Nevada | 03-0606420 | |
(State or other jurisdiction of incorporation | (I.R.S. Employer Identification No.) | |
or organization) |
Exhibit Number | Description | ||
99.1 | Audited consolidated balance sheets of A Sure Wing, LLC as of December 28, 2014 and December 29, 2013 the related consolidated statements of income, members’ equity, and cash flows for the years ended December 28, 2014 and December 29, 2013 and the notes to consolidated financial statements related thereto. | ||
99.2 | The unaudited consolidated balance sheets of A Sure Wing, LLC June 28, 2015 and December 28, 2014 and the related unaudited consolidated statements of income and members’ equity for the second quarter ended June 28, 2015 and June 29, 2014 and the notes to consolidated financial statements related thereto. | ||
99.3 | Unaudited Pro Forma Combined Financial Statements of Diversified Restaurant Holdings, Inc. |
Date: September 3, 2015 | DIVERSIFIED RESTAURANT HOLDINGS, INC. | ||
By: | /s/ T. Michael Ansley | ||
T. Michael Ansley | |||
Chairman of the Board, President, Chief Executive Officer, and Principal Executive Officer | |||
By: | /s/ David G. Burke | ||
Chief Financial Officer, Treasurer, Principal Financial Officer, and Principal Accounting Officer | |||
Exhibit Number | Description | ||
99.1 | Audited consolidated balance sheets of A Sure Wing, LLC as of December 28, 2014 and December 29, 2013 the related consolidated statements of operations, members’ equity, and cash flows for the years ended December 28, 2014 and December 29, 2013 and the notes to consolidated financial statements related thereto. | ||
99.2 | The unaudited consolidated balance sheets of A Sure Wing, LLC June 28, 2015 and December 28, 2014 and the related unaudited consolidated statements of income and members’ equity for the six months ended June 28, 2015 and June 29, 2014 and the notes to consolidated financial statements related thereto. | ||
99.3 | Unaudited Pro Forma Combined Financial Statements of Diversified Restaurant Holdings, Inc. |
December 28, | December 29, | |||||||
ASSETS | 2014 | 2013 | ||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 2,640,553 | $ | 2,841,640 | ||||
Investments | 500,000 | — | ||||||
Accounts receivable | 153,375 | 289,003 | ||||||
Inventory | 357,384 | 302,412 | ||||||
Prepaid assets | 23,909 | 65,878 | ||||||
Notes receivable - related party | 1,989,026 | 1,119,547 | ||||||
Total current assets | 5,664,247 | 4,618,480 | ||||||
Property and equipment, net | 10,919,288 | 8,953,707 | ||||||
Intangible assets, net | 172,084 | 172,543 | ||||||
Other long-term assets | 25,310 | 21,910 | ||||||
Total assets | $ | 16,780,929 | $ | 13,766,640 | ||||
LIABILITIES AND MEMBERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 599,506 | $ | 1,539,892 | ||||
Accrued compensation | 201,328 | 196,772 | ||||||
Other accrued liabilities | 285,280 | 230,254 | ||||||
Current portion of long-term debt | 945,798 | 896,460 | ||||||
Current portion of deferred rent | 485,786 | 402,453 | ||||||
Total current liabilities | 2,517,698 | 3,265,831 | ||||||
Deferred rent, less current portion | 4,482,918 | 3,311,033 | ||||||
Long-term debt, less current portion | 7,159,403 | 6,806,885 | ||||||
Total liabilities | 14,160,019 | 13,383,749 | ||||||
Members' equity | 2,620,910 | 382,891 | ||||||
Total liabilities and members' equity | $ | 16,780,929 | $ | 13,766,640 |
Twelve Months Ended | ||||||||
December 28, 2014 | December 29, 2013 | |||||||
Revenue | $ | 39,808,207 | $ | 35,080,825 | ||||
