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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Diversified Restaurant Holdings Inc | NASDAQ:SAUC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.04 | 1.04 | 1.05 | 0 | 01:00:00 |
Nevada
|
03-0606420
|
(State or other jurisdiction
of incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
|
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
ASSETS
|
|
(unaudited)
|
|
|||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
4,665,491
|
|
|
$
|
4,021,126
|
|
Accounts receivable
|
|
103,843
|
|
|
276,238
|
|
||
Inventory
|
|
1,503,617
|
|
|
1,700,604
|
|
||
Prepaid and other assets
|
|
1,171,343
|
|
|
1,305,936
|
|
||
Total current assets
|
|
7,444,294
|
|
|
7,303,904
|
|
||
|
|
|
|
|
||||
Deferred income taxes
|
|
18,020,997
|
|
|
16,250,928
|
|
||
Property and equipment, net
|
|
50,684,927
|
|
|
56,630,031
|
|
||
Intangible assets, net
|
|
2,493,602
|
|
|
2,666,364
|
|
||
Goodwill
|
|
50,097,081
|
|
|
50,097,081
|
|
||
Other long-term assets
|
|
187,084
|
|
|
233,539
|
|
||
Total assets
|
|
$
|
128,927,985
|
|
|
$
|
133,181,847
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
5,135,349
|
|
|
$
|
3,995,846
|
|
Accrued compensation
|
|
1,640,664
|
|
|
2,803,549
|
|
||
Other accrued liabilities
|
|
2,544,416
|
|
|
2,642,269
|
|
||
Current portion of long-term debt
|
|
11,375,468
|
|
|
11,307,819
|
|
||
Current portion of deferred rent
|
|
471,365
|
|
|
194,206
|
|
||
Total current liabilities
|
|
21,167,262
|
|
|
20,943,689
|
|
||
|
|
|
|
|
||||
Deferred rent, less current portion
|
|
2,103,398
|
|
|
2,020,199
|
|
||
Unfavorable operating leases
|
|
531,018
|
|
|
591,247
|
|
||
Other long-term liabilities
|
|
3,316,271
|
|
|
3,859,231
|
|
||
Long-term debt, less current portion
|
|
105,381,002
|
|
|
109,878,201
|
|
||
Total liabilities
|
|
132,498,951
|
|
|
137,292,567
|
|
||
|
|
|
|
|
||||
Commitments and contingencies (Notes 3, 10 and 11)
|
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders' deficit
|
|
|
|
|
||||
Common stock - $0.0001 par value; 100,000,000 shares authorized; 26,848,507 and 26,632,222, respectively, issued and outstanding
|
|
2,623
|
|
|
2,610
|
|
||
Additional paid-in capital
|
|
21,624,434
|
|
|
21,355,270
|
|
||
Accumulated other comprehensive loss
|
|
(795,281
|
)
|
|
(934,222
|
)
|
||
Accumulated deficit
|
|
(24,402,742
|
)
|
|
(24,534,378
|
)
|
||
Total stockholders' deficit
|
|
(3,570,966
|
)
|
|
(4,110,720
|
)
|
||
|
|
|
|
|
||||
Total liabilities and stockholders' deficit
|
|
$
|
128,927,985
|
|
|
$
|
133,181,847
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
Revenue
|
|
$
|
39,262,940
|
|
|
$
|
41,625,312
|
|
|
$
|
123,535,506
|
|
|
$
|
125,719,745
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
|
|
|
|
|
|
|
||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
|
|
|
|
|
|
|
|
|
||||||||
Food, beverage, and packaging costs
|
|
11,569,925
|
|
|
11,402,389
|
|
|
36,529,901
|
|
|
34,881,667
|
|
||||
Compensation costs
|
|
9,991,381
|
|
|
10,288,623
|
|
|
31,125,287
|
|
|
31,112,586
|
|
||||
Occupancy costs
|
|
2,969,250
|
|
|
2,899,508
|
|
|
8,701,927
|
|
|
8,440,075
|
|
||||
Other operating costs
|
|
8,770,406
|
|
|
8,922,440
|
|
|
26,188,432
|
|
|
25,808,943
|
|
||||
General and administrative expenses
|
|
2,301,061
|
|
|
2,375,476
|
|
|
6,724,436
|
|
|
6,896,819
|
|
||||
Pre-opening costs
|
|
79,605
|
|
|
84,650
|
|
|
405,448
|
|
|
654,034
|
|
||||
Depreciation and amortization
|
|
3,244,255
|
|
|
3,626,377
|
|
|
10,149,050
|
|
|
11,212,555
|
|
||||
Loss on asset disposal
|
|
16,578
|
|
|
79,220
|
|
|
302,652
|
|
|
263,371
|
|
||||
Total operating expenses
|
|
38,942,461
|
|
|
39,678,683
|
|
|
120,127,133
|
|
|
119,270,050
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating profit
|
|
320,479
|
|
|
1,946,629
|
|
|
3,408,373
|
|
|
6,449,695
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
(1,822,876
|
)
|
|
(1,439,273
|
)
|
|
(5,041,136
|
)
|
|
(4,324,765
|
)
|
||||
Other income, net
|
|
26,000
|
|
|
11,849
|
|
|
78,307
|
|
|
87,856
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations before income taxes
|
|
(1,476,397
|
)
|
|
519,205
|
|
|
(1,554,456
|
)
|
|
2,212,786
|
|
||||
Income tax benefit (expense) of continuing operations
|
|
933,157
|
|
|
77,504
|
|
|
1,515,453
|
|
|
(89,304
|
)
|
||||
Income (loss) from continuing operations
|
|
(543,240
|
)
|
|
596,709
|
|
|
(39,003
|
)
|
|
2,123,482
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Discontinued operations
|
|
|
|
|
|
|
|
|
||||||||
Loss from discontinued operations before income taxes
|
|
(22,960
|
)
|
|
(2,748,012
|
)
|
|
(155,552
|
)
|
|
(4,593,907
|
)
|
||||
Income tax benefit of discontinued operations
|
|
7,806
|
|
|
762,178
|
|
|
58,191
|
|
|
1,329,278
|
|
||||
Loss from discontinued operations
|
|
(15,154
|
)
|
|
(1,985,834
|
)
|
|
(97,361
|
)
|
|
(3,264,629
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net Loss
|
|
$
|
(558,394
|
)
|
|
$
|
(1,389,125
|
)
|
|
$
|
(136,364
|
)
|
|
$
|
(1,141,147
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share from:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
0.08
|
|
Discontinued operations
|
|
—
|
|
|
(0.07
|
)
|
|
—
|
|
|
(0.12
|
)
|
||||
Basic net earnings (loss) per share
|
|
$
|
(0.02
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share from:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
0.08
|
|
Discontinued operations
|
|
—
|
|
|
(0.07
|
)
|
|
—
|
|
|
(0.12
|
)
|
||||
Diluted net earnings (loss) per share
|
|
$
|
(0.02
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
26,764,776
|
|
|
26,625,615
|
|
|
26,672,057
|
|
|
26,434,238
|
|
||||
Diluted
|
|
26,764,776
|
|
|
26,625,615
|
|
|
26,672,057
|
|
|
26,434,238
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net Loss
|
|
$
|
(558,394
|
)
|
|
$
|
(1,389,125
|
)
|
|
$
|
(136,364
|
)
|
|
$
|
(1,141,147
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
||||||||
Unrealized changes in fair value of interest rate swaps, net of tax of ($150,926), ($183,417), ($71,576) and $544,923, respectively.
|
|
292,974
|
|
|
356,047
|
|
|
138,941
|
|
|
(1,057,790
|
)
|
||||
Total other comprehensive income (loss)
|
|
292,974
|
|
|
356,047
|
|
|
138,941
|
|
|
(1,057,790
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income (loss)
|
|
$
|
(265,420
|
)
|
|
$
|
(1,033,078
|
)
|
|
$
|
2,577
|
|
|
$
|
(2,198,937
|
)
|
|
|
|
|
|
Additional
|
|
Accumulated
Other |
|
|
|
Total
|
|||||||||||
|
Common Stock
|
|
Paid-in
|
|
Comprehensive
|
|
Accumulated
|
|
Stockholders'
|
|||||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Loss
|
|
Deficit
|
|
Equity (Deficit)
|
|||||||||||
Balances - December 27, 2015
|
26,298,725
|
|
|
$
|
2,597
|
|
|
$
|
36,136,319
|
|
|
$
|
(1,006,667
|
)
|
|
$
|
(18,531,897
|
)
|
|
$
|
16,600,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Issuance of restricted shares
|
342,331
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Forfeitures of restricted shares
|
(23,851
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Shares effectively repurchased for required employee withholding taxes
|
(5,940
|
)
|
|
(1
|
)
|
|
(9,325
|
)
|
|
—
|
|
|
—
|
|
|
(9,326
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Employee stock purchase plan
|
21,896
|
|
|
3
|
|
|
31,220
|
|
|
—
|
|
|
—
|
|
|
31,223
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Share-based compensation
|
—
|
|
|
8
|
|
|
351,369
|
|
|
—
|
|
|
—
|
|
|
351,377
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,057,790
|
)
|
|
—
|
|
|
(1,057,790
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income from continuing operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,123,482
|
|
|
2,123,482
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,264,629
|
)
|
|
(3,264,629
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances - September 25, 2016
|
26,633,161
|
|
|
$
|
2,607
|
|
|
$
|
36,509,583
|
|
|
$
|
(2,064,457
|
)
|
|
$
|
(19,673,044
|
)
|
|
$
|
14,774,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances - December 25, 2016
|
26,632,222
|
|
|
$
|
2,610
|
|
|
$
|
21,355,270
|
|
|
$
|
(934,222
|
)
|
|
$
|
(24,534,378
|
)
|
|
$
|
(4,110,720
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Issuance of restricted shares
|
263,332
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Forfeitures of restricted shares
|
(48,850
