10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  FORM 10-K

R   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For fiscal year ended:  December 31, 2015

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT

For the transition period from ____ to ____

Commission file number: 000-538-53

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

 (Exact name of the registrant as specified in its charter)

Colorado	80-0182193
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

2 N. Cascade Avenue, Suite 1400

Colorado Springs, CO 80903

(Address of principal executive offices)

719-265-5821

Telephone number, including Area code

Securities registered under Section 12(b) of the Exchange Act: None

Title of Each Class	Name of Each Exchange on Which Registered
NONE	NONE

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, no par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

Yes o No R

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes o No R

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes R No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes R   No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Yes ☐No R 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large accelerated filer ☐       Accelerated filer ☐       Non-accelerated filer ☐       Smaller reporting Company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

There were 70,818,764 shares of the issuer's common stock, no par value, outstanding as of March 15, 2016.

The aggregate market value of common stock held by non-affiliates of the Registrant as of June 30, 2015, computed by reference to the closing sales price on that date was approximately $18,178,316.  

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

FORM 10-K

FOR THE PERIOD ENDED DECEMBER 31, 2015

CONTENTS

PART I	1
Item 1.  Business	1
Item 1A. Risk Factors	3
Item 2.  Properties	9
Item 3. Legal Proceedings	9
Item 4. Mine Safety Disclosures	9
PART II	10
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	10
Item 6. Selected Financial Data	11
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	17
Item 8. Financial Statements and Supplementary Data	17
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	17
Item 9A. Controls and Procedures	18
Item 9B. Other Information	19
PART III	20
Item 10.  Directors, Executive Officers and Corporate Governance	20
Item 11. Executive Compensation	22
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	27
Item 13. Certain Relationships and Related Transactions, and Director Independence	29
Item 14. Principal Accountant Fees and Services	30
Item 15. Exhibits, Financial Statement Schedules	32
Signatures	33

Cautionary Statement about Forward-Looking Statements

This Form 10-K contains forward-looking statements regarding future events and the Company’s future results that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the Company’s management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of the Company’s future financial performance, the continuing development of the Company’s business plan operations, the Company’s anticipated growth and potentials in its business, the financial performance and/or gains by companies in which the Company holds a position, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified elsewhere herein, including under “Risk Factors.” Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.

The Company is under no duty to update any of these forward-looking statements after the date of this report. You should not place undue reliance on these forward-looking statements.

i

PART I

Item 1. BUSINESS.

General Discussion

Southern Concepts Restaurant Group, Inc. (“SCRG” or the “Company”) is a Colorado corporation that was formed on January 29, 2008. The Company, on March 9, 2015, with approval of a majority of the Company’s shareholders, changed its name from Bourbon Brothers Holding Corporation to Southern Concepts Restaurant Group, Inc.

The Company operates and manages restaurants through its wholly-owned and majority-owned subsidiaries, including:

SH Franchisee & Licensing Corp. (“SH”)

Southern Hospitality Denver Holdings, LLC (“SHDH”)

Southern Hospitality Denver, LLC (“SHD”)

Southern Hospitality Lone Tree, LLC (“SHLT”)

Carve Restaurant Group, LLC (“CRG”)

Carve BBQ Glendale, LLC (“CARVEG”)

Southern Hospitality Southern Kitchen Colorado Springs, LLC (“SHSK”)

Bourbon Brothers Holding Company, LLC (“BBHCLLC”)

Bourbon Brothers Restaurant Group, LLC (“BBRG”)

The Company began revenue generating activities in late February 2013, with the opening of its first Denver-based restaurant. In January 2014, the Company opened its second restaurant in Colorado Springs, Colorado, and in April 2015, the Company opened its third restaurant in Lone Tree, Colorado. The Company’s fourth restaurant opened November 5, 2015.

The Company has developed a fast casual concept, in which the Company opened its first fast casual restaurant in November 2015. This restaurant, located in Glendale, Colorado, is called Carve Barbecue, and it’s operated through a newly-formed 66.075% owned subsidiary, CARVEG.

The Company is a party to a franchise agreement (the “FA” or the “Franchise Agreement”) with SH Franchising & Licensing LLC, dba Southern Hospitality BBQ (the “Franchisor” or “SHFL”).  In February 2015, the Company also executed a sixth amendment to the Franchise Agreement which specifically granted SCRG the right to develop two new full service Southern Hospitality restaurants during 2015, the locations of which were named in the amendment to be Lone Tree, Colorado and downtown Colorado Springs, Colorado.  The Company did execute and open a Southern Hospitality restaurant in Lone Tree, Colorado in April 2015.  At this time, the Company has no plans to open a location in downtown Colorado Springs, Colorado. Additionally, the sixth amendment granted the Company the right to rebrand its Bourbon Brothers Southern Kitchen restaurant in northern Colorado Springs into a Southern Hospitality-branded full service franchised restaurant operating under the trade name Southern Hospitality Southern Kitchen, a differentiated and slightly more upscale concept to that of the original concept.

In February 2015, the Company entered into a Master License Agreement (“MLA”) with SHFL which grants the Company the right to license up to five Southern Hospitality-branded fast casual restaurants (SHQ) in the Denver and Colorado Springs markets through August 2016. SHFL and SCRG have agreed to a royalty of 2.5% of gross sales on each of the new SHQ locations. The agreement pertains exclusively to the Company’s right to develop the SHQ locations and does not restrict the Company from developing a similar, competitive brand in the future. Finally, in developing the SHQ concept, SCRG will retain joint ownership of this concept, which pertains to the functionality of the restaurant.  The Company does not anticipate opening a SHQ in the near future.

1

During 2016, the Company is exploring options for growth for the Company’s two brands, Southern Hospitality and Carve Barbecue.  Specifically, the Company is looking at building the Southern Hospitality growth model on the footprint and profitability similar to its Southern Hospitality Lone Tree location, with real estate between 4,000 to 5,000 square feet.  In regards to the Carve model, the Company is identifying real estate partners and locations for its 2,500 square feet footprint.

The Company dissolved several subsidiaries in February 2016 that were non-operational, including Southern Hospitality Tejon, LLC, Bourbon Brothers Franchise, LLC, Bourbon Brothers Brand, LLC and Bourbon Brothers Seafood and Chophouse Colorado Springs, LLC.  An organizational chart is filed with this Form 10-K.

Competition

We have a limited operating history, and therefore, anticipate that we will compete with national and regional casual and upscale casual dining restaurants. Our competition may also include a variety of locally owned restaurants and several major store chains. The number, size and strength of competitors vary by region, market and even restaurant. Competitors to our restaurants compete based on a number of factors, including taste, quality, speed of service, price and value, name recognition, location, customer service and the ambience and condition of the competitor.

Restaurant Site Selection

We believe that site selection is critical to our success and thus we devote substantial effort to evaluating potential locations. Our site selection process includes the use of external real estate brokers with expertise in specific markets. Locations proposed by real estate managers are reviewed on site by an executive of the Company. We study the surrounding trade area, demographic and business information within that area, and available information on competitors.

 Employees

As of December 31, 2015, the Company had 126 employees, of which 44 are full-time employees. 

Additional Information

The Company files reports with the Securities and Exchange Commission (the “SEC”) as required by Section 13(a) of the Exchange Act. The public may read and copy materials filed by the Company with the SEC at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

2

Item 1A.  RISK FACTORS

Our future performance is subject to a variety of risks and uncertainties. Although the risks described below are the risks that we believe are material, there may also be risks of which we are currently unaware, or that we currently regard as immaterial based upon the information available to us that later may prove to be material. The Company’s securities are highly speculative and involve a high degree of risk, including among other items the risk factors described below.

RISKS RELATED TO OUR BUSINESS

General Company Risks

The Company has a limited operating history.  The Company did not begin active business operations until late February 2013.  Therefore the Company is subject to many risks common to enterprises with limited or no operating history, including potential under-capitalization, limitations with respect to personnel, financial and other resources, and limited customers and revenue sources.  Our ability to successfully generate sufficient revenues from operations is dependent on a number of factors, including availability of funds to fund our current and anticipated operations, and to commercialize our business concept.  There can be no assurance that we will not encounter setbacks with the on-going development and implementation of our business plan.  In addition, our assumptions and projections may not prove to be accurate, and unexpected capital needs may arise. If such needs arise, our inability to raise additional funds, either through equity or debt financing, will materially impair our ability to implement our business plan and generate revenues.  Further, as a result of a general tightening of lending standards, and a general decrease in equity financing and similar type transactions, it could be difficult for us to obtain funding to allow us to continue to develop our business operations.

We likely will need additional capital in the future and it may not be available on acceptable terms.  The development of our business model will likely require significant additional capital in the future to, among other things, fund our operations and growth strategy.  We may rely on bank financing and also may seek access to the debt and/or equity capital markets.  There can be no assurance, however, that these sources of financing will be available on reasonable terms, or at all.  Our ability to obtain additional financing will be subject to a number of factors, including market/economic conditions, our operating performance, and investor sentiment.  These factors may make the timing, amount, terms and conditions of additional financings unattractive to us.  If we are unable to raise additional capital, our growth could be significantly impeded and/or we may be unable to execute upon our business model.

New or less mature restaurants, once opened, may vary in profitability and levels of operating revenue for six months or more and may under perform compared to existing or established restaurants.   New and less mature restaurants typically experience higher operating costs in both dollars and percentage of revenue initially when compared to restaurants in the comparable restaurant base.  Further, restaurants located in one city or location may not perform as well as restaurants in another city or location.  We expect that our restaurants may take up to one or more years to reach normalized operating levels due to inefficiencies typically associated with new restaurants.  These include operating costs, which are often significantly greater during the first year or two of operation.

The restaurant industry is highly competitive and subject to changes in consumer preferences.The Company’s business is to own and operate southern-food themed restaurants in several cities in the United States.  Competition in the restaurant industry is increasingly intense. Our competitors include a large and diverse group of restaurant chains and individual restaurants that range from independent local operators that have opened restaurants to well-capitalized national restaurant companies. Many of our competitors are well established, and some of our competitors have substantially greater financial, marketing, and other resources than do we. Accordingly, they may be better equipped than us to increase marketing or to take other measures to maintain their competitive position.

Moreover, the bar and restaurant industry is characterized by the continual introduction of new concepts and is subject to rapidly changing consumer preferences, tastes and habits.  Our success depends on the popularity of Southern U.S. based foods and drinks, and shifts in consumer preferences away from this cuisine and style would likely have a material adverse effect on our future profitability.

3

Our operating results will likely experience significant fluctuations. Our operating results may fluctuate significantly due to various risks and unexpected circumstances, increases in costs, seasonality, weather, and other factors outside our control.  The restaurant and bar business is subject to a number of significant risks such as: general economic conditions; extended periods of inclement weather which may affect guest visits as well as limit the availability of key commodities and items that are important ingredients in our products; increases in energy costs, costs of food, supplies, maintenance, labor and benefits, as well as other operating costs; and unanticipated expenses such as repairs to damaged or lost property. Moreover, our business may be subject to seasonal fluctuations. Accordingly, our results of operations from any given period may not necessarily be indicative of results to be expected for any particular future period.

Our expansion into new markets may present increased risks due to our unfamiliarity with those areas.  Our expansion strategy also entails opening restaurants in markets in which we have little or no operating experience. These new markets may have different competitive conditions, consumer tastes and discretionary spending patterns. In addition, our new restaurants will typically take several months to reach budgeted operating levels due to problems associated with new restaurants, including lack of market awareness, inability to hire sufficient staff and other factors. Restaurants opened in new markets may never reach expected sales and profit levels, thereby affecting our overall profitability. Although we have attempted to mitigate these factors by paying careful attention to training and staffing needs, there can be no assurance that we will be successful in operating new restaurants on a profitable basis.

Our ability to open new restaurants on schedule in accordance with our targeted capacity growth rate may be adversely affected by delays or problems associated with securing suitable restaurant locations and leases and by other factors, some of which are beyond our control and the timing of which is difficult to forecast accurately. Our objective is to grow our business and increase shareholder value primarily by (i) establishing and then expanding our base of restaurants that are profitable; and (ii) once established, increasing sales at existing restaurants.  Due in part to the unique nature of each proposed restaurant location, we cannot predict the timing or ultimate success of our site selection process or these lease negotiations. Delays encountered in negotiating, or our inability to finalize to our satisfaction, the terms of a restaurant lease may delay our actual rate of new restaurant growth and cause a significant variance from our targeted capacity growth rate. In addition, our scheduled rate of new restaurant openings may be adversely affected by other factors, some of which are beyond our control, including the following:

• the availability and cost of suitable restaurant locations for development;

• our ability to compete successfully for suitable restaurant locations;

• the availability of adequate financing;

• the timing of delivery of leased premises from our landlords so we can commence our build-out construction activities;

• construction and development costs;

• labor shortages or disputes experienced by our landlords or outside contractors, including their ability to manage union activities such as picketing or hand billing which could delay construction and which could create adverse publicity for our business and operations;

• any unforeseen engineering or environmental problems with the leased premises;

• our ability to hire, train and retain additional management and restaurant personnel;

• our ability to secure governmental approvals and permits, including liquor licenses;

• our ability to successfully promote our new restaurants and compete in the markets in which our new restaurants are located;

• weather conditions or natural disasters; and,

• general economic conditions.

4

As a franchisee and licensee we have obligations to our Franchisor.  We are obligated to pay the Franchisor royalties on gross sales from all Southern Hospitality restaurants, including those under the Master License Agreement that we entered into with the Franchisor.  These fees will require that the Company devote a substantial amount of its financial resources to paying such fees, which could negatively affect the Company’s results of operations and liquidity.

Our success depends on our ability to protect intellectual property used in our business operations. We rely on trade secrets and proprietary know-how in operating our restaurants, and we expect to employ various methods to protect those trade secrets and that proprietary know-how. However, such methods may not afford adequate protection and others could independently develop similar know-how or obtain access to our know-how, concepts and recipes.  We cannot offer any assurance that third parties will not claim that the trademarks or menu offerings we utilize infringe upon their proprietary rights. Any such claim, whether or not it has merit, could be time-consuming, result in costly litigation, cause delays in introducing new menu items in the future or require us to enter into royalty or licensing agreements. As a result, any such claim could have a material adverse effect on our business, results of operations, financial condition or liquidity.

If we fail to manage our growth effectively, it could harm our business. Failure to manage our growth effectively could harm our business.  Our business model anticipates that we may open multiple restaurants in various cities across the United States.  Our restaurant management systems, financial and management controls and information systems may not be adequate to support our planned expansion. Our ability to manage our growth effectively will require us to develop and enhance these systems, procedures and controls and to locate, hire, train and retain management and operating personnel. We cannot offer any assurance that we will be able to respond on a timely basis to all of the changing demands that our planned expansion will impose on management and on our infrastructure. If we are unable to manage our growth effectively, our business and operating results could be materially adversely impacted.

Our operations will be susceptible to the changes in cost and availability of food which could adversely affect our operating results. Our profitability will depend in part on our ability to anticipate and react to changes in food costs. Various factors beyond our control, including adverse weather conditions, governmental regulation, production, availability, recalls of food products, and seasonality, as well as the impact of the current macroeconomic environment on our suppliers, may affect our food costs or cause a disruption in our supply chain. Changes in the price or availability of commodities for which we do not have fixed price contracts could materially adversely affect our profitability. Expiring contracts with our food suppliers could also result in unfavorable renewal terms and therefore increase costs associated with these suppliers or may even necessitate negotiations with alternate suppliers. We cannot predict whether we will be able to anticipate and react to changing food costs by negotiating more favorable contract terms with suppliers or by adjusting our purchasing practices and menu prices, and a failure to do so could adversely affect our operating results. In addition, the ability of our suppliers to meet our supply requirements upon favorable terms, if at all, may be impacted by the economic recovery.

The restaurant business is subject to a significant amount of regulation and licensing requirements.Our proposed business is subject to various federal, state, and local government regulations, including those relating to the food safety and disclosure, alcoholic beverage sale and control, public accommodations, and public health and safety. These regulations are subject to continual changes and updating. Difficulties or failures in obtaining or maintaining the required licenses and approvals or maintaining compliance with existing or newly enacted requirements could delay the opening or affect the continued operation and profitability of one or more restaurants in a particular area.

We are also subject to "dram shop" statutes in certain states, such as Colorado.  These statutes generally allow a person injured by an intoxicated person to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. Failure to comply with alcoholic beverage control or dram shop regulations could subject the Company to liability and could adversely affect our business.

Various federal and state employment laws will govern our relationship with our team members and affect operating costs.  These laws govern minimum wage requirements, overtime pay, meal and rest breaks, unemployment tax rates, workers' compensation rates, citizenship or residency requirements, labor relations, child labor regulations, and discriminatory conduct. Additional government-imposed increases in federal and state minimum wages, overtime pay, paid leaves of absence, and mandated health benefits, increased tax reporting and tax payment requirements for team members who receive tips or a reduction in the number of states that allow tips to be credited toward minimum wage requirements could harm our operating results.

5

The food service industry is affected by litigation and publicity concerning food quality, health and other issues, which can cause guests to avoid our restaurants and result in significant liabilities or litigation costs.  Food service businesses can be adversely affected by litigation and complaints from guests, consumer groups or government authorities resulting from food quality, illness, injury or other health concerns or operating issues stemming from one restaurant or a limited number of restaurants. Adverse publicity about these allegations may negatively affect us, regardless of whether the allegations are true, by discouraging guests from eating at our restaurants. We could also incur significant liabilities if a lawsuit or claim results in a decision against us or litigation costs regardless of the result.

Health concerns relating to the consumption of certain food products could affect consumer preferences and could negatively impact our results of operations.   Like other restaurants, consumer preferences could be affected by health concerns about the consumption of certain food products (such as beef or chicken), or negative publicity concerning food quality, illness and injury in general. In recent years there has been negative publicity concerning e-coli, hepatitis A, "mad cow," "foot-and-mouth" disease and "bird flu." The restaurant industry has also been subject to a growing number of claims that the menus and actions of restaurant chains have led to the obesity of certain of their guests, resulting in legislation in some jurisdictions which require nutritional information to be disclosed to guests. Nutritional labeling could be enacted in many additional states, counties or cities as well as on a federal level. Nutritional labeling requirements and negative publicity concerning any of the food products we serve may adversely affect demand for our food and could result in a decrease in guest traffic to our restaurants. If we react to the labeling requirements or negative publicity by changing our concept or our menu offerings or their ingredients, we may lose guests who do not prefer the new concept or products, and we may not be able to attract sufficient new guests to produce the revenue needed to make our restaurants profitable. In addition, we may have different or additional competitors for our intended guests as a result of a change in our concept and may not be able to compete successfully against those competitors. A decrease in guest traffic to our restaurants as a result of these health concerns or negative publicity or as a result of a change in our menu or concept could materially harm our business.

Uncertainty regarding the economic recovery may negatively affect consumer spending and has adversely impacted our revenues and our results of operations and may continue to do so in the future.   Current uncertainty regarding economic conditions and the existence and rate of any economic recovery may have an adverse effect on the businesses, results of operations and financial condition of the Company and its customers, distributors and suppliers. These conditions include continued unemployment, weakness and lack of consistent improvement in the housing markets; downtrend or delays in residential or commercial real estate development; volatility in financial markets; inflationary pressures and reduced consumer confidence. As a result, our customers may continue to remain apprehensive about the economy and maintain or further reduce their already lowered level of discretionary spending. This could impact the frequency with which our customers choose to dine out or the amount they spend on meals while dining out, thereby decreasing our revenues and potentially negatively affecting our operating results. We believe there is a risk that prolonged negative economic conditions might cause consumers to make long-lasting changes to their discretionary spending behavior, including dining out less frequently on a more permanent basis, which would have an adverse effect on our business.

We expect to rely heavily on information technology, and any material failure, weakness or interruption could prevent us from effectively operating our business.The restaurant industry relies heavily on information systems, including point-of-sale processing in restaurants, payment of obligations, collection of cash, credit and debit card transactions and other processes and procedures. Our ability to efficiently and effectively manage our business will in part depend on the reliability and capacity of these systems.  The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new platforms could result in delays in guest service and reduce efficiency in our operations.  Remediation of such problems could result in significant, unplanned capital investments.

6

A security failure in our information technology systems could expose us to potential liability and loss of revenues.We accept credit and debit card payments in our restaurants.  A number of retailers have recently experienced actual or potential security breaches in which credit and debit card information may have been stolen, including a number of highly publicized incidents with well-known retailers.  If we experienced a security breach, either intentionally or inadvertently, we could become subject to claims, lawsuits or other proceedings for purportedly fraudulent transactions arising out of the theft of credit or debit card information, compromised security and information systems, failure of our employees to comply with applicable laws, the unauthorized acquisition or use of such information by third parties, or other similar claims.  Any such incidents or proceedings could disrupt the operation of our restaurants, adversely affect our reputation, guest confidence, and our results of operations, or result in the imposition of penalties or cause us to incur significant unplanned losses and expenditures, including those necessary to remediate any damage to persons whose personal information may have been compromised.  We do not maintain a separate insurance policy covering cyber security risks and, in light of recent court rulings and amendments to policy forms, there is uncertainty as to whether traditional commercial general liability policies will be construed to cover the expenses related to a cyber-attack and breaches if credit and debit card information is stolen.

