☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: | December 28, 2014 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to ___________. |
Commission File Number: | 000-54226 |
ARC GROUP, INC. |
(Exact Name of registrant as specified in its charter) |
Nevada | 59-3649554 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
212 Guilbeau Road Lafayette, LA | 70506 | |||
(Address of principal executive offices) | (Zip Code) |
(904) 741-5500 |
(Registrant’s Telephone Number, Including Area Code) |
Securities registered under Section 12(b) of the Act: |
Title of each class: None | Name of each exchange on which registered: Not Applicable | |||
Securities registered pursuant to Section 12(g) of the Act: |
Class A Common Stock, $.01 par value per share | ||
(Title of Class) |
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer (Do not check if a smaller reporting company) ☐ | Smaller reporting company ☒ |
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● | our ability to fund our future growth and implement our business strategy; |
● | market acceptance of our restaurants and products; |
● | food safety issues and other health concerns; |
● | the cost of food and other commodities; |
● | shortages or interruptions in the availability and delivery of food and other supplies; |
● | our ability to maintain and increase the value of our Dick’s Wings® brand; |
● | changes in consumer preferences; |
● | our ability to identify, attract and retain qualified franchisees; |
● | our franchisees’ ability to identify suitable restaurant sites and open new restaurants; |
● | our franchisees’ ability to open new restaurants and operate them in a profitable manner; |
● | our limited control over the activities of our franchisees; |
● | our ability to identify, acquire and integrate new restaurant brands and businesses; |
● | our ability to comply with applicable federal, state and local laws and regulations; |
● | competition and consolidation in the restaurant industry; |
● | our ability to protect our trademarks and other intellectual property; |
● | the effects of litigation on our business; |
● | the condition of the securities and capital markets generally; |
● | economic conditions in the jurisdictions in which we operate and nationally; |
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● | local market demographics, population density and psychographic profiles; |
● | occupancy rates and projected growth rates in the trade area; |
● | the location and performance of big box retailers and nationally branded peers; |
● | available square footage, parking and lease economics; |
● | local investment and operating costs; |
● | development and expansion constraints; |
● | vehicle traffic patterns, visibility and access; |
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● | regional consumer trends and preferences; |
● | those characteristics that are similar to our most successful existing restaurants; and |
● | other quantitative and qualitative measures. |
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● | our ability to accurately assess the value, growth potential, strengths, weaknesses, contingent and other liabilities, and potential profitability of the target businesses and assets; | |
● | our ability to complete the transaction and integrate the operations, technologies, services and personnel of any businesses or assets acquired; | |
● | costs associated with the completion of the transaction and the integration of the businesses or assets acquired; | |
● | our ability to generate sufficient revenue to offset the transaction costs and achieve projected economic and operating synergies; | |
● | the diversion of financial and management resources from existing operations and potential loss of key personnel; |
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● | risks associated with entering new domestic and international markets and conducting operations where we have little or no prior experience; | |
● | the possible negative impact of the transaction on our reputation and the reputation of our Dick’s Wings brand; and | |
● | the effect of any limitations imposed by federal and state tax laws on our ability to use all or a portion of our pre-transaction net operating losses against post-transaction income. |
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● | the Fair Labor Standards Act, Immigration Reform and Control Act, and other federal and state laws governing such employment matters as minimum wage requirements, overtime pay, tip credits, healthcare, paid leaves of absence, mandated training, working conditions, payroll taxes, sales taxes, workers’ compensation, union memberships, citizenship requirements and immigration; | |
