Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Diversified Restaurant Holdings, Inc. (1394156) 10-Q published on Aug 14, 2019 at 4:30 pm
Reporting Period: Jun 29, 2019
As previously disclosed on Form 8-K filed July 3, 2019, the Company announced that David G. Burke has resigned as President and Chief Executive Officer and as a Director of the Company, and that Phyllis A. Knight has resigned as Chief Financial Officer and Treasurer.
On June 29, 2019, the Board of Directors appointed T. Michael Ansley, the Executive Chairman of the Board of Directors, to serve as acting President and Chief Executive Officer.
On July 2, 2019, the Board of Directors appointed Toni Werner, to serve as Interim Chief Financial Officer. Ms. Werner has served as Controller of the Company since May 2014.
On July 2, 2019, in connection with their resignations, the Company, Mr. Burke and Ms. Knight have agreed to the general terms of Separation Agreements. Among other matters, the Separation Agreements will provide that Mr. Burke will receive severance payments in the aggregate amount of $535,800 payable over the course of one year, and Ms. Knight will receive severance payments in the aggregate amount of $404,200 payable over the course of one year. In addition, the restricted stock awards for 333,334 shares held by Mr. Burke and the restricted stock awards for 281,334 shares held by Ms. Knight under the Company’s applicable equity incentive plans will vest to the extent not already vested. The severance expense related to the resignations will be recognized in the third quarter of 2019.
Revenue for the six months ended June 30, 2019 ("Year to Date 2019") was $79.5 million, an increase of $2.9 million, or 3.8%, compared to $76.6 million of revenue generated during the six months ended July 1, 2018 ("Year to Date 2018"). The increase in sales was the result of an increase in off-premise sales and a favorable number of major sporting events in our core markets, partially offset by lower dine-in sales.
Occupancy costs increased by $0.1 million, or 3.3% to $5.9 million in Year to Date 2019 from $5.8 million in Year to Date 2018. The increase was due to receiving a property tax refund in Second Quarter 2018 and higher rent and taxes in other locations, partially offset by rent savings on one less restaurant operating in 2019. Occupancy as a percentage of sales was flat at 7.5% in Year to Date 2019 compared to Year to Date 2018.
On June 6, 2019, the Company received a notice from Nasdaq stating that, for the prior 30 consecutive business days (through June 5, 2019), the closing bid price of the Company’s listed securities had been below the minimum of $1.00 per share required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). The notification letter stated that the Company would be afforded 180 calendar days (until December 3, 2019) to regain compliance. In order to regain compliance, the Company’s closing bid price must remain at $1.00 or more for a minimum of ten consecutive business days. The notification letter also states that in the event the Company does not regain compliance within the 180 day period, the Company may be eligible for an additional 180 days to regain compliance. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq staff will provide notice to the Company that its securities will be subject to delisting. At that time, the Company may appeal the delisting determination to a Hearings Panel, but there can be no assurance that the Company's request for continued listing would be granted. Delisting from the Nasdaq Capital Market could adversely affect the liquidity and the price of the Company's common stock and the Company's ability to raise future capital through the sale of the Company's common stock.