Einstein Bros 2002 Annual Report Download - page 86

http://www.sec.gov/Archives/edgar/data/949373/000104746903027186/a2116520z10-ka.htm[9/11/2014 10:14:22 AM]
Halpern Denny 27,141,454 23,264,107
Brookwood New World Investors, LLC 6,252,011 4,995,325
BET Associates 6,242,511 5,066,026
Totals 39,635,976 33,325,458
F-57
On May 30, 2002, the Company entered into a Loan and Security Agreement with BET, which provides for a $7.5 million revolving loan
facility. The facility is secured by substantially all of the Company's assets. Borrowings under the facility bear interest at the rate of 11% per
annum. The facility was to expire on March 31, 2003. In connection with obtaining the facility, the Company paid MYFM Capital LLC a fee of
$75,000. Leonard Tannenbaum, one of the Company's directors, is the Managing Director of MYFM Capital and is a partner at BET. In February of
2003, the Company and BET executed an amendment to the facility to extend the maturity of the facility to June 1, 2003. From February 1, 2003 to
June 1, 2003, the facility will bear interest at the rate of 13% per annum. BET will receive an extension fee of $187,500 in connection with the
amendment, payable at maturity, and an additional fee of $112,500 if the facility is not paid in full by June 2, 2003.
In June 1999, the Company entered into a franchise agreement for a New World location with NW Coffee, Inc., pursuant to which NW
Coffee, Inc. paid the Company an initial franchise fee of $25,000 for the franchise. In addition, the franchise agreement provides for royalty
payments equal to 5.0% of gross sales, due and payable monthly. In connection with the franchise agreement the Company also entered into an
asset purchase agreement with NW Coffee, Inc., pursuant to which NW Coffee, Inc. purchased the assets of the New World location from the
Company for $250,000. In connection with the asset purchase agreement, NW Coffee, Inc. delivered to the Company a promissory note in the
amount of $255,000, which bears interest at 8% and is payable in installments commencing in June 2002. The Company has received no payments
on this note to date. As of December 31, 2002, the Company has fully-reserved the note within its allowance for doubtful accounts. The note is
secured by the assets of NW Coffee, Inc. used in the operation of the franchise. Mr. Kamfar's uncle owns NW Coffee, Inc. and Mr. Kamfar's
parents are officers of NW Coffee, Inc. In periods prior to April 2001, the Company purchased goods for the franchisee and paid for all of the
expenses of the franchisee other than payroll (other than the salary of the general manager), which generated receivables for the Company. From
time to time, NW Coffee, Inc. and Mr. Kamfar made payments to the Company to reduce the outstanding receivables. The outstanding receivable
from NW Coffee, Inc. was $249,948 and $266,950 for the period ended January 1, 2002 and December 31, 2002, respectively. As of December 31,
2002, the amount of the receivable was fully reserved. Until April 2002, the Company also provided payroll, accounting and other services to NW
Coffee, Inc. for no charge.
In August 1997, the Company entered into a franchise agreement for a New World location with 723 Food Corp., pursuant to which 723 Food
Corp. paid the Company an initial franchise fee of $25,000 for the franchise. In addition, the franchise agreement provides for royalty payments
equal to 5.0% of gross sales, due and payable monthly. In connection with the franchise agreement, 723 Food Corp. purchased the assets of the
New World location from the Company for $275,000. In connection with the asset purchase agreement, 723 Food Corp. delivered to the Company
a promissory note in the amount of $125,000, which bears interest at 6% and is payable on August 30, 2002, and a promissory note in the amount
of $100,000, which bears interest at 6% and is payable on November 30, 2002. The assets of 723 Food Corp. and 200,000 shares of Common
Stock secure the notes. In addition, Mr. Novack guaranteed the obligations of 723 Food Corp. The guarantee is no longer in effect. Until
August 17, 2000, Mr. Novack owned 50% of the capital stock of 723 Food Corp. and was an officer and director of 723 Food Corp. The
outstanding receivable from 723 Food Corp. was $16,137 and $14,808 as of January 1, 2002 and December 31, 2002, respectively. As of
December 31, 2002, the amount of the receivable was fully reserved. In addition, the Company issued a warrant to 723 Food Corp. to purchase
100,000 shares of Common Stock for $1.25 per share.
F-58
18. Selected Quarterly Financial Data (unaudited)
The following table presents selected quarterly financial data for the periods indicated (in thousands, except per share data)
As Restated
April 2,
2002
July 2,
2002
October 1,
2002 December 31, 2002
Revenues(1) $ 97,647 $ 101,578 $ 98,697 $ 100,728
Income (loss) from operations(2) (1,506) 2,512 (5,803) 4,481
Net loss(3) (27,420) (84) (9,538) (3,431)