from $7,948 or 2.8% of sales during
the same period in 1996 due to the opening of the Roseville

14
<PAGE> 15

Unit and the Calhoun Blues Club. First quarter 1997 depreciation and
amortization includes approximately $50,000 (2.2% of sales) representing
amortization of pre-opening expenses related to the Roseville and Calhoun Units.

INCOME FROM RESTAURANT OPERATIONS

Income from restaurant operations totaled $308,767, or 13.8 percent of net
sales, for the thirteen weeks ended March 30, 1997, compared to $38,935, or 13.2
percent of net sales, in the corresponding period of 1996. The increase in
income from restaurant operations, both in amount and as a percent of sales, is
due to the increase in sales from additional units opened and the changes in
costs and expenses as discussed above.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the thirteen weeks ended March 30,
1997 were $1,067,010 or 47.6% of sales, compared to $285,947 or 98.4% of sales
for the same period in 1996. The increase in general and administrative expenses
is largely attributable to additional expenses incurred as the Company expands
its corporate and administrative infrastructure to support the development of
additional units. First quarter 1997 general and administrative expenses include
approximately $150,000 of non-recurring expenses, primarily relating to
recruiting costs; however, the Company expects overall general and
administrative expenses to continue to increase during the remainder of 1997.
The decrease in general and administrative expenses as a percent of sales for
the thirteen weeks ended March 30, 1997 compared to 1996 was primarily due to
increased sales volume and the resulting improved leveraging of the cost of
corporate and administrative infrastructure.

INTEREST AND OTHER INCOME (EXPENSE), NET

Interest and other income (expense), net primarily represents interest
income received from short-term investments offset by interest expense on
capital lease obligations. Interest and other income (expense), net increased to
$138,956 for the thirteen weeks ending March 30, 1997 from $(2,896) for the same
period in 1996. The increase was due primarily to interest income received from
the short-term investment of proceeds from the initial public offering in
October 1996.

NET LOSS/NET LOSS PER COMMON SHARE

Net Loss for the thirteen weeks ended March 30, 1997 was $619,287 or $.10
per share compared to a net loss of $250,448 or $.11 per share during the
comparable period in 1996. The increase in the net loss is primarily the result
of increased general and administrative expenses which reflect the building of
the infrastructure necessary to support plans for future growth, partially
offset by increased income from restaurant operations as a result of the two new
units opened during 1996. The decrease in net loss per common share relates
primarily to the increase in weighted average number of common shares
outstanding, which increased from 2,214,423 in first quarter 1996 to 6,217,422
in first quarter 1997.

FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995

Net Sales -- Net sales increased by $4,270,000 or 887% to $4,752,000 for
the year ended December 29, 1996 from $481,510 for the year ended December 31,
1995. The increase in sales was due to the Linden Hills Unit being open the
entire year in 1996, coupled with the opening of the Roseville Unit in June 1996
and the Calhoun Blues Club in September 1996. As a result of the recent Unit
openings, along with expected additional Unit openings in 1997, the Company
anticipates net sales and operating expenses to continue to increase during
fiscal 1997.

Food and beverage costs -- Food and beverage costs for fiscal 1996 were
$1,704,000 or 35.8% of net sales compared to $170,000 or 35.3% for fiscal 1995.
The increase in food and beverage costs as a percent of net sales was primarily
due to increased pork prices, particularly in the second half of fiscal 1996,
offset by reduced costs and expenses due to improved purchasing power.

15
<PAGE> 16

Labor and benefits -- Labor and benefits were $1,140,000 or 24% of net
sales in fiscal 1996 compared to $167,000 or 34.7% of net sales in fiscal 1995.
The reduction in labor and benefits as a percent of net sales from fiscal 1995
to fiscal 1996 was primarily due to improved labor management, operating
efficiencies and increased sales.

Restaurant operating expenses -- Restaurant operating expenses for fiscal
1996 were $930,000 or 19.6% of net sales compared to $135,000 or 28.0% of net
sales for fiscal 1995. The decrease in restaurant operating expenses as a
percent of sales in fiscal 1996 compared to fiscal 1995 is primarily due to
improved operating efficiencies and increased sales.

General, administrative and development expenses --General, administrative
and development expenses increased to $1,518,000 or 31.9% of net sales in fiscal
1996 from $298,000 or 62.0% of net sales in fiscal 1995. The increase in these
expenses is largely attributable to additional expenses incurred as the Company
increases its corporate and administrative infrastructure to support the
development of additional locations.

Although no assurances can be given, management believes that the current
level of sales, additional sales from new Units, trained workforce and general
operating environment will continue to improve total Unit-level income in future
periods.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Company has met its capital requirements through
revenues from operations, the sale of Common Stock to and borrowings from its
founder, David W. Anderson, the private placement of Common Stock, and the sale
of Common Stock and Warrants to the public.

During the period from March 14, 1994 (Inception) through December 31,
1995, the Company sold to Mr. Anderson 2,000,000 shares of Common Stock at $.50
per share. Pursuant to the subscription agreement relating to such purchase,
payments were made totaling $425,270 during 1994 and $574,730 during 1995.
Additionally, the Company entered into a revolving promissory note with Mr.
Anderson allowing for advances of up to $2,000,000. As of March 30, 1997 and
December 29, 1996, the Company had no outstanding advances under this agreement.

In July 1996, the Company completed a private placement of 1,356,250 shares
of Common Stock at $3.50 per share. The net proceeds to the Company were
approximately $4.1 million. Such proceeds have been, and will be, used for
additional unit development and working capital.

In October 1996, the Company completed the initial public offering of
2,645,000 Units at an offering price of $6.50 per Unit, including 345,000 Units
from the exercise of the Underwriter's overallotment option which occurred in
November 1996. The Company received net proceeds from the offering of
approximately $15.2 million after the payment of approximately $2.0 million in
related underwriting discount and offering costs. Each Unit consists of one
share of Common Stock and one Redeemable Class A Warrant. The Class A Warrants
have a four-year term and are exercisable at $8.50 per warrant. Each warrant
converts into one share of Common Stock and is redeemable by the Company upon 30
days notice in the event that the Common Stock averages above $10.20 for 10
trading days. This condition for possible redemption has been achieved. Upon
exercise, the warrants may provide for approximately $22 million in additional
proceeds.

For the year ended December 31, 1995, the Company used $227,000 in cash
flow for operating activities and during the fiscal year ended December 29,
1996, the Company used $597,000 in cash flow for operating activities.

Since Inception and through March 30, 1997, the Company's principal capital
requirements were the funding of (i) the development of the Company and the
Famous Dave's concept, (ii) the construction of the Linden Hills, Roseville and
Calhoun Units and the acquisition of the furniture, fixtures and equipment
therein, (iii) site acquisition and preopening costs, and (iv) the development
of additional units, including the Maple Grove Unit, as described below. Total
capital expenditures for the Linden Hills, Roseville and Calhoun Units were
approximately $425,000, $1,100,000 and $2,400,000, respectively.

16
<PAGE> 17

In November 1996, the Company purchased land in Maple Grove, MN upon which
to construct the Maple Grove unit which opened in April 1997. The total cost of
the land was approximately $810,000. Total capital expenditures for the Maple
Grove Unit, including furniture, fixtures and equipment and excluding land were
approximately $1,600,000. In addition, in December, 1996, the Company purchased
land in Stillwater, MN to construct an approximately 5,200 square foot unit that
is scheduled to open during third quarter 1997. The total cost of the land was
approximately $540,000 of which $150,000 was paid upon closing, with the balance
paid prior to the commencement of construction in April 1997.

In addition to construction in progress, as of March 30, 1997, the Company
capitalized approximately $248,000 of direct, pre-opening costs relating to the
Roseville and Calhoun Units and Units under construction. It is the Company's
policy to amortize the direct costs of hiring and training the initial work
force and other direct costs associated with opening a new Unit over a
twelve-month period, beginning when the facility is opened, if the
recoverability of such costs can be reasonably assured. Accordingly, initial
costs related to the Linden Hills Unit were expensed as incurred due to the
developmental nature of the Unit.

As of March 30, 1997, the Company held cash and short-term investments of
approximately $13.3 million compared to $14.3 million as of December 29, 1996.
As reflected in the accompanying consolidated financial statements, this
decrease in cash and short-term investments during the thirteen weeks ended
March 30, 1997 primarily represents cash flow used for (i) investing activities
(site acquisition, development and construction) and (ii) the expansion of the
Company's corporate infrastructure.

For the six units in development as of March 30, 1997 (Maple Grove, St.
Paul, Stillwater, Forest Lake, Minnetonka and Madison), the Company had incurred
approximately $2.4 million in property, site acquisition, development and
construction costs through March 30, 1997. The Company estimates that total
capital expenditures for these additional units, when completed, including
furniture, fixtures and equipment, will be approximately $9.8 million.

For the seven units currently in development (St. Paul, Stillwater, Apple
Valley, Forest Lake, Minnetonka, Madison and Grand Chute), the Company estimates
that total capital expenditures for these units when completed, including
furniture, fixtures and equipment, will be approximately $9.9 million. It is
expected that these units will be completed and opened in 1997.

It is anticipated that additional development and expansion will be funded
or financed primarily through cash and short-term investments currently held,
the sale of additional equity and debt securities (including the exercise of
Class A Warrants), and other forms of financing such as lease financing or other
credit facilities. There are no assurances that additional financing required
will be available on terms acceptable or favorable to the Company.

As of March 30, 1997, in addition to potential proceeds from the 2,645,000
Redeemable Class A Warrants outstanding, the Company had the following financing
and credit facilities available:

(a) Lease financing of up to $3,500,000 for furniture, fixtures,
equipment and leasehold improvements, of which approximately $970,000 had
been funded as of March 30, 1997.

(b) $1,000,000 revolving note with a bank due June 26, 1997, accruing
interest at the prime rate (effective rate of 8.50%) and secured by all the
assets of the Company and the personal guaranty of the Company's founding
shareholder, of which the balance outstanding at March 30, 1997 was $0.

(c) Revolving promissory note with its founding shareholder, with
interest at 8%, due on demand and allowing for advances of up to
$2,000,000, of which the balance outstanding at March 30, 1997 was $0.

INCOME TAXES

The Company paid no federal or state income taxes in 1994 or 1995. Prior to
March 1996, the Company was an S-Corporation. At December 29, 1996, the Company
had federal and state net operating loss carryforwards for tax reporting
purposes of approximately $330,000, which if not used will expire in 2011.
During the thirteen weeks ended March 30, 1997, an additional net operating loss
of approximately $620,000

17
<PAGE> 18

was generated which, if not used, will expire in 2012. Future changes in the
ownership of the Company may place limitations on the use of these net operating
loss carryforwards. The Company has recorded a full valuation allowance against
its deferred tax asset due to the uncertainty of realizing the related benefit.

QUARTERLY FLUCTUATIONS, SEASONALITY AND INFLATION

As a result of the relatively substantial revenues associated with each new
Unit, the timing of new Unit openings will result in significant fluctuations in
quarterly results. The Units may also have higher second or third quarter
revenues than the other two quarters as a result of seasonal traffic increases
experienced during the summer months.

The primary inflationary factors affecting the Company's operations include
food and beverage and labor costs. In addition, the Company's leases require the
Company to pay taxes, maintenance, repairs and utilities and these costs are
subject to inflationary increases.

The Company believes low inflation rates have contributed to relatively
stable costs. There is no assurance, however, that low inflation rates will
continue.

18
<PAGE> 19

BUSINESS

GENERAL

Famous Dave's of America, Inc. (the "Company") develops, owns and operates
American roadhouse-style barbeque restaurants under the name "Famous Dave's".
The Company presently owns and operates four restaurants, one located in the
Linden Hills neighborhood of Minneapolis (the "Linden Hills Unit"), one in
Roseville, Minnesota (the "Roseville Unit"), one in Maple Grove, Minnesota and
the fourth in Calhoun Square in Minneapolis (the "Calhoun Blues Club"). The
Calhoun Blues Club features live blues music during certain evenings and an
authentic Chicago blues decor. The Company currently has five additional units
in development in the Minneapolis/St. Paul area, to be located in St. Paul,
Stillwater, Apple Valley, Forest Lake and Minnetonka, and two units in
development in Wisconsin, to be located in Madison and Grand Chute (Green
Bay/Appleton area). These seven additional units are expected to open before the
end of 1997.

THE FAMOUS DAVE'S CONCEPT AND STRATEGY

The Company seeks to differentiate itself by providing high-quality food in
a theme-based environment. The key factors of the Company's market position and
operating strategy are as follows:

HIGH QUALITY FOOD

Each restaurant features an assortment of menu items, such as
hickory-smoked St. Louis-Style Spareribs, Texas Beef Brisket, Country Roasted
Chicken, and Barbeque Sandwiches, as well as honey-buttered corn bread, potato
salad, coleslaw, Shack Fries and Wilbur(TM) Beans. Homemade desserts, including
Famous Dave's Bread Pudding and Hot Fudge Kahlua(TM) Brownies, are a specialty.
The Company's Famous Dave's BBQ Sauces, which are provided in four regional
variations (Rich & Sassy(TM), Texas Pit(TM), Georgia Mustard(TM) and Hot
Stuff(TM)), represent signature items for the Company. All menu items are
prepared on-site using fresh, high quality ingredients and, except for the
Calhoun Blues Club, ordered at a counter and delivered to the customer's table.
Lunch and dinner entrees range in price from $6 to $17 and the average guest
check was approximately $10 for the fifty-two week period ending December 29,
1996. Management believes that its high quality food contributes to a
significant level of repeat business.

DISTINCTIVE ENVIRONMENT -- DECOR AND MUSIC

The Company's primary theme, a nostalgic roadhouse shack (the "Shacks"), is
promoted by the abundant use of rustic antiques and items of Americana from the
'30s and '40s. In addition, the Company has developed the large Calhoun Blues
Club, which has an authentic Chicago blues decor and features live music seven
nights a week.

The Shacks also include very upbeat, hand-selected, recorded blues music to
enhance the environment and add to the customer's experience.

BROAD-BASED APPEAL

Management believes that the Company's concept has broader appeal than
other theme-based restaurant concepts because it attracts customers of all ages.
The Company's distinctive concept, combined with high-quality food, make Famous
Dave's appealing to children, teenagers and adults.

19
<PAGE> 20

UNITS INCLUDE VARIETY OF LOCATIONS

Based on early research results, management believes that broad-based
appeal can be achieved with both high profile, "A" locations as well as less
popular "B" locations. In addition, the Company has determined that future units
will be developed primarily by the conversion of existing spaces (retrofit), due
to the high turnover of units in the casual dining segment of the restaurant
industry. This will provide the Company with the opportunity to develop units
more rapidly, at a lower cost, and result in a wide variety of "character" in
the units.

FRANCHISING/AREA DEVELOPMENT AGREEMENTS

The Company intends to expand its business through franchising. The Company
plans on selling individual franchises as well as area development rights to
franchisees who will develop and own multiple Famous Dave's. The Company is
presently in the process of complying with federal and state franchising laws
and expects to be able to sell franchises before the end of third quarter 1997.
The Company anticipates that potential franchisees will have experience in the
restaurant business and the financial capability to develop multiple stores. It
is anticipated that management will actively pursue franchising as part of the
expansion strategy in the coming months and years.

TAKE OUT COMPONENT

Take-out revenues as a percent of total unit revenues during fiscal 1996
averaged approximately 25%-30%. The Company is committed to this aspect of
customer service and believes there is opportunity to enhance this area.

FOCUS ON CUSTOMER SATISFACTION

The Company is committed to staffing each Unit with an experienced
management team and providing its customers with prompt, friendly and efficient
service. The Company recognizes that, in order to maintain a high level of
repeat customers and to attract new business through word of mouth, it must
provide superior customer service.

COMMITMENT TO ATTRACTING AND RETAINING QUALITY EMPLOYEES

By providing extensive training and attractive compensation, the Company
fosters a strong corporate culture and encourages a sense of personal commitment
from its employees. The Company believes its compensation structure and positive
corporate culture enable it to attract and retain quality employees. The Company
places particular emphasis on the hiring of the General Manager of each Unit,
focusing on experience and management skills.