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Shares effectively repurchased for required employee withholding taxes
|
(22,716
|
)
|
|
(2
|
)
|
|
(59,926
|
)
|
|
—
|
|
|
—
|
|
|
(59,928
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Employee stock purchase plan
|
24,519
|
|
|
2
|
|
|
45,003
|
|
|
—
|
|
|
—
|
|
|
45,005
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Share-based compensation
|
—
|
|
|
13
|
|
|
284,087
|
|
|
—
|
|
|
—
|
|
|
284,100
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
138,941
|
|
|
—
|
|
|
138,941
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adoption of ASU 2016-09 (Note 1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
268,000
|
|
|
268,000
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss from continuing operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39,003
|
)
|
|
(39,003
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97,361
|
)
|
|
(97,361
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances - September 24, 2017
|
26,848,507
|
|
|
$
|
2,623
|
|
|
$
|
21,624,434
|
|
|
$
|
(795,281
|
)
|
|
$
|
(24,402,742
|
)
|
|
$
|
(3,570,966
|
)
|
|
|
Nine Months Ended
|
||||||
|
|
September 24, 2017
|
|
September 25, 2016
|
||||
Cash flows from operating activities
|
|
|
|
|
||||
Net loss
|
|
$
|
(136,364
|
)
|
|
$
|
(1,141,147
|
)
|
Net loss from discontinued operations
|
|
(97,361
|
)
|
|
(3,264,629
|
)
|
||
Net income (loss) from continuing operations
|
|
(39,003
|
)
|
|
2,123,482
|
|
||
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
|
|
|
|
||||
Depreciation and amortization
|
|
10,149,050
|
|
|
11,212,555
|
|
||
Amortization of debt discount and loan fees
|
|
156,951
|
|
|
178,287
|
|
||
Amortization of gain on sale-leaseback
|
|
(99,657
|
)
|
|
(95,878
|
)
|
||
Loss on asset disposals
|
|
302,652
|
|
|
263,371
|
|
||
Share-based compensation
|
|
284,100
|
|
|
351,377
|
|
||
Deferred income taxes
|
|
(1,573,644
|
)
|
|
(100,119
|
)
|
||
Changes in operating assets and liabilities that provided (used) cash
|
|
|
|
|
||||
Accounts receivable
|
|
172,395
|
|
|
(56,139
|
)
|
||
Inventory
|
|
196,987
|
|
|
135,837
|
|
||
Prepaid and other assets
|
|
134,593
|
|
|
(704,206
|
)
|
||
Intangible assets
|
|
(28,729
|
)
|
|
31,763
|
|
||
Other long-term assets
|
|
46,455
|
|
|
746,772
|
|
||
Accounts payable
|
|
1,228,025
|
|
|
(1,049,207
|
)
|
||
Accrued liabilities
|
|
(1,270,506
|
)
|
|
(1,049,327
|
)
|
||
Deferred rent
|
|
137,342
|
|
|
81,177
|
|
||
Net cash provided by operating activities of continuing operations
|
|
9,797,011
|
|
|
12,069,745
|
|
||
Net cash used in operating activities of discontinued operations
|
|
(97,361
|
)
|
|
(3,859,500
|
)
|
||
Net cash provided by operating activities
|
|
9,699,650
|
|
|
8,210,245
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(4,453,861
|
)
|
|
(12,161,596
|
)
|
||
Net cash used in investing activities of continuing operations
|
|
(4,453,861
|
)
|
|
(12,161,596
|
)
|
||
Net cash used in investing activities of discontinued operations
|
|
—
|
|
|
(640,655
|
)
|
||
Net cash used in investing activities
|
|
(4,453,861
|
)
|
|
(12,802,251
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
|
4,650,965
|
|
|
8,609,154
|
|
||
Repayments of long-term debt
|
|
(9,237,466
|
)
|
|
(13,634,717
|
)
|
||
Proceeds from employee stock purchase plan
|
|
45,005
|
|
|
31,223
|
|
||
Tax withholdings for restricted stock units
|
|
(59,928
|
)
|
|
(9,326
|
)
|
||
Net cash used in financing activities
|
|
(4,601,424
|
)
|
|
(5,003,666
|
)
|
||
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
|
644,365
|
|
|
(9,595,672
|
)
|
||
|
|
|
|
|
||||
Cash and cash equivalents, beginning of period
|
|
4,021,126
|
|
|
13,499,890
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents, end of period
|
|
$
|
4,665,491
|
|
|
$
|
3,904,218
|
|
•
|
Consolidated Statements of Operations - Bagger Dave's results of operations for the
three and nine
month periods ended
September 25, 2016
have been presented as discontinued operations. Additionally, all activity related to the discontinued operation at the Company is presented as discontinued operations for the
three and nine
month periods ended
September 24, 2017
.