● | federal, state and local laws governing health, sanitation, safety and fire standards, the sale of liquor, zoning, land use, traffic, and environmental and other matters, as well as the acquisition of permits and licenses in connection therewith; | |
● | the Americans with Disabilities Act, which is a federal law that prohibits discrimination on the basis of disability in public accommodations and employment, and other federal and state laws governing anti-discrimination, such as the Civil Rights Act and the Age Discrimination Act; | |
● | the FTC’s “Franchise Rule” and other federal and state laws that govern the offer and sale of franchises and other aspects of the franchisor-franchisee relationship, including terminations and the refusal to renew franchises; | |
● | the FDA’s Food Safety Modernization Act and other federal and state laws that govern nutritional content, nutritional labeling, product safety, menu labeling and other aspects of our restaurants’ operations; | |
● | federal and state privacy, consumer protection and other laws; and | |
● | in the event we expand our business into international jurisdictions, the foreign law equivalents of each of the above. |
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● | fluctuations in our annual or quarterly operating results; | |
● | changes in capital market conditions or other adverse economic conditions; | |
● | upgrades or downgrades by securities analysts following our stock; | |
● | changes in financial estimates by securities analysts following our stock; | |
● | our achievement, or our failure to achieve, projected financial results; | |
● | future sales of our stock by our officers, directors and significant stockholders; | |
● | investors’ perceptions of our business and prospects relative to other investment alternatives; | |
● | significant contracts, acquisitions, joint ventures or capital commitments by our competitors; | |
● | global economic, legal and regulatory factors unrelated to our performance; and | |
● | the other risks and uncertainties set forth herein under Item 1A. Risk Factors and elsewhere in this report. |
● | increases or decreases in same-store sales; | |
● | the timing of new restaurant openings; | |
● | our ability to operate effectively in new markets; | |
● | the profitability of our restaurants, particularly in new markets; |
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● | labor availability and costs for hourly and management personnel; | |
● | changes in consumer preferences and competitive conditions; | |
● | negative publicity relating to us, our restaurants, our vendors or the products we serve; | |
● | disruptions in the type and delivery of supplies; | |
● | consumer confidence and fluctuations in discretionary spending; | |
● | changes in labor costs or other variable expenses; | |
● | potential distractions or unusual expenses associated with our expansion plans; | |
● | the impact of inclement weather, natural disasters, and other calamities; and | |
● | economic conditions in the jurisdictions in which we operate and nationally. |
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High | Low | |||
Fiscal Year Ended December 28, 2014 | ||||
Quarter ended March 30, 2014 | $2.05 | $1.16 | ||
Quarter ended June 29, 2014 | $2.19 | $0.91 | ||
Quarter ended September 28, 2014 | $0.91 | $0.23 | ||
Quarter ended December 28, 2014 | $0.50 | $0.18 | ||
Fiscal Year Ended December 29, 2013 | ||||
Quarter ended March 31, 2013 | $0.84 | $0.35 | ||
Quarter ended June 30, 2013 | $0.77 | $0.42 | ||
Quarter ended September 29, 2013 | $3.01 | $0.49 | ||
Quarter ended December 29, 2013 | $3.00 | $1.05 |
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Item 6. Selected Financial Data. |
Not Applicable. |
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Outlook
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Name | Age | Positions Held | |||||
Richard W. Akam | 59 | Chief Executive Officer, Chief Operating Officer, and Secretary | |||||
Daniel Slone | 45 | Chief Financial Officer | |||||
Fred D. Alexander | 68 | Chairman of the Board | |||||
Ketan B. Pandya | 46 | Director |
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Name and | Stock | All Other | |||||||||||||||||||
Principal Position | Year | Salary ($) | Bonus ($) | Awards ($) (1) | Compensation(7) | Total ($) | |||||||||||||||
Richard W. Akam (2) | 2014 | 163,800 | -0- | (4) | 50,373 | (5) | 12,000 | 226,173 | |||||||||||||
Chief Executive Officer, Chief Operating Officer and Secretary | 2013 | 150,000 | -0- | (4) | 99,080 | (6) | 12,000 | 261,080 | |||||||||||||
Daniel Slone (3) | 2014 | 1 | -0- | -0- | -0- | 1 | |||||||||||||||
Chief Financial Officer | 2013 | 1 | -0- | -0- | -0- | 1 |