We identified material weaknesses in our disclosure controls and procedures and our Internal Controls Over Financial Reporting.  Section 404 of the Sarbanes-Oxley Act of 2002 requires management to assess our internal controls over financial reporting (“ICFR”) pursuant to a defined framework.  In making that assessment, management identified a material weakness in our disclosure controls as a result of several material weaknesses identified in our ICFR as described in Item 9A below.  There are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective ICFR can provide only reasonable assurance with respect of financial statement preparation and may not prevent or detect misstatements.  Material weaknesses make it more likely that a material misstatement of annual or interim financial statements will not be prevented or detected.  In addition, effective ICFR at any point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

We have signed leases under long-term non-cancelable terms for which we may remain obligated to perform under even after a restaurant closes, and we may be unable to renew leases at the end of their terms. Our current SHD lease for our first Denver restaurant is a non-cancelable ten-year lease with an option to renew for two five year terms. Our current Colorado Springs lease is a non-cancelable ten-year lease with an option to renew for a ten-year term.  Our current Lone Tree lease is a non-cancelable ten-year lease with an option to renew for two five-year terms.  Our current Glendale lease is a non-cancelable lease expiring July 31, 2020 with an option to renew for three five-year terms. If we were to close or fail to open a restaurant at a location we lease, we would generally remain committed to perform our obligations under the applicable lease, which could include, among other things, payment of the base rent for the balance of the lease term. Our obligation to continue making rental payments and fulfilling other lease obligations in respect of leases for closed or unopened restaurants could have a material adverse effect on our business and results of operations. Alternatively, at the end of the lease term and any renewal period for a restaurant, we may be unable to renew the lease without substantial additional cost, if at all. If we cannot renew such a lease we may be forced to close or relocate a restaurant, which could subject us to construction and other costs and risks.

The Company is significantly leveraged and has significant debt service requirements.  The Company has a significant amount of indebtedness which could limit the Company’s ability to incur additional indebtedness for capital raising purposes, securing a line of credit, or otherwise. The Company’s indebtedness could adversely affect the Company’s operations, including among other things its ability to obtain additional financing if necessary, and a significant portion of the Company’s cash flow from operations could be dedicated to the repayment of interest and principal on the debts which would reduce the amount of funds available for other corporate purposes.  The Company’s ability to meet its debt service obligations and reduce its indebtedness will be dependent upon the Company’s future performance, which will be subject to the success of its business strategy, general economic conditions, and other factors affecting the Company’s operations, many of which are beyond the Company’s control.

The Company is not required to establish a sinking fund (or any similar type of segregated accounts) for the repayment of its debt. There can be no assurance that the Company’s business operations will generate sufficient cash flow from operations to meet its debt service requirements and the potential payment of principal in cash when due, and if the Company is unable to do so, it may be required to liquidate assets, to refinance all or a portion of the indebtedness or seek to obtain additional financing.

7

RISKS RELATED TO OUR SECURITIES

The Company does not intend to declare any dividends in the foreseeable future.  The Company intends to retain any of its profits to fund the Company’s business operations.  Investors who require income from dividends should not purchase our common stock.

As our stock is not listed on a national securities exchange, trading in our shares will be subject to rules governing "penny stocks," which will impair trading activity in our shares.   Our stock is not on a national securities exchange. Therefore, our stock is subject to rules adopted by the SEC regulating broker dealer practices in connection with transactions in "penny stocks." Those disclosure rules applicable to "penny stocks" require a broker dealer, prior to a transaction in a "penny stock" not otherwise exempt from the rules, to deliver a standardized list disclosure document prepared by the SEC. That disclosure document advises an investor that investment in "penny stocks" can be very risky and that the investor's salesperson or broker is not an impartial advisor but rather paid to sell the shares. The disclosure contains further warnings for the investor to exercise caution in connection with an investment in "penny stocks," to independently investigate the security, as well as the salesperson with whom the investor is working and to understand the risky nature of an investment in this security. The broker dealer must also provide the customer with certain other information and must make a special written determination that the "penny stock" is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Further, the rules require that, following the proposed transaction, the broker provide the customer with monthly account statements containing market information about the prices of the securities.

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock. Many brokers may be unwilling to engage in transactions in our common stock because of the added disclosure requirements, thereby making it more difficult for shareholders to dispose of their shares. You will also find it difficult to obtain accurate information about, and/or quotations as to the price of, our common stock.  In general, buying low-priced penny stocks is very risky and speculative.  The Company’s common stock is currently defined as a penny stock under the Securities and Exchange Act of 1934, and rules thereunder.   You may not be able to sell your shares when you want to do so, if at all.  The penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock and may also affect your ability to resell any shares you may purchase in the public markets.

The over-the-counter market for stock such as ours is subject to extreme price and volume fluctuations. You may not be able to resell your shares at or above the public sale price. The securities of companies such as ours have historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors, such as new product developments and trends in the our industry and in the investment markets generally, as well as economic conditions and quarterly variations in our operational results, may have a negative effect on the market price of our common stock.

As a company with a class of securities registered pursuant to the Exchange Act the Company has significant obligations under the Exchange Act. Having a class of securities registered under the Exchange Act is a time consuming and expensive process and subjects the Company to increased regulatory scrutiny and extensive and complex regulation.  Complying with these regulations is expensive and requires a significant amount of management’s time.  For example, public companies are obligated to institute and maintain financial accounting controls and for the accuracy and completeness of their books and records.  These requirements could necessitate additional corporate spending on procedures and personnel requiring us to reallocate funds from other business objectives.

We are a holding company and depend on the cash flow of our subsidiaries. We are a holding company with no material assets other than the equity interests of our subsidiaries. Our subsidiaries conduct substantially all of our operations and own substantially all of our assets. Consequently, our cash flow and our ability to meet our obligations depends upon the cash flow of our subsidiaries and the payment of funds by our subsidiaries directly or indirectly to us in the form of dividends, distributions and other payments. Any inability on the part of our subsidiaries to make payments to us could have a material adverse effect on our business, financial condition and results of operations.

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There may be future sales or other dilution of our equity which may adversely affect the market price of our common stock. We are not restricted from issuing additional common stock or preferred stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or preferred stock or any substantially similar securities. Our Board of Directors is authorized to issue additional shares of common stock and additional classes or series of preferred stock without any action on the part of the stockholders. Our Board of Directors also has the discretion, without stockholder approval, to set the terms of any such classes or series of preferred stock that may be issued, including voting rights, rights and preferences with respect to dividends or upon the liquidation, or winding up of our business and other terms. If we issue additional preferred shares in the future that have a preference over our common stock with respect to the payment of dividends or upon liquidation, dissolution or winding up, or if we issue additional preferred shares with voting rights that dilute the voting power of our common stock, the rights of our common stockholders or the market price of our common stock could be adversely affected.

Item 2. PROPERTIES

The Company’s principal executive office, for all operations, is located at 2 North Cascade Avenue, Suite 1400, Colorado Springs, CO 80903.  The Company does not own any real property.  The following table provides certain information regarding our businesses leased as of December 31, 2015:

			Operating
	Principal	Lease	Square
Location	Uses	Commenced	Feet		Interest
Denver, Colorado	Restaurant	2012		7,464	Leased (a)
Colorado Springs, Colorado	Corporate Office	2013		4,450	Leased (b)
Colorado Springs, Colorado	Restaurant	2013		9,191	Leased (c)
Lone Tree, Colorado	Restaurant	2014		5,513	Leased (d)
Glendale, Colorado	Restaurant	2015		2,500	Leased (e)

(a) (b)	Occupied under the terms of a 124.5 month lease with an unaffiliated party.  We pay $15,550 per month escalating up to $20,289 per month in year 10. Occupied under the terms of a 78 month lease with an unaffiliated party ending December 31, 2016.  We pay approximately $6,000 per month in year 6.
(c)	Occupied under the terms of a 120 month lease with a related party.  We pay $33,340 per month escalating by approximately 10% every 60 months.
(d)	Occupied under the terms of a 120 month lease with an unaffiliated party.  We pay approximately $8,960 per month escalating up to $9,855 in year 10.
(e)	Occupied under the terms of a lease expiring on July 31, 2020 with an unaffiliated party. We pay approximately $11,100 per month escalating by 12.5% every 60 months.

Item 3. LEGAL PROCEEDINGS

None.

Item 4.  MINE SAFETY DISCLOSURES

None.

9

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is currently quoted on the OTCQB under the symbol “RIBS”. The table below sets forth the high and low bid prices of the Company’s common stock during the periods indicated as reported on Yahoo Finance (http://finance.yahoo.com).  The quotations reflect inter-dealer prices without retail mark-up, mark-down or commission and may not reflect actual transactions.

Quarter Ended	High		Low
December 31, 2015	$	0.24	$	0.24
September 30, 2015		0.27		0.21
June 30, 2015		0.27		0.27
March 31, 2015		0.27		0.26
December 31, 2014	$	0.81	$	0.15
September 30, 2014		0.67		0.30
June 30, 2014		0.97		0.31
March 31, 2014		1.01		0.34

The closing sales price of the Company’s common stock as reported on March 14, 2016, was $0.16 per share, which was last reported trade of the Company’s common stock on the OTCQB.

Holders

As of December 31, 2015, there were 258 holders of record of the Company’s common stock and 6 holders of record of our Series A preferred stock. On February 3, 2016, 4,428,791 shares of Series A Preferred Stock, converted to common shares, leaving 456,068 Series A Preferred Stock issued and outstanding and 2 holders of record. This does not include persons who hold our common stock in brokerage accounts and otherwise in “street name.”

Dividends

Since its inception, the Company has not declared or paid cash or other dividends on its common stock.  The Company has no plans to pay any dividends, although it may do so if its’ financial position changes.  There are no restrictions in the Registrant’s articles of incorporation or bylaws that restrict it from declaring dividends.  

Equity Compensation Plan Information

The Company has adopted one equity compensation plan being its 2012 Stock Option Plan (the “Plan”).   The Company’s shareholders approved the adoption of the Plan on November 14, 2012.  A total of 1,500,000 shares of Company common stock were reserved for issuance under the Plan as of December 31, 2013. That amount was increased to 3,000,000 on January 22, 2014, with approval of the Company’s shareholders and subsequently increased to 4,000,000 in December of 2014, with the approval of the Company’s shareholders..

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Under the Plan, the Company may grant stock options, restricted and other equity awards to any employee, consultant, independent contractor, director or officer of the Company.    The purpose of the Plan is to provide financial incentives for selected employees, advisors, consultants and directors of the Company, thereby promoting the long-term growth and financial success of the Company.

The following table gives information about the Company’s common stock that may be issued upon the exercise of options, warrants and rights under the Company’s compensation plans as of December 31, 2015.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance
Equity compensationplans approved by security holders		2,867,876		$0.30		1,132,124

Recent Sales of Unregistered Securities

All sales of unregistered equity securities that occurred during the period covered by this report, and through February 24, 2016, have been previously reported as required in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

Between January 1, 2016 and March 7, 2016, the Company sold 1,075,000 shares of its common stock and warrants at $0.20 per share for total gross proceeds of $215,000.  The Company relied on the exemptions from registration under Section 4(a)(2) of the Securities Act of 1933, as amended and Rule 506(b) promulgated thereunder.  No commission or other remuneration were paid on the sales.

Repurchases of Equity Securities

The Company did not repurchase any shares of the Company’s common stock during the year ended December 31, 2015.  

Item 6. SELECTED FINANCIAL DATA

Not applicable.

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Management’s Discussion and Analysis, we provide a historical and prospective narrative of our general financial condition, results of operations, liquidity and certain other factors that may affect our future results, including:

· Key events and recent developments within our Company;

· Our results of operations for the years ended 2015 and 2014;

· Our liquidity and capital resources;

· Any off balance sheet arrangements we utilize;

· Any contractual obligations to which we are committed;

· Our critical accounting policies;

· The inflation and seasonality of our business; and

· New accounting standards that affect our Company.

The review of Management’s Discussion and Analysis should be made in conjunction with our consolidated financial statements, related notes and other financial information included elsewhere in this annual report.

Results of Operations – Years ended December 31, 2015 and 2014

Revenues

The Company opened its first restaurant in Denver, Colorado on February 21, 2013 (the “SHD” restaurant).  The Company’s second restaurant opened in Colorado Springs, CO on January 27, 2014 (the “SHSK” restaurant). The Company’s third restaurant opened in Lone Tree, Colorado on April 27, 2015 (the “SHLT” restaurant).  The Company’s fourth restaurant opened on November 5, 2015 (the “CARVEG” restaurant).  The Company recognized $6,579,100 and $5,144,500 in revenues for the years ended December 31, 2015 and 2014, respectively.  The primary increase in 2015 over 2014 was due to the additional two store openings in 2015, along with same stores sales growth at SHD in 2015.

During 2015, SHD grew comparable same store sales 2015 over 2014 by 14.1%, which management attributes to increasing Southern Hospitality brand awareness in the metro Denver market, through the opening of the Lone Tree, Colorado location as well as innovative marketing campaigns the Company launched throughout the year. The Company anticipates continuing to grow comparable same store sales at SHD, and is forecasting an annual revenue increase of 8% for 2016.

Further, management expects SHLT to grow comparable same store sales during its second year of operations in 2016, by building on the increase in comparable sales metrics at SHD as well as expanded menu offerings. It is important to note that SHLT is currently the most efficient location in the system, having generated $311 in revenue per square foot in the eight months of operations in 2015. Management is conservatively estimating a same store sales increase for SHLT of 8% in 2016.

Additionally, management is anticipating same store sales increases for SHSK of between 10% and 12% for 2016, based on the anticipated traffic increases at the Polaris Pointe development, the Bass Pro Shops anchored development, where the Company’s Colorado Springs store is located. The traffic increases are primarily due to new tenants in the development such as Kneaders Bakery and Café, Sprouts Farmers Market, and the upcoming groundbreaking of the Colorado Grand Resort, a planned 300 room resort and indoor water park. Additionally, the Company is in the process of growing catering and offsite sales through an increase in business development efforts in the field.

Finally, the Company is very optimistic about the revenue potential in 2016 for its newly opened, fast casual barbecue concept, Carve Barbecue. The first location of Carve Barbecue opened in Glendale, Colorado on November 5, 2015 and generated $171, 700 in revenue during the approximate two months of operations. As a new concept, the Company will focus on increasing brand awareness for Carve Barbecue throughout the year as it works to refine and perfect operations for its planned regional rollout.

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Operating Expenses

For the years ended December 31, 2015 and 2014, the Company’s operating expenses were approximately $9,738,000 and $8,776,000, respectively.  The operating expenses in 2015 included costs to open the two restaurant locations of SHLT and CARVEG.  SHD earned $78,200 in net operating income for 2015 after store level operating expenses. Management attributes SHD’s profitability to an increase in comparable same store sales as well as increased operating efficiencies throughout the store level operating expenses of SHD. SHLT was the strongest performing unit for the Company during 2015. For the eight months of operation during the year, SHLT was able to earn $140,300 in store level net operating income (excluding pre-opening expenses), which represents 8.2% of revenue. Management attributes the positive operating performance of SHLT to its lease terms as well as exceptional management of store level operating expenses.  SHSK has been the lowest sales volume Southern Hospitality store in the system to date, causing its operating expenses as a percentage of revenue to struggle. The Company is confident that the store will become cash flow positive during 2016. Furthermore, management is currently working alongside its current landlord for the landlord to sell the building to an institutional owner of single tenant buildings at a reduced rental rate, which will increase SHSK’s earning potential. Over the long term, management believes SHSK will develop into one of the top earning stores for the Company, which will experience traffic catalysts over the coming years of additional retail and restaurants, a new intersection at I-25 and Powers, as well as the development of the Colorado Grand Resort.  Finally, the initial location of Carve Barbecue, which opened on November 5, 2015, had revenues of $171,700. Management expects certain marketing and labor expenses to not reoccur into 2016 that were associated with grand opening of Carve Barbecue. Specifically, labor was notably higher than where management believes they will normalize, however it is still too early for management to confidently issue guidance for 2016. The Company anticipates a Carve restaurant should earn approximately $360,000 in net operating income on average unit revenue volumes of $1,800,000 over the long term.

Pre-opening costs, which are expenses as incurred, consist of the costs of labor, hiring and training for the initial work force for our new restaurants; occupancy costs incurred prior to opening; travel expenses for our training team members; the cost of food and beverages used in training; marketing and supplies costs; and other direct costs related to the opening of new restaurants.

The operating expenses in 2014 included organization costs, merger costs with BBHC and its subsidiaries, and opening the SHSK restaurant. The largest expense in 2015 and 2014 was the restaurant operating costs totaling approximately $6,754,000 and $5,490,500, respectively. The Company’s next largest operating expenses during 2015 and 2014 were its general and administrative expenses totaling approximately $2,055,000 and $2,405,000, respectively. These expenses primarily included recurring corporate costs (such as payroll and related expenses) and costs incurred related to the initiation and organization of the corporate business component. General and administrative and selling and marketing expenses for the years ended December 31, 2015 and 2014 also included approximately $325,000 and $497,000 of (non-cash) stock-based compensation. Additionally, the Company incurred approximately $350,200 and $444,200 in selling and marketing expenses during the years ended December 31, 2015 and 2014, respectively. The Company expects to incur general and administrative expenses going forward as it grows its operations. The Company anticipates that net losses may continue in the foreseeable future due to the overall expansion of the Company and its subsidiaries due to expenses such as marketing and pre-opening.

Other Income (Expense)

For the years ended December 31, 2015 and 2014, the Company recognized other expense of approximately $729,700 and $137,400, of which all was attributable to interest expense. The increase in 2015 over 2014 was primarily due to the additional expense incurred as a result of the additional related party promissory note which was entered into at the end of 2014.

Liquidity and Capital Resources

As of December 31, 2015, the Company had a working capital deficiency of approximately $126,000 and had $1,107,300 of cash, which represents a $74,800 decrease in cash from December 31, 2014. The Company’s total assets and current assets increased as of December 31, 2015, when compared to December 31, 2014 due to the increase in prepaid expenses, property and equipment, deposits, and inventory. As noted above, the Company had a net loss for each of the years ended December 31, 2015 and 2014. Further, as of December 31, 2015, the Company had an accumulated deficit of approximately $12,092,100. Although the Company believes its revenues will continue to increase in 2016, for at least the near term, the Company expects to continue to in part rely on outside sources of capital to fund its current and planned operations.

The Company believes that the proceeds from the issuance of its equity securities and notes, coupled with its cash on hand and projected revenues, will be sufficient to cover its costs and expenses through 2016. However, estimates for expenses may change, in which case the Company’s capital would not be sufficient for this time period. The Company will continue to seek additional capital to help fund its operations in the near term. However, there can be no assurance that additional financing will be available to the Company on reasonable terms, if at all. As a result of the Company’s losses from operations and limited capital resources, the Company’s independent registered public accounting firm’s report in the Company’s financial statements as of, and for the year ended December 31, 2015, includes an explanatory paragraph discussing that these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue to pursue its plan of operations is dependent upon its ability to increase revenues and/or raise the capital necessary to meet its financial requirements on a continuing basis.

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Current Liabilities

The Company’s current liability for convertible and other notes payable and accrued interest as of December 31, 2015 and 2014, is $913,500 and $465,900. Accounts payable as of December 31, 2015, is $256,200 compared to $91,800 as of December 31, 2014. Accrued expenses as of December 31, 2015, were $272,300 compared to $229,500 as of December 31, 2014.  The increase in accrued expenses and accounts payable is due to operating two additional restaurant locations in 2015 over 2014.

Operating Activities

Net cash used in operating activities was approximately $2,258,600 in 2015, as compared to net cash used in operating activities of approximately $2,355,300 in 2014. The increase in net cash used in operating activities in 2015 (compared to 2014) was primarily due to the increase in net loss for the 2015 period, as compared to the 2014 period.

Investing Activities

Net cash used in investing activities in 2015 was approximately $1,867,400, as compared to net cash provided by investing activities of approximately $493,800 for the period of 2014. Net cash used in investing activities in 2015 for two additional restaurants and cash provided by investing activities in 2014 were primarily the result of cash used for purchases of property and equipment offset by cash acquired in the BBHCLLC acquisition.

Financing Activities

Net cash provided by financing activities in 2015 was approximately $4,051,200, compared to approximately $3,030,000 in 2014. Approximately $2,686,500 of cash was provided in 2015 from the issuance of common stock and warrants compared $1,255,000 in 2014. Additionally, the net cash included in financing activities in 2014 included cash of $1,772,000 in exchange for promissory notes, compared to $280,000 of cash for promissory notes in 2015.  The non-controlling interest holders contributed $984,000 in 2015 (compared to none for the year ended December 31, 2014). 

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our shareholders.

Critical Accounting Policies

The preparation of consolidated financial statements in conformity with U. S. generally accepted accounting principles requires management to make a variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements. and (ii) the reported amounts of revenues and expenses during the reporting periods covered by the consolidated financial statements.

Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates. Changes in estimates and assumptions based upon actual results may have a material impact on our results of operation and/or financial condition. Our significant accounting policies are disclosed in Note 2 to the Financial Statements included in this Form 10-K.  Our critical accounting policies are outlined below.

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Intangible Assets

The intangible asset at December 31, 2015 and 2014, represents franchise license costs for SHD. These costs are amortized over the ten-year term of the franchise agreement using the straight line method. The Company assesses potential impairment to intangible assets when there is evidence that events or changes in circumstances indicate that the recovery of the assets’ carrying value is not recoverable.

Property and Equipment

Management reviews property and equipment, including leasehold improvements, for impairment when events or circumstances indicate these assets might be impaired. The Company's management considers, or will consider, such factors as the Company's history of losses and the disruptions in the overall economy in preparing an analysis of its property, including leasehold improvements, to determine if events or circumstances have caused these assets to be impaired. Management bases this assessment upon the carrying value versus the fair value of the asset and whether or not that difference is recoverable. Such assessment is to be performed on a restaurant-by-restaurant basis and is to include other relevant facts and circumstances including the physical condition of the asset. If management determines the carrying value of the restaurant assets exceeds the projected future undiscounted cash flows, an impairment charge would be recorded to reduce the carrying value of the restaurant assets to their fair value.

Leasehold improvements, property and equipment are stated at cost. Internal costs directly associated with the acquisition, development and construction of a restaurant are capitalized. Expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, and leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Construction in process (leasehold improvements in process) and other property and equipment are not depreciated/amortized until placed in service. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings.