UNIT ECONOMICS -- "SHACKS"

For the fifty-two week period ended December 29, 1996, the Linden Hills
Unit generated net revenues of approximately $1.7 million. This unit generated
operating income of $384,000 or 22.7% of unit revenues, and cash flow of
$420,000 or 24.8% of unit revenues, for the same period. Cash flow represents
the Unit's operating income before depreciation and amortization. Although cash
flow should not be considered an alternative to operating income as an indicator
of the Company's operating performance or an alternative to cash flow from
operating activities as a measure of liquidity, such flow is commonly used as an
additional measure of operating profitability in the restaurant and certain
other related industries. The Linden Hills Unit, a 2,900 square foot converted
gas station, was developed at a cost of approximately $425,000, including costs
related to converting to a restaurant and the furniture, fixtures and equipment.
Additionally, the Company incurred approximately $27,000 in pre-opening costs
and purchased approximately $8,000 of inventory. The Roseville Unit, a 4,800
square foot building which opened in June 1996, was developed at a cost of
approximately $1.1 million. Additionally, the Company incurred approximately
$37,000 in pre-opening costs and purchased approximately $14,000 of inventory.
The Roseville Unit generated net revenues of approximately $1.6 million while
operating in the 29 weeks ended December 29, 1996. For this period, this unit
generated operating

20
<PAGE> 21

income of $298,000 or 18.7% of unit revenues, and cash flow of $379,000 or 23.8%
of unit revenues. The Company expects that most of its future BBQ "shack" units
will be between 2,000 and 6,000 square feet and will cost between $1 million and
$2.5 million, including new construction (if applicable), building conversion
costs and furniture, fixtures and equipment. The Company expects that
pre-opening and inventory costs related to most of its future BBQ "shack" units
will be approximately $50,000 to $100,000 and $15,000, respectively.

BLUES CLUBS

The Company has developed an additional environment for rollout in major
metropolitan markets under the theme "BBQ and Blues" or Blues Club units. There
is currently one Blues Club unit open at Calhoun Square in Minneapolis, MN which
is 10,500 square feet with live music nightly and a full service restaurant and
bar. The menu for the Blues Club is very similar to that of the Shacks with some
additions, including appetizers. The strategy of the Company is to locate a
Blues Club in major metropolitan markets to serve as a flagship unit, with the
Shacks supporting the surrounding metropolitan area. The Shacks will remain the
primary growth vehicle for the Company's expansion and the Blues Club will
provide added strategic and marketing support where deemed appropriate by
management.

UNIT LOCATIONS

The following table sets forth certain information about the Company's
existing units and current planned unit locations (all locations except the
Calhoun Blues Club are BBQ "Shacks"):

<TABLE>
<CAPTION>
SQUARE INTERIOR DATE OPENED OR
LOCATION FOOTAGE SEATS PLANNED TO BE OPENED
-------- ------- -------- --------------------
<S> <C> <C> <C>
Linden Hills, Minneapolis, MN........ 2,900 50 June 1995
Roseville, MN........................ 4,800 100 June 1996
Calhoun Square, Minneapolis, MN...... 10,500 350 September 1996
Maple Grove, MN...................... 5,200 120 April 1997
Highland Park, St. Paul, MN.......... 5,200* 120* June 1997
Stillwater, MN....................... 5,200* 120* Third Quarter 1997
Madison, WI.......................... 4,800* 100* Third Quarter 1997
Apple Valley, MN..................... 3,800* 90* Third Quarter 1997
Appleton, WI......................... 2,900* 75* Third Quarter 1997
Minnetonka, MN....................... 6,000* 150* Fourth Quarter 1997
Forest Lake, MN...................... 4,500* 90* Fourth Quarter 1997
</TABLE>

- -------------------------

* Estimated

EXPANSION PLANS AND SITE SELECTION

The Company's site selection strategy is to locate its Units in a variety
of locations, from high-profile, heavy-traffic, "A" locations to less visible,
less traveled "B" locations. The primary focus will be on conversion of existing
businesses (retrofits) in sizes ranging from 2,000 to 6,000 square feet. The
Company believes that its format can be utilized in a wide variety of locations,
including free standing buildings, small inline malls, and airports.

21
<PAGE> 22

FAMOUS DAVE'S UNIT FEATURES

Existing Famous Dave's units enjoy a high level of repeat business and
customer diversity because of the Company's commitment to providing high quality
food and customer service in an exciting and entertaining environment. Features
of the Units are as follows:

Distinctive Roadhouse Decor

The Linden Hills, Roseville and Maple Grove Units are "real" barbeque
joints, reminiscent of the old country-style roadhouse barbeque "joints" that
dotted rural America 50 years ago. The Company's nostalgic roadside shack theme
is promoted by the use of antiques and items of Americana from the '30s and '40s
in a rustic environment. The weathered barn wood walls, cozy, antique-filled
Southern country shack decor, overhead tin roofing and blues music in the air
are intended to convey the feeling of a down-home backyard barbeque.

Each restaurant table is covered with a red and white checkered oilcloth
and features salt, pepper and barbeque sauces stored in a six-pack beer
container. A large roll of paper towels accompanies every meal.

The Blues Component

The roadhouse theme is further enhanced by the use of blues music which,
together with the restaurant's decor, provides an entertaining dining
environment. Each restaurant features taped blues music that contributes to the
roadhouse theme. Mr. Anderson's attention to detail includes personal selection
of all music that is played in the restaurants. In addition, the Company's
Calhoun Blues Club features live blues music with Big John Dickerson and Blue
Chamber (the "Blues Band") every Thursday, Friday and Saturday night. Live music
from other blues bands is performed the other four nights each week. The Company
has Blues Band music on CD's available for sale at each restaurant, which
provides additional marketing exposure for the Company.

The Menu

The Company's primary focus is its food. The Company's mission is to
deliver the best barbeque in America. Each restaurant features an assortment of
menu items, such as hickory-smoked St. Louis-Style Spareribs, Texas Beef
Brisket, Country Roasted Chicken, and Barbeque Sandwiches, as well as honey-
buttered corn bread, potato salad, coleslaw, Shack Fries and Wilbur(TM) Beans.
Homemade desserts, including Famous Dave's Bread Pudding and Hot Fudge
Kahlua(TM) Brownies, are a specialty. The Company's Famous Dave's BBQ Sauces,
which are provided in four regional variations (Rich & Sassy(TM), Texas Pit(TM),
Georgia Mustard(TM) and Hot Stuff(TM)), represent signature items for the
Company. The Company's Rich & Sassy(TM) Famous Dave's BBQ Sauce was awarded
first place in the mild tomato division of the 1995 Kansas City American Royal
Barbecue Sauce Contest.

Lunch entrees range from $6 to $8 and dinner entrees from $10 to $17. The
average guest check for the year ending December 29, 1996 was approximately $10
per person. Food portions are generous to increase the perceived value.
Management believes that the Company's food, together with each restaurant's
distinctive decor, have resulted in a high level of repeat business.

The Company intends to obtain a beer and wine license for most of its
restaurants, with the intention that such beverages will be served along with
meals. The Company does not intend to emphasize sales of beer and wine apart
from meals in most of its restaurants, primarily because the Company feels that
it reduces the number of table turns and therefore profitability. In addition to
a beer and wine license, the Company has obtained a liquor license for the
Calhoun Blues Club.

Food Preparation and Delivery

The Company believes that ease of food preparation and delivery is one key
to its success. While some restaurants require highly compensated and
extensively trained chefs, the food served at each restaurant is prepared in a
basic three-step process that requires minimal training time. Mr. Anderson has
developed prepared seasonings, sauces, bread mixes and other ingredients, which
allow each menu item to be served with minimal preparation. The Company views
this efficient and effective process as critical for its national expansion.

22
<PAGE> 23

Focus on Customer Satisfaction

The Company is committed to staffing each unit with an experienced
management team and providing its customers with prompt, friendly and efficient
service. The customer's experience is also enhanced by the attitude and
attention of restaurant personnel. The Company recognizes that, in order to
maintain a high level of repeat customers and to attract new business, it must
provide superior customer service.

Famous Dave's maintains a mission statement that its goal is to strive for
"delighted" guests rather than just "satisfied" guests. The Company believes
that a customer establishes his or her opinion within the first seven seconds.
To this end, the Company has focused its property development to maximize first
impressions of sight, smell, sound, and feel. The Company accomplishes this
through the wonderful smell of hickory-smoked barbeque, the lively sounds of
juke joint blues music, the colorful and nostalgic decor, and the varied
textures of rough cut pine, corrugated tin roofs, and antiques.

OPERATIONS, MANAGEMENT AND EMPLOYEES

The Company's ability to manage multi-location units will be central to its
overall success. The Company believes that its management must include skilled
personnel at all levels. The Company's senior management team includes
experienced personnel with extensive restaurant experience. See "Management." At
the unit level, the Company places specific emphasis on the position of general
manager and seeks employees with significant restaurant experience and
management expertise. The Company strives to maintain quality and consistency in
each of its units through the careful training and supervision of personnel and
the establishment of, and adherence to, high standards relating to personnel
performance, food and beverage preparation, and maintenance of facilities. The
Company believes that it has been able to attract high quality, experienced
restaurant and retail management and personnel with its competitive compensation
and bonus programs. Staffing levels vary according to the time of day and size
of the restaurant. In general, each "roadside shack" unit has between 30 and 50
employees.

All managers must complete a training program, during which they are
instructed in areas such as food quality and preparation, customer service, and
employee relations. The Company has also prepared operations manuals relating to
food and beverage quality and service standards. New staff members participate
in approximately three weeks of training under the close supervision of Company
management. Management strives to instill enthusiasm and dedication in its
employees, regularly solicits employee suggestions concerning Company
operations, and endeavors to be responsive to employees' concerns. In addition,
the Company has extensive and varied programs designed to recognize and reward
employees for superior performance. As of December 29, 1996, the Company had
approximately 270 employees, 60 of which were full-time. The Company believes
that its relationship with its employees is good.

PURCHASING

The Company strives to obtain consistent quality items at competitive
prices from reliable sources. Any discontinuance of such favorable pricing could
negatively impact the Company's purchasing abilities. In order to maximize
operating efficiencies and to provide the freshest ingredients for its food
products while obtaining the lowest possible prices for the required quality,
each unit's management team determines the daily quantities of food items needed
and orders such quantities from major suppliers which are then shipped directly
to the restaurants. The Company purchases perishable food products locally.

MANAGEMENT INFORMATION SYSTEMS/ACCOUNTING

The Company has developed management information systems that include a
computerized point-of-sale system which facilitates the movement of customer
orders between the customer areas and kitchen operations, processes cash and
credit card transactions, and provides management with revenue and other key
operating and financial information. Operating and financial data from the
point-of-sale system is transferred electronically to Company headquarters on a
daily basis. The point-of-sale system is accessed by service personnel who are
assigned individual identification keys. The Company also uses a computerized
time management system which tracks the time worked by each employee, allowing
management to gather labor data, schedule work hours and produce payroll
reports.

23
<PAGE> 24

The Company's automated unit-level point-of-sale, time management and
inventory management systems provide data for posting to the Company's general
ledger and to other accounting subsystems. The general ledger system provides
various management reports comparing current and prior operating results. The
results are reported to and reviewed with Company management by accounting
personnel. Such reporting includes (i) weekly reports of revenues, cost of
revenues and selected controllable unit expenses and (ii) detailed monthly unit
performance reports of revenues and expenses.

MARKETING AND PROMOTION; THE RIBMOBILE

To date, the Company has relied primarily upon advertising, publicity and
"word of mouth" advertising to attract customers to its restaurants. The Company
also utilizes distinctive exterior signage and off-site billboards. In addition,
the Company has attempted to create brand awareness in its "Famous Dave's" name
by offering items such as Famous Dave's BBQ sauces for retail sale at its
restaurants and in approximately 130 grocery stores in the Twin Cities area.
Management is in the process of completing a media plan which will include
radio, print and promotional aspects, and which will promote "Famous Dave's" as
Legendary Pit Bar-B-Que. In addition, the Company has committed resources to
promote and arrange corporate and other group catering events.

The Company utilizes the Famous Dave's Ribmobile to participate in local
rib festivals and barbeque contests. The Company currently participates in seven
or eight "ribfests" a year. The Company has found that such festivals and
contests result in favorable publicity.

TRADEMARKS

The Company's ability to successfully implement its Famous Dave's concept
will depend in part upon its ability to protect its trademarks. The Company has
filed trademark applications with the United States Patent and Trademark Office
to register the mark "Famous Dave's" and design. There can be no assurance that
the Company will be granted trademark registration for any or all of the
proposed uses in the Company's applications. In the event the Company's mark is
granted registration, there can be no assurance that the Company can protect
such mark and design against prior users in areas where the Company conducts
operations. There is no assurance that the Company will be able to prevent
competitors from using the same or similar marks, concepts or appearance. In
October 1996, the Company received correspondence alleging that the Company's
use of a pig and guitar design in connection with its BBQ & Blues concept (the
"Design") infringed an existing trademark. The Company does not believe the
Design infringes such other trademark and intends to vigorously defend its use
of the Design against the holder of such other trademark.

COMPETITION

The food service industry is intensely competitive with respect to food
quality, concept, location, service and price. In addition, there are many
well-established food service competitors with substantially greater financial
and other resources than the Company and with substantially longer operating
histories. The Company believes that it competes with other full-service dine-in
restaurants, take-out food service companies, fast-food restaurants,
delicatessens, cafeteria-style buffets, and prepared food stores, as well as
with supermarkets and convenience stores. Competitors include national,
regional, and local restaurants, purveyors of carryout food, and convenience
dining establishments.

Primary national and regional competitors of the Company include such other
"family-oriented" comparable restaurants as Applebee's, TGI Friday's, Chili's,
Ground Round, Bennigan's and barbeque-related restaurants such as Tony Roma's,
Red Hot & Blue, Damon's and Sonny's. The Company believes that it can
effectively compete in this market by offering superior food taste, an
attractive highly theme-based family atmosphere, and superior ambiance provided
by carefully chosen blues music and an "open kitchen" smell of real barbeque.

Competition in the food service business is often affected by changes in
consumer tastes, national, regional, and local economic and real estate
conditions, demographic trends, traffic patterns, the cost and availability of
labor, purchasing power, availability of product, and local competitive factors.
The Company

24
<PAGE> 25

attempts to manage or adapt to these factors, but it should be recognized that
some or all of these factors could cause the Company to be adversely affected.

In addition, to the extent that barbeque restaurants are frequently viewed
as "local", the Company may experience intense competition or lack of consumer
acceptance if it expands into areas with existing barbeque restaurants.

The performance of individual Units may also be affected by factors such as
traffic patterns, weather, demographic considerations, local economic
conditions, and the type, number and location of competing restaurants. In
addition, factors such as inflation, increased food, labor and employee benefit
costs, and the availability of experienced management and hourly employees may
also adversely affect restaurant and retail operating costs. Costs are further
affected by increases in the minimum hourly wage, unemployment tax rates,
workers' compensation insurance rates and similar matters over which the Company
has no control.

REGULATION

Restaurants are subject to licensing and regulation by state and local
health, sanitation, safety, fire, and other authorities and are also subject to
state and local licensing and regulation of the sale of alcoholic beverages and
food. Difficulties in obtaining or failure to obtain required licenses and
approvals will result in delays in, or cancellation of, the opening of
restaurants. The food and liquor licenses are also subject to suspension or
non-renewal if the granting authority determines that the conduct of the holder
does not meet the standards for initial grant or renewal. The Company believes
that it is in compliance with all licensing and other regulations.

The Federal Americans With Disabilities Act prohibits discrimination on the
basis of disability in public accommodations and employment. The Company could
be required to expend funds to modify its restaurants in order to provide
service to or make reasonable accommodations for disabled persons. The Company's
restaurants are currently designed to be accessible to the disabled. The Company
believes it is in substantial compliance with all current applicable regulations
relating to accommodations for the disabled.

PROPERTY

The Company intends to lease or purchase facilities for each of its Units,
with leasing being the primary form of real estate acquisition. The Company has
entered into four lease or sublease agreements with S & D Land Holdings, Inc.
("S&D"), a Minnesota corporation wholly-owned by David W. Anderson, the
Company's Chairman and Chief Executive Officer, pursuant to the following terms:

1. Linden Hills. The Linden Hills unit contains approximately 2,900 square feet
of restaurant space, including the patio area. The site is subject to a
lease from S&D effective January 1, 1996 for a 10-year term with base rent
of $48,800 per year with annual increases based upon increases in the
consumer price index ("CPI"). The Company also has the right to extend the
term for two five-year periods. In addition to base rent, the Company is
responsible for the payment of all operating costs and real estate taxes.

2. Roseville. S&D is the tenant under an Agreement of Lease and Agreement
concerning Sublease (collectively, "Lease"). S&D has subleased the Roseville
site to the Company effective January 1, 1996 for $82,200 per year with
annual increases based upon increases in the CPI. The initial term under the
Sublease is seven years. The Company has the right to extend the term for an
additional five-year period. Should the Company so elect to extend, the
Company is obligated to pay percentage rent of 1% of gross sales as
additional rent. The improvements located on the site may revert to the
landlord at the termination of the Sublease. Assignment or subletting of any
interest in the Sublease requires the prior written approval of the
landlord. In addition to base rent and percentage rent, the Company is
responsible for the payment of operating costs and real estate taxes.