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Stock Awards | |||||||||||
Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (1) | ||||||||
Richard W. Akam | 1/1/14 | * | 50,000 | ||||||||
Daniel Slone | -0- | -0- |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
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Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percentage of Class (1) | ||||||||
Richard W. Akam | 171,291 | 2.6 | % | |||||||
Daniel Slone | 758 | * | ||||||||
Fred D. Alexander | -0- | * | ||||||||
Ketan B. Pandya | 45,700 | * | ||||||||
William D. Leopold II | 2,256,072 | 34.7 | % | |||||||
Michael P. Rosenberger | 653,287 | (2) | 10.0 | % | ||||||
Seenu G. Kasturi | 572,688 | (3) | 8.8 | % | ||||||
All officers and directors as a group (4 persons) | 217,749 | 3.4 | % |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted- average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | ||||||||||
Equity compensation plans approved by security holders: | -0- | N/A | -0- | ||||||||||
Equity compensation plans not approved by security holders: | -0- | N/A | 1,214,287 | ||||||||||
Total | -0- | N/A | 1,214,287 |
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In June 2007, we entered into a license agreement with Moose River Management, Inc. (“Moose River”), which is wholly owned by Michael Rosenberger, pursuant to which we licensed the U.S. registered trademarks “Dick’s Wings,” “Dick’s Wings & Grill” and design, and “Dick’s Wings Express” and design, and the Florida registered trademark “Dick’s Wings” and design. We paid Moose River $100 as consideration for the license. The license agreement was for a term of 50 years and was renewable for an additional term of 50 years. Mr. Rosenberger served as our Chief Executive Officer, Chief Financial Officer and Secretary, and as a member of our board of directors, at the time the parties entered into the license agreement and throughout the duration of the license agreement.
On July 12, 2013, we entered into a separation agreement with Mr. Rosenberger and Moose River which became effective on July 31, 2013. Under the terms of the separation agreement, Mr. Rosenberger agreed to resign from his positions as our Chief Executive Officer, Chief Financial Officer and Secretary, and from any and all other employment positions that he had with us, and agreed to resign as a member of our board of directors, all effective July 31, 2013. In addition, Moose River agreed to assign to us all of the “Dick’s Wings” trademarks (the “Trademarks”) then being licensed to us by Moose River under the License Agreement. We agreed to pay Mr. Rosenberger $10,000 in settlement of all compensation and reimbursement due to Mr. Rosenberger arising out of or in connection with his employment with us, and we and Mr. Rosenberger agreed to release each other from any and all claims that each of us may have had against each other.
On July 12, 2013, we also entered into a consulting agreement with Mr. Rosenberger pursuant to which Mr. Rosenberger assisted us with our prior business and future business during a term commencing July 31, 2013 and ending December 31, 2013. In return, we paid Mr. Rosenberger $70,000 on July 31, 2013 and made payments of $32,500 to Mr. Rosenberger on September 1, 2013, October 15, 2013, December 1, 2013 and December 31, 2013. The consulting agreement became effective on July 31, 2013 and terminated in accordance with its terms on December 31, 2013.
In October 2008 we entered into a loan agreement with Bank of America for an original principal amount of $338,138.The loan accrued interest at a rate of 7% per annum,was secured by substantially all of our assets, and was guaranteed by Michael Rosenberger, Rosalie Rosenberger and Hot Wings Concepts.The largest aggregate amount of principal outstanding under the loan agreement during the year ended December 29, 2013 was $279,664. In March 2013, we entered into a settlement and release agreement with Bank of America pursuant to which we paid $50,000 in full and final settlement of all outstanding principal, accrued but unpaid interest, and all other claims and amounts owed to Bank of America under the loan agreement. This was the only payment of principal or interest that we made in connection with the loan agreement during the year ended December 29, 2013.Mr. Rosenberger served as our Chief Executive Officer, Chief Financial Officer and Secretary, and as a member of our board of directors, when the loan agreement was executed and throughout the duration of the loan agreement.A description of the loan agreement and the settlement and release agreement is set forth herein underNote 8. Debt Obligations in the footnotes to our financial statements beginning on page F-1 of this report.