Operating expenses | ||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||||||||
Food, beverage, and packaging costs | 10,889,490 | 10,060,307 | ||||||
Compensation costs | 9,758,484 | 8,500,818 | ||||||
Occupancy costs | 2,886,671 | 2,861,524 | ||||||
Other operating costs | 7,440,186 | 6,539,159 | ||||||
General and administrative expenses | 2,048,936 | 1,888,635 | ||||||
Depreciation and amortization | 2,301,599 | 1,999,591 | ||||||
Loss on asset disposals | 21,767 | — | ||||||
Total operating expenses | 35,347,133 | 31,850,034 | ||||||
Operating income | 4,461,074 | 3,230,791 | ||||||
Interest expense | (491,295 | ) | (520,816 | ) | ||||
Other income, net | 76,248 | 18,869 | ||||||
Income before income taxes | 4,046,027 | 2,728,844 | ||||||
Income tax expense | 73,243 | 48,822 | ||||||
Net income | $ | 3,972,784 | $ | 2,680,022 |
Members' | |||
Equity | |||
Balances - December 31, 2012 | $ | 485,937 | |
Capital contribution | 350,000 | ||
Distributions | (3,133,068 | ) | |
Net income | 2,680,022 | ||
Balances - December 29, 2013 | $ | 382,891 | |
Distributions | (1,734,765 | ) | |
Net income | 3,972,784 | ||
Balances - December 28, 2014 | $ | 2,620,910 |
Twelve Months Ended | ||||||||
December 28, 2014 | December 29, 2013 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 3,972,784 | $ | 2,680,022 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation and amortization | 2,301,599 | 1,999,591 | ||||||
Loss on asset disposals | 21,767 | — | ||||||
Changes in operating assets and liabilities that provided (used) cash | ||||||||
Accounts receivable | 135,628 | (57,218 | ) | |||||
Inventory | (54,972 | ) | (14,117 | ) | ||||
Prepaid assets | 41,969 | (65,878 | ) | |||||
Intangible assets | (22,697 | ) | (59,734 | ) | ||||
Other long-term assets | (3,400 | ) | — | |||||
Accounts payable | (494,760 | ) | 374,759 | |||||
Accrued liabilities | 59,582 | (7,919 | ) | |||||
Deferred rent | 1,255,218 | 1,118,973 | ||||||
Net cash provided by operating activities | 7,212,718 | 5,968,479 | ||||||
Cash flows from investing activities | ||||||||
Purchase of investments | (500,000 | ) | — | |||||
Collection of principal on notes receivable | 7,883 | 7,512 | ||||||
Finance of notes receivable | (877,362 | ) | — | |||||
Purchases of property and equipment | (4,711,417 | ) | (2,757,574 | ) | ||||
Net cash used in investing activities | (6,080,896 | ) | (2,750,062 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of long-term debt | 1,298,317 | 1,529,938 | ||||||
Repayments of long-term debt | (896,461 | ) | (747,708 | ) | ||||
Capital contributions | — | 350,000 | ||||||
Capital distributions | (1,734,765 | ) | (3,133,068 | ) | ||||
Net cash used in financing activities | (1,332,909 | ) | (2,000,838 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (201,087 | ) | 1,217,579 | |||||
Cash and cash equivalents, beginning of period | 2,841,640 | 1,624,061 | ||||||
Cash and cash equivalents, end of period | $ | 2,640,553 | $ | 2,841,640 |
December 28, 2014 | December 29, 2013 | ||||||||
Equipment | 7,932,310 | 6,774,171 | |||||||
Furniture and fixtures | 749,600 | 670,994 | |||||||
Leasehold improvements | 17,836,747 | 15,708,005 | |||||||
Vehicles | 74,971 | 74,971 | |||||||
Total | 26,593,628 | 23,228,141 | |||||||
Less accumulated depreciation | (15,674,340 | ) | (14,274,434 | ) | |||||
Property and equipment, net | $ | 10,919,288 | $ | 8,953,707 |
December 28, 2014 | December 29, 2013 | |||||||