3. Minnetonka. The Minnetonka site is a former restaurant located on
approximately 2.3 acres of land. The Minnetonka site has been leased
effective July 1, 1997 from S&D for a 10-year term with base rent of
$124,129 per year with annual increases based upon increases in the CPI. The
Company has the right to

25
<PAGE> 26

extend the term for two five-year periods. In addition to base rent, the
company is responsible for the payment of all operating costs and real
estate taxes.

4. Highland Park. The Highland Park site contains approximately 2.3 acres of
vacant land and has been leased from S&D effective June 1, 1997 for a
10-year term with base rent of $44,900 per year with annual increases based
upon increases in the CPI. The Company also has the right to extend the term
for two five-year periods. The lease allows the Company to develop the site
as a restaurant at the Company's cost and with the prior written consent of
S&D. In addition to base rent, the Company is responsible for the payment of
its pro-rata share of operating costs and real estate taxes.

The above-mentioned leases are non-cancelable by the Company. The Company
or a subsidiary also has entered into leases or subleases for the following
properties:

5. Calhoun Square. Lake and Hennepin BBQ & Blues, Inc., a wholly-owned
subsidiary of the Company ("LHBB") has entered into a lease for the Calhoun
Square site with Calhoun Square Associates dated January 5, 1996. The lease
runs for a term of 15 years and LHBB has the right to extend the term for
two five-year periods. LHBB is obligated to pay base rent plus percentage
rent of 5% of gross sales, as defined. In addition to base rent and
percentage rent, the Company is responsible for the payment of its pro-rata
share of operating costs and real estate taxes.

6. Forest Lake. The Forest Lake site is located on approximately 57,900 square
feet of vacant land. The Forest Lake site has been leased since February 21,
1997 for a 15-year term with base rent of $69,480 per year with annual
increases based upon increases in the CPI. The Company has the right to
extend the term for two 5-year periods. In addition to base rent, the
Company is responsible for the payment of all operating costs and real
estate taxes.

7. Madison, Wisconsin. The Madison, Wisconsin site is a former restaurant
located on approximately 30,000 square feet of land. The Madison site has
been leased since March 19, 1997 for a 10-year term with base rent of
$48,000 with an increase after year five to $52,800. The Company has the
right to extend the term for two 5-year periods. The Company also has the
option to purchase the site after the initial ten-year term. In addition to
base rent, the Company is responsible for the payment of all operating costs
and real estate taxes.

8. Corporate Office. The Company has assumed a lease effective as of August 31,
1996 for 7,800 square feet of office/warehouse space at 12700 Industrial
Park Boulevard in Plymouth, Minnesota. The lease terminates on August 31,
1998.

9. Warehouse Space. The Company leased 6,000 square feet of warehouse space in
Plymouth, Minnesota in April 1997. The lease terminates in April 2000

In addition, the Company has acquired land in Maple Grove and Stillwater,
Minnesota to construct two units and purchased buildings in Apple Valley,
Minnesota and Grand Chute, Wisconsin (Green Bay/Appleton area) to convert into
two units. The Maple Grove property is approximately 2 acres which cost
approximately $810,000 and was acquired in November 1996. The Stillwater
property is approximately 2.3 acres which cost approximately $540,000 and was
acquired in December 1996. The Apple Valley property is a 3,800 square foot
former restaurant which cost approximately $525,000 and was acquired in April
1997. The Grand Chute property is a 2,900 square foot former restaurant on 1
acre of land which cost approximately $375,000 and was acquired in April 1997.

LEGAL PROCEEDINGS

Three former employees of the Company have threatened to bring legal claims
against the Company and a former manager, alleging sexual harassment and other
actionable conduct. The Company is currently investigating these claims. At this
time, management is unable to state with any degree of certainty the likelihood
of an unfavorable outcome and the range of loss, if any.

26
<PAGE> 27

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David W. Anderson.................... 43 Chairman of the Board
Douglas S. Lanham.................... 48 Director, Chief Executive Officer and Chief Operating
Officer
Mark A. Payne........................ 37 President, Secretary and Treasurer
Stanley R. Herman.................... 42 Executive Vice President, Strategic Planning and
Marketing
Steven E. Opdahl..................... 33 Vice President-Finance, Chief Financial Officer and
Assistant Secretary
Thomas J. Brosig..................... 47 Director
Richard L. Monfort................... 42 Director
Martin J. O'Dowd..................... 48 Director
</TABLE>

David W. Anderson was the founder of the Company and has been the Chairman
of the Board since its formation. Mr. Anderson was also Chief Executive Officer
of the Company until April 1, 1997. Mr. Anderson is also a founder of Rainforest
Cafe, Inc. In October 1990, Mr. Anderson co-founded Grand Casinos, Inc. and
through March 1996 served as a director and Executive Vice President of that
company.

Douglas S. Lanham joined the Company as President, Chief Operating Officer
and a director in January 1997. On April 1, 1997 Mr. Lanham assumed the title of
Chief Executive Officer and Chief Operating Officer. Mr. Lanham is a 25-year
veteran of full-service casual dining, including positions at Steak & Ale,
Bennigan's, Grady's American Grill and Chili's. At varying times from 1984 to
1996, Mr. Lanham held positions as a Chili's franchisee and a Senior Vice
President for Brinker International.

Mark A. Payne has been President of the Company since April 1, 1997. Mr.
Payne served as Vice President, Chief Financial Officer, Secretary and Treasurer
from August 1996 through March 1997. Previously, and since August 1995, he was
Senior Vice President, Business Development and Acquisitions of ValueVision
International, Inc., a television home shopping network. Prior to that and since
December 1990, he served as Vice President, Finance and Chief Financial Officer
at ValueVision.

Stanley R. Herman joined the Company as Executive Vice President, Strategic
Planning and Marketing in January 1997. Mr. Herman has over 20 years of
marketing experience, most recently as Partner and President of Growth Resources
International from 1993 to 1996 and in the same positions at Herman Mancino from
1986 to 1993. Both firms provided marketing consulting services to a wide range
of companies both domestically and internationally.

Steven E. Opdahl has been Vice President-Finance and Chief Financial
Officer of the Company since April 1, 1997. Mr. Opdahl joined the Company in
March 1997 with 11 years of financial experience. From May 1994 to March 1997,
Mr. Opdahl served in a variety of finance management positions with Honeywell,
both domestically and internationally, most recently as Middle East Area Finance
Manager. From May 1986 to April 1994, Mr. Opdahl was at Arthur Anderson & Co.
where he provided financial accounting audit and consulting services to a wide
variety of clients, serving as a manager for four of those years.

Martin J. O'Dowd has been a director of the Company since August 1996. From
May 1995 through April 1997, Mr. O'Dowd served as President and Chief Operating
Officer of Rainforest Cafe, Inc. From July 1987 to May 1995, Mr. O'Dowd was
Corporate Director, Food and Beverage Services, for Holiday Inn Worldwide. From
August 1985 to July 1987, Mr. O'Dowd was Vice President and General Operations
Manager for the Hard Rock Cafe in New York. Mr. O'Dowd is also a director of
Elephant & Castle Group, Inc.

27
<PAGE> 28

Thomas J. Brosig has been a Director of the Company since August 1996. Mr.
Brosig has served as President of Grand Casinos, Inc. since September 1996. From
August 1994 to that time, he served as its Executive Vice President -- Investor
Relations and Special Projects. From its inception until May 1995, Mr. Brosig
served as Secretary of Grand Casinos, Inc., and served as its President from May
1993 until August 1994. Mr. Brosig also served as Grand Casinos, Inc.'s Chief
Operating Officer from October 1991 until May 1993, and as its Chief Financial
Officer from its inception until January 1992. Mr. Brosig is also a director of
G-III Apparel Group Ltd., a manufacturer and distributor of leather apparel.

Richard L. Monfort became a director of the Company in December 1996. From
1990 to 1995, Mr. Monfort served as the President of the red meats division of
Conagra, which division had $8 billion in sales of beef and pork annually. From
September 1995 to the present, Mr. Monfort has been engaged in the management of
various private business and investment interests, including acting as managing
partner of the Hyatt Grand Champion Hotel (Palm Springs, California), owner of
the Hilltop Steakhouse (Boston, Massachusetts), and partner in the Montera
Cattle Company. Mr. Monfort is also a director of Electronic Fabrication
Technology Corporation (Greeley, Colorado), a producer of circuit boards and
other components for computer manufacturers.

EXECUTIVE COMPENSATION

The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by its Chairman of the Board
and Chief Executive Officer. Mr. David W. Anderson was Chief Executive Officer
of the Company through March 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------
OTHER ANNUAL
SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)
--------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
David W. Anderson......................................... 1996 $78,680 $0 $16,320
Chairman of the Board 1995 0 0 --
1994 0 0 --
</TABLE>

EMPLOYMENT AGREEMENTS

David W. Anderson, Chairman of the Board, has a two-year employment
agreement that expires on March 4, 1998. It is subject to early termination for
variety of reasons, including voluntary termination by Mr. Anderson. Mr.
Anderson's base salary is $100,000 per year for the first year of the agreement.
Such base salary may be adjusted annually as determined by the Company's Board
of Directors. Such agreement also provides that Mr. Anderson will receive six
months' severance if terminated by the Company for a reason other than "cause,"
as defined therein. Mr. Anderson receives medical, dental and other customary
benefits. The employment agreement provides that Mr. Anderson will not compete
with the Company for two years if he resigns or is terminated for cause.

Douglas S. Lanham, Chief Executive Officer and Chief Operating Officer, has
a four-year employment agreement with the Company which expires on January 31,
2001, subject to early termination for a variety of reasons. Mr. Lanham will
receive a base salary of $225,000 during the first year of employment. The base
salary will be adjusted annually to reflect, at a minimum, increases in the
consumer price index. Mr. Lanham will be eligible to receive an annual bonus in
the amount of up to 40% of his base salary, including a minimum of 20% of his
base salary for the first year only of the employment agreement. Such agreement
provides that Mr. Lanham will receive one year's severance if terminated by the
Company for a reason other than "cause" or if Mr. Lanham resigns for "good
reason," as defined therein, except that if Mr. Lanham resigns for any reason
between the sixth and 12th month of the agreement, he shall continue to receive
his base salary for the remainder of the calendar year or for three months, if
greater. Mr. Lanham also receives medical, dental and

28
<PAGE> 29

other customary benefits. The employment agreement provides that Mr. Lanham will
not compete with the Company for two years if he resigns or is terminated for
cause.

Mark A. Payne, President, Treasurer and Secretary, has a three-year
employment agreement which expires on August 12, 1999, subject to early
termination for a variety of reasons. Mr. Payne will receive a base salary of
$125,000 during his first year of employment. Such base salary is subject to
annual adjustment as may be determined by the Company's Board of Directors. Mr.
Payne is eligible to receive annual bonuses at the discretion of the Board of
Directors. Such agreement also provides that Mr. Payne will receive six months'
severance if terminated by the Company for a reason other than "cause," as
defined therein, within the first year of his employment and 12 months'
severance if terminated by the Company for a reason other than cause after the
first year of employment. Mr. Payne also receives medical, dental and other
customary benefits. The employment agreement provides that Mr. Payne will not
compete with the Company for two years if he resigns or is terminated for cause.

Stanley R. Herman, Executive Vice President of Strategic Planning and
Marketing, has a three-year employment agreement which expires on January 2,
2000, subject to early termination for a variety of reasons. Mr. Herman will
receive a base salary of $125,000 during the first year of employment and such
subsequent amounts as may be determined by the Company's Board of Directors. Mr.
Herman will receive a $25,000 bonus upon completion of a long-term strategic
business plan that has been approved by the Board of Directors, and is eligible
to receive an annual bonus of up to 25% of his base salary. Such agreement
provides that Mr. Herman will receive six months' severance if terminated by the
Company for a reason other than "cause." Mr. Herman also receives medical,
dental and other customary benefits. The employment agreement provides that Mr.
Herman will not compete with the Company for two years if he resigns or is
terminated for cause.

The Company intends to retain other management employees pursuant to
employment and consulting agreements. The Company intends to offer stock options
to such employees.

DIRECTOR COMPENSATION

Directors receive no fees for serving as directors. The Company's three
non-management directors, Messrs. Brosig, Monfort and O'Dowd, each received
ten-year options to purchase 25,000 shares of common stock when they became
members of the Board in 1996. One-third of the options vest on each of the
first, second and third anniversaries of the date of grant. The options granted
to Messrs. Brosig and O'Dowd have an exercise price of $4.33 a share and the
options granted to Mr. Monfort have an exercise price of $6.75 a share. Members
of the Board who are also employees of the Company receive no options for their
services as directors.

CERTAIN TRANSACTIONS

On January 1, 1996, the Company transferred the real estate, excluding
improvements, of its Linden Hills restaurant and the site of the proposed
restaurant in the Highland Park area of St. Paul, Minnesota to David W.
Anderson, Chairman and Chief Executive Officer of the Company, in exchange for
amounts due to Mr. Anderson and assumption of bank debt totaling $781,023. These
properties were transferred to Mr. Anderson at the Company's cost which, due to
the short amount of time which elapsed between the transfer and the Company's
original acquisition, the Company believes approximated the fair market values
of the real estate exchanged. Mr. Anderson concurrently transferred the real
estate to S&D Land Holdings, Inc. ("S&D"), a Minnesota company wholly owned by
Mr. Anderson, and entered into leases with the Company for such real estate. The
Company also leases the Roseville restaurant and the real estate for the
Minnetonka restaurant from S&D. The Company does not currently intend to enter
into any additional leases with S&D.

During 1996, S&D agreed to an abatement of rent in favor of the Company
under the leases relating to the Minnetonka and Highland Park units in the
amounts of $118,956 and $44,900, respectively.

The Company has a $2,000,000 revolving note with David W. Anderson. The
note bears interest at 8%, is unsecured and is due on demand. There were no
outstanding balances on the note at March 30, 1997.

29
<PAGE> 30

Pursuant to a license and trademark agreement between the Company and Grand
Pines Resorts, Inc. a Minnesota corporation wholly-owned by David W. Anderson
("Grand Pines"), the Company licenses its trademarks and recipes to Grand Pines
in exchange for a four per cent royalty fee on gross food sales. Also, pursuant
to a management agreement between the Company and Grand Pines, the Company has
agreed to provide certain management services relative to a restaurant operated
by Grand Pines in Hayward, Wisconsin in exchange for a fee of three per cent of
gross food sales.

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of May 13, 1997 by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director, (iii) each executive officer named
in the Summary Compensation Table, and (iv) all executive officers and directors
as a group. Unless otherwise indicated, each of the following persons has sole
voting and investment power with respect to the shares of Common Stock set forth
opposite their respective names.

<TABLE>
<CAPTION>
PERCENT OF CLASS
----------------------
BEFORE AFTER
NAME OF BENEFICIAL OWNER NUMBER OFFERING OFFERING(1)
------------------------ ------ -------- -----------
<S> <C> <C> <C>
David W. Anderson(2)........................................ 1,781,000(3) 29.6 20.5
Douglas S. Lanham........................................... 63,700(4) 1.0 *
Thomas J. Brosig............................................ 20,000(5) * *
Richard L. Monfort.......................................... 0 -- --
Martin J. O'Dowd............................................ 16,000 * *
Okabena Investment Services, Inc(6)......................... 632,750(7) 10.5 7.3
All executive officers and directors as a group
(eight persons)........................................... 1,905,700(8) 31.6 22.0
</TABLE>

- -------------------------

* Less than 1%.

(1) Assuming all of the Class A Warrants are exercised.

(2) The address of such person is 12700 Industrial Park Boulevard, Suite 60,
Plymouth, Minnesota 55441.

(3) Includes 100,000 shares owned by Grand Pines Resorts, Inc., a corporation
wholly-owned by Mr. Anderson. Mr. Anderson disclaims beneficial ownership of
such shares.

(4) Includes 50,000 shares issuable upon exercise of options exercisable within
60 days.

(5) Includes 5,000 shares issuable upon exercise of options exercisable within
60 days.

(6) The address of such person is 5140 Norwest Center, 90 South Seventh Street,
Minneapolis, MN 55402.

(7) Based on a Schedule 13D filed with the Securities and Exchange Commission on
October 30, 1996. Includes 602,750 shares beneficially owned by Okabena
Partnership K and 20,000 shares beneficially owned by Okabena Partnership L,
as to both of which Okabena Investment Services, Inc. ("OIS") is the
managing partner. Also includes 10,000 shares beneficially owned by Gary S.
Kohler, Vice President of OIS and the portfolio manager for Okabena
Partnership K.

(8) Includes 80,000 shares issuable upon exercise of options exercisable within
60 days.