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2014 | 2013 | |||||||
Audit Fees: | $ | 24,250 | $ | 12,500 | ||||
Audit-Related Fees: | --- | --- | ||||||
Tax Fees: | $ | 2,400 | $ | 2,400 | ||||
All Other Fees: | --- | --- | ||||||
Total: | $ | 26,650 | $ | 14,900 |
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● | Report of Independent Registered Public Accounting Firm. |
● | Balance Sheets at December 28, 2014 and December 29, 2013. |
● | Statements of Operations for the Years Ended December 28, 2014 and December 29, 2013. |
● | Statements of Stockholders’ Deficit for the Years Ended December 28, 2014 and December 29, 2013. |
● | Statements of Cash Flows for the Years Ended December 28, 2014 and December 29, 2013. |
● | Notes to Financial Statements. |
Exhibit No. | Exhibit Description | |||
2.1 | Agreement and Plan of Merger, dated June 13, 2014, by and between the Company and ARC Group, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K12G3 filed with the SEC on June 19, 2015) | |||
3.1 | Articles of Incorporation of ARC Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K12G3 filed with the SEC on June 19, 2015) | |||
3.2 | Bylaws of ARC Group Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K12G3 filed with the SEC on June 19, 2015) | |||
4.1 | Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K12G3 filed with the SEC on June 19, 2015) | |||
10.1+ | Employment Agreement, dated January 22, 2013, between the Company and Richard Akam (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on January 28, 2013) |
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10.2 | Settlement and Release Agreement, dated March 25, 2013, by and among the Company, Bank of America, N.A., Michael P. Rosenberger, Rosalie Rosenberger and Hot Wings Concepts, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on April 12, 2013) | |
10.3 | Voluntary Resignation and Compensation Agreement, With Exclusive Assignment, dated July 12, 2013, by and among the Company, Michael P. Rosenberger and Moose River Management, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on July 18, 2013) | |
10.4 | Consulting Agreement For Term, dated July 12, 2013, by and between the Company and Michael P. Rosenberger (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on July 18, 2013) | |
10.5 | Loan Agreement, dated September 13, 2013, by and between the Company and Blue Victory Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on September 19, 2013) | |
10.6 | Promissory Note, dated September 13, 2013, issued by the Company in favor of Blue Victory Holdings, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on September 19, 2013) | |
10.7 | Consulting Agreement, dated September 13, 2013, by and between the Company and Blue Victory Holdings, Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed with the SEC on September 19, 2013) | |
10.8 | Settlement Agreement and Release, dated November 1, 2013, by and among the Company, Brusta Investments, LLC, and D. Dale Thevenet (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on November 7, 2013) | |
10.9 | Contribution Agreement, dated January 20, 2014, by and between the Company and Paradise on Wings Franchise Group, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on January 24, 2014) | |
10.10 | Amended and Restated Operating Agreement of Paradise on Wings Franchise Group, LLC, dated January 20, 2014, by and among the Company and the other members thereto (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on January 24, 2014) | |
10.11 | Securities Purchase Agreement, dated February 27, 2014, by and between the Company and Seenu G. Kasturi (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on March 5, 2014) | |
10.12 | Promissory Note, dated February 27, 2014, issued by Seenu G. Kasturi in favor of the Company (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on March 5, 2014) | |
10.13+ | Summary of Compensation for Daniel Slone (incorporated by reference to Exhibit 10.13 to the Company Form 10-K filed with the SEC on March 31, 2014) |