Note payable - $3.0 million term loan B; payable to General Electric with a senior lien on all ASW’s personal property and fixtures. Scheduled monthly principal payments are based on 120 month amortization plus accrued interest through maturity in July 2019 at which time a balloon payment is due. Interest is charged at a fixed rate of 5.41% plus a variable component. The rate at December 28, 2014 was 6.74%. | $ | 2,450,495 | $ | 2,689,115 | ||||
Note payable - $0.7 million term loan B; payable to General Electric with a senior lien on all ASW’s personal property and fixtures. Scheduled monthly principal payments are based on 36 month amortization plus accrued interest through maturity in July 2015 at which time a balloon payment is due. Interest is charged at a fixed rate of 5.39% plus 90-day LIBOR. The rate at December 28, 2014 was 5.86%. | 140,469 | 369,755 | ||||||
Note payable - $3.0 million term loan C; payable to General Electric with a senior lien on all ASW’s personal property and fixtures. Scheduled monthly principal payments are based on 180 month amortization plus accrued interest through maturity in July 2019 at which time a balloon payment is due. Interest is charged at a fixed rate of 5.71% plus a variable component. The rate at December 28, 2014 was approximately 7.04%. | 2,705,286 | 2,833,641 | ||||||
Note payable - $1.1 million development line of credit payable to General Electric with a senior lien on all ASW’s personal property and fixtures. Scheduled monthly principal payments are based on 84 month amortization plus accrued interest through maturity in February 2020. Interest is charged at a fixed rate of 5.60%. | 852,687 | 990,780 | ||||||
Note payable - $0.9 million development line of credit payable to General Electric with a senior lien on all ASW’s personal property and fixtures. Scheduled monthly principal payments are based on 84 month amortization plus accrued interest through maturity in March 2020. Interest is charged at a fixed rate of 5.60% | 707,561 | 820,054 | ||||||
Note payable - $0.7 million development line of credit payable to General Electric with a senior lien on all ASW’s personal property and fixtures. Scheduled monthly principal payments are based on 84 month amortization plus accrued interest through maturity in August 2021. The rate at December 28, 2014 was approximately 6.25%. | 650,264 | — | ||||||
Note payable - $0.6 million development line of credit payable to General Electric with a senior lien on all ASW’s personal property and fixtures. Scheduled monthly principal payments are based on 84 month amortization plus accrued interest through maturity in August 2021. The rate at December 28, 2014 was approximately 6.25%. | $ | 598,439 | $ | — | ||||
Total long-term debt | 8,105,201 | 7,703,345 | ||||||
Less current portion | (945,798 | ) | (896,460 | ) | ||||
Long-term debt, net of current portion | $ | 7,159,403 | $ | 6,806,885 |
Year | Amount | |||
2015 | $ | 945,798 | ||
2016 | 877,388 | |||
2017 | 934,586 | |||
2018 | 995,544 | |||
2019 | 3,901,529 | |||
Thereafter | 450,356 | |||
Total | $ | 8,105,201 |
Year | Amount | |||
2015 | $ | 2,494,014 | ||
2016 | 2,551,463 | |||
2017 | 2,610,941 | |||
2018 | 2,541,506 | |||
2019 | 2,229,955 | |||
Thereafter | 10,601,787 | |||
Total | $ | 23,029,666 |
• | Level 1 | Quoted market prices in active markets for identical assets and liabilities; |
• | Level 2 | Inputs, other than level 1 inputs, either directly or indirectly observable; and |
• | Level 3 | Unobservable inputs developed using internal estimates and assumptions (there is little or no market data) which reflect those that market participants would use. |
June 28, | December 28, | |||||||
ASSETS | 2015 | 2014 | ||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 2,202,440 | $ | 2,640,553 | ||||
Investments | — | 500,000 | ||||||
Accounts receivable | 29,084 | 153,375 | ||||||
Inventory | 369,788 | 357,384 | ||||||
Prepaid assets | 37,546 | 23,909 | ||||||
Notes receivable - related party | 2,012,258 | 1,989,026 | ||||||
Total current assets | 4,651,116 | 5,664,247 | ||||||
Property and equipment, net | 9,750,501 | 10,919,288 | ||||||
Intangible assets, net | 159,664 | 172,084 | ||||||
Other long-term assets | 25,310 | 25,310 | ||||||
Total assets | $ | 14,586,591 | $ | 16,780,929 | ||||
LIABILITIES AND MEMBERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 824,742 | $ | 599,506 | ||||
Accrued compensation | 32,104 | 201,328 | ||||||
Other accrued liabilities | 145,906 | 285,280 | ||||||
Current portion of long-term debt | 945,798 | 945,798 | ||||||
Current portion of deferred rent | 485,786 | 485,786 | ||||||
Total current liabilities | 2,434,336 | 2,517,698 | ||||||
Deferred rent, less current portion | 4,252,845 | 4,482,918 | ||||||
Long-term debt, less current portion | 6,638,245 | 7,159,403 | ||||||
Total liabilities | 13,325,426 | 14,160,019 | ||||||
Members' equity | 1,261,165 | 2,620,910 | ||||||
Total liabilities and members' equity | $ | 14,586,591 | $ | 16,780,929 |
Six Months Ended | ||||||||
June 28, 2015 | June 29, 2014 | |||||||
Revenue | $ | 20,995,948 | $ | 19,414,905 | ||||
Operating expenses | ||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||||||||
Food, beverage, and packaging costs | 5,939,531 | 5,166,934 | ||||||
Compensation costs | 5,011,365 | 4,844,346 | ||||||
Occupancy costs | 1,786,664 | 1,608,457 | ||||||
Other operating costs | 3,758,523 | 3,678,448 | ||||||
General and administrative expenses | 1,158,231 | 1,037,207 | ||||||
Depreciation and amortization | 1,185,235 | 1,110,751 | ||||||
Total operating expenses | 18,839,549 | 17,446,143 | ||||||
Operating income | 2,156,399 | 1,968,762 | ||||||
Interest expense | (233,335 | ) | (244,888 | ) | ||||
Other income, net | 54,964 | 30,250 | ||||||
Income before income taxes | 1,978,028 | 1,754,124 | ||||||
Income tax expense | 82,550 | 73,242 | ||||||
Net income | $ | 1,895,478 | $ | 1,680,882 |
Members' | |||
Equity | |||
Balances - December 29, 2013 | $ | 382,891 | |
Distributions | (1,127,386 | ) | |
Net income | 1,680,882 | ||
Balances - June 29, 2014 | $ | 936,387 | |
Balances - December 28, 2014 | $ | 2,620,910 | |
Distributions | (3,255,223 | ) | |
Net income | 1,895,478 | ||
Balances - June 28, 2015 | $ | 1,261,165 |
Six Months Ended | ||||||||
June 28, 2015 | June 29, 2014 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 1,895,478 | $ | 1,680,882 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation and amortization | 1,185,235 | 1,110,751 | ||||||
Changes in operating assets and liabilities that provided (used) cash | ||||||||
Accounts receivable | 124,291 | 187,301 | ||||||
Inventory | (12,404 | ) | (50,440 | ) | ||||
Prepaid assets | (13,637 | ) | (25,783 | ) | ||||
Intangible assets | — | (19,500 | ) | |||||
Other long-term assets | — | (3,400 | ) | |||||
Accounts payable | 225,236 | 305,675 | ||||||
Accrued liabilities | (308,598 | ) | (78,135 | ) | ||||
Deferred rent | (230,073 | ) | 960,821 | |||||
Net cash provided by operating activities | 2,865,528 | 4,068,172 | ||||||
Cash flows from investing activities | ||||||||
Purchase of investments | — | (500,000 | ) | |||||
Proceeds from sale of investments | 500,000 | — | ||||||
Collection of principal on notes receivable | 4,086 | 3,894 | ||||||
Finance of notes receivable | (27,318 | ) | (410,745 | ) | ||||
Purchases of property and equipment | (4,028 | ) | (3,207,947 | ) | ||||
Net cash provided by (used in) investing activities | 472,740 | (4,114,798 | ) | |||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of long-term debt | — | 1,298,316 | ||||||
Repayments of long-term debt | (521,158 | ) | (417,356 | ) | ||||
Capital distributions | (3,255,223 | ) | (1,127,386 | ) | ||||
Net cash used in financing activities | (3,776,381 | ) | (246,426 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (438,113 | ) | (293,052 | ) | ||||
Cash and cash equivalents, beginning of period | 2,640,553 | 2,841,640 | ||||||
Cash and cash equivalents, end of period | $ | 2,202,440 | $ | 2,548,588 |
June 28, 2015 | December 28, 2014 | ||||||||
Equipment | 7,932,310 | 7,932,310 | |||||||
Furniture and fixtures | 749,600 | 749,600 | |||||||
Leasehold improvements | 17,845,826 | 17,836,747 | |||||||
Vehicles | 74,971 | 74,971 | |||||||
Total | 26,602,707 | 26,593,628 | |||||||
Less accumulated depreciation | (16,852,206 | ) | (15,674,340 | ) | |||||
Property and equipment, net | $ | 9,750,501 | $ | 10,919,288 |
• | Level 1 | Quoted market prices in active markets for identical assets and liabilities; |
• | Level 2 | Inputs, other than level 1 inputs, either directly or indirectly observable; and |
• | Level 3 | Unobservable inputs developed using internal estimates and assumptions (there is little or no market data) which reflect those that market participants would use. |
ASSETS | DRH June 28, 2015 | ASW June 28, 2015 | Pro forma adjustments | Ref. | Pro forma combined | ||||||||||||
Current assets | |||||||||||||||||
Cash and cash equivalents | $ | 17,093,963 | $ | 2,202,440 | $ | (2,202,440 | ) | A | |||||||||
21,750 | D | 17,115,713 | |||||||||||||||
Accounts receivable | 230,237 | 29,084 | (29,084 | ) | A | 230,237 | |||||||||||
Inventory | 1,471,008 | 369,788 | 21,694 | D | 1,862,490 | ||||||||||||
Other current assets | 767,068 | 37,546 | (37,546 | ) | A | 767,068 | |||||||||||
Notes receivable - related party | — | 2,012,258 | (2,012,258 | ) | A | — | |||||||||||
Total current assets | 19,562,276 | 4,651,116 | (4,237,884 | ) | 19,975,508 | ||||||||||||
Deferred income taxes | 5,127,678 | — | — | 5,127,678 | |||||||||||||
Property and equipment, net | 74,013,429 | 9,750,501 | 4,242,499 | D | 88,006,429 | ||||||||||||
Intangible assets, net | 2,951,391 | 159,664 | 457,680 | D | 3,568,735 | ||||||||||||
Goodwill | 10,998,630 | — | 38,748,452 | D | 49,747,082 | ||||||||||||
Other long-term assets | 1,083,875 | 25,310 | (25,310 | ) | A | 1,083,875 | |||||||||||
Total assets | $ | 113,737,279 | $ | 14,586,591 | $ | 39,185,437 | $ | 167,509,307 | |||||||||
LIABILITIES AND EQUITY | |||||||||||||||||
Current liabilities | |||||||||||||||||
Accounts payable | $ | 4,778,862 | $ | 824,742 | $ | (824,742 | ) | A | |||||||||
63,231 | D | 4,842,093 | |||||||||||||||
Accrued compensation | 2,349,796 | 32,104 | (32,104 | ) | A | 2,349,796 | |||||||||||
Other accrued liabilities | 3,589,091 | 145,906 | (145,906 | ) | A | 3,589,091 | |||||||||||
Current portion of long-term debt | 10,959,938 | 945,798 | (945,798 | ) | A | ||||||||||||
4,470,832 | C | 15,430,770 | |||||||||||||||
Current portion of deferred rent | 190,474 | 485,786 | (485,786 | ) | A | 190,474 | |||||||||||
Total current liabilities | 21,868,161 | 2,434,336 | 2,099,727 | 26,402,224 | |||||||||||||
Deferred rent, less current portion | 3,255,952 | 4,252,845 | (4,252,845 | ) | A | 3,255,952 | |||||||||||
Unfavorable operating leases | 656,242 | — | 58,797 | D | 715,039 | ||||||||||||
Other long-term liabilities | 3,601,321 | — | — | 3,601,321 | |||||||||||||
Long-term debt, less current portion | 54,359,780 | 6,638,245 | (6,638,245 | ) | A | ||||||||||||
— | — | 49,179,168 | C | 103,538,948 | |||||||||||||
Total liabilities | 83,741,456 | 13,325,426 | 40,446,602 | 137,513,484 | |||||||||||||
Equity | |||||||||||||||||
Common stock | 2,580 | — | — | 2,580 | |||||||||||||
Additional paid-in capital | 35,772,674 | — | — | 35,772,674 | |||||||||||||
Accumulated other comprehensive loss | (384,325 | ) | — | — | (384,325 | ) | |||||||||||
Retained earnings (accumulated deficit) | (5,395,106 | ) | 1,261,165 | (1,261,165 | ) | B | (5,395,106 | ) | |||||||||
Total equity | 29,995,823 | 1,261,165 | (1,261,165 | ) | 29,995,823 | ||||||||||||
Total liabilities and equity | $ | 113,737,279 | $ | 14,586,591 | $ | 39,185,437 | $ | 167,509,307 |
DRH December 28, 2014 | ASW December 28, 2014 | Pro forma adjustments | Ref. | Pro forma combined | |||||||||||||
Revenue | $ | 128,413,448 | $ | 39,808,207 | $ | — | $ | 168,221,655 | |||||||||
Operating expenses | |||||||||||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | |||||||||||||||||
Food, beverage, and packaging costs | 37,058,821 | 10,889,490 | — | 47,948,311 | |||||||||||||
Compensation costs | 33,337,000 | 9,758,484 | — | 43,095,484 | |||||||||||||
Occupancy costs | 7,205,420 | 2,886,671 | 2,677 | E | 10,094,768 | ||||||||||||
Other operating costs | 27,214,208 | 7,440,186 | — | 34,654,394 | |||||||||||||
General and administrative expenses | 8,786,520 | 2,048,936 | (61,851 | ) | I | ||||||||||||
(867,304 | ) | J | 9,906,301 | ||||||||||||||
Pre-opening costs | 3,473,664 | — | — | 3,473,664 | |||||||||||||
Depreciation and amortization | 10,956,951 | 2,301,599 | 489,553 | F | 13,748,103 | ||||||||||||
Loss on asset disposals | 1,023,144 | 21,767 | — | 1,044,911 | |||||||||||||
Total operating expenses | 129,055,728 | 35,347,133 | (436,925 | ) | 163,965,936 | ||||||||||||
Operating income (loss) | (642,280 | ) | 4,461,074 | 436,925 | 4,255,719 | ||||||||||||
Interest expense | (2,274,041 | ) | (491,295 | ) | 491,295 | G | |||||||||||
(1,904,072 | ) | G | (4,178,113 | ) | |||||||||||||
Other income (expense), net | (58,912 | ) | 76,248 | — | 17,336 | ||||||||||||
Income (loss) before income taxes | (2,975,233 | ) | 4,046,027 | (975,852 | ) | 94,942 | |||||||||||
Income tax expense (benefit) | (1,706,736 | ) | 73,243 | 1,043,860 | H | (589,633 | ) | ||||||||||
Net income (loss) | $ | (1,268,497 | ) | $ | 3,972,784 | $ | (2,019,712 | ) | $ | 684,575 | |||||||
Basic earnings per share | $ | (0.05 | ) | $ | — | $ | — | $ | 0.03 | ||||||||
Fully diluted earnings per share | $ | (0.05 | ) | $ | — | $ | — | $ | 0.03 | ||||||||
Weighted average number of common shares outstanding | |||||||||||||||||
Basic | 26,092,919 | — | — | 26,092,919 | |||||||||||||
Diluted | 26,092,919 | — | — | 26,193,996 |
DRH June 28, 2015 | ASW June 28, 2015 | Pro forma adjustments | Ref. | Pro forma combined | |||||||||||||
Revenue | $ | 76,312,170 | $ | 20,995,948 | $ | — | $ | 97,308,118 | |||||||||
Operating expenses | |||||||||||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | |||||||||||||||||
Food, beverage, and packaging costs | 22,009,173 | 5,939,531 | — | 27,948,704 | |||||||||||||
Compensation costs | 19,908,963 | 5,011,365 | — | 24,920,328 | |||||||||||||
Occupancy costs | 4,804,817 | 1,786,664 | 1,339 | E | 6,592,820 | ||||||||||||
Other operating costs | 15,772,029 | 3,758,523 | — | 19,530,552 | |||||||||||||
General and administrative expenses | 8,171,850 | 1,158,231 | (37,122 | ) | I | ||||||||||||
(434,844 | ) | J | 8,858,115 | ||||||||||||||
Pre-opening costs | 1,669,890 | — | — | 1,669,890 | |||||||||||||
Depreciation and amortization | 6,408,023 | 1,185,235 | 239,517 | F | 7,832,775 | ||||||||||||
Impairment and loss on asset disposals | 2,468,467 | — | — | 2,468,467 | |||||||||||||
Total operating expenses | 81,213,212 | 18,839,549 | (231,110 | ) | 99,821,651 | ||||||||||||
Operating income (loss) | (4,901,042 | ) | 2,156,399 | 231,110 | (2,513,533 | ) | |||||||||||
Interest expense | (991,258 | ) | (233,335 | ) | 233,335 | G | |||||||||||
(890,171 | ) | G | (1,881,429 | ) | |||||||||||||
Other income, net | 744,261 | 54,964 | — | 799,225 | |||||||||||||
Income (loss) before income taxes | (5,148,039 | ) | 1,978,028 | (425,726 | ) | (3,595,737 | ) | ||||||||||
Income tax expense (benefit) | (2,092,338 | ) | 82,550 | 527,783 | H | (1,482,005 | ) | ||||||||||
Net income (loss) | $ | (3,055,701 | ) | $ | 1,895,478 | $ | (953,509 | ) | $ | (2,113,732 | ) | ||||||
Basic earnings per share | $ | (0.12 | ) | $ | — | $ | — | $ | (0.08 | ) | |||||||
Fully diluted earnings per share | $ | (0.12 | ) | $ | — | $ | — | $ | (0.08 | ) | |||||||
Weighted average number of common shares outstanding | |||||||||||||||||
Basic | 26,150,518 | — | — | 26,150,518 | |||||||||||||
Diluted | 26,150,518 | — | — | 26,150,518 |
Working capital | $ | 413,231 | |
Fixed assets | 13,993,000 | ||
Intangible assets | 505,000 | ||
Goodwill | 38,748,452 | ||
Favorable lease | 112,344 | ||
Unfavorable lease liability | (58,797 | ) | |
Net cash paid for acquisition | $ | 53,713,230 |
A | Adjustment to eliminate ASW's assets not acquired and ASW's liabilities not assumed. |
B | Adjustment to eliminate the historical members' equity of ASW. |
C | Adjustment to record new debt in conjunction with the acquisition of ASW by DRH. |
D | Adjustment to record the purchase price allocation at June 29, 2015. |
E | Adjustment to record the straight-line amortization of favorable and unfavorable lease obligations in connection with the purchase price allocation. |
F | Adjustment to record the impact of additional depreciation and amortization expense on the increased basis of property and equipment and intangible assets in connection with the purchase price allocation. |
G | Adjustment to a) eliminate historical interest expense on debt that was not assumed by DRH and b) record the impact of interest expense relating to the new debt issued in connection with DRH's acquisition, which bears interest at LIBOR plus a Lease Adjusted Leverage Ratio margin (effective rate of 3.7% for the pro forma periods). |
H | Adjustment to reflect federal income tax expense at DRH's statutory rate of 34% related to a) the pro forma adjustments and b) ASW's pre-tax results that historically had not been subject to corporate taxation. |
I | Eliminate ASW's administrative fees for entity not acquired by DRH. |
J | Eliminate ASW's ownership's guarantee payments for service. DRH will not retain this obligation and will perform these services after the acquisition. |