30
<PAGE> 31

DESCRIPTION OF SECURITIES

CAPITAL STOCK

The Company's authorized capital stock consists of 100,000,000 undesignated
shares, $.01 par value per share in the case of Common Stock, and a par value as
determined by the Board of Directors in the case of Preferred Stock. If all of
the Class A Warrants are exercised, there will be issued and outstanding
8,669,250 shares of Common Stock

COMMON STOCK

There are no preemptive, subscription, conversion or redemption rights
pertaining to the Common Stock. The absence of preemptive rights could result in
a dilution of the interest of existing shareholders should additional shares of
Common Stock be issued. Holders of the Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of assets legally
available therefor, and to share ratably in the assets of the Company available
upon liquidation.

Each share of Common Stock is entitled to one vote for all purposes and
cumulative voting is not permitted in the election of directors. Accordingly,
the holders of more than 50% of all of the outstanding shares of Common Stock
can elect all of the directors. Significant corporate transactions such as
amendments to the articles of incorporation, mergers, sales of assets and
dissolution or liquidation require approval by the affirmative vote of the
majority of the outstanding shares of Common Stock. Other matters to be voted
upon by the holders of Common Stock normally require the affirmative vote of a
majority of the shares present at the particular shareholders' meeting. The
Company's directors and officers as a group beneficially own approximately 32%
of the outstanding Common Stock of the Company. If all of the Warrants are
exercised, such persons will beneficially own approximately 22% of the
outstanding shares. See "Principal Shareholders." Accordingly, such persons will
continue to be able to substantially control the Company's affairs, including,
without limitation, the sale of equity or debt securities of the Company, the
appointment of officers, the determination of officers' compensation and the
determination whether to cause a registration statement to be filed.

The rights of holders of the shares of Common Stock may become subject in
the future to prior and superior rights and preferences in the event the Board
of Directors establishes one or more additional classes of Common Stock, or one
or more additional series of Preferred Stock. The Board of Directors has no
present plan to establish any such additional class or series.

CLASS A WARRANTS

The Class A Warrants have been issued under and are governed by the
provisions of a Warrant Agreement (the "Warrant Agreement") between the Company
and Firstar Trust Company, Milwaukee, Minnesota, as Warrant Agent (the "Warrant
Agent"). The following summary of the Warrant Agreement is not complete, and is
qualified in its entirety by reference to the Warrant Agreement, a copy of which
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part.

One Class A Warrant entitles the holder ("Warrantholder") thereof to
purchase one share of Common Stock until October 21, 2000, subject to earlier
redemption, provided that at such time a current prospectus relating to the
shares of Common Stock issuable upon exercise of the Class A Warrants is in
effect and the issuance of such shares is qualified for sale or exempt from
qualification under applicable state securities laws. Each Class A Warrant will
be exercisable at an exercise price of $8.50 per warrant, subject to adjustment
in certain events.

The Class A Warrants are subject to redemption by the Company on not less
than 30 days written notice, at a price of $.01 per warrant provided that a
current prospectus covering the shares issuable upon the exercise of the Class A
Warrants is then effective under federal securities laws. Holders of Class A
Warrants will automatically forfeit all rights thereunder except the right to
receive the $.01 redemption price per warrant unless the Class A Warrants are
exercised before they are redeemed.

31
<PAGE> 32

The Warrantholders are not entitled to vote, receive dividends, or exercise
any of the rights of holders of shares of Common Stock for any purpose. The
Class A Warrants are in registered form and may be presented for transfer,
exchange or exercise at the office of the Warrant Agent.

The Warrant Agreement provides for adjustment of the exercise price and the
number of shares of Common Stock purchasable upon exercise of the Class A
Warrants to protect Warrantholders against dilution in certain events, including
stock dividends, stock splits, reclassification, and any combination of Common
Stock, or the merger, consolidation, or disposition of substantially all the
assets of the Company.

The Class A Warrants may be exercised upon surrender of the certificate
therefor on or prior to the expiration date (or earlier redemption date) at the
offices of the Warrant Agent, with the form of "Election to Purchase" on the
reverse side of the certificate properly completed and executed as indicated,
accompanied by payment of the full exercise price (by certified or cashier's
check payable to the order of the Company) for the number of Class A Warrants
being exercised.

SHARES ELIGIBLE FOR FUTURE SALE

If all of the Class A Warrants are exercised there will be 8,669,250 shares
of Common Stock issued and outstanding. The existing 2,668,000 publicly-held
shares, as well as the shares issuable upon exercise of the Class A Warrants
will be freely tradeable without registration or other restriction under the
Act, except for any shares purchased by an "affiliate" of the Company (as
defined in the Act).

The remaining 3,356,250 shares were issued in reliance upon the "private
placement" exemptions provided by the Act and are deemed restricted securities
within the meaning of Rule 144 ("Restricted Shares"). Restricted Shares may not
be sold unless they are registered under the Act or are sold pursuant to an
applicable exemption from registration, including an exemption under Rule 144.
It is expected that 1,356,250 Restricted Shares, which were sold in July 1996 in
a private placement pursuant to Rules 505 and 506 of Regulation D, will become
eligible for sale in July 1997, assuming all of the other requirements of Rule
144 have been satisfied. In addition, the Company has agreed to file a
registration statement relating to these shares one year following the Effective
Date, provided that the Company is then eligible to use Form S-3. In connection
with the IPO, certain officers and directors of the Company escrowed a portion
of their shares until October 1999 or until (i) the Company meets certain
earnings requirements established by the State of Minnesota, or (ii) the State
of Minnesota determines that the escrow agreement is no longer necessary. A
total of 2,028,000 shares of Common Stock are subject to escrow.

In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) including persons deemed to be affiliates, whose
restricted securities have been fully paid for and held for at least one year
from the later of the date of issuance by the Company or acquisition from an
affiliate, may sell such securities in broker's transactions or directly to
market makers, provided that the number of shares sold in any three month period
may not exceed the greater of 1% of the then-outstanding shares of Common Stock
or the average weekly trading volume of the shares of Common Stock in the
over-the-counter market during the four calendar weeks preceding the sale. Sales
under Rule 144 are also subject to certain notice requirements and the
availability of current public information about the Company. After two years
have elapsed from the later of the issuance of restricted securities by the
Company or their acquisition from an affiliate, such securities may be sold
without limitation by persons who are not affiliates under the rule.

The Company has registered 750,000 shares of Common Stock that are reserved
for issuance under employee and director stock option plans. See "Management."
Shares issued upon exercise of outstanding options would generally be eligible
for immediate resale in the public market, subject to vesting under the
applicable option agreements.

Following this Offering, the Company cannot predict the effect, if any,
that sales of the Common Stock or the availability of such Common Stock for sale
will have on the market price prevailing from time to time. Nevertheless, sales
by existing shareholders of substantial amounts of Common Stock could adversely
affect prevailing market prices for the Common Stock if and when a public market
exists. David W. Anderson, Chairman and Chief Executive Officer of the Company,
has agreed that he will not sell, grant any option for

32
<PAGE> 33

the sale of, or otherwise dispose of any shares of Common Stock until October
21, 1997 without the prior written consent of the Underwriter of the IPO.

MINNESOTA ANTI-TAKEOVER LAW

The Company is governed by the provisions of Sections 302A.671 and 302A.673
of the Minnesota Business Corporation Act. In general, Section 302A.671 provides
that the shares of a corporation acquired in a "control share acquisition" have
no voting rights unless voting rights are approved in a prescribed manner. A
"control share acquisition" is an acquisition, directly or indirectly, of
beneficial ownership of shares that would, when added to all other shares
beneficially owned by the acquiring person, entitle the acquiring person to have
voting power of 20% or more in the election of directors. In general, Section
302A.673 prohibits a publicly-held Minnesota corporation from engaging in a
"business combination" with an "interested shareholder" for a period of four
years after the date of the transaction in which the person became an interested
shareholder, unless the business combination is approved in a prescribed manner.
"Business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested shareholder. An "interested
shareholder" is a person who is the beneficial owner, directly or indirectly, of
10% or more of the corporation's voting stock or who is an affiliate or
associate of the corporation and at any time within four years prior to the date
in question was the beneficial owner, directly or indirectly, of 10% or more of
the corporation's voting stock.

TRANSFER AGENT AND REGISTRAR

Firstar Trust Company is the transfer agent and registrar for the Common
Stock, the Class A Warrants and the Units.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for the
Company by Maslon Edelman Borman & Brand, a Professional Limited Liability
Partnership, Minneapolis, Minnesota.

EXPERTS

The financial statements for the periods ended December 29, 1996 and
December 31, 1995 included herein have been audited by Lund Koehler Cox &
Company, PLLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report.

ADDITIONAL INFORMATION

This Prospectus is part of a Registration Statement on Form SB-2 (together
with all amendments and exhibits thereto, the "Registration Statement") which
has been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act, relating to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to herein are
not necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.

The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such reports, proxy and information statements
and other information filed by the Company as well as the Registration Statement
and Exhibits may be inspected

33
<PAGE> 34

and copied at the public reference facilities of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as at the
following Regional Offices: 7 World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street -- Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Commission by
mail at prescribed rates. Requests should be directed to the Commission's Public
Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549. In addition, the Commission maintains a Web site that
contains reports, proxy and information regarding registrants, such as the
Company, that file electronically with the Commission. The address of this Web
site is: http://www.sec.gov.

34
<PAGE> 35

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Financial Statements:
Balance Sheets............................................ F-3
Statements of Operations.................................. F-4
Statements of Shareholder's Equity........................ F-5
Statements of Cash Flows.................................. F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE> 36

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Famous Dave's of America, Inc.:

We have audited the accompanying consolidated balance sheets of Famous
Dave's of America, Inc. and Subsidiaries as of December 29, 1996 and December
31, 1995 and the related consolidated statements of operations, shareholders'
equity and cash flows for the years then ended. The consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Famous
Dave's of America, Inc. and Subsidiaries as of December 29, 1996 and December
31, 1995 and the results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.

LUND KOEHLER COX & COMPANY, PLLP

Minneapolis, Minnesota
January 27, 1997

F-2
<PAGE> 37

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29, MARCH 30,
1995 1996 1997
------------ ------------ ---------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 100,297 $ 4,906,640 $ 3,432,261
Securities available-for-sale........................ 0 9,417,188 9,837,197
Inventories.......................................... 10,921 166,594 185,562
Prepaids and other current assets.................... 69,176 577,590 581,714
---------- ----------- -----------
Total current assets.............................. 180,394 15,068,012 14,036,734
---------- ----------- -----------
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET.... 1,203,265 5,837,844 5,891,608
---------- ----------- -----------
OTHER ASSETS:
Construction in progress............................. 73,487 192,131 1,061,042
Pre-opening expenses, net............................ 0 159,292 117,917
Other................................................ 0 63,180 64,539
---------- ----------- -----------
Total other assets................................ 73,487 414,603 1,243,498
---------- ----------- -----------
$1,457,146 $21,320,459 $21,171,840
========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................................... $ 109,974 $ 445,910 $ 859,624
Notes payable........................................ 623,869 473,044 390,580
Current portion of capital lease obligations......... 0 162,261 162,262
Other current liabilities............................ 29,493 194,430 341,645
---------- ----------- -----------
Total current liabilities......................... 763,336 1,275,645 1,754,111
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION...... 0 741,797 702,649
---------- ----------- -----------
Total liabilities................................. 763,336 2,017,442 2,456,760
---------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares
authorized, 2,000,000, 6,001,250, and 6,015,250
shares issued and outstanding..................... 20,000 60,013 60,153
Additional paid-in capital........................... 980,000 19,586,515 19,600,375
Unrealized gain (loss) on securities
available-for-sale................................ 0 (11,850) 5,500
Accumulated deficit.................................. (306,190) (331,661) (950,948)
---------- ----------- -----------
Total shareholders' equity........................ 693,810 19,303,017 18,715,080
---------- ----------- -----------
$1,457,146 $21,320,459 $21,171,840
========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 38

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 39

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
UNREALIZED GAIN
COMMON STOCK ADDITIONAL STOCK (LOSS) ON
------------------- PAID-IN SUBSCRIPTION SECURITIES ACCUMULATED
SHARES AMOUNT CAPITAL RECEIVABLE AVAILABLE-FOR-SALE DEFICIT TOTAL
------ ------ ---------- ------------ ------------------ ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE -- DECEMBER 31,
1994.................. 2,000,000 $20,000 $ 980,000 $(574,730) $ 0 $ 0 $ 425,270
Payments received on
stock
subscription........ -- -- -- 574,730 -- -- 574,730
Net loss.............. -- -- -- -- -- (306,190) (306,190)
--------- ------- ----------- --------- -------- --------- -----------
BALANCE -- DECEMBER 31,
1995.................. 2,000,000 20,000 980,000 0 0 (306,190) 693,810
Termination of S
Corporation
status.............. -- -- (681,127) -- -- 681,127 0
Private placement of
common stock at
$3.50 per share, net
of issuance costs... 1,356,250 13,563 4,125,153 -- -- -- 4,138,716
Initial public
offering of common
stock at $6.50 per
share, net of
issuance costs...... 2,645,000 26,450 15,162,489 -- -- -- 15,188,939
Change in unrealized
gain (loss) on
securities
available-for-
sale................ -- -- -- -- (11,850) -- (11,850)
Net loss.............. -- -- -- -- -- (706,598) (706,598)
--------- ------- ----------- --------- -------- --------- -----------
BALANCE -- DECEMBER 29,
1996.................. 6,001,250 60,013 19,586,515 0 (11,850) (331,661) 19,303,017
Exercise of stock
options............. 14,000 140 13,860 -- -- -- 14,000
Change in unrealized
gain (loss) on
securities
available-for-
sale................ -- -- -- -- 17,350 -- 17,350
Net loss.............. -- -- -- -- -- (619,287) (619,287)
--------- ------- ----------- --------- -------- --------- -----------
BALANCE -- MARCH 30,
1997 (UNAUDITED)...... 6,015,250 $60,153 $19,600,375 $ 0 $ 5,500 $(950,948) $18,715,080
========= ======= =========== ========= ======== ========= ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 40

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED THIRTEEN WEEKS ENDED
--------------------------- -------------------------
DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1995 1996 1996 1997
------------ ------------ --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................... $ (306,190) $ (706,598) $(250,448) $ (619,287)
Adjustments to reconcile net loss to cash
flows from operating activities:
Depreciation and amortization............ 17,009 273,152 7,948 157,166
Changes in working capital items --
Inventories.............................. (10,921) (155,673) (6,433) (18,968)
Prepaids and other current assets........ (66,434) (508,414) (56,459) (4,124)
Accounts payable......................... 109,974 335,936 213,823 413,714
Other current liabilities................ 29,493 164,937 71,869 147,215
---------- ------------ --------- -----------
Cash flows from operating activities... (227,069) (596,660) (19,700) 75,716
---------- ------------ --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, equipment and
leasehold improvements................... (808,369) (4,241,596) (115,770) (154,174)
Increase in construction in progress........ (73,487) (118,644) (421,318) (868,911)
Net increase in available-for-sale
securities............................... 0 (9,429,038) 0 (402,659)
Purchase of intangibles..................... 0 (63,180) 0 (8,753)
Payment of pre-opening expenses............. 0 (247,978) (7,180) (7,987)
---------- ------------ --------- -----------
Cash flows from investing activities..... (881,856) (14,100,436) (544,268) (1,442,484)
---------- ------------ --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from private placement of stock,
net of issuance costs.................... 0 4,138,716 0 0
Proceeds from initial public offering, net
of issuance costs........................ 0 15,188,939 0 0
Payments on capital lease obligations....... 0 (64,741) 0 (39,147)
Advances on note payable -- stockholder,
net...................................... 276,046 240,525 493,407 0
Proceeds from exercise of stock options..... 0 0 0 14,000
Payments on mortgage note payable --
contract for deed........................ 0 0 0 (82,464)
Proceeds from mortgage note payable --
bank..................................... 375,000 0 0 0
Payments on mortgage note payable -- bank... (27,177) 0 0 0
Payments received on stock subscription..... 574,730 0 0 0
---------- ------------ --------- -----------
Cash flows from financing activities..... 1,198,599 19,503,439 493,407 (107,611)
---------- ------------ --------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................. 89,674 4,806,343 (70,561) (1,474,379)
CASH AND CASH EQUIVALENTS, BEGINNING.......... 10,623 100,297 100,297 4,906,640
---------- ------------ --------- -----------
CASH AND CASH EQUIVALENTS, ENDING............. $ 100,297 $ 4,906,640 $ 29,736 $ 3,432,261
========== ============ ========= ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 41

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 29, 1996 AND DECEMBER 31, 1995
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS -- Famous Dave's of America, Inc. (the Company) was
incorporated in the State of Minnesota on March 14, 1994. The Company develops,
owns and operates American roadhouse style barbeque restaurants (the Units)
under the name "Famous Dave's". As of December 29, 1996 and March 30, 1997, the
Company owned and operated three restaurants; one located in the Linden Hills
neighborhood of Minneapolis, one in Roseville, Minnesota and the third in
Calhoun Square in Minneapolis. As of March 30, 1997, the Company had five units
in development in the Minneapolis/St. Paul area and one in Madison, Wisconsin.
During April 1997, the Company opened one of these units in Maple Grove,
Minnesota.

UNAUDITED INTERIM FINANCIAL INFORMATION -- The financial statements as of
March 30, 1997 and for the thirteen weeks ended March 30, 1997 and March 31,
1996 are unaudited, but include all adjustments (consisting of normal recurring
adjustments) which management considers necessary for a fair presentation.

PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of Famous Dave's of America, Inc. and its wholly owned
subsidiaries Lake & Hennepin BBQ and Blues, Inc. and D&D of Minnesota, Inc. Lake
& Hennepin BBQ and Blues, Inc. and D&D of Minnesota, Inc. had no operating
activity through March 30, 1997. All significant intercompany transactions and
balances have been eliminated in consolidation.

FISCAL YEAR -- Beginning January 1, 1996, the Company adopted a 52/53 week
accounting period ending on the Sunday nearest December 31 of each year. Fiscal
year 1996 was a 52 week year. Prior periods using a calendar year end have not
been restated for comparative purposes as the differences are immaterial.

CASH AND CASH EQUIVALENTS -- The Company includes as cash equivalents
certificates of deposit and all other investments with original maturities of
three months or less when purchased which are readily convertible into known
amounts of cash.

INVENTORIES -- Inventories consist principally of food, beverages and
retail goods and are recorded at the lower of cost (first-in, first-out) or
market.

DEPRECIATION -- Property, equipment and leasehold improvements are recorded
at cost. Improvements are capitalized while repair and maintenance costs are
charged to operations when incurred. Furniture, fixtures and equipment are
depreciated using the straight-line method over five to seven years. Leasehold
improvements are amortized using the straight-line method over the shorter of
their estimated useful lives or the lease term including option periods.

PRE-OPENING EXPENSES -- It is the Company's policy to capitalize the direct
and incremental costs associated with opening a new Unit which consist primarily
of hiring and training the initial workforce and other direct costs. These costs
are amortized over the first twelve months of the Unit's operations if the
recoverability of such costs can be reasonably assured. Expenses incurred prior
to opening the Company's first Unit were charged to operations when incurred due
to the developmental nature of the Unit.

MUSIC PRODUCTION COSTS -- In accordance with Statement of Financial
Accounting Standards No. 50 "Financial Reporting in the Record and Music
Industry", the Company has expensed all amounts related to music production
costs in the period incurred.

RIB PROMOTIONAL ACTIVITY -- The Company incurs expenses for participation
in rib festivals and other events and records these expenses in the period
incurred, net of any related revenues generated by the activity.

INCOME TAXES -- Through March 3, 1996 the Company, with the consent of its
then sole shareholder, had elected under the Internal Revenue Code to be an S
Corporation. In lieu of corporation income taxes, a

F-7
<PAGE> 42

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

shareholder of an S Corporation is taxed on his proportionate share of the
company's taxable income. See Note 11.

RECENTLY ISSUED ACCOUNTING STANDARD -- During 1996 the Company adopted
Financial Accounting Standards Board Statement No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived-Assets to be Disposed Of"
(Statement 121). Statement 121 establishes accounting standards for the
recognition and measurement of impairment of long-lived assets, certain
identifiable intangibles, and goodwill either to be held or disposed of. The
adoption of Statement 121 did not have an impact on the Company's financial
position or results of operations.

MANAGEMENT'S USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

NET LOSS PER COMMON SHARE -- Net loss per common share is computed by
dividing net loss by the weighted average number of common shares outstanding
and dilutive common equivalent shares assumed to be outstanding during each
period. Common equivalent shares consist of dilutive options to purchase common
stock. However, pursuant to certain rules of the Securities and Exchange
Commission, the calculation also includes equity securities, including options
and warrants, issued within one year of an initial public offering with an issue
price less than the initial public offering price, even if the effect is
anti-dilutive. The treasury stock method was used in determining the dilutive
effect of such issuances.

RECLASSIFICATIONS -- Certain amounts in the 1995 consolidated financial
statements have been reclassified to conform to the 1996 presentation. These
reclassifications had no effect on net loss or shareholders' equity for the year
ended December 31, 1995.

(2) SECURITIES AVAILABLE-FOR-SALE

The Company classifies all investments which are not cash equivalents as
securities available-for-sale with all gross unrealized gains or losses included
as a separate component of shareholders' equity. There were unrealized gains
(losses) of $5,500 and ($11,850) at March 30, 1997 and December 29, 1996.

Securities available-for-sale at March 30, 1997 and December 29, 1996
consisted of commercial paper and corporate and government securities, are
reported at fair value and are due within one year of the financial statement
date.

(3) INVENTORIES

Inventories consisted of the following at:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29, MARCH 30,
1995 1996 1997
------------ ------------ ---------
<S> <C> <C> <C>
Food and beverage........................... $ 4,950 $ 43,898 $ 48,700
Retail goods................................ 5,971 122,696 136,862
------- -------- --------
$10,921 $166,594 $185,562
======= ======== ========
</TABLE>

F-8
<PAGE> 43

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(4) PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements consisted of the following
at:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29, MARCH 30,
1995 1996 1997
------------ ------------ ---------
<S> <C> <C> <C>
Land, buildings and improvements.......... $1,066,447 $4,477,754 $4,504,751
Furniture, fixtures and equipment......... 153,827 1,182,323 1,246,416
Portable kitchen equipment................ 0 141,126 166,336
Antiques.................................. 0 232,232 272,103
Less: accumulated depreciation............ (17,009) (197,591) (297,998)
---------- ---------- ----------
$1,203,265 $5,837,844 $5,891,608
========== ========== ==========
</TABLE>

(5) CONSTRUCTION IN PROGRESS

Construction in progress consists of direct and indirect costs related to
the Company's uncompleted development of its additional Units. Total costs
incurred were $1,061,042, $192,131 and $73,487 as of March 30, 1997, December
29, 1996 and December 31, 1995.

(6) NOTES PAYABLE

MORTGAGE NOTE PAYABLE -- CONTRACT FOR DEED -- The Company has a mortgage
note payable of $292,254 as of March 30, 1997 accruing interest at 9% quarterly
and secured by land. The principal balance was paid in full in April 1997.

NOTE PAYABLE -- SHAREHOLDER -- The Company has a $2,000,000 revolving note
with its majority shareholder. The note bears interest at 8%, is unsecured and
is due on demand. Outstanding balances on the note were $83,371 and $276,046 at
December 29, 1996 and December 31, 1995.

MORTGAGE NOTE PAYABLE -- BANK -- The Company had a mortgage note maturing
September 1996, accruing interest at 1% over the prime rate (effective rate of
9.75%) and secured by a real estate mortgage on the site of its proposed St.
Paul, Minnesota Unit. The balance outstanding at December 31, 1995 was $347,823.
This note was assumed by S&D Land Holdings, Inc. on January 1, 1996 (see Note
7).

NOTE PAYABLE -- BANK -- The Company has a $1,000,000 revolving note due
June 26, 1997, accruing interest at the prime rate (effective rate of 8.50%),
and secured by all the assets of the Company and the personal guaranty of the
Company's majority shareholder. There were no outstanding balances at March 30,
1997, December 29, 1996 and December 31, 1995.

(7) RELATED PARTY TRANSACTIONS

S&D LAND HOLDINGS, INC. -- On January 1, 1996, the Company transferred the
real estate, excluding improvements, of its Linden Hills Unit and the site of a
proposed Unit in St. Paul, Minnesota to its majority shareholder in exchange for
amounts due to the shareholder and assumption of bank debt (see Note 6) totaling
$781,023. The Company recognized no gain or loss on the transactions and
believes the exchange prices approximated the fair market values of the real
estate exchanged. The shareholder concurrently transferred the real estate to
S&D Land Holdings, Inc. (S&D), a company wholly owned by the majority
shareholder, and entered into leases with the Company for the real estate (see
Note 13). At March 30, 1997 and December 29, 1996, the Company owed S&D $91,938
and $48,337.

GRAND PINES RESORTS, INC. -- Grand Pines Resorts, Inc. (Grand Pines), is a
company wholly owned by the majority shareholder of the Company. The Company
charges Grand Pines a royalty of 4% of its food sales. Royalty income was
$10,648 for the thirteen weeks ended March 30, 1997 and $48,619 and $33,646 for
the

F-9
<PAGE> 44

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

years ended December 29, 1996 and December 31, 1995. The Company also provides
certain management services to Grand Pines for 3% (4% in 1995) of its food
sales. Management fee income was $7,986 for the thirteen weeks ended March 30,
1997 and $38,284 and $33,646 for the years ended December 29, 1996 and December
31, 1995. At March 30, 1997 and December 29, 1996, Grand Pines owed the Company
$238,736 and $214,549 for royalties, management services and other expenses.

(8) CAPITAL LEASE OBLIGATIONS

The Company leases certain equipment under agreements that expire through
June 2001. Interest is provided for at rates of approximately 11% to 17%. The
obligations are secured by the equipment under lease. Total cost and accumulated
depreciation of the leased equipment is $968,799 and $76,814 at December 29,
1996.

Future minimum lease payments as of December 29, 1996 are as follows for
the fiscal years ending:

<TABLE>
<S> <C>
1997........................................................ $ 254,026
1998........................................................ 254,026
1999........................................................ 253,314
2000........................................................ 245,492
2001........................................................ 156,356
----------
Total....................................................... 1,163,214
Less: amount representing interest.......................... 259,156
----------
Present value of future minimum lease payments.............. 904,058
Less: current portion....................................... 162,261
----------
Obligations under capital leases, net of current portion.... $ 741,797
==========
</TABLE>

(9) SHAREHOLDERS' EQUITY

STOCK SPLIT -- On June 11, 1996, the Company declared a 2,000-for-1 stock
split. The stock split has been retroactively reflected in the accompanying
consolidated financial statements.

PRIVATE PLACEMENT OF COMMON STOCK -- During July 1996, the Company sold
1,356,250 shares of its common stock in a private placement for $3.50 per share
and received net proceeds of approximately $4,100,000.

INITIAL PUBLIC OFFERING -- During October and November 1996, the Company
sold, in an initial public offering, 2,645,000 units consisting of one share of
common stock and one Redeemable Class A Warrant for $6.50 per unit. Class A
Warrants entitle the holder to purchase one share of common stock. Net proceeds
to the Company totaled approximately $15,200,000.

(10) STOCK OPTIONS

STOCK OPTION PLAN -- The Company adopted a Stock Option and Compensation
Plan (the "Plan") in 1995, pursuant to which options and other awards to acquire
an aggregate of 900,000 shares of the Company's common stock may be granted.
Stock options, stock appreciation rights, restricted stock, other stock and cash
awards may be granted under the Plan. In general, options vest over a period of
five years and expire ten years from the date of grant. In addition, the Company
has granted certain stock options outside of the Plan.

The Company applies APB Opinion 25 "Accounting for Stock Issued to
Employees" and related Interpretations in accounting for its stock options.
Accordingly, no compensation cost has been recognized for its stock options. Had
compensation cost for the Company's stock options been determined based on the
fair

F-10
<PAGE> 45

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

value at the grant dates consistent with the method of Statement of Financial
Accounting Standards No. 123 "Accounting for Stock Based Compensation"
(Statement 123), the Company's net loss would have been increased to the
proforma amounts indicated below:

<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Net loss:
As reported.......................................... $306,190 $706,598
Pro forma............................................ $306,738 $866,644
Earnings per share:
As reported.......................................... $ (0.14) $ (0.21)
Pro forma............................................ $ (0.14) $ (0.26)
</TABLE>

Information regarding the Company's stock options is summarized below:

<TABLE>
<CAPTION>
1995 1996
--------------------------- ---------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------ -------------- ------ --------------
<S> <C> <C> <C> <C>
Options outstanding, beginning of year........ 0 $0.00 150,000 $1.00
Granted..................................... 150,000 1.00 365,000 5.10
Canceled.................................... 0 0.00 0 0.00
Exercised................................... 0 0.00 0 0.00
------- ----- ------- -----
Options outstanding, end of year.............. 150,000 $1.00 515,000 $3.90
======= ===== ======= =====
Options exercisable, end of year.............. 0 $0.00 55,000 $2.51
======= ===== ======= =====
Weighted average fair value of options
granted..................................... $0.44 $3.85
===== =====
</TABLE>

Of the 365,000 stock options granted during 1996, 75,000, with exercise
prices ranging from $4.33 to $6.75 per share, were granted outside of the Plan.

Options outstanding at December 29, 1996 have an exercise price ranging
between $1.00 and $7.00 and a weighted average remaining contractual life of
9.47 years.

In determining the compensation cost of the options granted during 1996 and
1995, as specified by Statement 123, the fair value of each option grant has
been estimated on the date of grant using the Black-Scholes option pricing model
and the weighted average assumptions used in these calculations are summarized
below:

<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Risk free interest rate.................................. 7% 7%
Expected life of options granted......................... 10 years 10 years
Expected volatility of options granted................... 0.0% 34.3%
</TABLE>

(11) INCOME TAXES

The Company was an S Corporation through March 3, 1996 and incurred losses
totaling $681,127. Accordingly, these losses have been recognized by the
Company's majority stockholder on his personal tax return. These losses have
been reclassed to additional paid-in capital during 1996.

From March 4, 1996 through December 29, 1996 the Company generated a net
operating loss of approximately $330,000 which, if not used, will expire in
2011. During the thirteen weeks ended March 30, 1997, an additional net
operating loss of approximately $620,000 was generated which, if not used, will
expire

F-11
<PAGE> 46

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

in 2012. Future changes in the ownership of the Company may place limitations on
the use of this net operating loss carryforward. The Company has recorded a full
valuation allowance against its deferred tax asset due to the uncertainty of
realizing the related benefit.

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 1996
------------ ------------
<S> <C> <C>
Net operating loss carryforward............................. $0 $ 133,000
Valuation allowance......................................... 0 (133,000)
-- ---------
Net deferred taxes........................................ $0 $ 0
== =========
</TABLE>

(12) SUPPLEMENTAL CASH FLOWS INFORMATION

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29, MARCH 30,
1995 1996 1996
------------ ------------ ---------
<S> <C> <C> <C>
Cash paid for interest..................................... $9,067 $ 90,675 $32,375
====== ======== =======
Non cash investing and financing activities:
Equipment purchased under capital lease obligations........ $0 $968,799 $ 0
====== ======== =======
Change in unrealized loss on securities
available-for-sale....................................... $0 $ 11,850 $17,350
====== ======== =======
Purchase of land with contract for deed.................... $0 $389,673 $ 0
====== ======== =======
Real estate exchanged to retire debt....................... $0 $781,023 $ 0
====== ======== =======
</TABLE>

(13) COMMITMENTS AND CONTINGENCIES

OPERATING LEASES -- As of December 29, 1996, the Company has entered into
various operating leases as follows:

LEASES WITH S&D LAND HOLDINGS, INC. -- The Company leases the real estate
for certain of its current or proposed Units from S&D Land Holdings, Inc., a
company wholly owned by the Company's majority stockholder. Each lease generally
has a ten-year term with two five-year options to extend and requires the
payment of base rent plus the payment of real estate taxes and operating
expenses as follows:

Linden Hills Unit -- Base rent of $48,800 per year payable monthly,
adjusted annually for inflation. Expires in 2005 with two five-year
extensions available.

Roseville Unit -- Base rent of $82,200 per year payable monthly, adjusted
annually for inflation. Expires in 2003 with one five-year extension
available.

Proposed St. Paul, Minnesota Unit -- Base rent of $44,900 per year payable
monthly effective June 1, 1997, adjusted annually for inflation. Expires in
2005 with two five-year extensions available.

Proposed Minnetonka, Minnesota Unit -- Base rent of $124,129 per year
payable monthly effective July 1, 1997, adjusted annually for inflation.
Expires in 2005 with two five-year extensions available.

CORPORATE OFFICE -- The Company has a lease for its corporate office space
that expires in 1998. Base rent is $3,951 per month. The Company also is
required to pay its pro rata share of real estate taxes and operating expenses.

CALHOUN SQUARE UNIT -- The Company leases space for its Calhoun Square Unit
under a lease that expires in 2011, but may be terminated at the Company's
election after the first five years. The lease requires initial base rent of
$159,516 per year payable monthly, plus a percentage rent of 5% of annual gross
sales in excess of $3,129,320, payable annually. The Company has the right to
extend the term for two five-year

F-12
<PAGE> 47

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

periods. In addition to the base and percentage rents, the lease requires the
Company to pay real estate taxes and operating expenses.