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10.14 | Settlement Agreement and Release, dated January 8, 2015, by and between the Company and J. David Eberle | |
23.1 | Consent of M&K CPAS, PLLC | |
31.1 | Certification of Chief Executive Officer of the registrant required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended | |
31.2 | Certification of Chief Financial Officer of the registrant required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended | |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer of the registrant required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
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ARC GROUP, INC. | |||
Date: March 30, 2015 | By: | /s/ Richard W. Akam | |
Richard W. Akam | |||
Chief Executive Officer |
Signature | Title | Date | |||||
/s/ Richard W. Akam | Chief Executive Officer, Chief | March 30, 2015 | |||||
Richard W. Akam | Operating Officer and Secretary (Principal Executive Officer) | ||||||
/s/ Daniel Slone | Chief Financial Officer (Principal | March 30, 2015 | |||||
Daniel Slone | Financial Officer and Principal Accounting Officer) | ||||||
/s/ Ketan Pandya | Director | March 30, 2015 | |||||
Ketan Pandya | |||||||
/s/ Fred D. Alexander | Director | March 30, 2015 | |||||
Fred D. Alexander |
Page | ||
F-2 | ||
F-3 | ||
F-4 | ||
Statements of Stockholders’ Deficit for the Years Ended December 28, 2014 and December 29, 2013 | F-5 | |
F-6 | ||
F-7 |
F-1 |
F-2 |
December 28, | December 29, | |||||||
2014 | 2013 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | - | $ | 5,062 | ||||
Accounts receivable, net | - | 8,147 | ||||||
Accounts receivable, net – related party | 43,033 | 17,377 | ||||||
Notes receivable, current portion | 18,600 | 8,414 | ||||||
Notes receivable – related party | - | 6,000 | ||||||
Interest receivable | 5,063 | - | ||||||
Total current assets | 66,696 | 45,000 | ||||||
Property and equipment, net of accumulated depreciation of $4,674 at December 28, 2014 and December 29, 2013, respectively | - | - | ||||||
Deposits | 1,100 | 1,100 | ||||||
Notes receivable, net of current portion | 10,990 | 7,093 | ||||||
Equity investment in Paradise on Wings | 818,545 | - | ||||||
Total assets | $ | 897,331 | $ | 53,193 | ||||
Liabilities and stockholders’ deficit | ||||||||
Accounts payable and accrued expenses | $ | 495,765 | $ | 579,130 | ||||
Accrued expenses – related party | 17,898 | 40,066 | ||||||
Accrued interest | 11,480 | 1,255 | ||||||
Advertising fund liabilities | 31,474 | - | ||||||
Settlement agreements payable | 441,056 | 429,815 | ||||||
Notes payable – related party | 3,420 | 127,772 | ||||||
Notes payable – in default | 11,000 | 11,000 | ||||||
Other current liabilities | 4,741 | 801 | ||||||
Total current liabilities | 1,016,834 | 1,189,839 | ||||||
Total liabilities | 1,016,834 | 1,189,839 | ||||||
Stockholders’ deficit: | ||||||||
Class A common stock – $0.01 par value: 100,000,000 shares authorized, 6,362,464 and 5,659,418 shares issued and outstanding at December 28, 2014 and December 29, 2013, respectively | 63,625 | 56,594 | ||||||
Additional paid-in capital | 3,564,309 | 2,340,736 | ||||||
Stock subscriptions receivable | (170,000 | ) | - | |||||
Stock subscriptions payable | 289,452 | 139,080 | ||||||
Accumulated deficit | (3,866,889 | ) | (3,673,056 | ) | ||||
Total stockholders’ deficit | (119,503 | ) | (1,136,646 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 897,331 | $ | 53,193 |
F-3 |
For the Year Ended | ||||||||
December 28, 2014 | December 29, 2013 | |||||||
Revenue: | ||||||||
Net revenue | $ | 426,415 | $ | 472,439 | ||||
Net revenue – related party | 162,441 | 17,377 | ||||||
Total net revenue | 588,856 | 489,816 | ||||||
Operating expenses: | ||||||||
Professional fees | 184,644 | 536,191 | ||||||
Employee compensation expense | 418,519 | 665,084 | ||||||
General and administrative expenses | 185,648 | 240,978 | ||||||