|
•
|
Consolidated Statements of Cash Flows - The Bagger Dave's cash flows from operating and investing activities for the
nine-month periods ended September 24, 2017
and
September 25, 2016
have been presented separately on the face of the cash flow statement. The Bagger Dave's cash flows from financing activities for these years have not been separately reported on the consolidated statements of cash flows since there was only one financing function for both entities.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
Revenue
|
|
$
|
—
|
|
|
$
|
5,063,316
|
|
|
$
|
—
|
|
|
$
|
15,772,729
|
|
Restaurant operating and closure related costs (exclusive of depreciation and amortization)
|
|
|
|
|
(5,265,968
|
)
|
|
96,276
|
|
|
(16,125,720
|
)
|
||||
General and administrative expenses
|
|
(22,960
|
)
|
|
(909,153
|
)
|
|
(251,828
|
)
|
|
(1,865,550
|
)
|
||||
Depreciation and amortization
|
|
|
|
|
(1,547,698
|
)
|
|
—
|
|
|
(2,671,419
|
)
|
||||
Pre-opening costs
|
|
—
|
|
|
(11,664
|
)
|
|
—
|
|
|
(363,763
|
)
|
||||
Other income
|
|
—
|
|
|
1,018
|
|
|
—
|
|
|
9,905
|
|
||||
Gain (loss) on asset disposals
|
|
—
|
|
|
(77,863
|
)
|
|
—
|
|
|
649,911
|
|
||||
Loss from discontinued operations before income taxes
|
|
(22,960
|
)
|
|
(2,748,012
|
)
|
|
(155,552
|
)
|
|
(4,593,907
|
)
|
||||
Income tax benefit
|
|
7,806
|
|
|
762,178
|
|
|
58,191
|
|
|
1,329,278
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from discontinued operations
|
|
$
|
(15,154
|
)
|
|
$
|
(1,985,834
|
)
|
|
$
|
(97,361
|
)
|
|
$
|
(3,264,629
|
)
|
•
|
the financial condition of Bagger Dave’s, including its ability to service the lease payments on the locations it continues to operate;
|
•
|
its history of incurring operating losses;
|
•
|
its liquidity position and the actions available to it should its liquidity deteriorate to such a degree that its ability to service required lease payments is threatened; and
|
•
|
the actions available to the Company to avoid or mitigate potential losses should Bagger Dave's become unable to service one or more of the leases that the Company guarantees.
|
Location of lease
|
Status of location
|
Guarantee expiry date
|
|
Liability recognized on balance sheet
|
|
Future guaranteed lease payments
|
||||
Holland, MI
|
Closed / re-leased
|
10/09/17
|
|
$
|
2,101
|
|
|
$
|
2,177
|
|
Bloomfield, MI
|
Open
|
01/14/18
|
|
2,787
|
|
|
25,833
|
|
||
Shelby Township, MI
|
Open
|
01/31/18
|
|
2,622
|
|
|
25,929
|
|
||
West Chester Township, OH
|
Open
|
02/01/18
|
|
2,866
|
|
|
28,333
|
|
||
Woodhaven, MI
|
Closed
|
11/30/18
|
|
4,426
|
|
|
86,567
|
|
||
Traverse City, MI
|
Open
|
01/31/19
|
|
5,887
|
|
|
121,667
|
|
||
Fort Wayne, IN
|
Open
|
01/31/19
|
|
5,424
|
|
|
111,909
|
|
||
Grand Blanc, MI
|
Open
|
01/31/20
|
|
6,759
|
|
|
164,667
|
|
||
Centerville, OH
|
Open
|
11/30/20
|
|
13,293
|
|
|
345,343
|
|
||
Chesterfield Township, MI
|
Open
|
12/31/20
|
|
8,092
|
|
|
211,250
|
|
||
E. Lansing, MI
|
Open
|
09/10/21
|
|
2,334
|
|
|
75,000
|
|
||
Birch Run, MI
|
Open
|
12/31/24
|
|
23,557
|
|
|
690,138
|
|
||
Berkley, MI
|
Open
|
06/08/29
|
|
32,532
|
|
|
989,520
|
|
||
Cascade Township, MI
|
Open
|
06/08/29
|
|
29,856
|
|
|
908,124
|
|
||
Avon, IN
|
Closed / re-leased
|
06/30/29
|
|
48,658
|
|
|
1,480,024
|
|
||
Greenwood, IN
|
Closed / re-leased
|
06/30/29
|
|
50,372
|
|
|
1,532,160
|
|
||
Canton, MI
|
Open
|
06/30/30
|
|
63,541
|
|
|
1,971,938
|
|
||
Totals
|
|
|
|
$
|
305,107
|
|
|
$
|
8,770,579
|
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
Equipment
|
|
$
|
30,265,430
|
|
|
$
|
29,426,476
|
|
Furniture and fixtures
|
|
7,466,401
|
|
|
7,275,923
|
|
||
Leasehold improvements
|
|
64,837,092
|
|
|
63,449,082
|
|
||
Restaurant construction in progress
|
|
27,720
|
|
|
94,595
|
|
||
Total
|
|
102,596,643
|
|
|
100,246,076
|
|
||
Less accumulated depreciation
|
|
(51,911,716
|
)
|
|
(43,616,045
|
)
|
||
Property and equipment, net
|
|
$
|
50,684,927
|
|
|
$
|
56,630,031
|
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
Amortized intangible assets
|
|
|
|
|
||||
Franchise fees
|
|
$
|
1,290,642
|
|
|
$
|
1,290,642
|
|
Trademark
|
|
2,500
|
|
|
2,500
|
|
||
Non-compete
|
|
76,560
|
|
|
76,560
|
|
||
Favorable operating leases
|
|
351,344
|
|
|
351,344
|
|
||
Loan fees
|
|
368,083
|
|
|
368,083
|
|
||
Total
|
|
2,089,129
|
|
|
2,089,129
|
|
||
Less accumulated amortization
|
|
(859,779
|
)
|
|
(718,517
|
)
|
||
Amortized intangible assets, net
|
|
1,229,350
|
|
|
1,370,612
|
|
||
|
|
|
|
|
||||
Unamortized intangible assets
|
|
|
|
|
||||
Liquor licenses
|
|
1,264,252
|
|
|
1,295,752
|
|
||
Total intangible assets, net
|
|
$
|
2,493,602
|
|
|
$
|
2,666,364
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
Sales tax payable
|
$
|
671,642
|
|
|
$
|
816,215
|
|
Accrued interest
|
590,450
|
|
|
442,976
|
|
||
Accrued royalty fees
|
162,407
|
|
|
144,727
|
|
||
Accrued property taxes
|
315,412
|
|
|
490,809
|
|
||
Accrued loyalty rewards
|
279,923
|
|
|
—
|
|
||
Other
|
524,582
|
|
|
747,542
|
|
||
Total other accrued liabilities
|
$
|
2,544,416
|
|
|
$
|
2,642,269
|
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
$120.0 million term loan - the rate at September 24, 2017 and December 25, 2016 was 4.73% and 4.12%, respectively.
|
|
$
|
92,198,617
|
|
|
$
|
99,698,616
|
|
|
|
|
|
|
||||
$23.0 million development line of credit, converted to $18.2 million facility term loan in December 2016 - the rate at September 24, 2017 and December 25, 2016 was 4.73% and 4.21%, respectively.
|
|
17,062,009
|
|
|
18,199,476
|
|
||
|
|
|
|
|
||||
$5.0 million revolving line of credit - the rate at September 24, 2017 and December 25, 2016 was 4.79% and 6.25%, respectively.
|
|
5,000,000
|
|
|
4,000,000
|
|
||
|
|
|
|
|
||||
$5.0 million development line of credit - the rate at September 24, 2017 was 4.73%.
|
|
3,050,965
|
|
|
—
|
|
||
|
|
|
|
|
||||
Unamortized discount and debt issuance costs
|
|
(555,121
|
)
|
|
(712,072
|
)
|
||
|
|
|
|
|
||||
Total debt
|
|
116,756,470
|
|
|
121,186,020
|
|
||
|
|
|
|
|
||||
Less current portion
|
|
(11,375,468
|
)
|
|
(11,307,819
|
)
|
||
|
|
|
|
|
||||
Long-term debt, net of current portion
|
|
$
|
105,381,002
|
|
|
$
|
109,878,201
|
|
|
|
|
September 24, 2017
|
||||||||||||||
|
|
|
Notional amounts
|
|
Derivative assets
|
|
Derivative liabilities
|
||||||||||
Interest rate swaps
|
Rate
|
Expires
|
|
|
|
|
|
||||||||||
April 2012
|
1.4%
|
April 2019
|
$
|
3,619,048
|
|
|
$
|
696
|
|
|
$
|
—
|
|
||||
October 2012
|
0.9%
|
October 2017
|
1,714,286
|
|
|
438
|
|
|
—
|
|
|||||||
July 2013
|
1.4%
|
April 2018
|
2,190,476
|
|
|
—
|
|
|
1,307
|
|
|||||||
May 2014
|
1.5%
|
April 2018
|
7,678,571
|
|
|
—
|
|
|
8,540
|
|
|||||||
January 2015
|
1.8%
|
December 2019
|
21,547,619
|
|
|
—
|
|
|
133,945
|
|
|||||||
August 2015
|
2.3%
|
June 2020
|
60,783,333
|
|
|
—
|
|
|
1,062,316
|
|
|||||||
Total
|
|
|
$
|
97,533,333
|
|
|
$
|
1,134
|
|
|
$
|
1,206,108
|
|
|
|
|
December 25, 2016
|
||||||||||||||
|
|
|
Notional amounts
|
|
Derivative assets
|
|
Derivative liabilities
|
||||||||||
Interest rate swaps
|
Rate
|
Expires
|
|
|
|
|
|||||||||||
April 2012
|
1.4%
|
April 2019
|
$
|
5,333,333
|
|
|
$
|
—
|
|
|
$
|
21,037
|
|
||||
October 2012
|
0.9%
|
October 2017
|
2,357,143
|
|
|
—
|
|
|
723
|
|
|||||||
July 2013
|
1.4%
|
April 2018
|
4,761,905
|
|
|
—
|
|
|
18,949
|
|
|||||||
May 2014
|
1.5%
|
April 2018
|
9,285,714
|
|
|
—
|
|
|
58,359
|
|
|||||||
January 2015
|
1.8%
|
December 2019
|
21,119,048
|
|
|
—
|
|
|
271,144
|
|
|||||||
August 2015
|
2.3%
|
June 2020
|
49,696,875
|
|
|
—
|
|
|
1,045,279
|
|
|||||||
Total
|
|
|
$
|
92,554,018
|
|
|
$
|
—
|
|
|
$
|
1,415,491
|
|
|
Number of
Restricted
Stock Shares
|
|
Unvested, December 25, 2016
|
473,391
|
|
Granted
|
263,332
|
|
Vested
|
(132,158
|
)
|
Vested shares tax portion
|
(22,716
|
)
|
Expired/Forfeited
|
(48,850
|
)
|
Unvested, September 24, 2017
|
532,999
|
|
|
Number of
Restricted
Stock Shares
|
|
Unvested, December 27, 2015
|
241,124
|
|
Granted
|
342,331
|
|
Vested
|
(63,106
|
)
|
Vested shares tax portion
|
(5,940
|
)
|
Expired/Forfeited
|
(23,851
|
)
|
Unvested, September 25, 2016
|
490,558
|
|
Year
|
Amount
|
||
Remainder of 2017
|
$
|
2,282,774
|
|
2018
|
8,947,232
|
|
|
2019
|
8,249,477
|
|
|
2020
|
8,170,861
|
|
|
2021
|
7,342,901
|
|
|
Thereafter
|
33,729,527
|
|
|
Total
|
$
|
68,722,772
|
|
|
|
Three months ended
|
||||||
|
|
September 24, 2017
|
|
September 25, 2016
|
||||
Income (loss) from continuing operations
|
|
$
|
(543,240
|
)
|
|
$
|
596,709
|
|
Loss from discontinued operations
|
|
(15,154
|
)
|
|
(1,985,834
|
)
|
||
Net loss
|
|
$
|
(558,394
|
)
|
|
$
|
(1,389,125
|
)
|
|
|
|
|
|
||||
Weighted-average shares outstanding
|
|
26,764,776
|
|
|
26,625,615
|
|
||
Effect of dilutive securities
|
|
—
|
|
|
—
|
|
||
Weighted-average shares outstanding - assuming dilution
|
|
26,764,776
|
|
|
26,625,615
|
|
||
|
|
|
|
|
||||
Earnings per common share from continuing operations
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
Earnings per common share from discontinued operations
|
|
—
|
|
|
(0.07
|
)
|
||
Earnings per common share
|
|
$
|
(0.02
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
||||
Earnings per common share - assuming dilution - from continuing operations
|
|
(0.02
|
)
|
|
0.02
|
|
||
Earnings per common share - assuming dilution - from discontinued operations
|
|
—
|
|
|
(0.07
|
)
|
||
Earnings per common share - assuming dilution
|
|
$
|
(0.02
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
||||
|
|
Nine Months Ended
|
||||||
|
|
September 24, 2017
|
|
September 25, 2016
|
||||
Income (loss) from continuing operations
|
|
$
|
(39,003
|
)
|
|
$
|
2,123,482
|
|
Loss from discontinued operations
|
|
(97,361
|
)
|
|
(3,264,629
|
)
|
||
Net loss
|
|
$
|
(136,364
|
)
|
|
$
|
(1,141,147
|
)
|
|
|
|
|
|
|
|
||
Weighted-average shares outstanding
|
|
26,672,057
|
|
|
26,434,238
|
|
||
Effect of dilutive securities
|
|
—
|
|
|
—
|
|
||
Weighted-average shares outstanding - assuming dilution
|
|
26,672,057
|
|
|
26,434,238
|
|
||
|
|
|
|
|
|
|
||
Earnings per common share from continuing operations
|
|
$
|
—
|
|
|
$
|
0.08
|
|
Earnings per common share from discontinued operations
|
|
—
|
|
|
(0.12
|
)
|
||
Earnings per common share
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
||
Earnings per common share - assuming dilution - from continuing operations
|
|
—
|
|
|
0.08
|
|
||
Earnings per common share - assuming dilution - from discontinued operations
|
|
—
|
|
|
(0.12
|
)
|
||
Earnings per common share - assuming dilution
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
●
|
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.
|
FAIR VALUE MEASUREMENTS
|
||||||||||||||||
Description
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Liability
Total
|
||||||||
Interest rate swaps
|
|
$
|
—
|
|
|
$
|
(1,204,974
|
)
|
|
$
|
—
|
|
|
$
|
(1,204,974
|
)
|
Lease guarantee liability
|
|
—
|
|
|
(305,107
|
)
|
|
—
|
|
|
(305,107
|
)
|
||||
Total
|
|
$
|
—
|
|
|
$
|
(1,510,081
|
)
|
|
$
|
—
|
|
|
$
|
(1,510,081
|
)
|
FAIR VALUE MEASUREMENTS
|
||||||||||||||||
Description
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Liability
Total
|
||||||||
Interest rate swaps
|
|
$
|
—
|
|
|
$
|
(1,415,491
|
)
|
|
$
|
—
|
|
|
$
|
(1,415,491
|
)
|
Lease guarantee liability
|
|
—
|
|
|
(306,000
|
)
|
|
—
|
|
|
(306,000
|
)
|
||||
Total
|
|
$
|
—
|
|
|
$
|
(1,721,491
|
)
|
|
$
|
—
|
|
|
$
|
(1,721,491
|
)
|
|
|
Three Months Ended September 24, 2017
|
|
Three Months Ended September 25, 2016
|
||||
|
|
Interest Rate Swaps
|
|
Interest Rate Swaps
|
||||
Beginning balance
|
|
$
|
(1,088,255
|
)
|
|
$
|
(2,420,504
|
)
|
|
|
|
|
|
||||
Income recorded to other comprehensive loss
|
|
443,900
|
|
|
539,464
|
|
||
Tax expense
|
|
(150,926
|
)
|
|
(183,417
|
)
|
||
Other comprehensive income
|
|
292,974
|
|
|
356,047
|
|
||
|
|
|
|
|
||||
Accumulated OCL
|
|
$
|
(795,281
|
)
|
|
$
|
(2,064,457
|
)
|
|
|
|
|
|
||||
|
|
Nine Months Ended September 24, 2017
|
|
Nine Months Ended September 25, 2016
|
||||
|
|
Interest Rate Swaps
|
|
Interest Rate Swaps
|
||||
Beginning balance
|
|
$
|
(934,222
|
)
|
|
$
|
(1,006,667
|
)
|
|
|
|
|
|
||||
Income (loss) recorded to other comprehensive loss
|
|
210,517
|
|
|
(1,602,713
|
)
|
||
Tax benefit (expense)
|
|
(71,576
|
)
|
|
544,923
|
|
||
Other comprehensive income (loss)
|
|
138,941
|
|
|
(1,057,790
|
)
|
||
|
|
|
|
|
||||
Accumulated OCL
|
|
$
|
(795,281
|
)
|
|
$
|
(2,064,457
|
)
|
|
|
2017 (estimate)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|||||
Restaurants open at the beginning of year
|
|
64
|
|
|
62
|
|
|
42
|
|
|
36
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Openings/closures:
|
|
|
|
|
|
|
|
|
|
|
|||||
New restaurant openings
|
|
1
|
|
|
2
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Restaurant acquisitions
|
|
—
|
|
|
—
|
|
|
18
|
|
|
3
|
|
|
—
|
|
Restaurant closures
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
Total restaurants open at the end of the year
|
|
65
|
|
|
64
|
|
|
62
|
|
|
42
|
|
|
36
|
|
|
|
Three months ended
|
||||
|
|
September 24, 2017
|
|
September 25, 2016
|
||
Total revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
||
Operating expenses
|
|
|
|
|
||
Food, beverage, and packaging costs
|
|
29.5
|
%
|
|
27.4
|
%
|
Compensation costs
|
|
25.4
|
%
|
|
24.7
|
%
|
Occupancy costs
|
|
7.6
|
%
|
|
7.0
|
%
|
Other operating costs
|
|
22.3
|
%
|
|
21.4
|
%
|
General and administrative expenses
|
|
5.9
|
%
|
|
5.7
|
%
|
Pre-opening costs
|
|
0.2
|
%
|
|
0.2
|
%
|