Future minimum rental payments (excluding percentage rents) as of December
29, 1996, for the operating leases described above are as follows for the fiscal
years ending:

<TABLE>
<S> <C>
1997........................................................ $ 506,957
1998........................................................ 491,153
1999........................................................ 459,545
2000........................................................ 459,545
2001........................................................ 379,787
Thereafter.................................................. 987,766
----------
Total.................................................. $3,284,753
==========
</TABLE>

Rent expense was $128,162 for the thirteen weeks ended March 30, 1997 and
$232,456 and $4,650 for the years ended December 29, 1996 and December 31, 1995.

EMPLOYMENT AGREEMENTS -- As of March 30, 1997 the Company has employment
agreements with four of its officers. The agreements require minimum annual
compensation of $100,000 to $225,000 and have terms of two to four years. All of
the contracts require at least six months' severance payments with a resulting
one to two year non-compete with one of the contracts requiring up to twelve
months' severance.

CONCENTRATION OF CREDIT RISK -- The Company maintains cash accounts with
various financial institutions. The balances at times may exceed federally
insured limits.

(14) SUBSEQUENT EVENTS (UNAUDITED)

STOCK OPTIONS -- Subsequent to December 29, 1996, the Company granted
407,000 stock options, cancelled 18,500 stock options, and issued 9,000 new
shares of Common Stock upon exercise of 9,000 options in accordance with the
provisions of the Stock Option and Compensation Plan. The options were granted
at prices ranging from $6.63 to $8.63 per share, which was the fair value of the
stock at the date of grants. The options vest over five years from the date of
grant.

F-13
<PAGE> 48

======================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.

---------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 6
Use of Proceeds........................ 10
Dilution............................... 11
Price Range of Common Stock and
Dividend Policy...................... 12
Capitalization......................... 12
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 13
Business............................... 19
Management............................. 27
Certain Transactions................... 29
Principal Shareholders................. 30
Description of Securities.............. 31
Legal Matters.......................... 33
Experts................................ 33
Additional Information................. 33
Index to Consolidated Financial
Statements........................... F-1
</TABLE>

------------------------------------------------------

======================================================
------------------------------------------------------

2,645,000 SHARES

FAMOUS DAVE'S LOGO
COMMON STOCK
------------------------------

PROSPECTUS
------------------------------
MAY 15, 1997

======================================================
<PAGE> 49

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company is governed by Minnesota Statutes Chapter 302A. Minnesota
Statutes Section 302A.521 provides that a corporation shall indemnify any person
made or threatened to be made a party to any proceeding by reason of the former
or present official capacity of such person against judgments, penalties, fines,
including, without limitation, excise taxes assessed against such person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorney's fees and disbursements, incurred by such person in
connection with the proceeding, if, with respect to the acts or omissions of
such person complained of in the proceeding, such person has not been
indemnified by another organization or employee benefit plan for the same
expenses with respect to the same acts or omissions; acted in good faith;
received no improper personal benefit and Section 302A.255, if applicable, has
been satisfied; in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and in the case of acts or omissions by
persons in their official capacity for the corporation, reasonably believed that
the conduct was in the best interests of the corporation, or in the case of acts
or omissions by persons in their capacity for other organizations, reasonably
believed that the conduct was not opposed to the best interests of the
corporation.

As permitted by Section 302A.251 of the Minnesota Statutes, the Articles of
Incorporation of the Company provide that a director shall have no personal
liability to the Company and its shareholders for breach of his fiduciary duty
as a director, to the fullest extent permitted by law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with the issuance and distribution of
the Shares registered hereby are set forth in the following table:

<TABLE>
<S> <C>
Legal fees and expenses..................................... 15,000
Accounting fees and expenses................................ 10,000
Transfer agent fees and expenses............................ 1,000
Printing and engraving expenses............................. 15,000
Miscellaneous............................................... 9,000
-------
Total..................................................... $50,000
=======
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

In connection with the formation of the Company in March, 1994, the Company
issued 2,000,000 shares of Common Stock to David W. Anderson, Chairman and Chief
Executive Officer, for an aggregate of $1,000,000. The Company believes that
such sale of securities was exempt from registration pursuant to Section 4(2) of
the Securities Act as an isolated sale to an "Accredited Investor" as defined in
Regulation D of the Securities Act of 1933, as amended (the "Securities Act").
In connection with additional capitalization of the Company on July 29, 1996,
the Company sold and issued an aggregate of 1,356,250 shares of Common Stock to
certain "Accredited Investors" for a total aggregate consideration of
$4,746,875. R.J. Steichen & Co., Inc., the Underwriter, was involved in such
offering and received Agent's commissions totaling $427,219 pursuant to such
offering. The Company believes that each and every such sale and issuance of
such securities was made to an "Accredited Investor" on the basis of
representations made in writing to the Company by each purchaser prior to such
sale and thus was exempt from registration pursuant to Section 4(2) of the
Securities Act and Rule 506 promulgated thereunder.

II-1
<PAGE> 50

ITEM 27. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
1.1 Form of Underwriting Agreement*
1.2 Form of Underwriter's Warrant*
3.1 Articles of Incorporation*
3.2 By-laws*
3.3 Amendment to Articles of Incorporation dated May 31, 1996
increasing the number of authorized shares**
4 Warrant Agreement dated
5 Opinion of Maslon Edelman Borman & Brand, a Professional
Limited Liability Partnership*
10.1 Lease Agreement by and between S&D Land Holdings, Inc., and
Famous Dave's of Minneapolis, Inc. as of January 1, 1996
(Linden Hills)*
10.2 Lease Agreement by and between S&D Land Holdings, Inc., and
Famous Dave's of Minneapolis, Inc. as of January 1, 1996
(Highland Park)*
10.3 Lease Agreement by and between S&D Land Holdings, Inc., and
Famous Dave's of Minneapolis, Inc. as of January 15, 1996
(Minnetonka)*
10.4 Sublease Agreement by and between S&D Land Holdings, Inc.,
and Famous Dave's of Minneapolis, Inc. as of January 1, 1996
(Roseville)*
10.5 Lease Agreement by and between Calhoun Square Associates
Limited Partnership and Lake & Hennepin BBQ and Blues, Inc.
dated January 4, 1996, as amended on March 26, 1996 and as
further amended on July 15, 1996 (Calhoun Square)**
10.6 Assignment and Assumption of Lease Agreement by and between
Innovative Gaming, Inc., Carlson Real Estate Company, and
Famous Dave's of America, Inc. as of May 13, 1996 and Side
Agreement dated May 16, 1996 between Innovative Gaming, Inc.
and Famous Dave's of America, Inc. (corporate headquarters)*
10.7 Company's 1995 Stock Option and Compensation Plan*
10.8 Employment Agreement between the Company and David W.
Anderson dated as of March 4, 1996*
10.9 Employment Agreement between the Company and William L. Timm
dated as of March 4, 1996*
10.10 Employment Agreement between the Company and Mark A. Payne
dated as of August 12, 1996*
10.11 Trademark License Agreement between Famous Dave's of
America, Inc. and Grand Pines Resorts, Inc.*
10.12 Management Agreement dated January 1, 1996 between Famous
Dave's Enterprises, Inc. and Famous Dave's of Minneapolis,
Inc.*
10.13 Amendment dated August 12, 1996 to the Company's 1995 Stock
Option and Compensation Plan*
10.14 Employment Agreement dated as of December 18, 1996 between
the Company and Stanley R. Herman, as amended as of July 23,
1997, incorporated by reference from Exhibit 10.12 to the
Company's Annual Report on Form 10-KSB for the fiscal year
ended December 29, 1996 (the "1996 10-K").
10.15 Employment Agreement dated as of July 23, 1997 between the
Company and Douglas S. Lanham, incorporated by reference to
Exhibit 10.13 to the 1996 10-K.
24.1 Consent of Maslon Edelman Borman & Brand, a Professional
Limited Liability Partnership (included in Exhibit 5)*
24.2 Consent of Lund Koehler Cox & Company, PLLP
25 Powers of Attorney*
</TABLE>

- -------------------------
* Previously filed.

II-2
<PAGE> 51

ITEM 28. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the small business issuer will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned small business issuer hereby undertakes that it will:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to (i) include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) reflect
in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration
statement; and (iii) include any additional or changed material information
on the plan of distribution.

(2) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the small business issuer under Rule 424(b)(1) or
(4) or Rule 497(h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective.

(3) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.

The small business issuer hereby undertakes to provide to the Underwriter
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.

II-3
<PAGE> 52

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has authorized this
Post-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Minneapolis,
State of Minnesota, on May 14, 1997.

FAMOUS DAVE'S OF AMERICA, INC.

By /s/ DOUGLAS S. LANHAM

------------------------------------

Chief Executive Officer and

Chief Operating Officer

In accordance with the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

* Chairman of the Board May 14, 1997
- ---------------------------------------------
David W. Anderson

/s/ DOUGLAS S. LANHAM Chief Executive Officer and Chief May 14, 1997
- --------------------------------------------- Operating Officer (Principal Executive
Douglas S. Lanham Officer)

/s/ MARK A. PAYNE President, Secretary and Treasurer May 14, 1997
- ---------------------------------------------
Mark A. Payne

/s/ STEVEN E. OPDAHL Vice President, Finance, Chief May 14, 1997
- --------------------------------------------- Financial Officer and Assistant
Steven E. Opdahl Secretary (Principal Financial and
Accounting Officer)

* Director May 14, 1997
- ---------------------------------------------
Thomas J. Brosig
Director
- ---------------------------------------------
Richard L. Monfort

* Director May 14, 1997
- ---------------------------------------------
Martin J. O'Dowd
</TABLE>

By /s/ MARK A. PAYNE

----------------------------

Mark A. Payne

Attorney-in-Fact

II-4
<PAGE> 53

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
PAGE
EXHIBIT NO. DESCRIPTION OF EXHIBIT NUMBER
- ----------- ---------------------- ------
<C> <S> <C>
3.1 Articles of Incorporation*
3.2 By-laws*
3.3 Amendment to Articles of Incorporation dated May 31, 1996
increasing the number of authorized shares*
4 Warrant Agreement dated as of October 21, 1996 by and
between Famous Dave's of America, Inc. and Firstar Trust
Company.**
5 Opinion of Maslon Edelman Borman & Brand, a Professional
Limited Liability Partnership*
10.1 Lease Agreement by and between S&D Land Holdings, Inc., and
Famous Dave's of Minneapolis, Inc. as of January 1, 1996
(Linden Hills)*
10.2 Lease Agreement by and between S&D Land Holdings, Inc., and
Famous Dave's of Minneapolis, Inc. as of January 1, 1996
(Highland Park)*
10.3 Lease Agreement by and between S&D Land Holdings, Inc., and
Famous Dave's of Minneapolis, Inc. as of January 15, 1996
(Minnetonka)*
10.4 Sublease Agreement by and between S&D Land Holdings, Inc.,
and Famous Dave's of Minneapolis, Inc. as of January 1, 1996
(Roseville)*
10.5 Lease Agreement by and between Calhoun Square Associates
Limited Partnership and Lake & Hennepin BBQ and Blues, Inc.
dated January 4, 1996, as amended on March 26, 1996 and as
further amended on July 15, 1996 (Calhoun Square)**
10.6 Assignment and Assumption of Lease Agreement by and between
Innovative Gaming, Inc., Carlson Real Estate Company, and
Famous Dave's of America, Inc. as of May 13, 1996 and Side
Agreement dated May 16, 1996 between Innovative Gaming, Inc.
and Famous Dave's of America, Inc. (corporate headquarters)*
10.7 Company's 1995 Stock Option and Compensation Plan*
10.8 Employment Agreement between the Company and David W.
Anderson dated as of March 4, 1996*
10.9 Employment Agreement between the Company and William L. Timm
dated as of March 4, 1996*
10.10 Employment Agreement between the Company and Mark A. Payne
dated as of August 12, 1996*
10.11 Trademark License Agreement between Famous Dave's of
America, Inc. and Grand Pines Resorts, Inc.*
10.12 Management Agreement dated January 1, 1996 between Famous
Dave's Enterprises, Inc. and Famous Dave's of Minneapolis,
Inc.*
10.13 Amendment dated August 12, 1996 to the Company's 1995 Stock
Option and Compensation Plan*
24.1 Consent of Maslon Edelman Borman & Brand, a Professional
Limited Liability Partnership (included in Exhibit 5)**
24.2 Consent of Lund Koehler Cox & Company, PLLP**
25 Powers of Attorney*
</TABLE>

- -------------------------
* Previously filed.

** Filed herewith.

<PAGE> 1
WARRANT AGREEMENT

WARRANT AGREEMENT dated as of October 21, 1996 by and between Famous
Dave's of America, Inc., a Minnesota corporation (the "Company"), and Firstar
Trust Company, as Warrant Agent (the "Warrant Agent").

A. The Company proposes to issue up to 2,300,000 Redeemable Class A
Warrants (the "Warrants") evidencing the right to purchase an aggregate of up
to 2,300,000 authorized but previously unissued shares of Common Stock, $.01
par value per share, of the Company (the "Common Stock"). The Warrants would
be issued in connection with the issuance by the Company of up to 2,300,000
Units, each Unit consisting of one share of Common Stock and one Warrant, in
connection with the Company's Registration Statement on Form SB-2.

B. The Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent desires so to act, in connection with the
issuance, registration, transfer, exchange and exercise of the Warrants.

NOW THEREFORE, it is agreed as follows:

ARTICLE I.
APPOINTMENT OF WARRANT AGENT; ISSUANCE,
FORM AND EXECUTION OF WARRANT CERTIFICATES

Section 1.1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company, and the Warrant
Agent hereby accepts the agency established herein and agrees to perform its
agency duties in accordance with the terms and conditions of this Warrant
Agreement.

Section 1.2. Warrant Certificates. The Company shall execute and
deliver to the Warrant Agent certificates which the Company has authorized to
represent the Warrants ("Warrant Certificates"). The Warrant Certificates
shall be substantially as set forth in Exhibit A hereto and may have such
legends, summaries or endorsements printed, lithographed or engraved thereon as
the Company may deem appropriate and as are not inconsistent with the
provisions of this Warrant Agreement, or as may be required to comply with any
law or with any rule or regulation relating to listing of the Warrants on the
NASDAQ stock market, including the SmallCap Market System, or on any stock
exchange or to conform to usage. The Warrant Certificates shall be dated with
the date of their issuance.

Section 1.3. Execution of Warrant Certificates. The Warrant
Certificates shall be executed on behalf of the Company by a duly authorized
officer of the Company, either manually or by facsimile signature printed
thereon. The Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
Any Warrant Certificate may be signed on behalf of the Company by the person
who at the actual date of the signing of such Warrant Certificate shall have
been the proper officer

<PAGE> 2

of the Company, although at the date of issuance of such Warrant Certificate
any such person has ceased to be such officer of the Company.

ARTICLE II.
EXERCISE OF WARRANTS

Section 2.1. Exercise. Any or all of the Warrants represented by each
Warrant Certificate may be exercised by the holder thereof on or before 5:00
p.m., Minneapolis time, on October 21, 2000, unless extended by the Company, by
surrender of the Warrant Certificate with the Purchase Form, which is printed
on the reverse thereof (or a reasonable facsimile thereof) duly executed by
such holder, to the Warrant Agent at its principal office in Milwaukee,
Wisconsin, accompanied by payment, in cash or by certified or official bank
check payable to the order of the Company, in an amount equal to the product of
the number of shares of Common Stock issuable upon exercise of the Warrant
represented by such Warrant Certificate, as adjusted pursuant to the provisions
of Article III hereof, multiplied by the exercise price of $8.50, as adjusted
pursuant to the provisions of Article III hereof (such price as so adjusted
from time to time being herein called the "Exercise Price"), and such holder
shall be entitled to receive such number of fully paid and nonassessable shares
of Common Stock, as so adjusted, at the time of such exercise.

Section 2.2. Time of Exercise. Each exercise of Warrants shall be deemed
to have been effective immediately prior to the close of business on the
business day on which the Warrant Certificate relating to such Warrants shall
have been surrendered to the Warrant Agent as provided in Section 2.1, and at
such time the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such exercise as
provided in Section 2.3, shall be deemed to have become the holder or holders
of record thereof.