Total operating expenses | 788,811 | 1,442,253 | ||||||
Loss from operations | (199,955 | ) | (952,437 | ) | ||||
Other income: | ||||||||
Interest expense | (24,408 | ) | (37,776 | ) | ||||
Gain on settlement of debt | - | 320,798 | ||||||
Income from investment in Paradise on Wings | 18,545 | - | ||||||
Interest income | 11,938 | - | ||||||
Other income | 47 | 11,377 | ||||||
Total other income | 6,122 | 294,399 | ||||||
Net loss | $ | (193,833 | ) | $ | (658,038 | ) | ||
Net loss per share – basic and fully diluted | $ | (0.03 | ) | $ | (0.12 | ) | ||
Weighted average number of shares outstanding – basic and fully diluted | 6,255,668 | 5,387,641 |
F-4 |
Additional | Stock | Stock | ||||||||||||||||||||||||||
Common Stock | Paid-in | Subscriptions | Subscriptions | Accumulated | ||||||||||||||||||||||||
Shares | Par Value | Capital | Receivable | Payable | Deficit | Total | ||||||||||||||||||||||
Balance at December 30, 2012 | 5,315,506 | $ | 53,155 | $ | 1,554,314 | $ | - | $ | 90,000 | $ | (3,015,018 | ) | $ | (1,317,549 | ) | |||||||||||||
Common stock issued for services | 71,429 | 714 | 49,286 | - | 49,080 | - | 99,080 | |||||||||||||||||||||
Common stock issued upon conversion of promissory notes | 28,572 | 286 | 54,714 | - | - | - | 55,000 | |||||||||||||||||||||
Common stock issued upon conversion of promissory notes – related party | 243,911 | 2,439 | 473,186 | - | - | - | 475,625 | |||||||||||||||||||||
Imputed interest on no-interest loans | - | - | 11,686 | - | - | - | 11,686 | |||||||||||||||||||||
Settlement of related-party debt | - | - | 197,550 | - | - | - | 197,550 | |||||||||||||||||||||
Net loss | - | - | - | - | - | (658,038 | ) | (658,038 | ) | |||||||||||||||||||
Balance at December 29, 2013 | 5,659,418 | $ | 56,594 | $ | 2,340,736 | $ | - | $ | 139,080 | $ | (3,673,056 | ) | $ | (1,136,646 | ) | |||||||||||||
Common stock issued for note receivable – related party | 206,061 | 2,061 | 337,939 | (170,000 | ) | - | - | 170,000 | ||||||||||||||||||||
Common stock issued for services | 78,433 | 784 | 69,216 | - | 372 | - | 70,372 | |||||||||||||||||||||
Common stock issued upon conversion of promissory notes – related party | 326,017 | 3,260 | 567,269 | - | - | - | 570,529 | |||||||||||||||||||||
Imputed interest on no-interest loans | - | - | 75 | - | - | - | 75 | |||||||||||||||||||||
Common stock issued for investment in Paradise on Wings | 235,295 | 2,353 | 397,647 | - | - | - | 400,000 | |||||||||||||||||||||
Common stock reclassified to unissued shares | (142,857 | ) | (1,428 | ) | (148,572 | ) | - | 150,000 | - | - | ||||||||||||||||||
Common stock issued for reverse stock split | 97 | 1 | (1 | ) | - | - | - | - | ||||||||||||||||||||
Net loss | - | - | - | - | - | (193,833 | ) | (193,833 | ) | |||||||||||||||||||
Balance at December 28, 2014 | 6,362,464 | $ | 63,625 | $ | 3,564,309 | $ | (170,000 | ) | $ | 289,452 | $ | (3,866,889 | ) | $ | (119,503 | ) |
F-5 |
For the Years Ended | ||||||||
December 28, 2014 | December 29, 2013 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (193,833 | ) | $ | (658,038 | ) | ||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
Stock issued for compensation and amortization of stock compensation expense | 70,373 | 99,080 | ||||||
Equity earnings in Paradise on Wings | (18,545 | ) | - | |||||
Imputed interest on no-interest loans | 75 | 11,686 | ||||||
Gain on settlement of debt | - | (320,798 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 8,147 | (8,147 | ) | |||||
Accounts receivable – related party | (25,655 | ) | (17,377 | ) | ||||
Notes receivable | (10,990 | ) | (7,500 | ) | ||||
Deposits | - | (1,100 | ) | |||||
Interest receivable -- related party | (5,063 | ) | - | |||||
Accounts payable and accrued liabilities | (70,613 | ) | 294,237 | |||||
Accrued liabilities – related party | (22,168 | ) | 157,507 | |||||
Advertising fund liabilities | 31,474 | - | ||||||
Settlement agreements payable | 11,241 | (19,948 | ) | |||||
