SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 1, 1996
GRILL CONCEPTS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-23226 13-3319172
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
11661 San Vicente Blvd., Suite 404, Los Angeles, California 90049
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 820-5559
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On April 1, 1996, the Registrant consummated the acquisition of 100% of the
common stock of EMNDEE, Inc. ("EMNDEE") pursuant to a share exchange. The
Registrant issued an aggregate of 432,735 shares of common stock in exchange for
the stock of EMNDEE. EMNDEE is the general partner of, and holds a 50.91%
interest in, The Grill Limited Partnership, a California limited partnership
(the "Grill Partnership"), which owns and operates The Grill on the Alley ("The
Grill").
Subsequently, on April 22, 1996, the Registrant consummated the acquisition
of 100% of the common stock of The Grill on the Alley, Inc. ("Grill, Inc.").
Grill, Inc. is a partner, and holds the remaining 49.09% interest, in the Grill
Partnership. The Registrant issued an aggregate of 417,265 shares of common
stock in exchange for the stock of Grill, Inc.
The Grill is an upscale Beverly Hills restaurant which opened in 1984 and
served as the model for the Company's Daily Grill restaurants.
The Company's principal shareholders and directors (Robert Spivak, Michael
Weinstock and Richard Shapiro) controlled and were the principal shareholders of
EMNDEE. Commencing in 1995, the Company has provided management services to The
Grill in exchange for a management fee in an amount equal to 5% of the revenues
of The Grill. Previously, Robert Spivak, the Company's president, provided
management services on his own behalf to The Grill and received a salary from
The Grill.
The Company's outside directors negotiated the terms of the acquisition of
EMNDEE as well as the terms of the acquisition of the remaining partnership
interests in the Grill Partnership. Messrs. Spivak, Weinstock and Shapiro
abstained from voting with respect to approval of the acquisition of The Grill.
Item 7. Financial Statements and Exhibits.
Page (a) Financial Statements of Businesses Acquired
The Grill, A California Limited Partnership
Independent Auditors' Report........................................ 4
Balance Sheet as of December 31, 1995............................... 5
Statement of Income and Partners' Capital........................... 6
Statement of Cash Flows............................................. 7
Notes to Financial Statements....................................... 8
(b) Pro Forma Financial Information
It is impractical to provide the required pro forma financial information
at the time this report is being filed. The required pro forma financial
information will be filed under cover of Form 8-K/A as soon as practicable.
(c) Exhibits
2.1 Letter Agreement re: acquisition of The Grill.................. *
* Previously filed
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GRILL CONCEPTS, INC.
Date: June 14, 1996 By: /s/ Robert Spivak
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Robert Spivak, President
3
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INDEPENDENT AUDITORS' REPORT
Board of Directors
The Grill
We have audited the accompanying balance sheet of The Grill, a California
Limited Partnership, as of December 31, 1995, and the related statement of
income and partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Grill, a California Limited
Partnership, as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
June 5, 1996
Barkin, Perren & Schwager
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THE GRILL
(A CALIFORNIA LIMITED PARTNERSHIP)
Balance Sheet
December 31, 1995
ASSETS
Current Assets
Cash and cash equivalents (Note 1) $ 216,655
Investment securities, available for sale 233,486
Accounts receivable 30,820
Advances to employees 15,000
Inventories 45,521
Prepaid expenses 60,122
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Total Current Assets 601,604
Property and Equipment, at cost (Notes 1 & 2) 59,349
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Other Assets
Deposits 15,776
Liquor License 40,000
Total Other Assets 55,776
Total Assets $ 716,729
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LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Accounts payable $ 95,268
Accrued expenses 48,843
Due to Grill Concepts, Inc. (Note 5) 97,420
Due to partner (Note 5) 16,794
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Total Current Liabilities 258,325
Commitments and Contingencies (Note 3)
Partners' Capital 458,404
Total Liabilities and Partners' Capital $ 716,729
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See Independent Auditors' Report
The accompanying notes are an integral part of these statements.
F-2
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THE GRILL
(A CALIFORNIA LIMITED PARTNERSHIP)
Statement of Income and Partners' Capital
For the Year Ended December 31, 1995
% to
Sales
Sales
Food $2,030,126 73.69
Beverage 724,752 26.31
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Total Sales 2,754,878 100.00
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Cost of Sales
Food 668,257 24.26
Beverage 196,178 7.12
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Total Cost of Sales 864,435 31.38
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Gross Profit 1,890,443 68.62
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Operating Expenses
Payroll expenses 853,643 30.99
General and Administrative - Fixed 219,518 7.97
General and Administrative - Variable 294,487 10.69
Occupancy Costs 443,392 16.09
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Total Operating Expenses 1,811,040 65.74
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Operating Income 79,403 2.88
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Other Income (Expenses)
Interest Income 6,477 .24
Interest Expense (1,592) (.06)
Depreciation (9,494) (.35)
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Total Other Income (Expenses) (4,609) (.17)
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Net Income Before Taxes 74,794 2.71
Provision For Income Taxes (Note 1) 1,600 .06
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Net Income 73,194 2.65
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Partners' Capital - Beg. of Year 478,859
Unrealized Loss on Investment Securities
Available for Sale, Net (3,649)
Distributions (90,000)
Partners' Capital - End of Year $ 458,404
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See Independent Auditors' Report.
The accompanying notes are an integral part of these statements.
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THE GRILL
(A CALIFORNIA LIMITED PARTNERSHIP)
Statement of Cash Flows
For the Year Ended December 31, 1995
Cash Flows From Operating Activities
Received from sales $2,654,463
Received from interest 5,427
Paid for cost of sales (835,734)
Paid for operating expenses (1,621,543)
Paid for taxes to government (1,600)
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Net cash flows from operating activities
(Note 4) 201,013
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Cash Flows from Investing Activities
Purchase of investment securities (237,135)
Purchase of property and equipment (11,751)
Net cash used by investing activities (248,886)
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Cash Flow from Financing Activites
Distribution to Partners (90,000)
Net cash used by financing activities (90,000)
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Net decrease in cash (137,873)
Cash and cash equivalents at beginning of year 354,528
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Cash and cash equivalents at end of year $ 216,655
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See Independent Auditors' Report.
The accompanying notes are an integral part of these statements.
F-4
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THE GRILL
(A CALIFORNIA LIMITED PARTNERSHIP)
Notes to Financial Statements
December 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principal business activity
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The Company is a Limited Partnership formed in the State of California in 1983
and is engaged in the business of operating a restaurant in Beverly Hills,
California.
Inventories
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Inventories consisting of food, beverages and supplies are carried at the lower
of cost (first-in, first-out method) or market.
Property and Equipment
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Property and equipment are stated at cost and depreciated using the
double-declining balance and straight-line methods over their estimated useful
lives as follows:
Furniture and fixtures 3 - 7 years
Office equipment 5 - 7 years
Leasehold improvements 10 - 31.5 years
Maintenance and repairs are expensed as incurred and major betterments are
capitalized.
Income taxes
- ------------
The financial statements do not include a provision for federal income taxes
because the partnership does not incur federal or state income taxes. Instead
its earnings are passed through to its partners and they are responsible for any
taxes on their share of income allocated to them. The State of California
charges a minimum tax of $800 paid with the annual filing of the state
partnership return.
Cash and cash equivalents
- -------------------------
The "cash and cash equivalents" asset account, for purposes of the statement of
cash flows, includes all cash accounts and short-term investments with three
months or less to maturity at the financial statement date.
F-5
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THE GRILL
(A CALIFORNIA LIMITED PARTNERSHIP)
Notes to Financial Statements
December 31, 1995
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of:
Furniture and fixtures $ 21,460
Equipment 514,431
Leasehold improvements 228,243
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764,134
Less Accumulated Depreciation (704,785)
$ 59,349
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Company leases the building located at 9560 Dayton Way, Beverly Hills,
California under an operating lease originally dated October 12, 1982, amended
on March 18, 1987 and extended on February 26, 1992. The lease was extended
until May 1, 1998 under the same conditions as the original lease. In addition,
the Company is required to pay all real estate taxes, insurance and business
licenses.
Rent expense was $171,153 for the year ended December 31, 1995.
Future minimum lease payments required as of December 31, 1995 related to this
operating lease are as follows:
1996 $167,913
1997 167,913
1998 55,971
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$391,797
NOTE 4 - CASH FLOW FROM OPERATING ACTIVITIES - INDIRECT METHOD
Net income $ 73,194
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Noncash Revenue and Expense Adjustments:
Depreciation expense 9,494
Increase in accounts receivable (5,978)
Decrease in inventory 13,701
Increase in prepaid expenses (21,960)
Increase in accounts payable 31,571
Decrease in accrued expenses (9,071)
Increase in Due to Grill Concepts, Inc. 108,470
Increase in Due to Emndee, Inc. 1,592
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127,819
Net cash flows from operating activities $ 201,013
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F-6
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THE GRILL
(A CALIFORNIA LIMITED PARTNERSHIP)
Notes to Financial Statements
NOTE 5 - RELATED PARTY TRANSACTIONS
The company owes $97,420 to Grill Concepts, Inc. for various expenses including
management fees and insurance reimbursement. Some of the majority owners of
Grill Concepts, Inc. are also shareholders of Emndee, Inc. Emndee, Inc. is the
general partner of the Company. The Company intends to repay this liability
within the current period. No interest has been accrued on this amount.
The company owes $16,794 to its general partner, Emndee, Inc. for loans advanced
in earlier years. Interest is accrued at 10% and compounded monthly.
NOTE 6 - SUBSEQUENT EVENTS
In March 1996, a new entity, "The Grill on the Alley, Inc.", was formed for the
purpose of acquiring all of the limited partnership interests in the Company. In
exchange for each limited partnership unit, partners received shares in The
Grill on the Alley, Inc.
In April 1996, Grill Concepts, Inc. acquired all of the shares of both The Grill
on the Alley, Inc. and Emndee, Inc., in exchange for 850,000 shares of Grill
Concepts, Inc. common stock. The stock was distributed as follows: 432,735
shares to the general partner and 417,265 shares to the limited partners.
The Company extended the lease for the property discussed in Note 3 for an
additional 10 years with a termination date of April 30, 2008. The base rent
shall be $10,500 per month, subject to CPI adjustments.
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