Section 2.3. Issuance of Shares of Common Stock; No Fractional Shares.
As soon as practicable after the exercise of any Warrant, and in any event
within ten (10) days after receipt by the Warrant Agent of the notice of
exercise under Section 2.1, the Company at its expense (including the payment
by it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder thereof or as such holder (upon payment by such holder
of any applicable transfer taxes) may direct,

(a) a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to which
such holder would otherwise be entitled, an amount in cash equal to such
fraction multiplied by the then current value of a share of Common Stock,
such current value to be determined as follows:

(i) if the Common Stock shall be listed or admitted to
unlisted trading privileges on any single national securities
exchange, then such current value shall be computed on the
basis of the last reported sale price of the Common Stock on
such exchange on the last business day prior to the date

2
<PAGE> 3

of the exercise of such Warrant upon which a sale shall have
been effected; or

(ii) if the Common Stock shall not be so listed or
admitted to unlisted trading privileges and bid and asked
prices therefor in the over-the-counter market shall be
reported by NASDAQ, including the SmallCap Market System, then
such current value shall be the last reported sale on the last
business day prior to the date of the exercise of such
Warrant, or, in the event the last reported sale is
unavailable, the average of the closing bid and asked prices
on the last business day prior to the date of the exercise of
such Warrant as so reported; or

(iii) if the Common Stock shall be listed or admitted to
unlisted trading privileges on more than one national
securities exchange or one or more national securities
exchanges and in the over-the-counter market, then such
current value shall, if different as a result of calculation
under the applicable method(s) described above in this
Section, be deemed to be the higher number calculated in
connection therewith; or

(iv) if the Common Stock shall not be so listed or
admitted to unlisted trading privileges and such bid and asked
prices shall not be so reported, then such current value shall
be computed on the basis of the book value of Common Stock as
of the close of business on the last day of the month
immediately preceding the date upon which such Warrant was
exercised, as determined by the Company,

and

(b) in case such exercise includes only part of the Warrants
represented by any Warrant Certificate, a new Warrant Certificate or
Warrant Certificates of like tenor, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock equal (without
giving effect to any adjustment therein) to the number of such shares
called for on the face of such Warrant Certificate minus the number of
such shares designated by the holder for such exercise as provided in
Section 2.1. Warrants, represented by a properly assigned Warrant
Certificate, may be exercised by a new holder without first having a new
Warrant Certificate issued.

Section 2.4. Extension of Exercise Period; Change of Exercise Price. The
Company may, upon notice given to the Warrant Agent, and without the consent of
the holders of the Warrant Certificates, (i) reduce the Exercise Price during
all or any portion of the originally stated exercise period, or (ii) extend the
period over which the Warrants are exercisable beyond October 21, 2000 and
increase the Exercise Price for any period the Warrant exercise period is
extended. In the case of the extension of the exercise period or a change in
the Exercise Price, the Company must provide the Warrant Agent and the
Warrantholders of record notice of such extension of the exercise period,
specifying, as the case may be, the time to which such exercise period is

3
<PAGE> 4

extended, or specifying the new Exercise Price and the periods for which such
new Exercise Price is in effect, a reasonable time prior to the date such
extension or new Exercise Price is to take effect, such reasonable time to be
commercially reasonable and consistent with applicable securities laws and
regulations.

ARTICLE III.
ANTIDILUTION PROVISIONS

Section 3.1. Adjustment of Exercise Price.

(a) The Exercise Price shall be subject to the following adjustments.
In the event that:

(i) any dividends on any class of stock of the Company
payable in Common Stock or securities convertible into Common
Stock shall be paid by the Company;

(ii) the Company shall subdivide its then outstanding
shares of Common Stock into a greater number of shares; or

(iii) the Company shall combine outstanding shares of
Common Stock, by reclassification or otherwise;

then, in any such event, the Exercise Price in effect immediately prior to
such event shall (until adjusted again pursuant hereto) be adjusted
immediately after such event to a price (calculated to the nearest full
cent) determined by dividing (A) the number of shares of Common Stock
outstanding immediately prior to such event, multiplied by the then
existing Exercise Price, by (B) the total number of shares of Common Stock
outstanding immediately after such event (including the maximum number of
shares of Common Stock issuable in respect of any securities convertible
into Common Stock), and the resulting quotient shall be the adjusted
Exercise Price per share.

(b) No adjustment of the Exercise Price shall be made if the amount
of such adjustments shall be less than one cent per share, but in such
case any adjustment that would otherwise be required to be made shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustment or adjustments
so carried forward, shall amount to not less than one cent per share.

Section 3.2. Adjustment of Number of Shares Purchasable on Exercise of
Warrants. Upon each adjustment of the Exercise Price pursuant to Section 3.1,
the registered holder of each Warrant shall thereafter (until another such
adjustment) be entitled to purchase at the adjusted Exercise Price the number
of shares, calculated to the nearest full share, obtained by multiplying the
number of shares specified in such Warrant (as adjusted as a result of all
adjustments in the Exercise Price in effect prior to such adjustment) by the
Exercise Price in effect prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.

<PAGE> 5

Section 3.3. Notice as to Adjustment. Upon any adjustment of the
Exercise Price and an increase or decrease in the number of shares of Common
Stock purchasable upon the exercise of the Warrants, then, and in each such
case, the Company shall within ten (10) days after the effective date of such
adjustment give written notice thereof, by first class mail, postage prepaid,
addressed to each registered Warrantholder at the address of such Warrantholder
as shown on the books of the Company, which notice shall state the adjusted
Exercise Price and the increased or decreased number of shares purchasable upon
the exercise of the Warrants, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.

Section 3.4. Effect of Reorganization, Reclassification, Merger, Etc. If
at any time while any Warrant is outstanding there should be any capital
reorganization or reclassification of the capital stock of the Company (other
than the issue of any shares of Common Stock in subdivision of outstanding
shares of Common Stock by reclassification or otherwise and other than a
combination of shares provided for in Section 3.1 hereof) or any consolidation
or merger of the Company with another corporation or any sale, conveyance,
lease or other transfer by the Company of all or substantially all of its
assets to any other corporation, the holder of any Warrant shall, during the
remainder of the period such Warrant is exercisable, be entitled to receive,
upon payment of the Exercise Price, the number of shares of stock or other
securities or property of the Company, or of the successor corporation
resulting from such consolidation or merger, or of the corporation to which the
assets of the Company has been sold, conveyed, leased or otherwise transferred,
as the case may be, to which the Common Stock (and any other securities and
property) of the Company, deliverable upon the exercise of such Warrant, would
have been entitled upon such capital reorganization, reclassification of
capital stock, consolidation, merger, sale, conveyance, lease or other transfer
if such Warrant had been exercised immediately prior to such capital
reorganization, reclassification of capital stock, consolidation, merger, sale,
conveyance, lease or other transfer; and, in any such case, appropriate
adjustment (as determined by the Board of Directors of the Company) shall be
made in the application of the provisions set forth in this Warrant Agreement
with respect to the rights and interests thereafter of the Warrantholders to
the end that the provisions set forth in this Warrant Agreement (including the
adjustment of the Exercise Price and the number of shares issuable upon the
exercise of the Warrants) shall thereafter be applicable, as near as may be
reasonably practicable, in relation to any shares or other property thereafter
deliverable upon the exercise of the Warrants as if the Warrants had been
exercised immediately prior to such capital reorganization, reclassification of
capital stock, such consolidation, merger, sale, conveyance, lease or other
transfer and the Warrantholders had carried out the terms of the exchange as
provided for by such capital reorganization, reclassification, consolidation or
merger. The Company shall not effect any such capital reorganization,
consolidation, merger or transfer unless, upon or prior to the consummation
thereof, the successor corporation or the corporation to which the property of
the Company has been sold, conveyed, leased or otherwise transferred shall
assume by written instrument the obligation to deliver to the holder of each
Warrant such shares of stock, securities, cash or property as in accordance
with the foregoing provisions such holder shall be entitled to purchase.

<PAGE> 6

Section 3.5. Prior Notice as to Certain Events. In case at any time:

(a) The Company shall pay any dividend upon its Common Stock payable
in stock or make any distribution (other than cash dividends) to the
holders of its Common Stock; or

(b) The Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or any
other rights; or

(c) There shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the
Company with, or sale, conveyance, lease or other transfer of all or
substantially all of its assets to, another corporation; or

(d) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then in any one or more of such cases, the Company shall give prior written
notice, by first class mail, postage prepaid, addressed to each registered
Warrantholder at the address of such Warrantholder as shown on the books of the
Company, of the date on which (i) the books of the Company shall close or a
record shall be taken for such stock dividend, distribution or subscription
rights or (ii) such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up shall take place, as the case may
be. Such notice shall also specify the date as of which the holders of the
Common Stock of record shall participate in such dividend, distribution or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding up, as the case may be. Such written notice shall be given at least
twenty (20) days prior to the action in question and not less than twenty (20)
days prior to the record date or the date on which the Company's transfer books
are closed in respect thereto.

Section 3.6. Certain Obligations of the Company. The Company will not,
by amendment of its articles of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant Agreement or the Warrant
Certificate, but will at all times in good faith assist in the carrying out of
all such terms. Without limiting the generality of the foregoing, the Company
(a) will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares
of such stock upon the exercise of all Warrants from time to time outstanding,
and (b) will not (i) transfer all or substantially all of its properties and
assets to any other person or entity, or (ii) consolidate with or merge into
any other entity where the Company is not the continuing or surviving entity,
or (iii) permit any other entity to consolidate with or merge into the Company
where the Company is the continuing or surviving entity but, in connection with
such consolidation or merger, the Common Stock then issuable upon the exercise
of the Warrants shall be changed into or exchanged for shares or other
securities or property of any other entity unless, in any such case, the other
entity acquiring such properties and assets,

<PAGE> 7

continuing or surviving after such consolidation or merger or issuing or
distributing such shares or other securities or property, as the case may be,
shall expressly assume in writing and be bound by all the terms of this Warrant
Agreement and the Warrant Certificates.

Section 3.7. Reservation and Listing of Common Stock. The Company will
at all times reserve and keep available, solely for issuance and delivery upon
the exercise of the Warrants, all shares of Common Stock from time to time
issuable upon such exercise. All such shares shall be authorized and, when
issued upon such exercise, shall be validly issued, fully paid and
nonassessable with no liability on the part of the holder thereof. The
Company, at its expense, will list on each national securities exchange on
which any Common Stock may at any time be listed, subject to official notice of
issuance, and will maintain such listing of, the shares of Common Stock from
time to time issuable upon the exercise of the Warrants.

Section 3.8. Registration or Exemption for Common Stock. The Company
will use its best efforts (a) at all times the Warrants are exercisable to
maintain an effective registration statement under the Securities Act of 1933,
as amended (the "Act"), covering Common Stock issuable upon exercise of the
Warrants, (b) from time to time to amend or supplement the prospectus contained
in such registration statement to the extent necessary in order to comply with
applicable law, (c) to qualify for exemption from the registration requirements
of the Act the Common Stock issuable upon exercise of the Warrants, and (d) to
maintain exemptions or qualifications, in those jurisdictions in which the
original registration statement relating to the Warrants was initially
qualified, to permit the exercise of the Warrants and the issuance of the
Common Stock pursuant to such exercise. The Warrant Agent shall have no
responsibility for the maintenance of such exemptions or qualifications or for
liabilities arising from the exercise or attempted exercise of Warrants in
jurisdictions where exemptions or qualifications have not been maintained or
are otherwise unavailable.

ARTICLE IV.
REDEMPTION OF WARRANTS

Section 4.1. Redemption Price. The Warrants may be redeemed at the
option of the Company, at any time after the date hereof following a period of
10 consecutive trading days where the per share average closing bid price of
the Common Stock exceeds 120% of the Exercise Price, on notice as set forth in
Section 4.2, and at a redemption price equal to $.01 per Warrant. For purposes
of this Section, the closing bid price of the Common Stock shall be determined
by the closing bid price as reported by NASDAQ so long as the Common Stock is
quoted on NASDAQ and, if the Common Stock is listed on a national securities
exchange, shall be determined by the last reported sale price on the primary
exchange on which the Common Stock is traded.

Section 4.2. Notice of Redemption. In the case of any redemption of
Warrants, the Company or, at its request, the Warrant Agent in the name of and
at the expense of the Company shall give notice of such redemption to the
holders of the Warrants to be redeemed as hereinafter provided in this Section
4.2. Notice of redemption to the holders of Warrants shall be given by

<PAGE> 8

mailing by first-class mail a notice of such redemption not less than 30 days
prior to the date fixed for redemption. Any notice which is given in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the holder receives the notice. In any case, failure duly to
give such notice, or any defect in such notice, to the holder of any Warrant
Certificate shall not affect the validity of the proceedings for the redemption
of Warrants represented by any other Warrant Certificate. Each such notice
shall specify the date fixed for redemption, the place of redemption and the
redemption price of $.01 at which each Warrant is to be redeemed, and shall
state that payment of the redemption price of the Warrants will be made on
surrender of the Warrants at such place of redemption, and that if not
exercised by the close of business on the date fixed for redemption, the
exercise rights of the Warrants identified for redemption shall expire unless
extended by the Company. Such notice shall also state the current Exercise
Price and the date on which the right to exercise the Warrants will expire
unless extended by the Company.

Section 4.3. Payment of Warrants on Redemption; Deposit of Redemption
Price. If notice of redemption shall have been given as provided in Section
4.2, the redemption price of $.01 per Warrant shall, unless the Warrant is
theretofore exercised pursuant to the terms hereof, become due and payable on
the date and at the place stated in such notice. On and after such date of
redemption, provided that cash sufficient for the redemption thereof shall then
be deposited by the Company with the Warrant Agent for that purpose, the
exercise rights of the Warrants identified for redemption shall expire. On
presentation and surrender of Warrant Certificates at such place of payment in
such notice specified, the Warrants identified for redemption shall be paid and
redeemed at the redemption price of $.01 per Warrant. Prior to the date fixed
for redemption, the Company shall deposit with the Warrant Agent an amount of
money sufficient to pay the redemption price of all the Warrants identified for
redemption. Any monies which shall have been deposited with the Warrant Agent
for redemption of Warrants and which are not required for that purpose by
reason of exercise of Warrants shall be repaid to the Company upon delivery to
the Warrant Agent of evidence satisfactory to it of such exercise.

ARTICLE V.
CERTAIN OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANT CERTIFICATES

Section 5.1. No Rights of Shareholders. The Warrant Certificates shall
be issued in registered form only. No Warrant Certificate shall entitle the
holder thereof to any of the rights of a holder of shares of Common Stock of
the Company, including, without limitation, the right to vote, to receive
dividends and other distributions, or to receive any notice of, or to attend,
meetings of holders of Common Stock or any other proceedings of the Company.

Section 5.2. Loss, Theft, Destruction or Mutilation of Warrant
Certificates. Upon receipt by the Warrant Agent of evidence reasonably
satisfactory to the Warrant Agent of the loss, theft, destruction or mutilation
of any Warrant Certificate, and (a) in the case of any such loss, theft, or
destruction, upon delivery to the Warrant Agent of an indemnity bond in form
and amount, and issued by a bonding company, reasonably satisfactory to the
Company, or (b) in the case of any

8
<PAGE> 9

such mutilation, upon surrender to and cancellation by the Warrant Agent of
such Warrant Certificate, the Company at its expense will execute and cause the
Warrant Agent to countersign and deliver, in lieu thereof, a new Warrant
Certificate of like tenor.

Section 5.3. Transfer Agent; Cancellation of Warrant Certificates;
Unexercised Warrants. Firstar Trust Company (and any successor), as transfer
agent (the "Transfer Agent"), is hereby irrevocably authorized and directed at
all times to reserve such number of authorized and unissued shares of Common
Stock as shall be sufficient to permit the exercise in full of all Warrants
from time to time outstanding. The Company will keep a copy of this Agreement
on file with the Transfer Agent. The Warrant Agent, and any successor thereto,
is hereby irrevocably authorized to requisition from time to time from the
Transfer Agent certificates for shares of Common Stock required for exercise of
Warrants. The Company will supply the Transfer Agent with duly executed
certificates for shares of Common Stock for such purpose and will make
available any cash required in settlement of fractional share interests. All
Warrant Certificates surrendered upon the exercise or redemption of Warrants
shall be cancelled by the Warrant Agent and shall thereafter be delivered to
the Company; such cancelled Warrant Certificates, with the Purchase Form on the
reverse thereof duly filled in and signed, shall constitute conclusive evidence
as between the parties hereto of the numbers of shares of Common Stock which
shall have been issued upon exercises of Warrants. Promptly after the last day
on which the Warrants are exercisable (set forth in Section 2.1 above), the
Warrant Agent shall certify to the Company the aggregate number of Warrants
then outstanding and unexercised. No shares of Common Stock shall be subject
to reservation with respect to Warrants not exercised prior to the time and
date identified in Section 2.1 above as the last time and date at which
Warrants may be exercised.

ARTICLE VI.
TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES

Section 6.1. Warrant Register; Transfer or Exchange of Warrant
Certificates. The Warrant Agent shall cause to be kept at the principal office
of the Warrant Agent a register (the "Warrant Register") in which, subject to
such reasonable regulations as the Company may prescribe, provisions shall be
made for the registration of transfers and exchanges of Warrant Certificates.
Upon surrender for transfer or exchange of any Warrant Certificates, properly
endorsed, to the Warrant Agent, the Warrant Agent at the Company's expense will
issue and deliver to or upon the order of the holder thereof a new Warrant
Certificate or Warrant Certificates of like tenor, in the name of such holder
or as such holder (upon payment by such holder of any applicable transfer
taxes) may direct, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock called for on the face of the Warrant
Certificate so surrendered. Any Warrant Certificate surrendered for transfer
or exchange shall be cancelled by the Warrant Agent and shall thereafter be
delivered to the Company.

Section 6.2. Identity of Warrantholders. Until a Warrant Certificate is
transferred in the Warrant Register, the Company and the Warrant Agent may
treat the person in whose name the Warrant Certificate is registered as the
absolute owner thereof and of the Warrants represented thereby for all
purposes, notwithstanding any notice to the contrary, except that, if and when
any

<PAGE> 10

Warrant Certificate is properly assigned in blank, the Company and the Warrant
Agent may (but shall not be obligated to) treat the bearer thereof as the
absolute owner of the Warrant Certificate and of the Warrants represented
thereby for all purposes, notwithstanding any notice to the contrary.

ARTICLE VII.
CONCERNING THE WARRANT AGENT

Section 7. 1. Taxes. The Company will, from time to time, promptly pay to
the Warrant Agent, or make provision satisfactory to the Warrant Agent for the
payment of, all taxes and charges that may be imposed by the United States or
any State upon the Company or the Warrant Agent upon the transfer or delivery
of shares of Common Stock upon the exercise of Warrants, but the Company shall
not be obligated to pay any tax imposed in connection with any transfer
involved in the delivery of a certificate for shares of Common Stock in any
name other than that of the registered holder of the Warrant Certificate
surrendered in connection with the purchase thereof.

Section 7.2. Replacement of Warrant Agent in Certain Circumstances.

(a) The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder after giving thirty (30) days
notice in writing to the Company, except that such shorter notice may be
given as the Company shall, in writing, accept as sufficient. The Company
may discharge the Warrant Agent at any time with or without reason,
effective upon thirty (30) days written notice to the Warrant Agent or
such shorter period as the Warrant Agent shall, in writing, accept as
sufficient. If the office of Warrant Agent becomes vacant by resignation,
discharge, incapacity to act or otherwise, the Company shall appoint in
writing a new Warrant Agent, the principal office of which shall be in
Minnesota. If the Company shall fail to make such appointment within a
period of thirty (30) days after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Warrant Agent
or by the holder of a Warrant Certificate, then the holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Warrant Agent. Any new Warrant Agent, whether
appointed by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United States or of the
State of Minnesota, of good standing, and having its principal office in
Minnesota, which is authorized under such laws to exercise corporate trust
powers and is subject to supervision or examination by Federal or State
authority. Any new Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to the Company an instrument accepting such
appointment hereunder and thereupon such new Warrant Agent without any
further act or deed shall become vested with all the rights, powers,
duties and responsibilities of the Warrant Agent hereunder with like
effect as if it had been named as the Warrant Agent; but if for any reason
it becomes necessary or expedient to have the former Warrant Agent execute
and deliver any further assurance, conveyance, act or deed, the same shall
be done and shall be legally and validly executed and delivered by the
former Warrant Agent. Not later than

<PAGE> 11

the effective date of any such appointment the Company shall file notice
thereof with the former Warrant Agent. The Company shall promptly give
notice of any such appointment to the holders of the Warrant Certificates
by mail to their addresses as shown in the Warrant Register. Failure to
file or give such notice, or any defect therein, shall not affect the
legality or validity of the appointment of the successor Warrant Agent.

(b) Any company into which the Warrant Agent or any new Warrant Agent
may be merged or converted or with which it may be consolidated or any
company resulting from any merger, conversion or consolidation to which
the Warrant Agent shall be a party shall be the successor Warrant Agent
under this Warrant Agreement without any further act; provided that if
such company would not be eligible for appointment as a successor Warrant
Agent under the provisions of paragraph (a) of this Section 7.2 the
Company shall forthwith appoint a new Warrant Agent in accordance with
such provisions. Any such successor Warrant Agent may adopt the prior
countersignature of any predecessor Warrant Agent and deliver Warrant
Certificates countersigned and not delivered by such predecessor Warrant
Agent or may countersign Warrant Certificates either in the name of any
predecessor Warrant Agent or the name of the successor Warrant Agent.

Section 7.3. Remuneration of Warrant Agent. The Company will pay the
Warrant Agent reasonable remuneration for its services as Warrant Agent
hereunder and will reimburse the Warrant Agent upon demand for all expenditures
that the Warrant Agent may reasonably incur in the execution of its duties
hereunder.

Section 7.4. Further Assurances. The Company will perform, exercise,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
by the Warrant Agent of the provisions of this Warrant Agreement.

Section 7.5. Limitations on Liabilities of the Warrant Agent.

(a) The Warrant Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection of the
Warrant Agent as to any action taken or omitted by it in good faith
and in accordance with such opinion.

(b) Whenever, in the performance of its duties under this
Warrant Agreement, the Warrant Agent shall deem it necessary or
desirable that any matter be proved or established, or that any
instructions with respect to the performance of its duties hereunder
be given, by the Company prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established, or such instructions may be given, by a
certificate or instrument signed by an officer of the Company and
delivered to the Warrant Agent; and such certificate or instrument
shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this
Warrant Agreement in

<PAGE> 12

reliance upon such certificate or instrument; but in its discretion
the Warrant Agent may in lieu thereof accept other evidence of such
matter or may require such further or additional evidence as it may
deem reasonable.

(c) The Warrant Agent shall be liable hereunder only for its
own negligence or willful misconduct. The Warrant Agent shall act
hereunder solely as agent, and its duties shall be determined solely
by the provisions hereof. The Company agrees to indemnify the
Warrant Agent and save it harmless against any and all liabilities,
including judgments, costs and counsel fees, for anything done or
omitted by the Warrant Agent in the execution of this Warrant
Agreement except as a result of the Warrant Agent's negligence or
willful misconduct.

(d) The Warrant Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Warrant
Agreement or in the Warrant Certificates (except its
countersignature thereof) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been
made by the Company only.

(e) The Warrant Agent shall not be under any responsibility in
respect to the validity or execution of any Warrant Certificate
(except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained
in this Warrant Agreement or in any Warrant Certificate; nor shall
it be responsible for the making of any adjustment in the Exercise
Price, or number of shares issuable upon exercise of the Warrant
Certificates or responsible for the manner, method or amount of any
such adjustment or the facts that would require any such adjustment;
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any shares of Common Stock to be issued pursuant to this Warrant
Agreement or any Warrant Certificate or as to whether any shares of
Common Stock or other securities are or will be validly authorized
and issued and fully paid and nonassessable.

Section 7.6. Amendment and Modification. The Warrant Agent may, without
the consent or concurrence of the holders of the Warrant Certificates, by
supplemental agreement or otherwise, join with the Company in making any
changes or corrections in this Warrant Agreement that they shall have been
advised by counsel (a) are required to cure any ambiguity or to correct any
defective or inconsistent provision or clerical omission or mistake or manifest
error herein contained, (b) add to the obligations of the Company in this
Warrant Agreement further obligations thereafter to be observed by it, or
surrender any right or power reserved to or conferred upon the Company in this
Warrant Agreement, or (c) do not or will not adversely affect, alter or change
the rights, privileges or immunities of the holders of Warrant Certificates not
provided for under this Warrant Agreement; provided, however, that any term of
this Warrant Agreement or any Warrant Certificate may be changed, waived,
discharged or terminated by an instrument in writing signed by each party
against which enforcement of such change, waiver, discharge or termination is
sought, or by which the same is to be performed or observed.

<PAGE> 13

ARTICLE VIII.
OTHER MATTERS

Section 8.1. Successors and Assigns. All the covenants and provisions of
this Warrant Agreement by or for the benefit of the Company or the Warrant
Agent shall bind and inure to the benefit of their respective successors and
assigns.

Section 8.2. Notices. Any notice or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant Certificate to or on the Company shall be sufficiently given or made if
sent by first class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Company with the Warrant Agent) as
follows:

Famous Dave's of America, Inc.
12700 Industrial Park Boulevard, Suite 60
Plymouth, MN 55441

Any notice or demand authorized by this Warrant Agreement to be given or made
by the holder of any Warrant Certificate or by the Company to or on the Warrant
Agent shall be sufficiently given or made if sent by first class or registered
mail, postage prepaid, addressed (until another address is filed in writing by
the Warrant Agent with the Company) as follows:

Firstar Trust Company
Corporate Trust
615 East Michigan Street, 4th Floor
Milwaukee, MI 53202

Section 8.3. Governing Law. This Warrant Agreement and the Warrant
Certificates are being delivered in the State of Minnesota and shall be
construed and enforced in accordance with and governed by the laws of such
State.

Section 8.4. No Benefits Conferred. Nothing in this Warrant Agreement
expressed and nothing that may be implied from any of the provisions hereof is
intended, or shall be construed, to confer upon, or give to, any person or
corporation other than the Company, the Warrant Agent, and the holders of the
Warrant Certificates, any right, remedy or claim under or by reason of this
Agreement or of any covenant, condition, stipulation, promise or agreement
herein; and all covenants, conditions, stipulations, promises and agreements in
this Warrant Agreement contained shall be for the sole and exclusive benefit of
the Company, the Warrant Agent, their respective successors and the holders of
the Warrant Certificates.

Section 8.5. Headings. The descriptive headings used in this Warrant
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

<PAGE> 14

IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the
parties hereto as of the day and year first above written.

FAMOUS DAVE'S OF AMERICA, INC.

By /s/ David W. Anderson
----------------------------------
Its Chief Executive Officer

FIRSTAR TRUST COMPANY

By /s/ Suzanne P. Norman Barnes
----------------------------------
Its Assistant Vice President
----------------------------

<PAGE> 15

EXHIBIT A

No. _____________ Certificate for ______ Warrants

THIS WARRANT CERTIFICATE MAY BE
TRANSFERRED SEPARATELY FROM THE COMMON STOCK CERTIFICATE
WITH WHICH IT IS INITIALLY ISSUED

EXERCISABLE ON OR BEFORE, AND VOID AFTER,
5:00 P.M. MINNEAPOLIS TIME OCTOBER 21, 2000

FAMOUS DAVE'S OF AMERICA, INC.

WARRANTS TO PURCHASE COMMON STOCK OF
FAMOUS DAVE'S OF AMERICA, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA

THIS CERTIFIES that CUSIP 307068 11 4

or assigns, is the owner of the number of Warrants set forth above, each of
which represents the right to purchase from Famous Dave's of America, Inc., a
Minnesota corporation (the "Company"), at any time on or before 5:00
Minneapolis time, October 21, 2000, upon compliance with and subject to the
conditions set forth herein and in the Warrant Agreement hereinafter referred
to, one share (subject to adjustments referred to below) of the Common Stock of
the Company (such shares or other securities or property purchasable upon
exercise of the Warrants being herein called the "Shares"), by surrendering
this Warrant Certificate, with the Purchase Form on the reverse side duly
executed, at the principal office of Firstar Trust Company, or its successor,
as warrant agent (the "Warrant Agent"), and by paying in full, in cash or by
certified or official bank check payable to the order of the Company, the
exercise price of $8.50 per share.

Upon any exercise of less than all the Warrants evidenced by this Warrant
Certificate, there shall be issued to the holder a new Warrant Certificate in
respect of the Warrants as to which this Warrant Certificate was not exercised.

Upon the surrender for transfer or exchange hereof, properly endorsed, to
the Warrant Agent, the Warrant Agent at the Company's expense will issue and
deliver to the order of the holder hereof, a new Warrant Certificate or Warrant
Certificates of like tenor, in the name of such holder or as such holder (upon
payment by such holder of any applicable transfer taxes) may direct, calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face hereof.

<PAGE> 16

The Warrant Certificates are issued only as registered Warrant
Certificates. Until this Warrant Certificate is transferred in the Warrant
Register, the Company and the Warrant Agent may treat the person in whose name
this Warrant Certificate is registered as the absolute owner hereof and of the
Warrants represented hereby for all purposes, notwithstanding any notice to the
contrary.

This Warrant Certificate is issued under the Warrant Agreement dated as of
October 21, 1996 between the Company and the Warrant Agent. The Warrant
Agreement is hereby incorporated by reference into this Warrant Certificate and
this Warrant Certificate is subject to the terms and provisions contained in
said Warrant Agreement, to all of which terms and provisions the registered
holder of this Warrant Certificate consents by acceptance hereof. Copies of
said Warrant Agreement are on file at the principal office of the Warrant Agent
in Milwaukee, Wisconsin, and may be obtained by writing to the Warrant Agent.

The number of Shares receivable upon the exercise of the Warrants
represented by this Warrant Certificate and the exercise price per share are
subject to adjustment upon the happening of certain events specified in the
Warrant Agreement.

No fractional Shares of the Company's Common Stock will be issued upon the
exercise of Warrants. As to any final fraction of a share which a holder of
Warrants exercised in the same transaction would otherwise be entitled to
purchase on such exercise, the Company shall pay a cash adjustment in lieu of
any fractional Share determined as provided in the Warrant Agreement.

The Warrants may be redeemed at the option of the Company, at any time
following a period of 10 consecutive trading days where the per share average
closing bid price of the Common Stock exceeds 120% of the Exercise Price, on
notice as set forth in the Warrant Agreement, and at a redemption price equal
to $.01 per Warrant. If notice of redemption shall have been given as provided
in the Warrant Agreement and cash sufficient for the redemption be deposited by
the Company for that purpose, the exercise rights of the Warrants identified
for redemption shall expire at the close of business on such date of redemption
unless extended by the Company.

This Warrant Certificate shall not entitle the holder hereof to any of the
rights of a holder of Common Stock of the Company, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive right, or to receive any notice of, or to attend
meetings of holders of Common Stock or any other proceedings of the Company.

This Warrant Certificate shall be void and the Warrants and any rights
represented hereby shall cease unless exercised on or before 5:00 p.m.
Minneapolis time on October 21, 2000, unless extended by the Company.

<PAGE> 17

This Warrant Certificate shall not be valid for any purpose until it shall
have been countersigned by the Warrant Agent.

WITNESS the facsimile signatures of the Company's duly authorized
officers.

FAMOUS DAVE'S OF AMERICA, INC.

By
-----------------------------------
Chairman of the Board

By
-----------------------------------
Secretary

COUNTERSIGNED AND REGISTERED:
as Warrant Agent

FIRSTAR TRUST COMPANY

By
-----------------------------------
Authorized Officer

<PAGE> 18

[REVERSE OF WARRANT CERTIFICATE]

THE CORPORATION WILL FURNISH ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE, A
COPY OF THE ARTICLES OF INCORPORATION AND A FULL STATEMENT OF THE DESIGNATIONS,
PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OR
SERIES AUTHORIZED TO BE ISSUED, SO FAR AS THEY HAVE BEEN DETERMINED, AND THE
AUTHORITY OF THE BOARD TO DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF
SUBSEQUENT CLASSES OR SERIES.

TO: Famous Dave's of America, Inc.
c/o Firstar Trust Company
Warrant Agent

PURCHASE FORM
(To be Executed by the Registered Holder
in Order to Exercise of Warrant Certificates)

The undersigned hereby irrevocably elects to exercise ________________* of
the Warrants represented by the Warrant Certificate and to purchase for cash
the Shares issuable upon the exercise of said Warrants and requests that
certificates for such Shares shall be issued in the name of

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
REGISTERED HOLDER OF CERTIFICATE

______________________________________________________________________________
(Print Name)
______________________________________________________________________________
(Address)
______________________________________________________________________________

Dated: __________________________ Signature: ______________________________

* Insert here the number of Warrants evidenced on the face of this Warrant
Certificate (or, in the case of a partial exercise, the portion thereof being
exercised), in either case without making any adjustment for additional Common
Stock or any other securities or property or cash which, pursuant to the
adjustment provisions referred to in this Warrant Certificate, may be
deliverable upon exercise.

<PAGE> 19

ASSIGNMENT FORM
(To be Executed by the Registered Holder
in Order to Transfer Warrant Certificates)

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
____________________________________ of the Warrants to purchase shares of
Common Stock represented by this Warrant Certificate unto

______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
______________________________________________________________________________

______________________________________________________________________________

and does hereby irrevocably constitute and appoint
____________________________________

Attorney to transfer this Warrant Certificate on the records of the Company
with full power of substitution in the premises.

Dated:________________________ Signature(s) ______________________________

SIGNATURE(S) GUARANTEED:

_____________________________

NOTICE

The signature(s) to the Purchase Form or the Assignment Form must
correspond to the name as written upon the face of this Warrant Certificate in
every particular without alteration or enlargement or any change whatsoever.

89275-1

<PAGE> 1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in, or made part of, this
Post-effective Amendment No. 1 to Registration Statement No. 333-10675.

LUND KOEHLER COX & COMPANY, PLLP

Minneapolis, Minnesota

May 14, 1997