Other current liabilities | 3,940 | 801 | ||||||
Net cash used by operating activities | (221,617 | ) | (469,597 | ) | ||||
Cash flows from investing activities | ||||||||
Equity investment in Paradise on Wings | (400,000 | ) | - | |||||
Issuance of notes receivable | - | (10,507 | ) | |||||
Issuance of notes receivable – related party | (18,600 | ) | (6,000 | ) | ||||
Repayments of notes receivable | 16,845 | 2,500 | ||||||
Net cash used by investing activities | (401,755 | ) | (14,007 | ) | ||||
Cash flows from financing activities | ||||||||
Issuance of notes payable – related party | 448,310 | 526,308 | ||||||
Repayments on notes payable | - | (50,000 | ) | |||||
Payments on stock subscriptions receivable | 170,000 | - | ||||||
Net cash provided by financing activities | 618,310 | 476,308 | ||||||
Net decrease in cash and cash equivalents | (5,062 | ) | (7,296 | ) | ||||
Cash and cash equivalents, beginning of period | 5,062 | 12,358 | ||||||
Cash and cash equivalents, end of period | $ | - | $ | 5,062 | ||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for interest | $ | - | $ | - | ||||
Cash paid for income taxes | $ | - | $ | - | ||||
Schedule of non-cash financing activities | ||||||||
Equity investment in Paradise on Wings | $ | 400,000 | $ | - | ||||
Stock issued upon conversion of notes payable | $ | - | $ | 55,000 | ||||
Stock issued upon conversion of notes payable – related party | $ | 570,529 | $ | 475,626 | ||||
Stock issued for stock subscriptions payable | $ | 49,080 | $ | - | ||||
Settlement of related-party debt | $ | - | $ | 197,550 |
F-6 |
F-7 |
F-8 |
F-9 |
F-10 |
F-11 |
F-12 |
December 28, | December 29, | |||||||
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 850,235 | $ | 784,758 | ||||
Deferred tax liabilities | --- | --- | ||||||
Valuation allowance | (850,235 | ) | (784,758 | ) | ||||
Net deferred tax asset | $ | --- | $ | --- |
F-13 |
F-14 |
F-15 |
Statement of Operations | Period From January 21, 2014 Through December 28, 2014 | |||
Revenue | $ | 313,087 | ||
Operating expenses | (276,496 | ) | ||
Income from operations | 36,591 | |||
Other income | 499 | |||
Net income | $ | 37,090 | ||
Company’s share of net income | $ | 18,545 |
F-16 |
Balance Sheet | December 28, 2014 | |||
Current assets | $ | 89,968 | ||
Equity investment | 400,000 | |||
Note receivable | 160,051 | |||
Total assets | $ | 650,019 | ||
Total liabilities | $ | 43,300 | ||
Equity | 606,719 | |||
Total liabilities and equity | $ | 650,019 |
Level 1 | Level 2 | Level 3 | ||||||||||
Equity investments – December 28, 2014 | $ | -0- | $ | 818,545 | $ | -0- | ||||||
Equity investments – December 29, 2013 | $ | -0- | $ | -0- | $ | -0- |
F-17 |
F-18 |
F-19 |
Year | Lease Payment | ||||
2015 | $ | 22,768 | |||
2016 | 22,871 | ||||
2017 | 22,069 | ||||
2018 | -0- | ||||
2019 | -0- | ||||
Thereafter | -0- | ||||
Total | $ | 67,708 |
F-20 |
F-21 |
F-22 |
F-23 |
F-24 |
December 28, | December 29, | |||||||
2014 | 2013 | |||||||
Notes payable – related party | $ | 3,420 | $ | 127,772 | ||||
Notes payable – in default | 11,000 | 11,000 | ||||||
Total notes payable, net | $ | 14,420 | $ | 138,772 |
F-25 |
F-26 |
F-27 |
F-28 |
F-29 |
F-30 |
F-31 |
F-32 |
Exhibit | Exhibit Description | |||
10.14 | Settlement Agreement and Release, dated January 8, 2015, by and between the Company and J. David Eberle | |||
23.1 | Consent of M&K CPAS, PLLC | |||
31.1 | Certification of Chief Executive Officer of the registrant required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended | |||
31.2 | Certification of Chief Financial Officer of the registrant required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended | |||
32.1 | Certification of Chief Executive Officer and Chief Financial Officer of the registrant required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended | |||
101.INS* | XBRL Instance Document | |||
101.SCH* | XBRL Taxonomy Extension Schema Document | |||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |