-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G7gKf41lqjKJ7SlaW4FMwSTFTduiQT7CGZWV6X3LCt6j+b3e9L3r0PtdCk9AaI+w CMi87YLamcP1sLDOWLjTDw== 0000950134-03-005794.txt : 20030414 0000950134-03-005794.hdr.sgml : 20030414 20030414172804 ACCESSION NUMBER: 0000950134-03-005794 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20021229 FILED AS OF DATE: 20030414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAMOUS DAVES OF AMERICA INC CENTRAL INDEX KEY: 0001021270 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 411782300 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21625 FILM NUMBER: 03649241 BUSINESS ADDRESS: STREET 1: 7657 ANAGRAM DR CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 BUSINESS PHONE: 612-557-57 MAIL ADDRESS: STREET 1: 7657 ANAGRAM DR CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 10-K/A 1 c75666ae10vkza.txt AMENDMENT TO FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 10-K/A [X] AMENDMENT NO. 1 TO ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 29, 2002 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ------------------- TO ------------------- COMMISSION FILE NUMBER: 0-21625 FAMOUS DAVE'S OF AMERICA, INC. (Registrant) MINNESOTA 41-1782300 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 8091 WALLACE ROAD EDEN PRAIRIE, MN 55344 (Address of principal executive offices) Issuer's telephone number: (952) 294-1300 Securities to be registered pursuant to Section 12(b) of the Exchange Act: None Securities to be registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $.01 par value Indicate by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12-b-2 of the Act). Yes [ ] No[X] The aggregate market value of Famous Dave's of America, Inc.'s Common Stock held by non-affiliates on June 30, 2002 (the last business day of Famous Dave's of America, Inc.'s most recently completed second fiscal quarter), based on the average bid and asked per share sales price of Famous Dave's of America, Inc.'s Common Stock on The NASDAQ National Market(SM) on June 28, 2002, was $74,965,984. As of March 24, 2003 we had outstanding 11,400,795 shares of Common Stock, $.01 par value. Transitional Small Business Disclosure Format: Yes [ ] No [X] Documents Incorporated by Reference: Portions of our Proxy Statement for our Annual Meeting of Shareholders to be conducted in June, 2003 (the "2003 Proxy Statement") are incorporated by reference into Part III of this Form 10-K, to the extent described in Part III. The 2003 Proxy Statement will be filed within 120 days after the end of the fiscal year ended December 29, 2002. Explanatory Note This Amendment No. 1 to the Annual Report on Form 10-K of Famous Dave's of America, Inc. amends and restates in its entirety Item 15 of Part IV for the sole purpose of adding the financial statements of Fumume, LLC and subsidiaries for the fiscal years ended December 30, 2001 and December 29, 2002, which are being filed as Exhibit 99.2. PART IV Item 15. Exhibits, Financial Statement Schedules and Reports and Form 8-K Item 15(1) and 15(d). Exhibits Consolidated financials of Famous Dave's of America, Inc., are incorporated by reference to Item 8 of the Form 10-K filed March 28, 2003 and attached to such filing on pages F-1 through F-20. Financial Statements of Fumume, LLC for fiscal years ended December 30, 2001 and December 29, 2002 are attached to this Amendment No. 1 as Exhibit 99.2. Item 15(b) Reports on Form 8-K. None. SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FAMOUS DAVE'S OF AMERICA, INC. ("REGISTRANT") Dated: April 14, 2003 By /s/ Martin J. O'Dowd ------------------------ Martin J. O'Dowd Chief Executive Officer, President and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on March 28, 2003 by the following persons on behalf of the Registrant, in the capacities indicated. SIGNATURE TITLE /s/ David W. Anderson Chairman of the Board --------------------- David W. Anderson /s/Martin J. O'Dowd Chief Executive Officer, President, Secretary ------------------- Martin J. O'Dowd and Director (principal executive officer) /s/Kenneth J. Stanecki Chief Financial Officer (principal accounting officer) ---------------------- Kenneth J. Stanecki /s/ Thomas J. Brosig Director -------------------- Thomas J. Brosig /s/ Richard L. Monfort Director ---------------------- Richard L. Monfort /s/ K. Jeffrey Dahlberg Director ----------------------- K. Jeffrey Dahlberg /s/ Dean Riesen Director --------------- Dean Riesen CERTIFICATIONS I, Martin J. O'Dowd, certify that: 1. I have reviewed this annual report on Form 10-K/A of Famous Dave's of America, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: April 14, 2003 /s/ Martin J. O'Dowd Martin J. O'Dowd President and Chief Executive Officer 28 I, Kenneth J. Stanecki, certify that: 1. I have reviewed this annual report on Form 10-K/A of Famous Dave's of America, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: i. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; ii. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and iii. presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): i. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and ii. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: April 14, 2003 /s/ Kenneth J. Stanecki Kenneth J. Stanecki Chief Financial Officer 29 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO. - ----------- ----------- -------- 3.1 Articles of Incorporation, incorporated by reference from Exhibit 3.1 to our Registration Statement on Form SB-2 (File No. 333-10675) filed with the Securities and Exchange Commission on August 23, 1996 3.2 Bylaws, incorporated by reference from Exhibit 3.2 to the Registration Statement on Form SB-2 (File No. 333-10675) filed on August 23, 1996 10.1 Lease Agreement dated as of January 1, 1996 by and between S&D Land Holdings, Inc. and Famous Dave's of Minneapolis, Inc. (Linden Hills), incorporated by reference from Exhibit 10.1 to the Registration Statement on Form SB-2 (File No. 333-10675) filed on August 23, 1996 10.2 Lease Agreement dated as of January 1, 1996 by and between S&D Land Holdings, Inc. and Famous Dave's of Minneapolis, Inc. (Highland Park), incorporated by reference from Exhibit 10.2 to the Registration Statement on Form SB-2 (File No. 333-10675) filed on August 23, 1996 10.3 Sublease Agreement dated as of January 1, 1996 by and between S&D Land Holdings, Inc. and Famous Dave's of Minneapolis, Inc. (Roseville), incorporated by reference from Exhibit 10.4 to the Registration Statement on Form SB-2 (File No. 333-10675) filed on August 23, 1996 10.4 Trademark License Agreement between Famous Dave's of America, Inc. and Grand Pines Resorts, Inc., incorporated by reference from Exhibit 10.11 to the Registration Statement on Form SB-2 (File No. 333-10675) filed on August 23, 1996 10.5 Employment Agreement dated as of July 1, 1999 between Famous Dave's of America, Inc. and Martin J. O'Dowd, incorporated by reference from Exhibit 10.2 to Form 10-QSB filed August 18, 1999
EXHIBIT INDEX, CONTINUED 10.6 Agreement, dated as of January 21, 2000, by and between S&D Land Holdings, Inc., Grand Pines Resorts, Inc. and Famous Dave's of America, Inc., incorporated by reference from Exhibit 10.19 to Form 10-Q filed May 16, 2000 10.7 Promissory Note, dated January 21, 2000, by Famous Dave's of America, Inc. and payable to S&D Land Holdings, Inc., in the initial principal amount of $750,000, incorporated by reference from Exhibit 10.20 to Form 10-Q filed May 16, 2000 10.8 Loan Agreement, dated as of January 21, 2000, by and between FFCA Acquisition Corporation and MinWood Partners, Inc., incorporated by reference from Exhibit 10.21 to Form 10-Q filed May 16, 2000 10.9 Master Lease, dated as of January 21, 2000, by and between MinWood Partners, Inc. and Famous Dave's of America, Inc., incorporated by reference from Exhibit 10.22 to Form 10-Q filed May 16, 2000 10.10 Loan Agreement, dated as of August 4, 2000, by and between FFCA Funding Corporation and FDA Properties, Inc., incorporated by reference from Exhibit 10.13 to Form 10-K filed March 29, 2001 10.11 Master Lease, dated as of August 4, 2000, by and between FDA Properties, Inc. and Famous Dave's of America, Inc., incorporated by reference from Exhibit 10.5 to Form 10-K filed March 29, 2001 10.12 FUMUME, LLC Operating Agreement, incorporated by reference from Exhibit 10.1 to Form 10-Q filed August 13, 2001 10.13 Contribution Agreement, dated as of May 31, 2001, by and between Famous Dave's Ribs-U, Inc., and FUMUME, LLC. Agreement, incorporated by reference from Exhibit 10.2 to Form 10-Q filed August 13, 2001 10.14 Management Agreement, dated as of May 18, 2001, by and among FUMUME, LLC, FUMUME II, LLC, FUMUME III, LLC, and Famous Dave's Ribs-U, Inc. Agreement, incorporated by reference from Exhibit 10.3 to Form 10-Q filed August 13, 2001
EXHIBIT INDEX, CONTINUED 10.15 Assignment and Assumption of Lease, dated as of May 18, 2001 dated September 16, 1997, between Famous Dave's Ribs-U, Inc. and FUMUME II, LLC (Chicago) Agreement, incorporated by reference from Exhibit 10.4 to Form 10-Q filed August 13, 2001 10.16 Re-affirmation of Guaranty, dated as of May 31, 2001, by Famous Dave's of America, Inc. of obligations under Lease dated September 16, 1997, between Famous Dave's Ribs-U, Inc., predecessor-in-interest of FUMUME II, LLC, and D&H Building Corporation. Agreement, incorporated by reference from Exhibit 10.5 to Form 10-Q filed August 13, 2001 10.17 Service Mark License Agreement, dated as of May 31, 2001, by and between Famous Dave's of America, Inc. and FUMUME, LLC. Agreement, incorporated by reference from Exhibit 10.6 to Form 10-Q filed August 13, 2001 10.18 Amendment No. 1 to Employment Agreement dated September 1, 2001 between Famous Dave's of America, Inc. and Martin J. O'Dowd, incorporated by reference from Exhibit 10.1 to Form 10-Q filed November 14, 2001 10.19 Area Development Option Agreement by and among Famous Dave's of America, Inc. and Martin O'Dowd, incorporated by reference from Exhibit 10.2 to Form 10-Q filed November 14, 2001 10.20 1997 Employee Stock Option Plan (as amended through May 22, 2002), incorporated by reference from Exhibit 10.11 to Form 10-Q filed August 14, 2002 10.21 1995 Stock Option and Compensation Plan (as amended through May 22, 2002), incorporated by reference from Exhibit 10.2 to Form 10-Q filed August 14, 2002 10.22 1998 Director Stock Option Plan (as amended through May 22, 2002), incorporated by reference from Exhibit 10.3 to Form 10-Q filed August 14, 2002 21 Subsidiaries of Famous Dave's of America, Inc., incorporated by reference from Exhibit 21 to Form 10-K filed on March 28, 2003. 23.1 Consent of Grant Thornton LLP 23.2 Consent of Virchow, Krause & Company, LLP 99.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Financial Statements of Fumume, LLC and subsidiaries for the fiscal years ended December 30, 2001 and December 29, 2002
EX-23.1 3 c75666aexv23w1.txt CONSENT OF GRANT THORNTON LLP Exhibit 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated January 31, 2003 (except for Note 17 to the financial statements, as to which the date is March 21, 2003), accompanying the consolidated financial statements included in the Annual Report of Famous Dave's of America, Inc. on Form 10-K/A for the year ended December 29, 2002. We hereby consent to the incorporation by reference of said report in the Registration Statements of Famous Dave's of America, Inc. on Forms S-3 (File No.'s 333-86358, 333-48492, 333-95311, 333-54562, 333-65428 & 333-73504) and Forms S-8 (File No.'s 333-88928, 333-88930, 333-88932, 333-16299, 333-49939 & 333-49965). /s/ GRANT THORNTON LLP Minneapolis, Minnesota April 14, 2003 EX-23.2 4 c75666aexv23w2.txt CONSENT OF VIRCHOW, KRAUSE & COMPANY, LLP Exhibit 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Amendment No. 1 to Form 10-K into the Company's previously filed Registration Statements on Form S-3 (File No.'s 333-86358, 333-48492, 333-95311, 333-54562, 333-65428 & 333-73504) and Form S-8 (File No.'s 333-88928, 333-88930, 333-88932, 333-16299, 333-49939 & 333-49965). /s/ Virchow, Krause & Company, LLP Minneapolis, Minnesota April 14, 2003 EX-99.1 5 c75666aexv99w1.txt CERTIFICATION PURSUANT TO SECTION 906 Exhibit 99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Famous Dave's of America, Inc. does hereby certify that: a) the Amendment No. 1 to the Annual Report on Form 10-K of Famous Dave's of America, Inc. for the year ended December 29, 2002 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Famous Dave's of America, Inc. Dated: April 14, 2003 /s/ Martin J. O'Dowd -------------------------------------- Martin J. O'Dowd President and Chief Executive Officer Dated: April 14, 2003 /s/ Kenneth J Stanecki -------------------------------------- Kenneth J. Stanecki Chief Financial Officer EX-99.2 6 c75666aexv99w2.txt FINANCIAL STATEMENTS OF FUMUME, LLC FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FUMUME, LLC DECEMBER 29, 2002 AND DECEMBER 30, 2001 CONTENTS
Page ---- REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS............................ 3 FINANCIAL STATEMENTS BALANCE SHEETS............................................................. 4 STATEMENTS OF OPERATIONS................................................... 6 STATEMENTS OF CHANGES IN MEMBERS' EQUITY................................... 7 STATEMENTS OF CASH FLOWS................................................... 8 NOTES TO FINANCIAL STATEMENTS.............................................. 9
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors FUMUME, LLC We have audited the accompanying balance sheets of FUMUME, LLC as of December 29, 2002 and December 30, 2001, and the related statements of operations, members' equity, and cash flows for the year ended December 29, 2002 and the period from inception (April 9, 2001) to December 30, 2001. 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 financial statements referred to above present fairly, in all material respects, the financial position of FUMUME, LLC as of December 29, 2002 and December 30, 2001, and the results of its operations and its cash flows for the year ended December 29, 2002 and the period from inception (April 9, 2001) to December 30, 2001, in conformity with accounting principles generally accepted in the United States of America. /s/ Grant Thornton LLP Minneapolis, Minnesota April 4, 2003 3 FINANCIAL STATEMENTS FUMUME, LLC BALANCE SHEETS DECEMBER 29, 2002 AND DECEMBER 30, 2001
ASSETS 2002 2001 ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ -- $ 536,535 Accounts receivable 170,404 43,808 Inventories 231,095 296,639 Current portion of notes receivable from member 50,332 47,845 Prepaid expenses and other current assets 316,270 278,498 ----------- ----------- Total current assets 768,101 1,203,325 EQUIPMENT-AT COST Leasehold improvements 1,847,761 4,021,616 Equipment and fixtures 1,508,961 1,898,278 ----------- ----------- 3,356,722 5,919,894 Less accumulated depreciation and amortization 351,561 224,921 ----------- ----------- 3,005,161 5,694,973 OTHER ASSETS Goodwill, net of accumulated amortization of $187,419 in 2002 and 2001 3,025,470 3,025,470 Note receivable from member, net of current portion 207,652 253,926 ----------- ----------- 3,233,122 3,279,396 ----------- ----------- $ 7,006,384 $10,177,694 =========== ===========
The accompanying notes are an integral part of these statements. 4
LIABILITIES AND MEMBERS' EQUITY 2002 2001 ------------ ------------ CURRENT LIABILITIES Bank overdraft $ 184,290 $ -- Current maturities of long-term debt 318,388 16,366 Accounts payable 257,717 208,563 Accrued liabilities 670,626 185,025 ------------ ------------ Total current liabilities 1,431,021 409,954 LONG-TERM DEBT, net of current maturities 9,331 304,113 MEMBERS' EQUITY Contributed capital 11,623,322 11,045,406 Accumulated deficit (6,057,290) (1,581,779) ------------ ------------ 5,566,032 9,463,627 ------------ ------------ $ 7,006,384 $ 10,177,694 ============ ============
5 FUMUME, LLC STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 29, 2002 AND PERIOD FROM INCEPTION (APRIL 9, 2001) TO DECEMBER 30, 2001
Period from inception Year ended (April 9, 2001) to December 29, December 30, 2002 2001 --------------- --------------- Revenues $ 7,011,248 $ 2,582,419 Food and beverage costs 2,193,884 739,986 --------------- --------------- Gross Profit 4,817,364 1,842,433 Operating expenses Labor and benefits 1,667,597 667,597 Direct and occupancy 1,493,548 816,221 General and administrative 3,625,642 1,940,061 Impairment write-down 2,500,282 -- --------------- --------------- 9,287,069 3,423,879 --------------- --------------- Operating loss (4,469,705) (1,581,446) Other expense Interest expense 5,806 333 --------------- --------------- 5,806 333 --------------- --------------- NET LOSS $ (4,475,511) $ (1,581,779) =============== ===============
The accompanying notes are an integral part of these statements. 6 FUMUME, LLC STATEMENTS OF CHANGES IN MEMBERS' EQUITY YEAR ENDED DECEMBER 29, 2002 AND PERIOD FROM INCEPTION (APRIL 9, 2001) TO DECEMBER 30, 2001
Contributed Accumulated capital deficit Total ------------ ------------ ------------ Balance at April 9, 2001, date of inception $ -- $ -- $ -- Contributions from members 11,045,406 -- 11,045,406 Net loss -- (1,581,779) (1,581,779) ------------ ------------ ------------ Balance at December 30, 2001 11,045,406 (1,581,779) 9,463,627 Contributions from members 577,916 -- 577,916 Net loss -- (4,475,511) (4,475,511) ------------ ------------ ------------ Balance at December 29, 2002 $ 11,623,322 $ (6,057,290) $ 5,566,032 ============ ============ ============
The accompanying notes are an integral part of these statements. 7 FUMUME, LLC STATEMENTS OF CASH FLOW YEAR ENDED DECEMBER 29, 2002 AND PERIOD FROM INCEPTION (APRIL 9, 2001) TO DECEMBER 30, 2001
Period from inception Year ended (April 9, 2001) to December 29, December 30, 2002 2001 ------------ ------------------ Cash flows from operating activities: Net loss $ (4,475,511) $ (1,581,779) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 576,071 414,220 Impairment write-down 2,500,282 -- Other (14,512) -- Change in assets and liabilities: Accounts receivable (126,596) (43,808) Inventories 65,544 (296,639) Prepaid expenses and other current assets (37,772) (278,498) Accounts payable 49,154 208,563 Accrued liabilities 485,601 185,025 ------------ ------------ Net cash used in operating activities (977,739) (1,392,916) Cash flows from investing activities: Capital expenditures (386,541) (3,256,680) Issuance of note receivable -- (300,000) ------------ ------------ Net cash used in investing activities (386,541) (3,556,680) Cash flows from financing activities: Bank overdraft 184,290 -- Payments on note payables (4,461) (1,312) Proceeds from notes payable -- 320,020 Contributions from members 647,916 5,167,423 ------------ ------------ Net cash provided by financing activities 827,745 5,486,131 ------------ ------------ Net (decrease) increase in cash and cash equivalents (536,535) 536,535 Cash and cash equivalents at beginning of year 536,535 -- ------------ ------------ Cash and cash equivalents at end of year $ -- $ 536,535 ============ ============ Supplemental disclosures of cash flow information: Cash paid during the year for interest $ 1,627 $ 333 Non-cash investing and financing activities: Initial contribution of tangible and intangible assets $ -- $ 5,877,983 Note receivable reduction through contributed capital distribution $ 70,000 $ --
The accompanying notes are an integral part of these statements. 8 FUMUME, LLC NOTES TO FINANCIAL STATEMENTS DECEMBER 29, 2002 AND DECEMBER 30, 2001 NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FUMUME, LLC ("the Company") was formed on April 9, 2001 to operate Isaac Hayes themed restaurants. A Chicago, Illinois restaurant was opened in May 2001 and a Memphis, Tennessee restaurant was opened in October 2001. A summary of the Company's significant accounting policies consistently applied in the preparation of the accompanying financial statements follows: Fiscal Year The Company has adopted a 52/53 week accounting period ending on the Sunday nearest December 31 of each year. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains its cash balances in two financial institutions, which at times, may exceed federally insured limits. Accounts Receivable The Company considers accounts receivable to be fully collectible, accordingly, no allowance for doubtful accounts has been established. If amounts become uncollectible, they will be charged to operations when that determination is made. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support amounts due. Revenue Recognition Revenue is recorded at the time food and beverages are served. 9 FUMUME, LLC NOTES TO FINANCIAL STATEMENTS-CONTINUED DECEMBER 29, 2002 AND DECEMBER 30, 2001 NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Depreciation Equipment, fixtures and leasehold improvements are recorded at cost. Improvements are capitalized while repair and maintenance costs are charged to operations when incurred. Equipment and fixtures are depreciated using the straight-line method over estimated useful lives ranging from three to seven years. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term, including renewal options, or the estimated useful life of the assets which is 20 years. Inventories Inventories consist principally of food, beverages and retail goods and are recorded at the lower of cost (first-in, first-out) or market. Advertising Costs The Company expenses advertising costs when incurred. Advertising costs were $231,222 for the year ending December 29, 2002 and $76,661 for the period from inception (April 9, 2001) to December 30, 2001. Income Taxes Income taxes on earnings of the Company are payable personally by the members. Accordingly, no provision has been made in the financial statements for Federal and state income taxes. The Company's intention is to make distributions to the members sufficient to pay income taxes resulting from the effect, if any, of the Company's earnings on their personal income tax returns. Recoverability of Long-Lived Assets Pursuant to Statement of Financial Accounting Standards (SFAS) No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, the Company evaluates long-lived assets for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows. 10 FUMUME, LLC NOTES TO FINANCIAL STATEMENTS-CONTINUED DECEMBER 29, 2002 AND DECEMBER 30, 2001 NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued A restaurant is deemed to be impaired if a forecast of undiscounted future operating cash flows directly related to the restaurant is less than its carrying amount. If a restaurant is determined to be impaired, the loss is measured as the amount by which the carrying amount of the restaurant exceeds its fair value. Fair value is an estimate based on the best information available, including prices for similar assets or the results of valuation techniques such as undiscounted estimated future cash flows as if the decision to continue to use the impaired restaurant was a new investment decision. The Company generally measures fair value by discounting estimated future cash flows. Considerable management judgment is necessary to estimate undiscounted future cash flows. Accordingly, actual results could vary significantly from such estimates. During the year ended December 29, 2002, the Company recorded an impairment charge of $2,500,282 related to the Chicago restaurant site. During the period from inception (April 9, 2001) to December 30, 2001, the Company recorded no impairment charges. Fair Values of Financial Instruments Due to their short-term nature, the carrying value of current financial assets and liabilities approximate their fair values. The fair value of borrowings, if recalculated based on current interest rates, would not significantly differ from the recorded amounts. Goodwill and Change in Accounting Principle The Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142), on January 1, 2002. This statement provides that goodwill and intangible assets with indefinite lives, should not be amortized but reviewed for impairment annually, or more frequently if indicators of impairment arise. Accordingly, with the adoption of SFAS 142 in 2002, the Company discontinued the amortization of goodwill. The information presented below reflects adjustments to information reported in 2001 as if SFAS 142 had been applied in 2001. The adjustment includes the effect of not amortizing goodwill.
Period from inception Year ended (April 9, 2001) to December 29, December 30, 2002 2001 ------------- ------------- Reported net loss $ (4,475,511) $ (1,581,779) Add back: goodwill amortization -- 187,419 ------------- ------------- $ (4,475,511) $ (1,394,360) ============= =============
11 FUMUME, LLC NOTES TO FINANCIAL STATEMENTS-CONTINUED DECEMBER 29, 2002 AND DECEMBER 30, 2001 NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued The Company assesses the recoverability of goodwill on an annual basis. Impairment is tested at the concept level for goodwill based upon the historical cash flow and other relevant facts and circumstances as the primary basis for the Company's estimates of future cash flows. A concept is deemed to be impaired if a forecast of undiscounted future operating cash flows directly related to the concept is less than its carrying amount of fixed assets and goodwill. Fair value is an estimate based on the best information available, including prices for similar assets or the results of valuation techniques such as undiscounted estimated future cash flows as if the decision to continue to use the concept was a new investment decision. The Company tested goodwill for impairment at the January 1, 2002 transition date and at December 29, 2002, and determined that no impairment existed. New Accounting Pronouncements In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company believes the adoption of SFAS No. 143 will not have a material effect on the Company's financial position or results of operations. In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS 145 streamlines the reporting of debt extinguishments and requires that only gains and losses from extinguishments meeting the criteria in Accounting Policies Opinion 30 will be classified as extraordinary. The Company has chosen not to early-adopt SFAS No. 145 and believes the adoption of SFAS No. 145 will not have a material effect on its financial position or its results of operations. In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses accounting and processing for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue 94-3. SFAS No. 146 requires the recognition of a liability for a cost associated with an exit or disposal activity when the liability is incurred versus the date a company commits to an exit plan. In addition, SFAS No. 146 states the liability should be initially measured at fair value. The requirements of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes the adoption of SFAS No. 146 will not have a material adverse effect on its financial position or its results of operations. 12 FUMUME, LLC NOTES TO FINANCIAL STATEMENTS-CONTINUED DECEMBER 29, 2002 AND DECEMBER 30, 2001 NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Accounting Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes 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, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE B-FORMATION OF COMPANY The Company was formed on April 9, 2001 through the contribution of the following:
Equipment and Intangible leasehold Member Cash assets improvements Total Units ------------ ------------ ------------ ------------ ------------ Lifestyle Ventures, LLC $ 1,056,510 $ 873,490 $ -- $ 1,930,000 22,000 H&H Holding Company, LLC -- 1,580,000 -- 1,580,000 18,000 Famous Dave's of America, Inc. 825,507 9,399 2,665,094 3,500,000 40,000 Jack Belz 1,000,000 750,000 -- 1,750,000 20,000 ------------ ------------ ------------ ------------ ------------ $ 2,882,017 $ 3,212,889 $ 2,665,094 $ 8,760,000 100,000 ============ ============ ============ ============ ============
The total initial contribution to the Company was $8,760,000. Famous Dave's of America, Inc. is required to fund the Company's subsequent cash losses. This obligation will terminate with respect to the Chicago club if after any two-year period there are cumulative operating losses. With respect to the Memphis, club this obligation will terminate if cumulative operating losses exceed $2.0 million or if after any five-year period there are cumulative operating losses. Additional contributions to the Company under this obligation were $577,916 for the year ended December 31, 2002 and $2,285,406 for the period from inception (April 9, 2001) to December 31, 2001. The units were valued based on the fair market value of the cash and equipment and leasehold improvements contributed by Famous Dave's of America, Inc. of $825,507 and $2,665,094, in exchange for 40,000 units. Goodwill was calculated as the fair market value of the units, as described above, less any cash contributed. 13 FUMUME, LLC NOTES TO FINANCIAL STATEMENTS-CONTINUED DECEMBER 29, 2002 AND DECEMBER 30, 2001 NOTE C-INVENTORIES Inventories consisted of the following at:
December 29, December 30, 2002 2001 ------------- ------------- Food and beverages $ 45,069 $ 92,538 Retail goods 8,841 30,350 Smallwares and supplies 177,185 173,751 ------------- ------------- $ 231,095 $ 296,639 ============= =============
NOTE D-NOTE RECEIVABLE During November 2001, the Company signed a note receivable with one of its members for $300,000. The note bears interest at 9% annually and is due in quarterly installments of $17,500, first applied to interest and then to principal, with the entire note due before December 2006. Subsequent to December 29, 2002, this note was forgiven - see Note H. NOTE E-LONG-TERM DEBT Long-term debt consists of the following at:
December 29, December 30, 2002 2001 ------------ ------------ Note payable to member; interest at 9%; payable in quarterly installments of $8,925 applied first to interest then principal, remaining balance due December 2006 $ 168,783 $ 153,903 Note payable to member; interest at 9%, payable in quarterly installments of $8,575 applied first to interest then to principal with remaining balance due December 2006 144,690 147,868 Other 14,246 18,708 ------------ ------------ 327,719 320,479 Less current maturities 318,388 16,366 ------------ ------------ $ 9,331 $ 304,113 ============ ============
14 FUMUME, LLC NOTES TO FINANCIAL STATEMENTS-CONTINUED DECEMBER 29, 2002 AND DECEMBER 30, 2001 NOTE E-LONG-TERM DEBT-Continued Payments due on the notes payable to members were not made in 2002. This resulted in the notes being in default and the classification of all outstanding notes payable as current. Subsequent to December 29, 2002, these notes were paid in full or forgiven - see Note H. NOTE F-RELATED PARTY TRANSACTIONS During the year ended December 29, 2002, the Company had transactions with various members. They paid Famous Dave's of America, Inc. $494,513 for management fees and the reimbursement of 2001 miscellaneous operating, construction and Chicago equipment rental expenses, Lifestyle Ventures, LLC $44,293 for facility support and miscellaneous expenses, and Peabody Place, LLC (a company owned by Jack Belz) $627,660 for rent of the Memphis facility. During the period from inception (April 9, 2001) to December 30, 2001, the Company paid Lifestyle Ventures, LLC $6,906 for facility support and miscellaneous expenses, and Peabody Place, LLC (a company owned by Jack Belz) $232,931 for rent of the Memphis facility. The Company has a note receivable outstanding with a member, H&H Holding, LLC, as of December 29, 2002 and December 30, 2001 - see Note D. They also have two notes payable outstanding to members, Famous Dave's of America, Inc. and Jack Belz, as of December 29, 2002 and December 30, 2001 - see Note E. NOTE G-COMMITMENTS AND CONTINGENCIES The Company leases its two restaurant facilities. The lease agreements provide for annual rentals (including allocated occupancy costs), subject to a rent escalation and annual operating cost adjustment clauses. The Chicago, Illinois facility lease expires in May 2008 and the Memphis, Tennessee facility lease expires in September 2016. Rent expense was $979,000 and $394,000 for the year ended December 29, 2002 and for the period from inception (April 9, 2001) to December 30, 2001. Subsequent to December 29, 2002, the Company entered into an agreement that reassigned the Chicago, Illinois facility lease to one of its members. The future minimum payments for the Chicago facility have been assumed by an acquiring company (see Note H). No future minimum payments are due as of December 29, 2002 for this facility. 15 FUMUME, LLC NOTES TO FINANCIAL STATEMENTS-CONTINUED DECEMBER 29, 2002 AND DECEMBER 30, 2001 NOTE G-COMMITMENTS AND CONTINGENCIES-Continued Future minimum payments are as follows for the Memphis, Tennessee facility lease for the years ending: 2003 $ 499,000 2004 499,000 2005 499,000 2006 509,000 2007 558,000 Thereafter 5,300,000
NOTE H-SUBSEQUENT EVENTS In February 2003, the Company redeemed the membership interest held by Famous Dave's of America, Inc., consisting of 40,000 membership units. In exchange for its membership units, Famous Dave's of America, Inc. agreed to take all the assets and the lease obligation of the Chicago, Illinois facility. These membership units were then reissued to another member, Jack Belz. Also in accordance with this arrangement, the Company's $300,000 note receivable with H&H Holding Company and the Company's note payable to Famous Dave's of America, Inc. were forgiven. The Company's note payable with Jack Belz was repaid in full. 16 -----END PRIVACY-ENHANCED MESSAGE-----