Depreciation and amortization
|
|
8.3
|
%
|
|
8.7
|
%
|
Loss on asset disposal
|
|
—
|
%
|
|
0.2
|
%
|
Total operating expenses
|
|
99.2
|
%
|
|
95.3
|
%
|
|
|
|
|
|
||
Operating profit
|
|
0.8
|
%
|
|
4.7
|
%
|
|
|
|
|
|
||
Interest expense
|
|
(4.6
|
)%
|
|
(3.5
|
)%
|
Other income, net
|
|
0.1
|
%
|
|
0.0
|
%
|
|
|
|
|
|
||
Income (loss) from continuing operations before income taxes
|
|
(3.7
|
)%
|
|
1.2
|
%
|
|
|
|
|
|
||
Income tax benefit of continuing operations
|
|
2.4
|
%
|
|
0.3
|
%
|
|
|
|
|
|
||
Income (loss) from continuing operations
|
|
(1.3
|
)%
|
|
1.5
|
%
|
|
|
|
|
|
||
Loss from discontinued operations before income taxes
|
|
(0.1
|
)%
|
|
(6.6
|
)%
|
Income tax benefit of discontinued operations
|
|
—
|
%
|
|
1.8
|
%
|
Loss from discontinued operations
|
|
(0.1
|
)%
|
|
(4.8
|
)%
|
|
|
|
|
|
||
Net Loss
|
|
(1.4
|
)%
|
|
(3.3
|
)%
|
|
|
Nine months ended
|
||||
|
|
September 24, 2017
|
|
September 25, 2016
|
||
Total revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
||
Operating expenses
|
|
|
|
|
||
Food, beverage, and packaging costs
|
|
29.6
|
%
|
|
27.7
|
%
|
Compensation costs
|
|
25.2
|
%
|
|
24.8
|
%
|
Occupancy costs
|
|
7.0
|
%
|
|
6.7
|
%
|
Other operating costs
|
|
21.2
|
%
|
|
20.6
|
%
|
General and administrative expenses
|
|
5.4
|
%
|
|
5.5
|
%
|
Pre-opening costs
|
|
0.3
|
%
|
|
0.5
|
%
|
Depreciation and amortization
|
|
8.2
|
%
|
|
8.9
|
%
|
Loss on asset disposal
|
|
0.2
|
%
|
|
0.2
|
%
|
Total operating expenses
|
|
97.1
|
%
|
|
94.9
|
%
|
|
|
|
|
|
||
Operating profit
|
|
2.9
|
%
|
|
5.1
|
%
|
|
|
|
|
|
||
Interest expense
|
|
(4.1
|
)%
|
|
(3.4
|
)%
|
Other income, net
|
|
0.1
|
%
|
|
0.1
|
%
|
|
|
|
|
|
||
Income (loss) from continuing operations before income taxes
|
|
(1.1
|
)%
|
|
1.8
|
%
|
|
|
|
|
|
||
Income tax benefit (expense) of continuing operations
|
|
1.2
|
%
|
|
(0.1
|
)%
|
|
|
|
|
|
||
Income from continuing operations
|
|
0.1
|
%
|
|
1.7
|
%
|
|
|
|
|
|
||
Loss from discontinued operations before income taxes
|
|
(0.1
|
)%
|
|
(3.7
|
)%
|
Income tax benefit of discontinued operations
|
|
—
|
%
|
|
1.1
|
%
|
Loss from discontinued operations
|
|
(0.1
|
)%
|
|
(2.6
|
)%
|
|
|
|
|
|
||
Net Loss
|
|
—
|
%
|
|
(0.9
|
)%
|
|
|
DIVERSIFIED RESTAURANT HOLDINGS, INC.
|
|
|
|
|
|
|
|
|
|
Dated:
|
November 3, 2017
|
By:
|
/s/ David G. Burke
|
|
|
David G. Burke
|
|
|
|
President and Chief Executive
|
|
|
|
Officer (Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Phyllis A. Knight
|
|
|
Phyllis A. Knight
|
|
|
|
Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial and Accounting Officer)
|
Exhibit No.
|
Exhibit Description
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
3.3
|
|
|
|
3.4
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Document
|
1 Year Diversified Restaurant Chart |
1 Month Diversified Restaurant Chart |
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