The estimated useful lives are as follows:

Leasehold improvements 10 years

Furniture and fixtures 3-10 years

Equipment 3-7 years

Leases and Deferred Rent

The Company leases and intends to continue to lease substantially all of its restaurant properties. For leases that contain rent escalation clauses, the Company records the total rent payable during the lease term and recognizes expense on a straight-line basis over the initial lease term, including the "build-out" or "rent-holiday" period where no rent payments are typically due under the terms of the lease. Any difference between minimum rent and straight-line rent is recorded as deferred rent. Additionally, contingent rent expense based on a percentage of revenue is accrued and recorded to the extent it is expected to exceed minimum base rent per the lease agreement based on estimates of probable levels of revenue during the contingency period. Deferred rent also includes tenant improvement allowances the Company may receive, which is amortized as a reduction of rent expense, also on a straight-line basis over the initial term of the lease.

Convertible Debt and Warrants

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption.

In addition, the Company has issued warrants to purchase common shares of the Company; in some instances along with debt.  Warrants are valued using a fair value based method, whereby the fair value of the warrant is determined at the warrant issue date using a market-based option valuation model based on factors including an evaluation of the Company’s value as of the date of the issuance, consideration of the Company’s limited liquid resources and business prospects, the market price of the Company’s stock in its mostly inactive public market and the historical valuations and purchases of the Company’s warrants.  When warrants are issued in combination with debt or equity securities, the warrants are valued and accounted for based on the relative fair value of the warrants in relation to the total value assigned to the debt or equity securities and warrants combined.

15

Revenue Recognition

The Company generates revenue through its restaurant operations.  The Company recognizes revenue pursuant to Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition, and applicable related guidance.

Revenue is derived from the sale of prepared food and beverage and select retail items. Revenue is recognized at the time of sale and is to be reported on the Company's consolidated statements of operations net of sales taxes collected. The amount of sales tax collected is to be included in accrued expenses until the taxes are remitted to the appropriate taxing authorities.

Stock-Based Compensation

The Company accounts for stock-based compensation under Accounting Standards Codification (“ASC”) 718, Share-Based Payment. ASC 718 requires the recognition of the cost of services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. ASC 718 also requires the stock-based compensation expense to be recognized over the period of service in exchange for the award (generally the vesting period). The Company estimates the fair value of each stock option at the grant date by using an option pricing model, typically the Black-Scholes model.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their financial statement reported amounts, and for tax loss and credit carry-forwards. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized. The Company determines its income tax expense in each of the jurisdictions in which it operates. The income tax expense includes an estimate of the current income tax expense, as well as deferred income tax expense, which results from the determination of temporary differences arising from the different treatment of items for book and tax purposes. The Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions. Many of the Company’s subsidiaries  are limited liability companies (“LLCs”) and treated for tax purposes as pass-through entities. As a result, any taxes are the responsibility of the respective members. The Company assesses the likelihood of the financial statement effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying financial statements. The Company recognizes tax-related interest and penalties, if any, as a component of income tax expense. 

Recently Issued and Adopted Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern: Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.  The guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early application permitted.  The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts from Customers, which supersedes the revenue recognition in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB delayed the effective date by one year. This new standard is now effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied retrospectively, with early adoption now permitted to the original effective date of December 15, 2016. The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

16

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. Once effective, ASU No. 2015-02 will apply to the consolidation assessment of all entities. This standard is effective for public reporting entities in fiscal periods beginning after December 15, 2015. The Company does not anticipate any material impact upon the adoption of this new standard.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) Simplifying the Measurement of Inventory, which changes the measurement from lower of cost or market to lower of cost and net realizable value. The guidance requires prospective application for reporting periods beginning after December 15, 2016 and permits adoption in an earlier period. The Company intends to adopt this ASU in the first quarter of 2016; the adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company intends to adopt this ASU in the first quarter of 2016, at which time the Company will reclassify debt issuance costs (if any) associated with the Company's debt from other noncurrent assets to debt. A reclassification will also be applied retrospectively to each prior period presented.

In February 2016, the FASB issued ASU No. 2016-02 ("ASU 2016-02"),Leases (Topic 842), which supersedes existing guidance on accounting for leases in"Leases (Topic 840)"and generally requires all leases to be recognized in the statement of financial position. The provisions of ASU 2016-02 are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions of this ASU are to be applied using a modified retrospective approach. We are currently evaluating the effect that this ASU will have on our consolidated financial statements.

The Company reviews new accounting standards as issued.  Management has not identified any recently issued accounting standards that it believes will have a significant impact on the Company’s consolidated financial statements.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Financial Statements following the signature page of this Form 10-K.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

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Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(e) under the Exchange Act, as of December 31, 2014, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures.  This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer (the person who performs the functions of our principal executive officer) and our Chief Financial Officer (the person who performs the functions of our principal financial officer). Based upon that evaluation, our Chief Executive Officer (the person who performs the functions of our principal executive officer) and Chief Financial Officer (the person who performs the functions of our principal financial officer) concluded that because of the material weakness in our internal control over financial reporting, described below, that our disclosure controls and procedures were not effective as of December 31, 2015.  A material weakness is a deficiency or a combination of deficiencies in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management Report on Internal Control Over Financial Reporting.

Management of the Company is also responsible for establishing and maintaining  internal control over financial reporting as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act.

The Company’s internal controls over financial reporting are intended to be designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal controls over financial reporting are expected to include those policies and procedures that management believes are necessary that:

(i)    pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii)    provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(iii)    provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

As of December 31, 2015, management assessed the effectiveness of the Company's internal control over financial reporting (ICFR) based on the criteria for effective ICFR established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and SEC guidance on conducting such assessments by smaller reporting companies and non-accelerated filers.

Based on that assessment, management concluded that, during the period covered by this report, such internal controls and procedures were not effective as of December 31, 2015 and that material weaknesses in ICFR existed as more fully described below.

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Management identified the following control deficiencies that represent material weaknesses as of December 31, 2015:

(1) Lack of an independent audit committee or audit committee financial expert.  We have not identified an audit committee financial expert on our board of directors.  These factors are counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management.

(2) Limited staffing within our accounting operations.  The relatively small number of personnel who are responsible for accounting functions prevents us from fully segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews which may result in a failure to detect errors in spreadsheets, calculations, or assumptions used to prepare the financial statements and related disclosures as filed with the SEC. Additionally, we did not maintain a sufficient number of financial and accounting staff with the appropriate level of knowledge and experience to ensure that accurate and reliable financial statement of the Company are prepared and reviewed timely in accordance with accounting principles generally accepted in the United States.

Our management determined that these deficiencies constituted material weaknesses.

Due to a lack of financial and personnel resources, we likely will not take any immediate action to remediate these material weaknesses.  However, we expect to implement further controls as circumstances and working capital permit.  Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in this Annual Report on Form 10-K for the fiscal year ended December 31, 2015, fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.

We are committed to improving our financial organization. As part of this commitment, we will (when funds and/or additional resources are available to the Company) consider taking the following actions: (1) appoint outside directors to our Board of Directors and utilize an independent audit committee of the Board of Directors who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and will increase our personnel resources; and (3) hire independent third parties to perform expert advice.  We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting due to the permanent exemption from such requirement for smaller reporting companies.

Item 9B. OTHER INFORMATION

On February 3, 2016, 4,428,791 shares of Series A Preferred Stock converted to common shares, leaving 456,068 shares of Series A Stock issued and outstanding.  The Certificate of Designation of the Company’s Series A Stock requires that any shares of Series A Stock that are converted into Common Stock be cancelled and are not available for reissuance by the Company.  At the annual meeting of the Company's shareholders held on March 9, 2016, (the "Annual Meeting") the shareholders approved an amendment to the Company's Articles of Incorporation to increase the authorized shares of common stock of the Company from 120,000,000 shares to 125,000,000 shares.  On March 9, 2016, the Company filed amendments to its Articles of Incorporation with the Colorado Secretary of State cancelling the 4,428,791 shares of Series A Preferred Stock that was converted to common stock and increasing the authorized shares of common stock of the Company to 125,000,000 shares.

In addition to the approval of the increase in authorized shares of common stock by the shareholders at the Annual Meeting, the shareholders also elected five directors (being, James J. Fenlason, Robert L. Cohen, Mitchell R. Roth, Heather Atkinson, and Kenneth Cutshaw), ratified the appointment of GHP Horwath as the independent registered public accounting firm, and approved the compensation of the Company’s named executive officers.

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PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Identification of Directors and Executive Officers

The table below sets forth the names, titles, and ages of the members of the Company’s Board of Directors and its executive officers.   Executive officers of the Company are appointed by the Board of Directors.  There was no agreement or understanding between the Company and any director,  or executive officer pursuant to whom he was selected as an officer or director.

Name	Position	Age	Year Appointed as Officer or Director
James J. Fenlason	Director, Co-Chairman	56	2014
Robert Cohen	Director	53	2014
Mitchell Roth	CEO, Director and Co-Chairman	27	2014
Kenneth Cutshaw	Director	62	2016
Heather Atkinson	CFO, Secretary, Treasurer and Director	38	2014

James J. Fenlason, age 56, was appointed as a member of the Board of Directors of the Company on June 1, 2014. Mr. Fenlason is currently a Member of the Board of Directors of Rocky Mountain Bank & Trust, a privately owned Colorado bank and has held that position since 2013. In addition, Mr. Fenlason is a member of the Advisory Board for Touch 4 Partners, LLC since April 2015. Furthermore, Mr. Fenlason is an active entrepreneur in the Colorado Springs region with involvement in several successful ventures including: Advantage Marketing, Inc., which he founded and has served as President since 1993; The Home Advantage, LLC which he founded and has served as President since 2005; Deerfield Mobile Home Community, LLC which he founded and has served as President since 2008; Bigg City Holdings, LLC where he has served as CEO since 2010. In addition to his business ventures, Mr. Fenlason served on the board and was the board chairman of America’s Family, LLC a non-profit organization with financial programs and loans for the working poor and an annual Christmas event for 8,000 to 14,000 in Colorado Springs, Colorado. He currently serves on the advisory board of PastorServe in the Western United States.  Mr. Fenlason graduated from Liberty University in 1981 in Lynchburg, Virginia with a Bachelor of Science degree in Accounting.

Robert Cohen, age 53, was appointed as a member of the Board of Directors of the Company on September 15, 2014. Mr. Cohen is currently the Chairman and CEO of IMA Financial Group, Inc., a diversified financial services company specializing in retail insurance brokerage, wholesale insurance brokerage, and discretionary money management. IMA is consistently ranked amongst the top 20 independently owned brokers in the United States. Mr. Cohen has been with IMA Financial Group, Inc. since 1986, a member of their Board of Directors since 1994, and served in his current role for the last 15 years. Since 2004, Mr. Cohen has also served as a Co-Founder and Partner of Iron Gate Capital, LLC, a private equity firm created by proven operating executives to invest their capital in compelling growth opportunities. Some of their most successful portfolio companies in the restaurant and hospitality industries include Smashburger, a fast-casual restaurant concept, and CPX Lone Tree Hotel, LLLP, the operator of Hampton Inn and Suites in south Denver, CO, as well as numerous successful real estate investments nationwide. In addition, Mr. Cohen currently serves on the Boards of Atlas Advertising since 2001, Dovetail Solutions since 2007 and Commerce Bank since 2010.  Mr. Cohen graduated from University of Texas at Austin where he received a Bachelor degree in Risk Management and Finance.

Kenneth Cutshaw, age 62, is a Director of the Company as of March 9, 2016, and currently the Chairman and CEO of Global Network Growth, LLC, a consulting business primarily in hospitality. Mr. Cutshawn has held this position since October 2015. Prior to this, Mr. Cutshawn was the President of Quiznos Global, LLC, from September 2012 through October 2015 and the Executive Vice President of Church’s Chicken from January 2006 through July 2012. Mr. Cutshaw holds numerous degrees including a Bachelor of Arts degree in Public Administration and a minor in Political Science where he graduated from the University of Tennessee in 1975, a Doctor of Jurisprudence from the University of Tennessee which he received in 1978 and a Master of Laws from American University received in 1987. In addition, Mr. Cutshaw holds an executive certificate from the Duke University Fuqua Business School received in 2007.

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Mitchell Roth, age 27, was appointed President for the Company on June 1, 2014 and elected to the Board of Directors on March 9, 2015.  Mr. Roth began serving as Chief Executive Officer and Co-Chairman of the Board of Directors of the Company on June 16, 2015.  Mr. Roth joined the Company in November 2013 and has been primarily responsible for corporate development to include capital raising, real estate development, and strategy. Additionally, Mr. Roth is a Director of Roth’s LLC, a prepared foods manufacturer, distributor and retailer.  Prior to joining the Company, Mr. Roth worked at the investment-banking firm Laidlaw and Company, Ltd. in New York, NY from May 2013 through October 2013. Mr. Roth previously held summer internships at Accredited Members Acquisition Corporation, a Colorado corporation, in 2012 and 2013. Mr. Roth received a Bachelor of Science degree in May 2013 in Business Finance and Economics from Liberty University in Lynchburg, VA. Mr. Roth is licensed with FINRA and holds a Series 7/General Securities and Series 63 licenses.

Heather Atkinson, age 38, was appointed Chief Financial Officer effective January 22, 2014 and is a Director beginning March 9, 2016. Additionally, Ms. Atkinson is the CFO of Roth’s LLC, a prepared foods manufacturer, distributor and retailer.  Prior to joining the Company, Ms. Atkinson was the controller of Accredited Members Acquisition Corporation and subsidiaries and its predecessor, Accredited Members Holding Corporation, positions which she has held since 2010. Prior to these roles, Ms. Atkinson was an assistant worldwide consolidations controller, along with other accounting staff roles, at Lee Hecht Harrison for over eight years.  Ms. Atkinson has over 17 years of accounting, finance and financial reporting experience in both public and private companies including consolidations, shareholder and investor relations, SEC reporting, internal and external financial statement reporting, budgeting, cash forecasting, mergers and acquisitions, restructuring and international accounting while working closely with the outside audit and legal firms.  She is a licensed CPA and holds a Bachelor of Science degree in Accounting from Evangel University.

Involvement in Certain Legal Proceedings

During the past ten years, none of the persons serving as executive officers and/or directors of the Company has been the subject matter of any of the following legal proceedings that are required to be disclosed pursuant to Item 401(f) of Regulation S-K including:  (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (b) any criminal convictions; (c) any order, judgment, or decree permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (d) any finding by a court, the SEC or the CFTC to have violated a federal or state securities or commodities law, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud; or (e) any sanction or order of any self-regulatory organization or registered entity or equivalent exchange, association or entity.  Further, no such legal proceedings are believed to be contemplated by governmental authorities against any director or executive officer.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the 1934 Act requires the Company’s directors and officers and any persons who own more than ten percent of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the “SEC”).  All directors, officers and greater than ten-percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports files.  Based solely on our review of the copies of Forms 3, 4 and any amendments thereto furnished to us during the fiscal year completed December 31, 2014, and subsequently, all Forms 3 and Forms 4 were filed timely with the exception of the following: Ms. Atkinson inadvertently failed to file a report on a timely basis relating to one transaction in January 2015; Mr. Mitchell Roth inadvertently failed to file a report on a timely basis relating to one transaction in January 2015; Mr. JW Roth inadvertently failed to file a report on a timely basis relating to two transactions, one in December 2014 and one  in January 2015; and Ms. Norton inadvertently failed to file a Form 3 on a timely basis relating to her election as a director of the Company in March of 2015.

Code of Ethics

The Company adopted a code of ethics on January 22, 2014, and filed these with the Form 10-K for the period ended December 31, 2013, with the SEC on March 19, 2014.

No Audit Committee

The Company does not have a separately designated audit committee.  Instead, the entire Board as a whole acts as the Company’s audit committee.  Consequently the Company does not currently have a designated audit committee financial expert.

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Item 11. EXECUTIVE COMPENSATION

The following table sets out the compensation received for the fiscal years December 31, 2015 and 2014 in respect to each of the individuals who served as the Company’s chief executive officer at any time during the last fiscal year, as well as the Company’s two most highly compensated executive officers: 

						Option			All Other
Name and	Fiscal	Salary		Bonus		Awards*			Compensation		Total
Principal Position	Year	($)		($)		($)			($)		($)
Mitchell Roth,
CEO and Co-Chairman of the Board (1)	2015	$	90,000	$	2,165	$	53,606	(6)	$	4,890	$	150,661
	2014	$	58,187	$	-	$	132,140	(6)	$	3,690	$	194,017
Shawn Owen,
Former Chief Operating Officer (2)	2015	$	90,463	$	-	$	42,056	(7)	$	14,671	$	147,190
	2014	$	87,384	$	-	$	162,264	(7)	$	8,741	$	258,389
Robert B. Mudd,
Former Director, Former Chief Executive Officer (3)	2015	$	--	$	-	$	--		$	--	$	--
	2014	$	65,385	$	-	$	13,900	(8)	$	6,160	$	85,445
JW Roth
Former Chairman of the Board (4) (10)	2015	$	87,135	$	-	$	87,327		$	14,671	$	189,133
	2014	$	93,766	$	-	$	104,743	(9)	$	18,343	$	216,852
Heather Atkinson
Chief Financial Officer, Secretary and	2015	$	90,000	$	2,165	$	12,494	(11)	$	14,671	$	119,330
Treasurer (5)	2014	$	93,872	$	-	$	49,977	(11)	$	13,437	$	157,286

(1)  Mr. Mitchell Roth served as the Company’s President since June 1, 2014, through June 16, 2015 at which time Mr. Mitchell Roth was appointed as the Chief Executive Officer and Co-Chairman of the Board of Directors.

(2)  Mr. Owen served as the Chief Operating Officer from March 1, 2014, through December 2, 2015, whereas Mr. Owen resigned from his position as COO but remains working for the Company in a different capacity.

(3)  Mr. Mudd served as the Interim Chief Executive Officer, Interim Chief Financial Officer and Interim Chairman of the Board from June 20, 2013, through January 22, 2014.  On January 22, 2014, he began serving as the Chief Executive Officer, President and Director until May 31, 2014, at which time he resigned as Chief Executive Officer and President.  He continued to serve as a Director through March 9, 2015.

(4)  Mr. JW Roth is a founder of the Company and served as the Company’s Chairman from August 15, 2012, through his resignation date of May 17, 2013.  He was a Director of the Company since its inception in August 2011 through his resignation date on May 17, 2013. He served as the Company’s Chairman of the Board from January 22, 2014, through March 9, 2015. The salary paid to Mr. JW Roth was in exchange for services as an employee of the Company and not on behalf of his position as a Director and Chairman of the Board.  Effective April 1, 2015, Mr. JW Roth agreed to sign a Founder Emeritus Agreement with the Company for a term of 10 years or until he is no longer liable on any Company obligations, to remain responsible to provide a personal guarantee on the royalty payments of Southern Hospitality restaurants, provide a personal guarantee on the Company’s Carve BBQ Glendale lease and provide a personal guarantee on a loan with Rocky Mountain Bank and Trust for restaurant equipment, which has subsequently been released. As part of this Founder Emeritus Agreement, Mr. JW Roth is to receive an annual wage of $90,000 increasing by 3% each year and be entitled to participate in all of the Company’s benefit plans.

(5)  Ms. Atkinson has served as the Company's Chief Financial Officer since January 22, 2014 through the present.

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(6)  Upon his appointment as the Company’s President, Mr. Mitchell Roth was granted an option to acquire 300,000 shares of Common Stock at $0.45 per share with 75,000 shares vesting immediately and the remaining shares vesting evenly over three years.  Upon serving as a Director of the Company, Mr. Mitchell Roth was granted options for 100,000 shares of Common Stock that vest in full on March 9, 2016 exercisable at $0.30 per share.

(7)  In March 2014, the Company granted Mr. Owen options to purchase up to 300,000 shares of Common Stock, vesting in equal shares annually over four years, with the first tranche vested fully by March 1, 2015, with an exercise price of $0.50 per share with a five-year term.  In addition, Mr. Owen holds options for 18,243 common shares to vest evenly over two years with the first tranche vested fully by September 30, 2014, with an exercise price of $0.14 with a five-year term. In addition, he holds options to purchase up to 30,000 shares of Common Stock vesting in equal parts annually over three years with the first tranche vested fully by February 5, 2015, with an exercise price of $0.45 with a five-year term. Finally, Mr. Owens hold options to purchase 30,000 common shares that vested evenly over two years, these options are fully vested, and have an exercise price of $1.50 with a five year term.

(8)  On August 19, 2013, Mr. Mudd was granted options to acquire 304,854 shares of Common Stock to vest evenly over a three year vesting period.  The first tranche vested in August 2014 at an exercise price of approximately $0.000274 per share.  Upon Mr. Mudd’s resignation, these options were terminated.

(9)  In January 2014, the Company granted Mr. JW Roth options to purchase up to 729,707 shares of Common Stock vesting evenly over four years with the first tranche vested fully by January 9, 2015, with an exercise price of $0.0685 with a five-year term.  As of November 6, 2014, the Company entered into a financing agreement with Rocky Mountain Bank & Trust for up to $200,000 that Mr. JW Roth personally guaranteed. In turn for his personal guarantee, the vesting of these options for 729,707 shares of Common Stock became immediately vested.

(10)  On December 14, 2012, the Company entered into an indemnification agreement with JW Roth for his personal risk regarding personal guarantees in favor of Southern Hospitality Franchising & Licensing, LLC (the “Franchisor”), which are the subject of an Area Development Agreement between the Franchisor and Southern Hospitality Franchisee Holding Corporation, a wholly owned subsidiary of the Company. In addition to the indemnification agreements, the Company compensated Mr. Roth for his personal guarantee in the form of a warrant for 200,000 shares exercisable for ten years at $1.00 per share with the warrant vested immediately with a cashless exercise feature. In addition, Mr. Roth was granted a warrant for 5,000,000 shares of Common Stock at $0.10 per share for Mr. JW Roth’s personal guarantee on a Bourbon Brothers #14, LLC loan and his proportionate share of a Bourbon Brothers #14, LLC 7,000,000 share warrant to acquire 477,612 shares of Common Stock at $0.10 per share. As of February 2016, Mr. Roth gifted his warrant for 5,000,000 shares of Common Stock to an unrelated party, forfeited his right to his proportionate share to the Bourbon Brothers #14, LLC warrant and forfeited his warrant with the Company for 200,000 shares.

(11)  On August 19, 2013, the Company granted Ms. Atkinson options to purchase up to 364,854 shares of Common Stock of the Company which were scheduled to vest in substantially equal annual installments over four years beginning on August 19, 2014 with an exercise price approximately of $0.000274 per share. Ms. Atkinson has subsequently exercised 182,428 of these options in 2014 and 2015.

(*)  Amounts represent the calculated fair value of stock options granted to the named executive officers based on provisions of ASC 718-10, Stock Compensation. See note 7 to the consolidated financial statements for the annual reporting period ending December 31, 2015 regarding assumptions used to calculate fair value under the Black-Scholes valuation model.

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Compensation Committee Interlocks and Insider Participation

The Board of Directors acting in lieu of a compensation committee, is charged with reviewing and approving the terms and structure of the compensation of the Company’s executive officers.  To date, the Company has not retained an independent compensation committee to assist the Company review and analyze the structure and terms of the Company’s executive officers.  

The Company considers various factors when evaluating and determining the compensation terms and structure of its executive officers, including the following:

1. The executive’s leadership and operational performance and potential to enhance long-term value to the Company’s shareholders;

2. The Company’s financial resources, results of operations, and financial projections;

3. Performance compared to the financial, operational and strategic goals established for the Company;

4. The nature, scope and level of the executive’s responsibilities;

5. Competitive market compensation paid by other companies for similar positions, experience and performance levels; and

6. The executive’s current salary, the appropriate balance between incentives for long-term and short-term performance.

Company management is responsible for reviewing the base salary, annual bonus and long-term compensation levels for other Company employees, and the Company expects this practice to continue going forward.  The entire Board of Directors remains responsible for significant changes to, or adoption, of new employee benefit plans.  The Company believes that, as a relatively new company, its compensation structure is fair to its executive officers as it is intended to balance the Company’s need to minimize its overhead costs yet reward its executives for individual performance and company performance.

To date the Company has not entered into any employment agreements with any of the persons who serve (or served) as the Company’s executive officers.  Currently there are no contractual commitments in place that provide for severance payments to our executive officers or similar benefits upon a change of control transaction.

The Company believes that the compensation environment for qualified professionals in the industry in which we operate is competitive.  In order to compete in this environment, the compensation of our executive officers is primarily comprised of the following components:

● Base salary;

● Stock option awards and/or equity based compensation;

● Discretionary cash bonuses; and

● Other employment benefits.

Base Salary.  Base salary, paid in cash, is the first element of compensation to our officers.  In determining base salaries for our key executive officers, the Company aims to set base salaries at a level we believe enables us to hire and retain individuals in a competitive environment and to reward individual performance and contribution to our overall business goals.  The Board of Directors believes that base salary should be relatively stable over time, providing the executive a dependable, minimum level of compensation, which is approximately equivalent to compensation that may be paid by competitors for persons of similar abilities.  The Board of Directors believes that base salaries for our executive officers are appropriate for persons serving as executive officers of public companies similar in size and complexity to the Company.

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During the Company’s 2015 and 2014 calendar years, it paid its executive officers the following base salaries:

● Robert B. Mudd was paid a salary of $150,000 in 2014.

● Mitchell Roth was paid a salary of $90,000 beginning in June 2014 and 2015.

● Shawn Owen was paid a salary of $90,000 in 2014 and 2015.

● Heather Atkinson was paid a salary of $90,000 in 2014 and 2015.

Stock Option Plan Benefits.  The Company believes that equity based compensation helps align management and executives’ interests with the interests of our shareholders.  Our equity incentives are also intended to reward the attainment of long-term corporate objectives by our executives.  We also believe that grants of equity-based compensation are necessary to enable us to be competitive from a total remuneration standpoint.   At the present time, we have one equity incentive plan for our management and employees, the 2012 Stock Option Plan.

We have no set formula for granting awards to our executives or employees.  In determining whether to grant awards and the amount of any awards, we take into consideration discretionary factors such as the individual’s current and expected future performance, level of responsibilities, retention considerations, and the total compensation package.  The Company has granted certain of its executive officers stock options under the Company’s 2012 Stock Option Plan, as described below.

Discretionary Annual Bonus.  Discretionary cash bonuses are another prong of our compensation plan.  The Board of Directors believes that it is appropriate that executive officers and other employees have the potential to receive a portion of their annual cash compensation as a cash bonus to encourage performance to achieve key corporate objectives and to be competitive from a total remuneration standpoint.

We have no set bonus formula for determining or awarding discretionary cash bonuses to our other executives or employees.  In determining whether to award bonuses and the amount of any bonuses, we have taken and expect to continue to take into consideration discretionary factors such as the individual’s current and expected future performance, level of responsibilities, retention considerations, and the total compensation package, as well as the Company’s overall performance including cash flow and other operational factors.

Other Compensation/Benefits.  Another element of the overall compensation is through providing our executive officers are various employment benefits, such as the payment of a monthly allowance for health care insurance and other benefits costs.

Option Grants to Our Named Executive Officers

In accordance with the Company’s 2012 Stock Option Plan, the Company granted certain of its executive officers stock options during the Company’s 2015 fiscal year. The following table sets forth the outstanding stock option equity awards for each named executive officer at December 31, 2015.    

Outstanding Equity Awards at Fiscal Year End

	Number of Securities
	Underlying Unexercised
	Options (#)				Option		Option
					Exercise		Expiration
Name and Principal Position	Exercisable		Un-exercisable		Price ($)		Date
Mitchell Roth, CEO (1)		150,000		150,000		$0.45	08/21/2019
		100,000		--		$0.30	03/09/2020
Heather Atkinson, CFO (2)		--		182,426		$0.000274	08/19/2019

(1) Upon his appointment as the Company’s President, Mr. Mitchell Roth was granted an option to acquire 300,000 shares of Common Stock at $0.45 per share with 75,000 shares vesting immediately and the remaining shares vesting evenly over three years.   In addition, Mr. Mitchell Roth was granted options for his time serving on the Company’s Board for 100,000 shares of Common Stock at $0.30 per share that vest in full on March 9, 2016.

(2) On August 19, 2013, the Company granted Ms. Atkinson options to purchase up to 364,854 shares of Common Stock which were scheduled to vest in substantially equal annual installments over four years beginning on August 19, 2014 with an exercise price approximately of $0.000274 per share.

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Compensation of Directors

The Company has provided stock option compensation to the persons serving as its directors on the Board beginning in 2015. As such, the table below reflects compensation paid to the non-employee members of the board during the year ended December 31, 2015:

	Fees
	Earned or		Options
	Paid in		Awards*
Director	Cash				Total
Richard Steward (1)		--	$	29,273	$	29,273
James J. Fenlason (1)		--	$	29,273	$	29,273
Robert Cohen (1)		--	$	29,273	$	29,273
Brent Wood (1)		--	$	29,273	$	29,273
Jane Norton (1)		--	$	29,273	$	29,273

(1) Includes options to acquire 100,000 shares of Common Stock at $0.30 per share which vest in full on March 9, 2016.  These awards represent the directors’ service for one year to serve on the board and, among other duties, attend quarterly board meetings.

(*)  Amounts represent the calculated fair value of stock options granted to the named executive officers based on provisions of ASC 718-10, Stock Compensation. See notes to the annual consolidated financial statements for the period ending December 31, 2015 for discussion regarding assumptions used to calculate fair value under the Black-Scholes valuation model.

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ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS.

Security Ownership of Directors and Management

The number of shares outstanding of the Company’s Common Stock at March 7, 2016 was 70,818,764, and the number of shares outstanding of the Company’s Series A Preferred Stock at March 10, 2016 was 456,068. The following table sets forth the beneficial ownership of the Common Stock and Series A Preferred Stock as of March 7, 2016, by each director and executive officer of the Company.  To the extent any of the named shareholders own derivative securities that are vested or otherwise exercisable into shares of our Common Stock these securities are included in the column regarding that shareholders’ Common Stock beneficial ownership (as required by Rule 13d-3(a)) and the material terms of such derivative securities are explained in the notes to the table.

Name and Address of Beneficial Owner

Position

Common Stock - Amount and Nature of Beneficial Ownership

Percent of Common Stock

Series A Preferred Stock-Amount and Nature of Beneficial Ownership

Percent of Series A Preferred Stock

All Stock-Amount of Beneficial Ownership(5)

Voting Power (6)

Mitchell Roth 2 North Cascade Ave, Suite1400 Colorado Springs, CO 80903

CEO, Director and Co-Chairman of the Board

1,250,000

(1)

1.77

%

228,034

50.00

%

1,478,034

8.45%

James J. Fenlason

Director and

2 North Cascade Ave, Suite 1400

Co-Chairman of the

Colorado Springs, CO 80903

Board

200,000

(2)

*

–

*

200,000

*

Robert L. Cohen

2 North Cascade Ave, Suite 1400

Colorado Springs, CO 80903

Director

700,000

(3)

*

–

*

700,000

*

Heather Atkinson

2 North Cascade Ave, Suite 1400

CFO, Secretary,

Colorado Springs, CO 80903

Treasurer and Director

1,047,282

(4)

1.55%

–

*

1,047,282

1.27%

Kenneth Cutshaw

2 North Cascade Ave, Suite 1400

Colorado Springs, CO 80903

Director

–

*

–

*

–

*

All current directors and executive officers as a group

3,197,282

4.72

%

228,034

50.00

%

3,425,316

10.82%

(1)	Includes options for Mr. Mitchell Roth’s service as an officer to acquire 150,000 shares of Common Stock at $0.45 per share. Also, includes options for Mr. Mitchell Roth’s service as a Director to acquire 100,000 shares of Common Stock at $0.30 per share.  In addition, includes 1,000,000 shares in the form of a warrant exercisable at $0.10 per share.
(2)	Includes warrants to acquire 100,000 shares of Common Stock at $0.30 per share and options to acquire 100,000 shares of Common Stock at $0.30 per share which will vest in full on March 9, 2016.
(3)	Includes 500,000 shares owned by Dakotah Investments, LLC, an entity controlled by Mr. Cohen.  In addition, includes warrants to acquire 100,000 shares of Common Stock at $0.30 per share and options to acquire 100,000 shares of Common Stock at $0.30 per share which will vest in full on March 9, 2016.
(4)	Includes 500,000 shares in the form of a warrant exercisable at $0.10 per share for Ms. Atkinson’s service as manager of Bourbon Brothers #14, LLC.
(5)	Common Stock and Series A Preferred Stock (on a 1:1 converted basis to Common Stock).
(6)	Calculated based on one vote per common share and 25 votes per share of Series A Preferred Stock.

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Security Ownership of Certain Beneficial Owners

The following table sets forth the persons who beneficially own of record, or was known to own beneficially, more than 5% of the Company’s Common Stock and/or Series A Preferred Stock as of March 16, 2016.  To the extent any of the named shareholders own derivative securities that are vested or otherwise exercisable into shares of our Common Stock these securities are included in the column regarding that shareholder’s Common Stock beneficial ownership (as required by Rule 13d-3(a)) and the material terms of such derivative securities are explained in the notes to the table.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership of Common Stock			Percent of Common Stock			Amount and Nature of Beneficial Ownership of Series A Preferred Stock		Percent of Series A Preferred Stock		All Stock-Amount of Beneficial Ownership		Voting Power(5)
JW Roth		6,659,669	(1)		9.40	%		--		--		6,659,669		8.10	%
2 North Cascade Ave Suite 1400
Colorado Springs, CO 80903
David Lavigne		3,789,753	(2)		5.35	%		--		--		3,789,753		4.61	%
2 North Cascade Ave Suite 1400
Colorado Springs, CO 80903

(1) Includes 1,932,427 common shares, 4,499,208 common shares owned by his spouse as trustee for the KMR Living Trust Dated Nov. 19, 2012 and 228,034 shares owned by his minor daughter.

(2) Includes fully vested options to acquire 100,000 shares at $0.51 per share and 1,056,800 common shares. Also, includes 1,046,541 shares owned by Skywriter MD, Inc., an entity controlled by Mr. Lavigne and 1,586,412 shares owned by his spouse.

Changes in Control

There are no arrangements known to the Company which may result in a change in control of the Company.

Securities Authorized for Issuance Under Equity Compensation Plans

See Item 5, above, for information regarding securities authorized for issuance under equity compensation plan in the form required by Item 201(d) of Regulation S-K.

28

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Party Transactions

The Company’s Board of Directors as a whole is charged with reviewing and approving all related party transactions.  There have not been any transactions, or proposed transactions, to which the Company was or is to be a party, in which any Company director, officer, 5% beneficial owner or any member of the immediate family of the aforementioned persons had or is to have a direct or indirect material interest, except those outlined below.  The following disclosure is with respect to material transactions between the Company and related parties and with respect to material transactions.

Richard Steward, served as a member of the Board of Directors from 2014 through March 9, 2016,has nominal equity interests in several related party entities including Hospitality Income & Asset, LLC and Bourbon Brothers #14, LLC. The Company has a ten year lease with Hospitality Income & Asset, LLC for real property in connection with a restaurant location in Colorado Springs. Additionally, Bourbon Brothers #14, LLC, in December of 2014, loaned the Company $1,250,000. In November 2014, Mr. Steward (along with Mr. JW Roth) personally guaranteed a loan between Southern Hospitality Lone Tree LLC, a majority owned subsidiary of the Company and Rocky Mountain Bank & Trust to purchase kitchen equipment for the restaurant location and in exchange Mr. Steward’s options for 100,000 shares of Common Stock granted on March 5, 2014 became immediately exercisable.  This personal guarantee has since been released. Mr. Steward holds a proportionate share of a Bourbon Brothers #14, LLC 7,000,000 share warrant to acquire 373,134 shares of Common Stock at $0.10 per share.

Robert Cohen,a current member of the Board of Directors,is currently the Chairman and CEO of IMA Financial Group, Inc., a diversified financial services company specializing in retail insurance brokerage, wholesale insurance brokerage, and discretionary money management.  The Company has in the past and may continue to do so in the future, purchase insurance products from IMA Financial Group, Inc.  To the Company’s knowledge, Mr. Cohen has not been compensated by IMA Financial Group, Inc. in connection with any products or services provided to the Company.

James J. Fenlason,a current member and co-chairman of the Board of Directors of the Company, is a Member of the Board of Directors of Rocky Mountain Bank & Trust, a privately owned Colorado bank.  In November of 2014, SHLT and Rocky Mountain Bank & Trust entered into a bank financing agreement to purchase kitchen equipment for the restaurant.  Beginning in September 2015, monthly principal and interest payments of approximately $5,800 are due through maturity in August 2020.The Company has in the past and may continue to do so in the future, obtain financing from Rocky Mountain Bank & Trust.  To the Company’s knowledge, Mr. Fenlason has not been compensated by Rocky Mountain Bank & Trust in connection with any financing or services provided to the Company.

Heather Atkinson¸ the Company’s Chief Financial Officer, is currently the manager of Bourbon Brothers #14, LLC (“BB14”). In December 2014, BB14 received a warrant from the Company as partial consideration the loan from BB14 to the Company in the aggregate principal amount of 7,500,000.  Mr. Atkinson was assigned 500,000 of this warrant for her service as manager of BB14 which became exercisable on December 31, 2015. Ms. Atkinson also has voting and dispositive control of BB14 as manager.  Ms. Atkinson has a nominal equity interest in Hospitality Income & Asset, LLC. The Company has a real property lease with Hospitality Income & Asset, LLC, as described above.

J.W. Roth served as the Company’s Chairman of the Board from January 22, 2014 through March 9, 2015 and beneficially owns more than 5% of the Company’s Common Stock and/or Series A Preferred Stock as of December 31, 2015. Mr. Roth has substantial business interests in the restaurant space and real estate property related to restaurants.  Mr. Roth may continue to buy real estate, engage in real estate transactions with third parties, and then lease the space to the Company.  He is the founder of, and owned a substantial interest in, Bourbon Brothers Holding Company, LLC (which the Company acquired in January 2014) and holds a substantial equity interest in several other related party entities including Hospitality Income & Asset, LLC and Bourbon Brothers #14, LLC.  In December 2012, Mr. Roth entered into an indemnification agreement with the Company for his personal risk regarding personal guarantees in favor of Southern Hospitality Franchising & Licensing, LLC, which is the subject of a Franchise Agreement between Southern Hospitality Franchising & Licensing, LLC and Southern Hospitality Franchising and Licensing Corporation, a wholly owned subsidiary of the Company and received compensation in the form of a warrant for 200,000 of common shares.  In November 2014, Mr. Roth (along with Richard Steward) personally guaranteed a loan between Southern Hospitality Lone Tree, LLC, a majority owned subsidiary of the Company and Rocky Mountain Bank & Trust to purchase kitchen equipment for the restaurant location and in exchange Mr. Roth’s options for 729,707 shares of Common Stock granted on January 22, 2014 became immediately exercisable.  This personal guarantee has since been released.  In December 2014, Mr. Roth personally guaranteed a loan on behalf of Bourbon Brothers #14, LLC allowing Bourbon Brothers #14, LLC the ability to subsequently loan to the Company $1,250,000. In exchange for the personal guarantee, Mr. Roth received a warrant for the purchase of 7,500,000 shares of Common Stock exercisable on December 31, 2015. Mr. Roth has since gifted a portion of this warrant for 2,500,000 shares of Common Stock to others, resulting in Mr. Roth having a warrant of 5,000,000 shares of Common Stock. Mr. Roth holds a proportionate share of a Bourbon Brothers #14, LLC 7,000,000 share warrant to acquire 477,612 shares of Common Stock at $0.10 per share. In February 2016, Mr. Roth gifted his warrant for 5,000,000 shares of Common Stock to an unrelated party and forfeited his proportionate share of the Bourbon Brothers #14, LLC warrant.  Effective April 1, 2015, Mr. JW Roth signed a Founder Emeritus Agreement with the Company for a term of 10 years or until he is no longer liable on any Company obligations, to remain responsible to provide a personal guarantee on the royalty payments of Southern Hospitality restaurants and provide a personal guarantee on the Company’s Carve BBQ Glendale lease. As part of this Founder Emeritus Agreement, Mr. JW Roth is to receive an annual wage of $90,000 increasing by 3% each year and be entitled to participate in all of the Company’s benefit plans.

29

David Lavigne, served as the Company's Secretary and Treasurer from its inception in August 2011 until May 17, 2013 and as a Director of the Company from January 22, 2014, through the March 6, 2015.  During such time, Mr. Lavigne, held a substantial equity interest in Bourbon Brothers Holding Company, LLC (which the Company acquired in January 2014) and holds a substantial equity interest in several other related party entities including Hospitality Income & Asset, LLC and Bourbon Brothers #14, LLC.  Mr. Lavigne holds a proportionate share of a Bourbon Brothers #14, LLC 7,000,000 share warrant to acquire 388,060 shares of Common Stock at $0.10 per share.

Independence of the Board of Directors

Our Board of Directors currently consists of Messrs. Roth, Fenlason, Cohen and Cutshaw and Mrs. Atkinson.  Messrs. Fenlason, Cohen and Cutshaw are the only directors considered “independent” as that term defined by Section 803A of the NYSE MKT LLC Company Guide inasmuch as each of the other directors has had material relationships with the Company.  The Board considers all relevant facts and circumstances in its determination of independence of all members of the Board.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees.

Our independent registered public accounting firm, GHP Horwath, P.C., (“GHP Horwath”) billed us aggregate fees in the amount of approximately $56,420 for the calendar year ended December 31, 2015 and $53,000 for the calendar year ended December 31, 2014.  These amounts were billed for professional services that GHP Horwath provided for the audit of our annual consolidated financial statements, as well as for reviews of our quarterly interim financial statements.

Audit-Related Fees.

None.

Tax Fees.

GHP Horwath did not bill us for any tax fees for the fiscal years ended December 31, 2015 and 2014.

All Other Fees.

GHP Horwath did not bill us for any other fees for the fiscal years ended December 31, 2015 and 2014.

30

Audit Committee’s Pre-Approval Practice

Inasmuch as the Company does not have an audit committee, the Company’s board of directors performs the functions of its audit committee.  Section 10A(i) of the 1934 Act prohibits our auditors from performing audit services for us as well as any services not considered to be “audit services” unless such services are pre-approved by the board of directors (in lieu of the audit committee) or unless the services meet certain de minimis standards.

The board of directors has adopted resolutions that provide that the board must:

Pre-approve all audit services that the auditor may provide to us or any subsidiary (including, without limitation, providing comfort letters in connection with securities underwritings or statutory audits) as required by §10A(i)(1)(A) of the 1934 Act.

Pre-approve all non-audit services (other than certain de minimis services described in §10A(i)(1)(B) of the 1934 Act that the auditors propose to provide to us or any of our subsidiaries.

The board of directors considers at each of its meetings whether to approve any audit services or non-audit services.  In some cases, management may present the request; in other cases, the auditors may present the request.  The board of directors approved GHP Horwath performing our audit for the 2015 fiscal year.

31

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibit  Number	Description
3.1	Articles of Incorporation, as amended through March 16, 2016. Filed Herewith.
3.2.	Bylaws, as amended through January 6, 2015. (1)
10.1.1	Franchise Agreement by and between SH Franchising & Licensing LLC and Southern Hospitality Franchisee Holding Corporation, dated November 4, 2011, as amended by the First Amendment dated November 4, 2011, as amended by the Second Amendment dated November 9, 2012, and as amended by the Third Amendment dated January 9, 2013.(2)
10.1.2	Amendment and Release Agreement by and between SH Franchising & Licensing LLC, Southern Hospitality Franchisee Holding Corporation, and Southern Hospitality Denver, LLC, dated September 23, 2013.(3)
10.1.3	Fifth Amendment to the Franchise Agreement dated December 30, 2014, and Sixth Amendment to the Franchise Agreement dated February 8, 2015. (4)
10.2	2012 Stock Option Plan, as amended on January 22, 2014.(5)
10.3	Lease Agreement by and between Southern Hospitality Southern Kitchen Colorado Springs, LLC f/k/a Bourbon Brothers Smokehouse and Tavern Colorado Springs, LLC and Bourbon Brothers, LLC, dated May 29, 2013.(6)
10.4	Standard Building Lease by and between Southern Hospitality Franchise Holding Corporation and ELMO, LLC dated April 15, 2012.(7)
10.5	Lease Agreement by and between Carve BBQ Glendale, LLC and The Robford Company, LLC. Filed herewith.
10.5.1	Second Lease Assignment, Assumption and Amendment between Carve BBQ Glendale, LLC and The Robford Company, LLC dated April 24, 2015. Filed herewith.
10.5.2	Third Lease Assignment, Assumption and Amendment between Carve BBQ Glendale, LLC and The Robford Company, LLC dated July 27, 2015. Filed herewith.
10.6.1	Lease Agreement by and between Bourbon Brothers Holding Company, LLC and Stradivarius Highlands, LLC, dated July 9, 2014.(8)
10.6.2	First Amendment to the Lease Agreement by and between Bourbon Brothers Holding Company, LLC and Stradivarius Highlands, LLC, dated September 17, 2014.(9)
10.6.3	Guaranty of Lease by and between Bourbon Brothers Holding Company, LLC and Stradivarius Highlands, LLC, dated September 17, 2014.(10)
10.7	Master License Agreement by and between SH Franchising & Licensing, LLC and SH Franchising & Licensee Corp. dated February 8, 2015.(11)
14.1	Code of Ethics as adopted by the Board of Directors on January 22, 2014.(12)
21.1	List of subsidiaries and organization chart. Filed herewith.
31.1	Rule 13a-14(a)/15d-14(a) - Certification of Principal Executive Officer.  Filed herewith.
31.2	Rule 13a-14(a)/15d-14(a) - Certification of Principal Financial Officer.  Filed herewith.
32.1	Section 1350 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the SARBANES-OXLEY ACT of 2002. Filed herewith.
32.2 101	Section 1350 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the SARBANES-OXLEY ACT of 2002. Filed herewith. Interactive data files. Filed herewith.

(1) Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and filed on March 6, 2015.

(2) Incorporated by reference from the Company’s Annual Report on Form 10-K for the period ending December 31, 2013, and filed on March 19, 2014.

(3) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2013, and filed on November 14, 2013.

(4) Incorporated by reference from the Company’s Annual Report on Form 10-K for the period ending December 31, 2014, and filed on March 6, 2015.

(5) Incorporated by reference from the Company’s Annual Report on Form 10-K for the period ending December 31, 2013, and filed on March 19, 2014.

(6) Incorporated by reference from the Company’s Annual Report on Form 10-K for the period ending December 31, 2013, and filed on March 19, 2014.

(7) Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and filed on March 6, 2015

(8) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2014, and filed on October 31, 2014.

(9) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2014, and filed on October 31, 2014.

(10) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2014, and filed on October 31, 2014.

(11) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ending March 31, 2015, and filed on May 15, 2015.

(12) Incorporated by reference from the Company’s Annual Report on Form 10-K for the period ending December 31, 2013, and filed on March 19, 2014.

32

In accordance with the requirements of Section 13 or 15(d) Exchange Act, we have duly caused this report to be signed on our behalf by the undersigned, thereunto duly authorized.

	SOUTHERN CONCEPTS RESTAURANT GROUP, INC.
Date:  March 16, 2016	By:	/s/  Mitchell Roth
		Mitchell Roth, CEO, Co-Chairman and Principal Executive Officer

Date:  March 16, 2016	By:	/s/ Heather Atkinson
		Heather Atkinson, CFO, Secretary, Treasurer and Principal Accounting Officer
Date:  March 16, 2016	By:	/s/ Robert Cohen
		Robert Cohen, Director
Date:  March 16, 2016	By:	/s/ Kenneth Cutshaw
		Kenneth Cutshaw, Director
Date:  March 16, 2016	By:	/s/ James J. Fenlason
		James J. Fenlason, Director and Co-Chairman

33

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

YEARS ENDED DECEMBER 31, 2015 AND 2014

CONTENTS

	PAGE
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Financial Statements:
Balance sheets as of December 31, 2015 and 2014	F-3
Statements of loss for the years ended December 31, 2015 and 2014	F-4
Statements of changes in equity for the years ended December 31, 2015 and 2014	F-5
Statements of cash flows for the years ended December 31, 2015 and 2014	F-6
Notes to financial statements	F-7 – F-23

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Southern Concepts Restaurant Group, Inc.:

We have audited the accompanying consolidated balance sheets of Southern Concepts Restaurant Group, Inc. and its subsidiaries (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of loss, changes in equity, and cash flows for the years ended December 31, 2015 and 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the periods then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a limited operating history, it has suffered recurring losses from operations, and has an accumulated deficit at December 31, 2015. These factors raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 1.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ GHP Horwath, P.C.

Denver, Colorado

March 16, 2016

F-2

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

  CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2015			2014
Assets
Current assets:
Cash and cash equivalents	$	1,107,330		$	1,182,099
Prepaid expenses and other		117,499			66,023
Inventory		91,358			64,091
Total current assets		1,316,187			1,312,213
Deposits		120,555			80,525
Deferred financing costs, net		-			28,369
Related party receivable		25,787			25,787
Intangible asset, net		35,625			40,625
Property and equipment, net		4,279,096			2,986,050
Total assets	$	5,777,250		$	4,473,569
Liabilities and equity
Current liabilities:
Accounts payable	$	256,252		$	91,792
Accrued expenses		272,347			229,539
Related party notes payable and accrued interest		-			117,318
Notes payable and accrued interest		-			218,970
Convertible notes payable and accrued interest, current portion		129,489			129,589
Related party note payable (net of $365,940 (2015))		784,059			-
Total current liabilities		1,442,147			787,208
Deferred rent		309,895			303,070
Notes payable and accrued interest		482,934			-
Related party note payable (net of $731,880 discount)		-			520,184
Convertible notes payable and accrued interest, less current portion,
(net of $514,545 (2015) and $528,019 (2014) discount)		1,110,122			722,439
Total liabilities		3,345,098			2,332,901
Commitments and contingencies
Equity
Preferred stock - par value $0.001;
Authorized Series A shares - 4,884,859
Issued and outstanding Series A shares - 4,884,859 (2015 and 2014)		248,994			248,994
Common stock - no par value;
Authorized shares - 120,000,000
Issued and outstanding shares - 62,398,303 (2015) and 48,783,363 (2014)		9,799,319			7,916,942
Additional paid-in capital		3,873,710			2,602,171
Accumulated deficit		(12,092,077	)		(8,692,743	)
Total Southern Concepts Restaurant Group, Inc ("SCRG") equity		1,829,946			2,075,364
Noncontrolling interest		602,206			65,304
Total equity		2,432,152			2,140,668
Total liabilities and equity	$	5,777,250		$	4,473,569

See notes to consolidated financial statements

F-3

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

CONSOLIDATED STATEMENTS OF LOSS

	Years ended
	December 31,
	2015			2014
Revenue	$	6,579,106		$	5,144,491
Operating expenses:
Restaurant operating costs (related party $401,092 and $383,400 for the years ended
December 31, 2015 and 2014), exclusive of depreciation and amortization below		6,754,065			5,490,495
General and administrative		2,054,924			2,405,191
Selling and marketing		350,187			444,216
Depreciation and amortization		579,327			436,228
Total operating expenses		9,738,503			8,776,130
Loss from operations		(3,159,397	)		(3,631,639	)
Other expense:
Interest expense (related party $130,000 and nil for the years ended December 31, 2015 and 2014)		(729,748	)		(137,376	)
Net loss	$	(3,889,145	)	$	(3,769,015	)
Net loss attributable to noncontrolling interest	$	(489,811	)	$	(374,014	)
Net loss attributable to SCRG		(3,399,334	)		(3,395,001	)
Net loss	$	(3,889,145	)	$	(3,769,015	)
Basic and diluted net loss per share attributable to SCRG common shareholders	$	(0.06	)	$	(0.08	)
Weighted average number of common shares outstanding - basic and diluted		52,685,296			42,302,121

See notes to consolidated financial statements

F-4

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
											Additional					Non-
	Common Stock				Preferred Stock						paid-in		Accumulated			Controlling
	Shares		Amount		Shares			Amount			capital		Deficit			Interest			Total
Balances, January 1, 2014		9,629,220	$	4,925,860		-		$	-		$	1,086,609	$	(5,297,742	)	$	439,318		$	1,154,045
Issuance of common stock for cash		4,183,042		1,254,913		-			-			-		-			-			1,254,913
Acquisition of BBHCLLC for common and preferred shares		20,274,201		1,033,429		18,242,687			929,878			-		-			-			1,963,307
Stock issued for services		51,678		21,503		-			-			-		-			-			21,503
Exercise of stock options		192,832		53		-			-			-		-			-			53
Exercise of warrants		1,094,562		300		-			-			-		-			-			300
Conversion of preferred shares to common		13,357,828		680,884		(13,357,828	)		(680,884	)		-		-			-			-
Debt discount on convertible debt allocated to warrants and beneficial conversion feature		-		-		-			-			308,626		-			-			308,626
Debt discount on long-term debt allocated to warrants												731,880								731,880
Stock-based compensation		-		-		-			-			475,056		-			-			475,056
Net loss		-		-		-			-			-		(3,395,001	)		(374,014	)		(3,769,015	)
Balances, December 31, 2014		48,783,363		7,916,942		4,884,859			248,994			2,602,171		(8,692,743	)		65,304			2,140,668
Issuance of common stock and warrants for cash		13,386,852		1,849,019		-			-			837,480		-			-			2,686,499
Debt discount on convertible debt allocated to warrants and beneficial conversion feature		-		-		-			-			109,130		-			-			109,130
Stock-based compensation		-		-		-			-			324,929		-			-			324,929
Issuance of common stock for services		136,874		33,333		-			-			-		-			-			33,333
Exercise of stock options		91,214		25		-			-			-		-			-			25
Contribution by non-controlling interest holder		-		-		-			-			-		-			1,084,023			1,084,023
Distribution to non-controlling interest holder																	(57,310	)		(57,310	)
Net loss		-		-		-			-			-		(3,399,334	)		(489,811	)		(3,889,145	)
Balances, December 31, 2015		62,398,303	$	9,799,319		4,884,859		$	248,994		$	3,873,710	$	(12,092,077	)	$	602,206		$	2,432,152

See notes to consolidated financial statements

F-5

 

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year ended
	December 31
	2015			2014
Net loss	$	(3,889,145	)	$	(3,769,015	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		516,995			76,469
Stock-based compensation		324,929			475,056
Depreciation and amortization		579,327			436,228
Amortization of prepaid management services and guarantees		-			99,820
Stock issues for services		33,333			21,503
Interest attributed to converted debt		-			47,556
Changes in operating assets and liabilities,net of 2014 business acquisition:
Prepaid expenses		(51,476	)		226,054
Deposit		(40,030	)		(24,614	)
Inventory		(27,267	)		(32,532	)
Accounts payable		164,460			10,777
Accrued expenses and interest		123,494			9,179
Deferred rent		6,825			68,170
Net cash used in operating activities		(2,258,555	)		(2,355,349	)
Cash flows from investing activities
Cash acquired in acquisition		-			869,907
Note receivable advance		-			(25,334	)
Purchase of property and equipment		(1,867,372	)		(350,771	)
Net cash (used in) provided by investing activities		(1,867,372	)		493,802
Cash flows from financing activities
Contribution to subsidiary by non-controlling interest		984,022			-
Distribution to non-controlling interest holders		(57,310	)		-
Payment of related party promissory notes		(125,000	)		-
Payment of long-term debt		(17,066	)		-
Proceeds from sale of common stock and warrants		2,686,499			1,254,913
Proceeds from issuance of promissory notes and warrants		280,000			460,000
Proceeds from issuance of long-term debt, net		-			1,197,714
Proceeds from issuance of related party promissory note		-			115,000
Proceeds from bank loan		299,988			2,055
Proceeds from exercise of a stock options and warrants		25			353
Net cash provided by financing activities		4,051,158			3,030,035
Net (decrease) increase in cash and cash equivalents		(74,769	)		1,168,488
Cash and cash equivalents, beginning		1,182,099			13,611
Cash and cash equivalents, ending	$	1,107,330		$	1,182,099
Supplemental disclosure of non-cash operating, investing and financing activities:
Preferred stock converted to common stock	$	-		$	680,884
Acquisition of BBHCLLC in exchange for preferred and common stock	$	-		$	1,963,307
Note payable exchanged for subsidiary equity	$	100,000		$	-
Debt discount related to beneficial conversion features and warrants	$	109,130		$	1,040,506
Cash paid for interest	$	130,481		$	16,215

See notes to consolidated financial statements

F-6

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 1 – ORGANIZATION, RECENT EVENTS, BASIS OF PRESENTATION AND MANAGEMENT’S PLANS

Organization and Recent Events

Southern Concepts Restaurant Group, Inc. (“SCRG” or the “Company”) is a Colorado corporation that was formed on January 29, 2008. The Company, on March 9, 2015, with approval of a majority of the Company’s shareholders, changed its name from Bourbon Brothers Holding Corporation to Southern Concepts Restaurant Group, Inc.

The Company operates and manages restaurants through its wholly-owned and majority-owned subsidiaries, including:

SH Franchisee & Licensing Corp. (“SH”)

Southern Hospitality Denver Holdings, LLC (“SHDH”)

Southern Hospitality Denver, LLC (“SHD”)

Southern Hospitality Lone Tree, LLC (“SHLT”)

Carve Restaurant Group, LLC (“CRG”)

Carve BBQ Glendale, LLC (“CARVEG”)

Southern Hospitality Southern Kitchen Colorado Springs, LLC (“SHSK”)

Bourbon Brothers Holding Company, LLC (“BBHCLLC”)

Bourbon Brothers Restaurant Group, LLC (“BBRG”)

The Company began revenue generating activities in late February 2013, with the opening of its first Denver-based restaurant. In January 2014, the Company opened its second restaurant in Colorado Springs, Colorado, and in April 2015, the Company opened its third restaurant in Lone Tree, Colorado (the “SHLT” restaurant). The Company developed a fast casual concept, called Carve Barbecue, in which the Company entered into a lease in Glendale, Colorado in April 2015 through a newly-formed 66.075% owned subsidiary (the “CARVEG” restaurant). The Company opened this location on November 5, 2015.

In February 2015, the Company also executed a sixth amendment to the Franchise Agreement which specifically granted SCRG the right to develop two new full service Southern Hospitality restaurants during 2015, the locations of which were named in the document to be Lone Tree, Colorado and downtown Colorado Springs, Colorado. Additionally, the sixth amendment granted the Company the right to rebrand its Bourbon Brothers Southern Kitchen restaurant in northern Colorado Springs into a Southern Hospitality-branded full service franchised restaurant operating under the trade name Southern Hospitality Southern Kitchen, a differentiated and slightly more upscale concept to that of the original concept.

The Company is a party to a franchise agreement (the “FA” or the “Franchise Agreement”) with SH Franchising & Licensing LLC, dba Southern Hospitality BBQ (the “Franchisor” or “SHFL”). In addition, in February 2015, the Company entered into a Master License Agreement (“MLA”) with SHFL which grants the Company the right to license up to five Southern Hospitality-branded fast casual restaurants (SHQ) in the Denver and Colorado Springs markets through August 2016. SHFL and SCRG have agreed to a royalty of 2.5% of gross sales on each of the new SHQ locations. The agreement pertains exclusively to the Company’s right to develop the SHQ locations and does not restrict the Company from developing a similar, competitive brand in the future. Finally, in developing the SHQ concept, SCRG will retain joint ownership of this concept, which pertains to the functionality of the restaurant.  The Company does not anticipate to open a SHQ in the near future.

During 2016, the Company is exploring options for growth for the Company’s two brands, Southern Hospitality and Carve Barbecue.  Specifically, the Company is looking at building the Southern Hospitality growth model on the footprint and profitability similar to its Southern Hospitality Lone Tree location, with real estate between 4,000 to 5,000 square feet.  In regards to the Carve model, the Company is identifying real estate partners and locations for its 2,500 square feet footprint.

Management’s Plans

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.  The Company reported a net loss of approximately $3.9 million and $3.8 million for the years ended December 31, 2015 and 2014, respectively, and has an accumulated deficit of approximately $12.1 million at December 31, 2015. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company has devoted substantially all of its efforts to developing its business plan, raising capital, and opening and operating its four restaurants in Denver, Colorado Springs, Glendale and Lone Tree.

The Company’s continued implementation of its business plan is dependent on its future profitability and engaging in strategic transactions, or on additional debt or equity financing, which may not be available in amounts or on terms acceptable to the Company or at all. As a consequence, if the Company is unable to achieve and maintain profitability through current restaurant operations, enter into strategic transactions, or obtain additional financing in the near term, the Company may be required to delay its business plan implementation, which would have a material adverse impact on the Company.

F-7

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All material intercompany accounts, transactions and profits are eliminated in consolidation.

Accounting guidance provides a framework for determining whether an entity should be considered a variable interest entity (VIE), and if so, whether the Company’s involvement with the entity results in a variable interest in the entity. If the Company determines that it does have a variable interest in the entity, it must perform an analysis to determine whether it represents the primary beneficiary of the VIE. If the Company determines it is the primary beneficiary of the VIE, it is required to consolidate the assets, liabilities and results of operations and cash flows of the VIE into the consolidated financial statements of the Company.

A company is the primary beneficiary of a VIE if it has a controlling financial interest in the VIE. A company is deemed to have a controlling financial interest in a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company has concluded that there are no VIE’s subject to consolidation at December 31, 2015 and December 31, 2014. While the Company believes its evaluation is appropriate, future changes in estimates, judgments and assumptions in the case of an evaluation triggered by a reconsideration event as defined in the accounting standard may affect the determination of primary beneficiary status and the resulting consolidation, or deconsolidation, of the assets, liabilities and results of operations of a VIE on the Company’s consolidated financial statements.

Use of Estimates

The process of preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. The areas that require management’s most significant estimates are impairment of long-lived assets, allocation of purchase price for business combinations, estimating fair value of debt and equity instruments, assessment of going conern, and share-based compensation. Actual results could differ from the estimates. Changes in estimates are recorded in the period of change.

Fair Value Measurements

The Company accounts for financial instruments pursuant to accounting guidance which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair measurements.  To increase consistency and comparability in fair value measurements, the accounting guidance established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 – quoted prices (unadjusted) in active markets of identical assets or liabilities;

Level 2 – observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 – assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions.  Unobservable inputs require significant management judgments or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy.  In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement.  Such determination requires significant management judgment.  There were no financial assets or liabilities measured at fair value, with the exception of cash and cash equivalents as of December 31, 2015 and 2014.

The carrying amounts of accounts payable and notes payable approximate their fair values due to their short-term maturities.  The carrying amounts of related party receivables and payables are not practicable to estimate based on the related party nature of the underlying transaction.

F-8

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Non-controlling Interest

The non-controlling interest represents capital contributions, income and loss attributable to the owners of less than wholly-owned consolidated entities (SHD, SHSK, SHLT and CARVEG), and are reported in equity. From inception through December 31, 2015, in exchange for their interest in SHD, the non-controlling members contributed $897,465 in cash (no contributions in 2015 or 2014). The non-controlling members of SHSK contributed $109,022 for the year ended December 31, 2015.  The non-controlling members of SHLT contributed $500,000 in cash for the year ended December 31, 2015.  In April 2015, related party notes and accrued interest were converted into non-controlling CARVEG equity of $100,000 (Note 5), and $375,000 was contributed in cash in the year ended December 31, 2015.  During 2015, the Company distributed cash of $57,310 to the non-controlling members of SHLT and CARVEG.

Pre-opening Costs

Pre-opening costs, such as travel and employee payroll and related training costs are expensed as incurred and include direct and incremental costs incurred in connection with the opening of each restaurant. Pre-opening costs also may include non-cash rental costs under operating leases incurred during a construction period.

Cash and Cash Equivalents

From time to time, the Company maintains cash equivalents that include short-term highly liquid investments with an original a maturity of three months or less when purchased. The Company has no cash equivalents at December 31, 2015 and 2014.  In addition, the majority of payments due from financial institutions for the settlement of debit card and credit card transactions process within two business days, and therefore these payments due are classified as cash and cash equivalents.

Inventory

Inventory consists of food and beverages and is stated at the lower of cost (first-in, first-out) or market.

Deferred Financing Costs

Deferred financing costs are amortized over the term of the related debt using the straight-line method, which is not materially different than the effective-interest method.

Property and Equipment

Management reviews property and equipment, including leasehold improvements, for impairment when events or circumstances indicate these assets might be impaired. The Company's management considers, or will consider, such factors as the Company's history of losses and the disruptions in the overall economy in preparing an analysis of its property, including leasehold improvements, to determine if events or circumstances have caused these assets to be impaired. Management bases this assessment upon the carrying value versus the fair value of the asset and whether or not that difference is recoverable. Such assessment is performed on a restaurant-by-restaurant basis and includes relevant facts and circumstances including the physical condition of the asset. If management determines the carrying value of the restaurant assets exceeds the projected future undiscounted cash flows, an impairment charge would be recorded to reduce the carrying value of the restaurant assets to their fair value. Management determined that no impairment existed at December 31, 2015 and 2014.

Leasehold improvements are stated at cost. Property and equipment costs directly associated with the acquisition, development and construction of a restaurant are capitalized. Expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, and leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Property and equipment are not depreciated/amortized until placed in service. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings.

F-9

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Capitalized Interest

Interest on funds used to finance the acquisition and construction of a restaurant to the date the asset is placed in service is capitalized.

Leases and Deferred Rent

The Company leases and intends to lease substantially all of its restaurant properties.  For leases that contain rent escalation clauses, the Company records the total rent payable during the lease term and recognizes expense on a straight-line basis over the initial lease term, including the "build-out" or "rent-holiday" period where no rent payments are typically due under the terms of the lease. Any difference between minimum rent and straight-line rent is recorded as deferred rent. Additionally, contingent rent expense based on a percentage of revenue is accrued and recorded to the extent it is expected to exceed minimum base rent per the lease agreement based on estimates of probable levels of revenue during the contingency period.  Long-term deposits on leases in the amount of $120,555 and $80,525 are recorded as of December 31, 2015 and 2014, respectively.  Deferred rent also includes a tenant improvement allowance the Company received in 2012 for $150,000, which is amortized as a reduction of rent expense, also on a straight-line basis over the initial term of the lease. 

Revenue Recognition

The Company recognizes revenues pursuant to SEC Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition, and applicable related guidance. Revenue is derived from the sale of prepared food and beverage and select retail items. Revenue is recognized at the time of sale and is reported on the Company's consolidated statements of income (loss) net of sales taxes collected. The amount of sales tax collected is included in accrued expenses until the taxes are remitted to the appropriate taxing authorities.

The Company sells gift cards which do not have an expiration date, and it does not deduct dormancy fees from outstanding gift card balances. The Company recognizes revenue from gift cards when: (i) the gift card is redeemed by the customer; or (ii) the likelihood of the gift card being redeemed by the customer is remote (gift card breakage), and the Company determines that there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction. The Company did not recognize any revenue related to unredeemed gift card breakage in 2015 or 2014. Unearned gift card revenue (presented within accrued expenses) at December 31, 2015 and 2014, was approximately $18,530 and $22,880, respectively.

Advertising Expenses

Advertising costs are expensed as incurred. Total advertising expenses were approximately $350,200 and $444,200, for the years ended December 31, 2015 and 2014, respectively.

F-10

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation

The Company accounts for stock-based compensation under Accounting Standards Codification (“ASC”) 718, Share-Based Payment. ASC 718 requires the recognition of the cost of services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. ASC 718 also requires the stock-based compensation expense to be recognized over the period of service in exchange for the award (generally the vesting period). The Company estimates the fair value of each stock option at the grant date by using an option pricing model, typically the Black-Scholes model.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their financial statement reported amounts, and for tax loss and credit carry-forwards. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized.

The Company determines its income tax expense (benefit) in each of the jurisdictions in which it operates. Income tax includes an estimate of the current income tax expense (benefit), as well as deferred income tax expense, which results from the determination of temporary differences arising from the different treatment of items for book and tax purposes.

The Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions.  Periods subject to examination for the Company’s federal and state income tax returns are 2012 through the 2014 tax year.

Certain of the Company’s subsidiaries are limited liability companies (“LLC’s”), which are treated for tax purposes as pass-through entities. As a result, any taxes are the responsibility of the respective members.

The Company assesses the likelihood of the financial statement effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying consolidated financial statements. The Company recognizes tax related interest and penalties, if any, as a component of income tax expense.

F-11

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net loss per share

Basic net loss per share is computed by dividing the net loss applicable to common shareholders by the weighted-average number of shares of common stock outstanding for the period. The Series A convertible preferred shares are not included in the computation of basic loss per share, as the Series A convertible preferred shares do not have a contractual obligation to share in the losses of the Company. Diluted net loss per share reflects the potential dilution that could occur if dilutive securities were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect of such inclusion would reduce a loss or increase earnings per share. For each of the periods presented in the accompanying consolidated financial statements, the effect of the inclusion of dilutive shares would have resulted in a decrease in loss per share. Common stock options, warrants and shares underlying convertible debt aggregating 35,652,529 and 9,591,056 for the years ended December 31, 2015 and 2014, respectively, have been excluded from the calculation of diluted net loss per common share.

Recently Issued Accounting Standards

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern: Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.  The guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early application permitted.  The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts from Customers, which supersedes the revenue recognition in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB delayed the effective date by one year. This new standard is now effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied retrospectively, with early adoption now permitted to the original effective date of December 15, 2016. The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. Once effective, ASU No. 2015-02 will apply to the consolidation assessment of all entities. This standard is effective for public reporting entities in fiscal periods beginning after December 15, 2015. The Company does not anticipate any material impact upon adoption of this new standard.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) Simplifying the Measurement of Inventory, which changes the measurement from lower of cost or market to lower of cost and net realizable value. The guidance requires prospective application for reporting periods beginning after December 15, 2016 and permits adoption in an earlier period. The Company intends to adopt this ASU in the first quarter of 2016; the adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company intends to adopt this ASU in the first quarter of 2016, at which time the Company will reclassify debt issuance costs (if any) associated with the Company's debt from other noncurrent assets to debt. A reclassification will also be applied retrospectively to each prior period presented.

In February 2016, the FASB issued ASU No. 2016-02 ("ASU 2016-02"),Leases (Topic 842), which supersedes existing guidance on accounting for leases in"Leases (Topic 840)"and generally requires all leases to be recognized in the statement of financial position. The provisions of ASU 2016-02 are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions of this ASU are to be applied using a modified retrospective approach. The Company is currently evaluating the effect that this ASU will have on our consolidated financial statements.

Management has not identified any other recently issued accounting standards that it believes may have a significant impact on the Company’s consolidated financial statements. 

F-12

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 3 – INTANGIBLE ASSET

Franchise Agreements

The intangible asset at December 31, 2015 and 2014, represents franchise license costs for the Denver restaurant (net of accumulated amortization of $14,375 and $9,375, respectively).

Amortization expense of $5,000 was recorded for each of the years ended December 31, 2015 and 2014. Amortization expense for the next five years is estimated to be as follows:

2016	$	5,000
2017		5,000
2018		5,000
2019		5,000
2020		5,000
Thereafter		10,625
	$	35,625

The Company licenses the rights to the trademark “Bourbon Brothers” and certain intellectual property, as defined, from a related party, Hospitality Income & Asset, LLC, f/k/a Bourbon Brothers LLC (“HIA”), for use in the Company’s business operations. HIA has granted an exclusive license to use and to sublicense the tradename and intellectual property for an initial ten-year term. The agreement shall automatically renew for additional terms of ten-years each without any action required by either party. This license agreement does not require the payment of royalties or any other consideration. The Company is not currently using this trademark in its operations, nor is it contemplated for use in the foreseeable future.

F-13

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 4 – PROPERTY AND EQUIPMENT

As of December 31, 2015 and 2014, property and equipment consists of the following:

	December 31,			December 31,
	2015			2014			Useful lives
Leasehold improvements	$	3,237,345		$	2,227,438		10 years
Website development		45,750			21,500		3 years
Equipment		2,077,889			1,299,220		3-7 years
Computers and hardware		170,822			116,275		5 years
		5,531,806			3,664,433
Less accumulated depreciation		(1,252,710	)		(678,383	)
	$	4,279,096		$	2,986,050

Depreciation expense for the years ended December 31, 2015 and 2014 was approximately $574,300 and $431,200, respectively.

NOTE 5 – NOTES PAYABLE

Convertible Notes:

The Company has outstanding 5% promissory notes (the “Notes”) that bear interest at 5% per annum, they are unsecured, and their maturity dates are seven years from their issue date (October 2018 through November 2019). Quarterly payments are applied against accrued interest first, then principal. The minimum aggregate quarterly payment to Note holders is 2.5% of the Company’s portion of gross quarterly revenues from each Southern Hospitality BBQ restaurant.  Payments made in the year ended December 31, 2014 were $2,409; no payments were made in 2015. At December 31, 2015, the Company has not made all required payments of interest on the Notes.  At December 31, 2015 and 2014, quarterly payments in arrears total $108,000 and $64,870.  Accrued interest at December 31, 2015 and 2014 is $119,490 and $77,620, respectively. The Company may cure this deferral in quarterly payments within a defined period of time, as provided for in the note agreements, thus preventing the Notes from becoming callable.

The Notes and accrued interest are convertible, at the option of the holder. The conversion price is 80% of the 20-day average closing sales price on the date conversion is elected, but not less than $0.50 per share. The Company determined that there was a beneficial conversion feature associated with the Notes in the amount of $283,500 related to the intrinsic value of the conversion feature before the Company’s stock became public.  The Company recorded the beneficial conversion feature as a discount to the Notes and is amortizing the amount to interest over the term of the Notes.  Approximately $53,900 and $49,100 was amortized for the years ended December 31, 2015 and 2014, respectively.  No Notes were converted in 2015 or in 2014.  At December 31, 2015 and 2014, the balance of the Notes and accrued interest, net of discount, was approximately $764,100 and $665,900, respectively.

Beginning in August 2014, the Company began selling 6.5% promissory notes (the “2014 Notes”) along with warrants to purchase the Company’s common stock. Investors received a warrant to purchase four shares of common stock for each one dollar of principal amount loaned to the Company. The 2014 Notes bear interest at 6.5% per annum, they are unsecured, and their maturity dates are five years from their issue date. The Company sold $460,000 of 2014 Notes from August through December 2014 and $280,000 of 2014 Notes in 2015.  By their original terms, the 2014 Notes and accrued interest become convertible, at the option of the holder, after two years from the issue date. The conversion price is the lower of 80% of the 20-day average closing sales price on the date conversion is elected or $0.25 per share.

F-14

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 5 – NOTES PAYABLE (CONTINUED)

Convertible Notes:

The 2014 Notes were recorded at $322,200 after discounting the convertible notes based on the relative fair value of the warrants issued with the debt, of approximately $274,700.  The warrants were issued with the convertible debt and their relative fair value was determined using the Black-Scholes option pricing model.  Additionally, the convertible notes were further discounted, as the Company determined that the convertible debt contained a beneficial conversion feature and recorded an additional debt discount of approximately $143,100.  The net carrying value of the 2014 Notes and accrued interest at December 31, 2015 and 2014 was $467,700 and $159,200, respectively.

The assumptions used in the Black-Scholes model to determine the fair value of warrants are as follows: (1) dividend yield of 0%, (2) expected volatility of 205%, (3) weighted average risk-free interest rate of 0.79%, (4) contractual life of 3.0 years, and fair value of the Company’s shares of $0.14 to $0.30 per share.  The relative fair value attributable to the warrants and the beneficial conversion feature have been recorded as a discount and deducted from the face value of the convertible debt in the accompanying consolidated balance sheet.  The discount applied to the 2014 Notes is being amortized over the five-year term of the convertible notes.

Promissory Note:

During the year ended December 31, 2013, the Company issued a promissory note with an aggregate face value of $200,000, along with a warrant to purchase 50,000 shares of the Company’s common stock. This note bears interest at 5% per annum, it is unsecured and due on demand. The holder of the note received additional consideration in the form of a fully vested warrant to purchase 50,000 common shares at an exercise price of $0.50 per share exercisable for three years from the date of execution of the note.  The Company determined the relative fair value of the warrant to be approximately $44,000, which was recorded as a discount to the note payable, which was amortized over approximately three months.  In February 2016, the Company paid $50,000 in principal and issued a new promissory note for $150,000 which bears interest at 5% per annum, is unsecured and is due on February 3, 2017.

Bank Financing:

In November 2014, SHLT and Rocky Mountain Bank & Trust entered into a bank financing agreement to purchase kitchen equipment for the Lone Tree restaurant location.  A board member of the Company is also a board member of Rocky Mountain Bank & Trust. The agreement provides for financing up to $300,000, of which the Company had drawn $282,900 by December 31, 2015 and $2,055 by December 31, 2014. This loan bears interest at 6%.  Monthly interest-only payments began in December 2014 and continued through August 2015.  Beginning in September 2015, monthly principal and interest payments of approximately $5,800 are due through maturity in August 2020.   This agreement is collateralized by the kitchen equipment at the SHLT and SHD restaurants.

Related Party Promissory Notes:

The Company issued short-term promissory notes totaling $90,000 in the third quarter of 2014 to two shareholders.  These notes bear interest at 10% per annum, are unsecured, and had a maturity date of 180 days after the date of execution. These notes with accrued interest were subsequently converted to equity in CARVEG in April 2015 at a conversion rate of $1.05 per membership unit. In addition, the Company issued a short-term, unsecured promissory note for $25,000 on November 13, 2014, to a third shareholder.  This note was subsequently paid off in full in January 2015.

F-15

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 5 – NOTES PAYABLE (CONTINUED)

Related Party Loan Agreement:

On December 31, 2014, the Company entered into a Loan Agreement and associated Promissory Note (the “Loan Agreement”) with Bourbon Brothers #14, LLC (“BB14”) which provides for an unsecured term loan in the aggregate original principal amount of $1,250,000 (the “Loan”). The Company received net proceeds of $1,197,714 after loan closing fees.  BB14 is a related party entity, controlled by certain shareholders of the Company. The Company is to pay interest on the Loan at the greater of 9.5% or 6.25% per annum plus the prime rate announced by the Wall Street Journal. In addition, the Company is to pay a monthly loan servicing fee in the amount of 1% of the principal balance of the Loan. The entire principal balance of the Loan, plus any accrued and unpaid interest, is due on December 29, 2016. The related party interest expense on this loan for the year ended December 31, 2015 was $130,300.  The Company paid $100,000 towards prepayment of this Loan to BB14 at December 31, 2015.  Subsequently, the Company prepaid an additional $400,000 towards this Loan to BB14 in January 2016.

In connection with the Loan, the Company issued a warrant to BB14 for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share with the warrant vesting in one year. BB14 funded the Loan with financing BB14 received from a third-party lender.  JW Roth, a director of the Company, personally guaranteed the BB14 Loan to obtain financing to facilitate the Loan. To compensate JW Roth, the Company issued a warrant to Mr. Roth for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share with the warrant vesting in one year.  The Company determined the relative fair value of the 15,000,000 warrants to be approximately $731,800, which has been recorded as a discount to the Loan principal balance, and which is being amortized over the term of the Loan.  The balance of the discount at December 31, 2015 and December 31, 2014 was $365,940 and $731,800, respectively.

Scheduled maturities of notes payable for the next five years and thereafter as of December 31, 2015, are as follows:

Year ending December 31,
2016	$	1,150,000
2017		200,000
2018		837,425
2019		740,000
2020		282,934
Thereafter		-
		3,210,359
Less total discount on notes payable		(880,485	)
Add accrued interest at December 31, 2015		176,730
		2,506,604
Less current portion		(913,548	)
Non-current portion	$	1,593,056

F-16

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Commitments:

Franchise agreement

The Company operates its Denver restaurant property under a franchise agreement with the Franchisor under an initial ten-year term, renewable for two additional five-year terms. Pursuant to the franchise agreement, as amended, the Company is to pay royalty fees based on a percentage of gross revenues (2.5%, subject to a monthly floor of $5,000) , plus additional fees and costs for marketing, training, inventory and other franchisor costs. Two officers of the Company have personally guaranteed royalty payments to the Franchisor.

On December 30, 2014, SHD entered into a Fifth Amendment to its FA with the Franchisor in connection with the opening of a new Southern Hospitality restaurant in Lone Tree, Colorado. Under the FA, SHD partially assigned its rights to SHLT to use the Franchisor’s marks, business methods, proprietary products, confidential information and intellectual property to operate a Southern Hospitality restaurant. In addition, pursuant to the FA, the Franchisor waived certain initial fees in connection with SHLT opening a restaurant in Lone Tree, Colorado.

On February 13, 2015, SHD entered into a Sixth Amendment to its FA with the Franchisor in connection with the potential for opening two Southern Hospitality restaurants in Colorado Springs, Colorado.  Under the FA, SHD partially assigned its rights to SHSK, a 51%-owned subsidiary of the Company, and Southern Hospitality Tejon, LLC, a wholly-owned subsidiary of the Company, to use the Franchisor's marks, business methods, proprietary products, confidential information and intellectual property to operate a Southern Hospitality restaurant.

For the years ended December 31, 2015 and 2014, the Company incurred franchise royalty expense of approximately $139,300 and $59,000, respectively.

Leases:

In April 2012, the Company entered into a ten-year, non-cancellable lease for the restaurant in Denver, Colorado. This lease provides for two, five-year renewal options. Rent payments are approximately $16,000 per month plus certain common area maintenance charges, as defined, and are subject to escalation provisions.  Lease expense was approximately $188,800 and $194,120 for the years ended December 31, 2015 and 2014, respectively.  

The Company has a ten-year lease with HIA, a related party, for the real property in connection with the restaurant location in Colorado Springs.  The lease commenced upon taking possession of the premises in January 2014.  Rent is approximately $33,340 per month for the first 60 months, and thereafter is subject to adjustment every 60 months. This lease provides for one, ten-year renewal option.  Related party lease expense was approximately $401,000 and $383,000 for each of the years ended December 31, 2015 and 2014, respectively.

The Company has a ten-year, non-cancellable lease for the restaurant in Lone Tree, Colorado. The lease provides for an initial lease term of ten years and for two, five-year renewal options.  Rent payments are approximately $8,900 per month plus certain common area maintenance charges, and are subject to escalation provisions.  In addition to base rent, this lease requires contingent rent payments equal to 5% of gross sales above predetermined thresholds, as defined. This location opened April 27, 2015, at which time the lease commenced.  Lease expense was approximately $74,400 for the year ended December 31, 2015 (none in 2014).

In April 2015, CARVEG entered into a non-cancellable lease for the Company’s first fast casual restaurant in Glendale, Colorado. The initial term of this lease provides for expiration on July 31, 2020. This lease includes three, five-year extension options. Rent payments are approximately $11,100 per month, which includes certain common area maintenance charges, and are subject to escalation provisions.  This location opened November 5, 2015. Lease expense was approximately $84,960 for the year ended December 31, 2015 (none in 2014).

On January 1, 2014, the Company assumed a lease from a related party for the corporate office in Colorado Springs.  The lease is for 78 months with an unaffiliated party.  Monthly rent is $5,800 per month escalating up to $6,000 per month in year six.  The initial term of the lease provides for expiration on December 31, 2016. Lease expense for the years ended December 31, 2015 and 2014 was $71,200 and $69,600, respectively.

F-17

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

The future minimum lease payments are as follows:

	Third Party		Related Party		Total
2016	$	492,089	$	401,092	$	893,181
2017		424,843		401,092		825,935
2018		431,206		401,092		832,298
2019		437,761		401,092		838,853
2020		409,629		401,092		810,721
Thereafter		893,731		1,219,988		2,113,719
	$	3,089,259	$	3,225,448	$	6,314,707

Contingencies:

From time to time, the Company may become party to litigation and other claims in the ordinary course of business. To the extent that such claims and litigation arise, management provides for them if upon the advice of counsel, losses are determined to be both probable and estimable.

NOTE 7 – INCOME TAXES

At December 31, 2015, the Company has approximately $8,699,000 of net operating loss carry-forwards which expire between 2031 and 2035. The net operating loss carry-forwards may be subject to certain restrictions in the future, particularly in the event of a change in ownership under Internal Revenue Code Section 382.

Deferred tax assets and liabilities are recorded based on the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, as measured by the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are carried on the balance sheet with the presumption that they will be realizable in future periods when pre-tax income is generated. A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities represent the future impact of temporary differences between the financial statement and tax bases of assets and liabilities.  The Company’s net deferred tax assets have been fully reserved, effectively by a valuation allowance, because management does not believe realization of the deferred tax assets is more likely than not at the balance sheet date.

The deferred tax assets (liabilities) and associated valuation allowance at December 31, 2015 and 2014, are as follows:

	2015			2014
Current assets:
Stock based compensation	$	490,000		$	370,000
		490,000			370,000
Non-current assets:
Intangible assets		4,900			7,000
Property and equipment		840,000			157,000
Net operating loss carryforwards		3,219,000			2,598,000
		4,553,900			3,132,000
Valuation allowance		(4,553,900	)		(3,132,000	)
Net deferred tax assets	$	-		$	-

F-18

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 7 – INCOME TAXES (CONTINUED)

No income tax benefit was recognized for the years ended December 31, 2015 and 2014, as indicated below:

	2015			2014
Deferred tax benefit:
Federal	$	(1,307,000	)	$	(1,204,000	)
State		(115,000	)		(106,000	)
		(1,422,000	)		(1,310,000	)
Increase in valuation allowance		1,422,000			1,310,000
	$	-		$	-

A reconciliation of income tax computed at the U.S. statutory tax rate of 34% to the effective income tax rate is as follows:

	2015			2014
Statutory rate		34	%		34	%
State taxes		3			3
Permanent differences and other		(4	)		(7	)
Valuation allowance		(33	)		(30	)
Effective rate		-			-

NOTE 8 –  EQUITY

Preferred stock:

The Company authorized the issuance of up to 18,242,700 shares of Series A convertible preferred stock ("Series A Stock”) January 2014, of which 18,242,687 shares were issued on January 22, 2014. As of March 1, 2014, the holders of 13,357,828 Series A preferred shares chose to convert their Series A preferred stock into shares of the Company's common stock at a ratio of one to one. These Series A preferred shares were then subsequently cancelled. The Certificate of Designation of the Company’s Series A Stock requires that any shares of Series A Stock that are converted into Common Stock be cancelled and are not available for reissuance by the Company.  On February 3, 2016, 4,428,791 shares of Series A Preferred Stock, converted to common shares, leaving 456,068 Series A Preferred Stock issued and outstanding.

Each share of Series A convertible preferred is entitled to 25 votes and is convertible into shares of common stock on a one-for-one basis.  Other rights of the Series A convertible preferred are identical to the common stock rights.

F-19

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 8 – EQUITY (CONTINUED)

Common stock:

In 2015, the Company issued 13,386,852 common shares of stock for proceeds of $1,849,019, along with 6,265,000 warrants to purchase shares of common stock, exercisable at $0.40 per warrant.  In 2014, the Company issued 4,183,042 units (each unit consisted of one share of common stock and one warrant to purchase common stock) for cash of $1,254,913, at $0.30 and $0.50 per unit.

In connection with services provided to the Company, the Company issued 30,000 common shares valued at $15,000 ($0.50 per share) and 21,678 common shares valued at $6,503 ($0.30 per share) during the year ended December 31, 2014.  In connection with services provided to the Company, the Company issued 136,874 common shares valued at $33,333 (at $0.24 and $0.27 per share) during the year ended December 31, 2015.

Stock options:

Effective November 13, 2012, the Company adopted the 2012 Stock Option Plan (the “Plan”). Under the Plan, the Company may grant stock options, restricted and other equity awards to any employee, consultant, independent contractor, director or officer of the Company. A total of 4 million shares of common stock may be issued under the Plan (as amended on January 22, 2014).

During the year ended December 31, 2015, the Company granted options to purchase up to 120,000 common shares to two of its restaurant managers that vest evenly over three years, with the first tranche vesting on February 2, 2016 and each year thereafter with an exercise price of $0.25 per share.  In addition, the Company granted options to another of its store managers to purchase up to 20,000 shares that vest evenly over two years beginning on March 16, 2015, with an exercise price of $0.27 per share. In June 2015, the Company granted options to purchase up to 600,000 common shares to six members of its board of directors that vest on March 9, 2016, with an exercise price of $0.30 per share.  In 2015, the Company also issued options to purchase up to 43,500 shares of common stock to restaurant management which vest in full on November 9, 2016, exercisable at $0.20 per option.

The stock-based compensation cost related to options that have been included as a charge to general and administrative expense in the statements of operations was approximately $324,900 and $475,056 for the years ended December 31, 2015 and 2014, respectively.  As of December 31, 2015, there was approximately $241,200 of unrecognized compensation cost related to non-vested stock options. The cost is expected to be recognized over a weighted-average period of less than five years.

The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options.  The weighted-average fair value of options granted during the years ended December 31, 2015 and 2014 was $0.33 and $0.47 per share.  The assumptions utilized to determine the fair value of options granted during the years ended December 31, 2015 and 2014 are as follows:

	2015			2014
Risk free interest rate		0.79	%		0.79	%
Expected volatility		168	%		205	%
Expected term	5 years			5 years
Expected dividend yield		0			0

The expected term of stock options represents the period of time that the stock options granted are expected to be outstanding. The expected volatility is based on the historical price volatility of the common stock of similar companies. The risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents the anticipated cash dividend over the expected term of the stock options.

F-20

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 8 – EQUITY (CONTINUED)

The following tables set forth the activity in the Company's Plan for the year ended December 31, 2015:

						Weighted
				Weighted		average
	Shares			average		remaining	Aggregate
	under			exercise		contractual	intrinsic
	option			price		life	value
Outstanding at January 1, 2015		2,636,039		$	0.29
Granted		783,500			0.29
Exercised		(91,214	)		-
Forfeited/cancelled		(460,449	)		0.22
Outstanding at December 31, 2015		2,867,876			0.30	3.40	$	-
Exercisable at December 31, 2015		1,501,949		$	0.30	2.99	$	-

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the estimated fair value of the Company’s common stock on December 31, 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they exercised their options on December 31, 2015.  The total value of all options exercised during the years ended December 31, 2015 and 2014 was $25 and $53.

The following table summarizes the activity and value of non-vested options as of and for the year ended December 31, 2015:

				Weighted
				average
	Number of			grant date
	options			fair value
Non-vested options outstanding at January 1, 2015		1,494,663		$	0.09
Granted		783,500			0.29
Vested		(451,788	)		0.46
Forfeited/cancelled		(460,449	)		0.22
Non-vested options outstanding at December 31, 2015		1,365,926		$	0.18

F-21

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 8 – EQUITY (CONTINUED)

Warrants:

The Company uses the Black-Scholes pricing model to determine the weighted average fair value of warrants. The assumptions utilized to determine the fair value of warrants granted during the years ended December 31, 2015 and 2014, are as follows:

	2015			2014
Risk free interest rate		0.79	%		0.79	%
Expected volatility		168	%		205	%
Expected term	5 years			5 years
Expected dividend yield		0			0

The following table sets forth the activity regarding warrants for the year ended December 31, 2015:

						Weighted
				Weighted		Average
	Shares			Average		Remaining		Aggregate
	Underlying			Exercise		Contractual		Intrinsic
	Warrants			Price		Life		Value
Outstanding at January 1, 2015		20,184,614		$	0.18
Granted		7,563,000			0.40
Forfeited/cancelled		(30,000	)		0.30
Outstanding at December 31, 2015		27,717,614			0.25		2.96	$	-
Exercisable at December 31 , 2015		27,544,614		$	0.25		2.96	$	-

The following table sets for the activity regarding non-vested warrants for the twelve months ended December 31, 2015:

	Non-vested			Weighted		Weighted
	Shares			Average		Average
	Underlying			Exercise		Grant Date
	Warrants			Price		Fair Value
Non-vested at January 1, 2015		30,000		$	0.18	$	0.05
Granted		7,563,000			0.40	$	0.24
Vested		(7,390,000	)		0.40		0.40
Forfeited/cancelled		(30,000	)		0.30	$	0.30
Non-vested at December 31, 2015		173,000		$	0.18	$	0.24

During the year ended December 31, 2015, the Company issued warrants to purchase up to 6,265,000 shares of common stock in connection with its common stock offering. These warrants have a three-year term and are exercisable at $0.40 per share. In 2015, approximately $837,500 was allocated to warrants (additional paid in capital) based on the relative fair value of such warrants. The Company used the Black Scholes pricing model to determine the fair value, and used the expected exercisable term of such warrants, a risk free interest rate of  0.78% and a volatility of 168%.

F-22

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014

NOTE 8 – EQUITY (CONTINUED)

Warrants:

In addition, during the year ended December 31, 2015, the Company granted warrants in connection to services provided to the Company to purchase up to 178,000 shares of the Company’s common stock at $0.25-$0.31 per share. These warrants have a three-year term and vest over one year. The Company used the Black Scholes pricing model to determine the fair value of these warrants, using a risk free interest rate of 0.79% and a volatility of between 168-205%.

During the year ended December 31, 2014, the Company granted warrants to certain officers, board members and others, to purchase up to 330,000 shares of the Company’s common stock at $0.30 per share. In December 2014, in connection with the loan the Company has with BB14, the Company issued a warrant to BB14 for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share. In addition, to compensate JW Roth, a director of the Company, for his personal guarantee in connection with BB14 obtaining financing to facilitate the Loan, the Company issued a warrant to Mr. Roth for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share. Both of these warrants are fully vested as of December 31, 2015.  The Company used the Black Scholes pricing model to determine the fair value of the warrants.  The Company used the contractual term of the warrant, a risk free interest rate of 0.79% and a volatility of 205%.  A relative fair value of approximately $730,880 was calculated and assigned to the warrants based on their fair values.

During the year ended December 31, 2014, existing warrants were exercised in exchange for 1,094,562 shares of common stock. No warrants were exercised in 2015.

NOTE 9 – RELATED PARTY TRANSACTIONS

Related Party Note Receivable

In 2014, the Company advanced $25,334 to the non-controlling interest holder of SHD to fund certain of its liabilities, in exchange for a 10%, unsecured promissory note receivable.  The note receivable and accrued interest is due January 2017.

NOTE 10 – SUBSEQUENT EVENTS

In February 2016, the Company received $25,000 from Touch 4 Partners, LLC, in exchange for a promissory note, with an aggregate face value of $25,000, which bears interest at 5% per annum and is unsecured.  The note is due in full one year from the issuance date, February 3, 2017.  The Company, in turn, used these proceeds to partially pay $50,000 in principal on the outstanding promissory note (Note 5) of $200,000, along with paying accrued interest totaling $10,833. At the same time, a new promissory note was issued for the remaining $150,000 in principal, which bears interest at 5% per annum, is unsecured and due on February 3, 2017.

On February 3, 2016, three shareholders converted Series A Preferred shares totaling 4,428,791 into shares of common stock of the Company.  In January and February 2016, the Company sold 1,075,000 shares of common stock and warrants for $215,000.  On March 11, 2016, the Company filed an amendment to its Articles of Incorporation with the Colorado Secretary of State, (i) decreasing the authorized preferred stock to 456,068 and (ii) increasing authorized capital stock of the Company to 125,456,068 shares, consisting of 125,000,000 shares of Common Stock and 456,068 shares designated as Series A Stock.

F-23

EX-3.1

Exhibit 3.1

  Document must be filed electronically. Paper documents are not accepted. Fees & forms are subject to change. For more  information or print copies of filed documents, visit www.sos.state.co.us    E-Filed   Colorado Secretary of State Date and Time: 03/11/2016 09:28 AM ID Number: 20081058152   Document number: 20161179338 Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Amendment

filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)

ID number:   20081058152

1.    Enity name:	Southern Concepts Restaurant Group, Inc.
	(If changing the name of the corporation, indicate name BEFORE the name change)

2.  New Entity name:

      (if aplicable)

3.  Use of Restricted Words (if any of these
terms are contained in an entity name, true name of an entity, trade name or trademark stated in this document, mark the applicable box):	o  "bank" or "trust" or any derivative thereof  o   "credit union" o "savings and loan"  o   "insurance", casualty", "mutual", or "surety"

4.   Other amendments, if any, are attached.

5.   If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment states the provisions for implementing the amendment.

6.  If the corporation's period of duration as amended is less than perpetual, state the date on which the period of duration expires:
	(mm/dd/yyyy)

OR

If the corporation's period of duration as amended is perpetual, mark this box:  þ

7.  (Optional) Delayed effective date:
	(mm/dd/yyyy)

Notice:

Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the individual's act and deed, or that the individual in good faith believes the document is the act and deed of the person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic statutes, and that the individual in good faith believes the facts stated in the document are true and the document complies with the requirements of that Part, the constituent documents, and the organic statutes.

This perjury notice applies to each individual who causes this document to be delivered to the secretary of state, whether or not such individual is named in the document as one who has caused it to be delivered.

8. Name(s) and address(es) of the individual(s) causing the document to be delivered for filing:
	Filam                                 Amy                                                 K.
	(Last) (First) (Middle) (Suffix)
	6400 South Fiddlers Green Circle
	(Street name and number or Post Office information)
	Suite 1000
	Greenwood Village                        CO                    80111
	(City) (State) (Postal/Zip Code)
	United States
	(Province - if applicable) (Country - if not US)

(The document need not state the true name and address of more than one individual. However, if you wish to state the name and addressof any additional individuals causing the document to be delivered for filing, mark this box[ ]  and include an attachment stating the name and address of such individuals.)

Disclaimer:

This form, and any related instructions, are not intended to provide legal, business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time, remains the responsibility of the user of this form. Questions should be addressed to the user's attorney.

ARTICLES OF AMENDMENT TO THE

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

These Articles of Amendment to the Amended and Restated Articles of Incorporation were approved by the directors of Southern Concepts Restaurant Group, Inc. (the “Corporation”). This attachment is incorporated into the foregoing Articles of Amendment.

1. Article II of the Amended and Restated Articles of Incorporation of the Corporation is hereby amended as follows:

The number of shares designated as Preferred Stock is decreased from 4,884,859 to 456,068.

The aggregate number of authorized shares of the Corporation is increased from 124,884,859 to 125,456,068.

The number of shares designated as Common Stock is increased from 120,000,000 to 125,000,000.

The total number of authorized shares remaining after the foregoing changes in shares is hereby evidenced by the following amendment. Article II, Section 1 of the Amended and Restated Articles of Incorporation of the Corporation hereby is replaced in its entirety to read as follows:

“ARTICLE II

Authorized Shares

Section 1: Number. The aggregate number of shares which the Corporation shall have authority to issue is One Hundred Twenty-Five Million Four Hundred Fifty-Six Thousand And Sixty-Eight (125,456,068), of which One Hundred Twenty-Five Million (125,000,000) shall be designated as shares of Common Stock of one class with unlimited voting rights with no par value, and Four Hundred Fifty-Six Thousand And Sixty-Eight (456,068) shall be designated as shares of Preferred Stock, to have such par value, classes and preferences as the Board of Directors may determine from time to time.”

2. Section 1 of the Certificate of Designation of the Corporation’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) is hereby amended as follows:

The number of authorized shares of Series A Preferred Stock is decreased from 4,884,859 to 456,068.

The total number of authorized shares of Series A Preferred Stock remaining after the reduction in shares is hereby evidenced by the following amendment. Section 1 of the Certificate of Designation of the Corporation’s Series A Convertible Preferred Stock hereby is replaced in its entirety to read as follows:

“Section 1: Designation and Amount. All of the 456,068 shares of the Company’s authorized preferred stock, $0.001 par value per share are designated as “Series A Convertible Preferred Stock,” with the rights and preferences set forth below.”

  Document must be filed electronically. Paper documents are not accepted. Fees & forms are subject to change. For more  information or print copies of filed documents, visit www.sos.state.co.us    E-Filed   Colorado Secretary of State Date and Time: 03/09/2015 01:05 PM ID Number: 20081058152   Document number: 20151169812 Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Amendment

filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)

ID number:   20081058152

1.    Enity name:	Bourbon Brothers Holding Corporation
	(If changing the name of the corporation, indicate name BEFORE the name change)

2.  New Entity name:	Southern Concepts Restaurant Group, Inc.
(if aplicable)

3.  Use of Restricted Words (if any of these
terms are contained in an entity name, true name of an entity, trade name or trademark stated in this document, mark the applicable box):	o  "bank" or "trust" or any derivative thereof  o   "credit union" o "savings and loan"  o   "insurance", casualty", "mutual", or "surety"

4.   Other amendments, if any, are attached.

5.   If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment states the provisions for implementing the amendment.

6.  If the corporation's period of duration as amended is less than perpetual, state the date on which the period of duration expires:
	(mm/dd/yyyy)

OR

If the corporation's period of duration as amended is perpetual, mark this box:  þ

7.  (Optional) Delayed effective date:
	(mm/dd/yyyy)

Notice:

Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the individual's act and deed, or that the individual in good faith believes the document is the act and deed of the person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic statutes, and that the individual in good faith believes the facts stated in the document are true and the document complies with the requirements of that Part, the constituent documents, and the organic statutes.

This perjury notice applies to each individual who causes this document to be delivered to the secretary of state, whether or not such individual is named in the document as one who has caused it to be delivered.

8. Name(s) and address(es) of the individual(s) causing the document to be delivered for filing:
	Fliam                             Amy
	(Last) (First) (Middle) (Suffix)
	6400 South Fiddlers Green Circle
	(Street name and number or Post Office information)
	Suite 1000
	Greenwood Village                        CO                    80111
	(City) (State) (Postal/Zip Code)
	United States
	(Province - if applicable) (Country - if not US)

(The document need not state the true name and address of more than one individual. However, if you wish to state the name and addressof any additional individuals causing the document to be delivered for filing, mark this box[ ]  and include an attachment stating the name and address of such individuals.)

Disclaimer:

This form, and any related instructions, are not intended to provide legal, business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time, remains the responsibility of the user of this form. Questions should be addressed to the user's attorney.

  Document must be filed electronically. Paper documents are not accepted. Fees & forms are subject to change. For more  information or print copies of filed documents, visit www.sos.state.co.us    E-Filed   Colorado Secretary of State Date and Time: 03/09/2015 02:43 PM ID Number: 20081058152   Document number: 20151170188 Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Amendment

filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)

ID number:   20081058152

1.    Enity name:	Southern Concepts Restaurant Group, Inc.
	(If changing the name of the corporation, indicate name BEFORE the name change)

2.  New Entity name:

      (if aplicable)

3.  Use of Restricted Words (if any of these
terms are contained in an entity name, true name of an entity, trade name or trademark stated in this document, mark the applicable box):	o  "bank" or "trust" or any derivative thereof  o   "credit union" o "savings and loan"  o   "insurance", casualty", "mutual", or "surety"

4.   Other amendments, if any, are attached.

5.   If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment states the provisions for implementing the amendment.

6.  If the corporation's period of duration as amended is less than perpetual, state the date on which the period of duration expires:
	(mm/dd/yyyy)

OR

If the corporation's period of duration as amended is perpetual, mark this box:  þ

7.  (Optional) Delayed effective date:
	(mm/dd/yyyy)

Notice:

Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the individual's act and deed, or that the individual in good faith believes the document is the act and deed of the person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic statutes, and that the individual in good faith believes the facts stated in the document are true and the document complies with the requirements of that Part, the constituent documents, and the organic statutes.

This perjury notice applies to each individual who causes this document to be delivered to the secretary of state, whether or not such individual is named in the document as one who has caused it to be delivered.

8. Name(s) and address(es) of the individual(s) causing the document to be delivered for filing:
	Fliam                             Amy
	(Last) (First) (Middle) (Suffix)
	6400 South Fiddlers Green Circle
	(Street name and number or Post Office information)
	Suite 1000
	Greenwood Village                        CO                    80111
	(City) (State) (Postal/Zip Code)
	United States
	(Province - if applicable) (Country - if not US)

(The document need not state the true name and address of more than one individual. However, if you wish to state the name and addressof any additional individuals causing the document to be delivered for filing, mark this box[ ]  and include an attachment stating the name and address of such individuals.)

Disclaimer:

This form, and any related instructions, are not intended to provide legal, business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time, remains the responsibility of the user of this form. Questions should be addressed to the user's attorney.

ARTICLES OF AMENDMENT TO THE

ARTICLES OF INCORPORATION OF

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

These Articles of Amendment to the Articles of Incorporation were approved by the directors following the approval of certain amendments by the shareholders of Southern Concepts Restaurant Group, Inc. (the “Corporation”). This attachment is incorporated into the foregoing Articles of Amendment.

1. Article II, Section 1 of the Amended and Restated Certificate of Incorporation of the Corporation is hereby deleted and replaced in its entirety by the following:

“ARTICLE II

Authorized Shares

Section 1: Number. The aggregate number of shares which the Corporation shall have authority to issue is One Hundred Twenty-Four Million Eight Hundred Eighty-Four Thousand Eight Hundred Fifty-Nine (124,884,859), of which One Hundred Twenty Million (120,000,000) shall be designated as shares of Common Stock of one class with unlimited voting rights with no par value, and Four Million Eight Hundred Eighty-Four Thousand Eight Hundred Fifty-Nine (4,884,859) shall be designated as shares of Preferred Stock, to have such par value, classes and preferences as the Board of Directors may determine from time to time.”

  Document must be filed electronically. Paper documents are not accepted. Fees & forms are subject to change. For more  information or print copies of filed documents, visit www.sos.state.co.us    E-Filed   Colorado Secretary of State Date and Time: 03/09/2015 02:43 PM ID Number: 20081058152   Document number: 20151170188 Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Amendment

filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)

ID number:   20081058152

1.    Enity name:	Southern Concepts Restaurant Group, Inc.
	(If changing the name of the corporation, indicate name BEFORE the name change)

2.  New Entity name:

      (if aplicable)

3.  Use of Restricted Words (if any of these
terms are contained in an entity name, true name of an entity, trade name or trademark stated in this document, mark the applicable box):	o  "bank" or "trust" or any derivative thereof  o   "credit union" o "savings and loan"  o   "insurance", casualty", "mutual", or "surety"

4.   Other amendments, if any, are attached.

5.   If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment states the provisions for implementing the amendment.

6.  If the corporation's period of duration as amended is less than perpetual, state the date on which the period of duration expires:
	(mm/dd/yyyy)

OR

If the corporation's period of duration as amended is perpetual, mark this box:  þ

7.  (Optional) Delayed effective date:
	(mm/dd/yyyy)

Notice:

Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the individual's act and deed, or that the individual in good faith believes the document is the act and deed of the person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic statutes, and that the individual in good faith believes the facts stated in the document are true and the document complies with the requirements of that Part, the constituent documents, and the organic statutes.

This perjury notice applies to each individual who causes this document to be delivered to the secretary of state, whether or not such individual is named in the document as one who has caused it to be delivered.

8. Name(s) and address(es) of the individual(s) causing the document to be delivered for filing:
	Fliam                             Amy
	(Last) (First) (Middle) (Suffix)
	6400 South Fiddlers Green Circle
	(Street name and number or Post Office information)
	Suite 1000
	Greenwood Village                        CO                    80111
	(City) (State) (Postal/Zip Code)
	United States
	(Province - if applicable) (Country - if not US)

(The document need not state the true name and address of more than one individual. However, if you wish to state the name and addressof any additional individuals causing the document to be delivered for filing, mark this box[ ]  and include an attachment stating the name and address of such individuals.)

Disclaimer:

This form, and any related instructions, are not intended to provide legal, business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time, remains the responsibility of the user of this form. Questions should be addressed to the user's attorney.

  Document must be filed electronically. Paper documents are not accepted. Fees & forms are subject to change. For more  information or print copies of filed documents, visit www.sos.state.co.us    E-Filed   Colorado Secretary of State Date and Time: 01/22/2015 09:29 AM ID Number: 20081058152   Document number: 20151042804 Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Amendment

filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)

ID number:   20081058152

1.    Enity name:	Bourbon Brothers Holding Corporation
	(If changing the name of the corporation, indicate name BEFORE the name change)

2.  New Entity name:

      (if aplicable)

3.  Use of Restricted Words (if any of these
terms are contained in an entity name, true name of an entity, trade name or trademark stated in this document, mark the applicable box):	o  "bank" or "trust" or any derivative thereof  o   "credit union" o "savings and loan"  o   "insurance", casualty", "mutual", or "surety"

4.   Other amendments, if any, are attached.

5.   If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment states the provisions for implementing the amendment.

6.  If the corporation's period of duration as amended is less than perpetual, state the date on which the period of duration expires:
	(mm/dd/yyyy)

OR

If the corporation's period of duration as amended is perpetual, mark this box:  þ

7.  (Optional) Delayed effective date:
	(mm/dd/yyyy)

Notice:

Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the individual's act and deed, or that the individual in good faith believes the document is the act and deed of the person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic statutes, and that the individual in good faith believes the facts stated in the document are true and the document complies with the requirements of that Part, the constituent documents, and the organic statutes.

This perjury notice applies to each individual who causes this document to be delivered to the secretary of state, whether or not such individual is named in the document as one who has caused it to be delivered.

8. Name(s) and address(es) of the individual(s) causing the document to be delivered for filing:
	Fliam                             Amy
	(Last) (First) (Middle) (Suffix)
	6400 South Fiddlers Green Circle
	(Street name and number or Post Office information)
	Suite 1000
	Greenwood Village                        CO                    80111
	(City) (State) (Postal/Zip Code)
	United States
	(Province - if applicable) (Country - if not US)

(The document need not state the true name and address of more than one individual. However, if you wish to state the name and addressof any additional individuals causing the document to be delivered for filing, mark this box[ ]  and include an attachment stating the name and address of such individuals.)

Disclaimer:

This form, and any related instructions, are not intended to provide legal, business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time, remains the responsibility of the user of this form. Questions should be addressed to the user's attorney.

ARTICLES OF AMENDMENT TO THE

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF

BOURBON BROTHERS HOLDING CORPORATION

These Articles of Amendment to the Amended and Restated Articles of Incorporation were approved by the directors of Bourbon Brothers Holding Corporation (the “Corporation”). This attachment is incorporated into the foregoing Articles of Amendment.

1.     Article II of the Amended and Restated Articles of Incorporation of the Corporation is hereby amended as follows:

The aggregate number of authorized shares of the Corporation is decreased from 118,247,700 to 104,884,859.

The number of shares designated as Preferred Stock is decreased from 18,242,700 to 4,884,859.

The total number of authorized shares remaining after the reduction in shares is hereby evidenced by the following amendment. Article II, Section 1 of the Amended and Restated Articles of Incorporation of the Corporation hereby is replaced in its entirety to read as follows:

“ARTICLE II

Authorized Shares

Section 1: Number. The aggregate number of shares which the Corporation shall have authority to issue is One Hundred Four Million Eight Hundred Eighty-Four Thousand Eight Hundred Fifty- Nine (104,884,859), of which One Hundred Million (100,000,000) shall be designated as shares of Common Stock of one class with unlimited voting rights with no par value, and Four Million Eight Hundred Eighty-Four Thousand Eight Hundred Fifty-Nine (4,884,859) shall be designated as shares of Preferred Stock, to have such par value, classes and preferences as the Board of Directors may determine from time to time.”

2.        Section 1 of the Certificate of Designation of the Corporation’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) is hereby amended as follows:

The number of authorized shares of Series A Preferred Stock is decreased from 18,242,700 to 4,884,859.

The total number of authorized shares of Series A Preferred Stock remaining after the reduction in shares is hereby evidenced by the following amendment. Section 1 of the Certificate of Designation of the Corporation’s Series A Convertible Preferred Stock hereby is replaced in its entirety to read as follows:

“Section 1: Designation and Amount. All of the 4,884,859 shares of the Company’s authorized preferred stock, $0.001 par value per share are designated as “Series A Convertible Preferred Stock,” with the rights and preferences set forth below.”

  Document must be filed electronically. Paper documents are not accepted. Fees & forms are subject to change. For more  information or print copies of filed documents, visit www.sos.state.co.us    E-Filed   Colorado Secretary of State Date and Time: 01/22/2014 03:18 PM ID Number: 20081058152   Document number: 20141042156 Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Amendment

filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)

ID number:   20081058152

1.    Enity name:	Southern Concepts Restaurant Group, Inc.
	(If changing the name of the corporation, indicate name BEFORE the name change)

2.  New Entity name:	Bourbon Brothers Holding Corporation
(if aplicable)

3.  Use of Restricted Words (if any of these
terms are contained in an entity name, true name of an entity, trade name or trademark stated in this document, mark the applicable box):	o  "bank" or "trust" or any derivative thereof  o   "credit union" o "savings and loan"  o   "insurance", casualty", "mutual", or "surety"

4.   Other amendments, if any, are attached.

5.   If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment states the provisions for implementing the amendment.

6.  If the corporation's period of duration as amended is less than perpetual, state the date on which the period of duration expires:
	(mm/dd/yyyy)

OR

If the corporation's period of duration as amended is perpetual, mark this box:  þ

7.  (Optional) Delayed effective date:
	(mm/dd/yyyy)

Notice:

Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the individual's act and deed, or that the individual in good faith believes the document is the act and deed of the person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic statutes, and that the individual in good faith believes the facts stated in the document are true and the document complies with the requirements of that Part, the constituent documents, and the organic statutes.

This perjury notice applies to each individual who causes this document to be delivered to the secretary of state, whether or not such individual is named in the document as one who has caused it to be delivered.

8. Name(s) and address(es) of the individual(s) causing the document to be delivered for filing:
	Bantz                             Victoria
	(Last) (First) (Middle) (Suffix)
	Burns Figa & Will PC 6400 South Fiddlers Green Circle
	(Street name and number or Post Office information)
	Suite 1000
	Greenwood Village                        CO                    80111
	(City) (State) (Postal/Zip Code)
	United States
	(Province - if applicable) (Country - if not US)

(The document need not state the true name and address of more than one individual. However, if you wish to state the name and addressof any additional individuals causing the document to be delivered for filing, mark this box[ ]  and include an attachment stating the name and address of such individuals.)

Disclaimer:

This form, and any related instructions, are not intended to provide legal, business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time, remains the responsibility of the user of this form. Questions should be addressed to the user's attorney.

ARTICLES OF AMENDMENT TO THE

ARTICLES OF INCORPORATION OF

SMOKIN CONCEPTS DEVELOPMENT CORPORATION

These Articles of Amendment to the Articles of Incorporation were approved by the directors following the approval of certain amendments by the shareholders of Smokin Concepts Development Corporation (the “Corporation”). This attachment is incorporated into the foregoing Articles of Amendment.

1. Article II of the Amended and Restated Certificate of Incorporation of the Corporation is hereby deleted and replaced in its entirety by the following:

“ARTICLE II

Authorized Shares

Section 1: Number. The aggregate number of shares which the Corporation shall have authority to issue is One Hundred Eighteen Million Two Hundred Forty-Two Thousand Seven Hundred (118,242,700), of which One Hundred Million (100,000,000) shall be designated as shares of Common Stock of one class with unlimited voting rights with no par value, and Eighteen Million Two Hundred Forty-Two Thousand Seven Hundred (18,242,700) shall be designated as shares of Preferred Stock, to have such par value, classes and preferences as the Board of Directors may determine from time to time.

Section 2: Dividends. Dividends in cash, property or shares of the Corporation may be paid upon the stock, as and when declared by the Board of Directors, out of funds of the Corporation to the extent and in the manner permitted by law.”

2. Article VI of the Amended and Restated Certificate of Incorporation of the Corporation is hereby deleted and replaced in its entirety by the following:

“ARTICLE VI

Purposes

The purposes of the Corporation (through its subsidiaries) are:

1. To develop, own, and operate restaurants and branding, such as Southern Hospitality and Bourbon Brothers, franchise Bourbon Brothers restaurants and extend the brand to product lines including but not limited to cigars, bourbon, pies, etc.; and

2. To provide restaurant management services to other businesses.

For the purposes of the Corporation’s directors’ duties of loyalty, the investment and involvement by any directors and officers in any other business shall be considered outside the scope of the purposes of the Corporation, and not a corporate opportunity. Thus, directors and officers of the Corporation will not be deemed to have usurped a corporate opportunity by personally investing or being involved in other businesses, including real estate investments related to the Company. Similarly, the provision of management services to a restaurant by any officer or director shall not be deemed to be a usurpation of a corporate opportunity so long as the officer or director has a personal investment in such restaurant.”

CERTIFICATE OF DESIGNATION

of the

PREFERENCES, RIGHTS, LIMITATIONS, QUALIFICATIONS AND RESTRICTIONS

of the

SERIES A CONVERTIBLE PREFERRED STOCK

of

SMOKIN CONCEPTS DEVELOPMENT CORPORATION

SMOKIN CONCEPTS DEVELOPMENT CORPORATION (hereinafter the “Corporation”), a corporation organized and existing under the Colorado Business Corporation Act (the “CBCA”), hereby certifies that, pursuant to the authority conferred upon the Board of Directors of the Corporation (the “Board”) by its Articles of Incorporation and pursuant to the provisions of the CBCA, on January 22, 2014, the Board duly adopted the following resolution providing for the authorization of 18,242,700 shares of the Corporation’s Series A Convertible Preferred Stock (the “Series A Stock”):

RESOLVED, that pursuant to the authority vested in the Board by the Corporation’s Articles of Incorporation, the Board hereby establishes from the Corporation’s authorized class of preferred stock a new series to be known as “Series A Convertible Preferred Stock,” consisting of 18,242,700 shares, and hereby determines the designation, preferences, rights, qualifications, limitations and privileges of the Series A Stock to be as follows:

1. Designation and Amount. All of the 18,242,700 shares of the Company’s authorized preferred stock, $0.001 par value per share are designated as “Series A Convertible Preferred Stock,” with the rights and preferences set forth below.

2. Rank.  The Series A Stock shall be pari passu to the Common Stock.

3. Voting Rights. The holders of outstanding shares of Series A Stock shall be entitled to notice of any shareholders’ meeting and to vote as a single class with the Common Stock upon any matter submitted for approval by the holders of Common Stock. Each share of Series A Stock shall have 25 votes per share.

4. Restrictions on Transfer. Holders of Series A Stock are prohibited from selling, transferring, assigning, or in any way alienating their shares of Series A Stock of the Corporation (“transfer”), or any right or interest in the them, whether voluntarily or by operation of law, or by gift or otherwise, to any person except another holder of Series A Stock. The term “transfer” shall include any sale, transfer, assignment or involuntary transfer made by a holder of Series A Stock, including (without limitation) any transfer or disposition of shares of Series A Stock under judicial order, legal process, execution, attachment, as a result of death of the holder of Series A Stock, or upon enforcement of a pledge, trust, or other security interest or other beneficial interest in the shares of Series A Stock, however arising, and notwithstanding the fact that the pledge, trust, security interest, or other beneficial interest may have initially been granted voluntarily. An involuntary transfer does not include a mere inchoate interest (such as, but not limited to, a dower right or a spousal interest in the appreciation of property) as to which the involuntary transferee has not expressly asserted a right thereto. The term “transfer” does not include the negotiation or signing of an agreement to merge, consolidate, sell all or substantially all of the Corporation’s assets or a

similar transaction to which the Corporation is a party, or the completion of such an agreement following shareholder approval thereof.

5. Dividends. When any dividend or distribution is declared or paid by the Corporation on Common Stock, whether payable in cash, property, securities or rights to acquire securities, the holders of the Series A Stock will be entitled to participate with the holders of Common Stock in such dividend or distribution. At the time such dividend or distribution is payable to the holders of Common Stock, the Corporation will pay to each holder of Series A Stock such holder’s share of such dividend or distribution in an amount equal to the dividend or distribution per share of Common Stock payable at such time multiplied by the number of shares of Common Stock then obtainable upon conversion of such holder’s Series A Stock.

6. Liquidation Rights. Upon any liquidation, dissolution or winding up of the Corporation, the holders of outstanding shares of Series A Stock will be entitled to be paid together with the holders of Common Stock on a pro rata basis with the Common Stock the net proceeds remaining from the liquidation of the Corporation and its assets, and the payment of all indebtedness and any liquidation preference on any securities that rank senior to the Common Stock, based on the number of shares of Common Stock into which the shares of Series A Stock is then convertible as set forth in Section 7 hereof.

7. Conversion Rights.

a. The holder of any shares of the Series A Stock, may convert such shares of Series A Stock in whole, upon written notice to the Corporation by February 15th of each calendar year with conversion to take place on March 1st of each calendar year, subject to the terms set forth below. The Series A Stock may, or shall, be converted into shares of the Corporation’s authorized but unissued Common Stock on the following bases:

i. At the option of the holder, each share of Series A Stock shall be convertible into one share of the Corporation’s Common Stock (the “conversion ratio”).

ii. No partial conversion of preferred shares shall take place. All shares of Series A Stock held by the shareholder shall be converted in whole with no partial conversions to take place.

iii. Upon any conversions on March 1st of each calendar year, any Series A Stock that is converted will be cancelled and not be available for reissuance.

b. Mechanics of Conversion. No fractional shares of Common Stock shall be issued upon the conversion of the Series A Stock. If the number of shares to be issued to the holders of the Series A Stock is not a whole number, then the number of the shares shall be rounded up to the nearest whole number. Before any holder of Series A Stock shall be entitled to convert the same into full shares of Common Stock, and to receive certificates therefor, he shall either (x) surrender the certificate or certificates therefor, duly endorsed, at the office the transfer agent or (y) notify the Corporation that such certificates have been lost, stolen or destroyed and execute an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in

connection with such certificates, and shall give written notice to the Corporation at such office that he elects to convert the same.

c. Adjustments for Subdivisions or Combinations of Common Stock. In the event the outstanding shares of Common Stock shall be subdivided (by stock split, by payment of a stock dividend or otherwise), into a greater number of shares of Common Stock, the conversion ratio of the Series A Stock in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately increased. In the event the outstanding shares of Common Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Common Stock, the conversion ratio in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately decreased.

d. Other Adjustments. If any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (such as a stock dividend), then the Board of Directors of the Corporation will make an appropriate adjustment in the conversion ratio so as to protect the rights of the holders of Series A Stock.

e. Mandatory Conversion. Any transfer of Series A Stock not in accordance with Section 4 hereto shall result in the automatic conversion of all shares of Series A Stock held by the transferring shareholder to shares of Common Stock pursuant to this Section 7 as of the effective date of the non-permitted transfer. The effective date of the non-permitted transfer due to the shareholder’s death is the shareholder’s date of death. This mandatory conversion shall apply regardless of whether the non-permitted transfer was for less than all of the shares held by the transferee shareholder.

8. Severability. If any right, preference or limitation of the Series A Stock set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule, law or public policy, all other rights, preferences and limitations set forth herein that can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall nevertheless remain in full force and effect, and no right, preference or limitation herein shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein.

9. Amendment and Waiver. This Certificate of Designation shall not be amended, either directly or indirectly or through merger or consolidation with another entity, in any manner that would alter or change the powers, preferences or special rights of the holders of Series A Stock so as to affect them materially and adversely without the consent of a majority of the outstanding shares of Series A Stock. Subject to the preceding sentence, any amendment, modification or waiver of any of the terms or provisions of the Series A Stock shall be binding upon all holders of Series A Stock.

10. Replacement. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered Holder shall be satisfactory) of the ownership and the loss, theft, destruction, or mutilation of any certificate evidencing shares of Series A Stock, and in the case of any such loss, theft or destruction upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the Holder is a financial institution or other institutional investor its own agreement shall be satisfactory) or in the case of any such mutilation upon surrender of such certificate, the Corporation, at its expense, shall execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of such Series A Stock represented by such

lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.

11. Notices. Any notice required by the provisions of this Certificate of Designation shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed facsimile if sent during normal business hours of the recipient; if not, then on the next business day; (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt; or (v) when sent by electronic mail (with confirmation of transmission) if sent during normal business hours of the recipient; if not, then on the next business day. All notices to the Corporation shall be addressed to the Corporation’s President at the Corporation’s principal place of business on file with the Secretary of State of the State of Colorado. All notices to shareholders shall be addressed to each holder of record at the address of such holder appearing on the books of the Corporation.

* * * * *

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be executed by Robert B. Mudd, Interim CEO and CFO of the Corporation, this 22nd day of January 2014.

By:         /s/Robert  B. Mudd

Name: Robert B. Mudd

Title:  Interim CEO & CFO

  Document must be filed electronically. Paper documents are not accepted. Fees & forms are subject to change. For more  information or print copies of filed documents, visit www.sos.state.co.us    E-Filed   Colorado Secretary of State Date and Time: 05/01/2013 02:43 PM ID Number: 20081058152   Document number: 20131272364 Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Amended and Restated Articles of Incorporation

filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)

ID number:   20081058152

1.    Enity name:	Southern Hospitality Development Corp.
	(If changing the name of the corporation, indicate name BEFORE the name change)

2.  New Entity name:	Smokin Concepts Development Corporation
(if aplicable)

3.  Use of Restricted Words (if any of these
terms are contained in an entity name, true name of an entity, trade name or trademark stated in this document, mark the applicable box):	o  "bank" or "trust" or any derivative thereof  o   "credit union" o "savings and loan"  o   "insurance", casualty", "mutual", or "surety"

4.   Other amendments, if any, are attached.

5.   If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment states the provisions for implementing the amendment.

6.  If the corporation's period of duration as amended is less than perpetual, state the date on which the period of duration expires:
	(mm/dd/yyyy)

OR

If the corporation's period of duration as amended is perpetual, mark this box:  þ

7.  (Optional) Delayed effective date:	05/03/2013  08:00 AM
	(mm/dd/yyyy)

Notice:

Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the individual's act and deed, or that the individual in good faith believes the document is the act and deed of the person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic statutes, and that the individual in good faith believes the facts stated in the document are true and the document complies with the requirements of that Part, the constituent documents, and the organic statutes.

This perjury notice applies to each individual who causes this document to be delivered to the secretary of state, whether or not such individual is named in the document as one who has caused it to be delivered.

8. Name(s) and address(es) of the individual(s) causing the document to be delivered for filing:
Welter	Welter                             Andrea                                      E.
	(Last) (First) (Middle) (Suffix)
	6400 South Fiddlers Green Circle
	(Street name and number or Post Office information)
	Suite 1000
	Greenwood Village                        CO                    80111
	(City) (State) (Postal/Zip Code)
	United States
	(Province - if applicable) (Country - if not US)

(The document need not state the true name and address of more than one individual. However, if you wish to state the name and addressof any additional individuals causing the document to be delivered for filing, mark this box[ ]  and include an attachment stating the name and address of such individuals.)

Disclaimer:

This form, and any related instructions, are not intended to provide legal, business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time, remains the responsibility of the user of this form. Questions should be addressed to the user's attorney.

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF

SMOKIN CONCEPTS DEVELOPMENT CORPORATION

These Amended and Restated Articles of Incorporation were approved by the directors following the approval of certain amendments by the shareholders of the Corporation.

ARTICLE I

Incorporation

This attachment is incorporated into the foregoing Amended and Restated Articles of Incorporation.

ARTICLE II

Authorized Shares

Section 1: Number. The aggregate number of shares which the Corporation shall have authority to issue is Fifty Million (50,000,000) Common Shares of one class, with unlimited voting rights, all with no par value, and One Million (1,000,000) Preferred Shares, to have such par value, classes and preferences as the Board of Directors may determine from time to time.

Section 2: Dividends. Dividends in cash, property or shares of the Corporation may be paid upon the stock, as and when declared by the Board of Directors, out of funds of the Corporation to the extent and in the manner permitted by law.

ARTICLE III

Preemptive Rights

The holders of the capital stock of this Corporation shall not have the preemptive right to acquire additional unissued shares or treasury shares of the capital stock of this Corporation, or securities convertible into shares of capital stock or carrying capital purchase warrants or privileges.

ARTICLE IV

Cumulative Voting

Cumulative voting of shares of stock of the Corporation shall not be allowed or authorized in the election of the Board of Directors of the Corporation.

ARTICLE V

Provisions for Regulation of the Internal Corporate Affairs

The following provisions are inserted for the management of the business and for the regulation of the internal affairs of the Corporation, and the same are in furtherance of and not in limitation or exclusion of the powers conferred by law.

Section 1: Bylaws. The Board of Directors shall have the power to adopt, alter, amend or repeal, from time to time, such Bylaws as it deems proper for the management of the affairs of the Corporation, according to these Articles and the laws in such cases made and provided.

Section 2: Executive Committee. The Bylaws may provide for designation by the Board of Directors of an Executive Committee and one or more other committees, the personnel and authority of which and the other provisions relating to which shall be as may be set forth in the Bylaws.

Section 3: Place of Meetings. Both Stockholders' and Directors' meetings may be held either within or without the State of Colorado, as may be provided in the Bylaws.

Section 4: Compensation to Directors. The Board of Directors is authorized to make provisions for reasonable compensation to its members for their services as Directors. Any Director of the Corporation may also serve the Corporation in any other capacity and receive compensation therefor in any form.

Section 5: Conflicts of Interest. No transaction of the Corporation with any other person, firm or corporation, or in which this Corporation is interested, shall be affected or invalidated solely by: (a) the fact that any one or more of the Directors or Officers of this Corporation is interested in or is a director or officer of another corporation; or (b) the fact that any Director or Officer, individually or jointly with others, may be a party to or may be interested in any such contract or transaction.

Section 6: Registered Owner of Stock. The Corporation shall be entitled to treat the registered holder of any shares of the Corporation as the owner thereof for all purposes, including all rights deriving from such shares, on the part of any other person, including, but not limited to, a purchaser, assignee or transferee of such shares or rights deriving from such shares, unless and until such purchaser, assignee, transferee or other person becomes the registered holder of such shares, whether or not the Corporation shall have either actual or constructive notice of the interest of such purchaser, assignee, transferee or other person. The purchaser, assignee or transferee of any of the shares of the Corporation shall not be entitled to: (a) receive notice of the meetings of the Shareholders; (b) vote at such meetings; (c) examine a list of the Shareholders; (d) be paid dividends or other sums payable to Shareholders, or (e) own, enjoy or exercise any other property or rights deriving from such shares against the Corporation, until such purchaser, assignee or transferee has become the registered holder of such shares.

Section 7: Conduct of Business. The Corporation may conduct part or all of its business, not only in the State of Colorado, but also in every other state of the United States and the District of Columbia, and in any territory, district and possession of the United States, and in any foreign country, and the Corporation may qualify to do business in any of such locations and appoint an agent for service of process therein. The Corporation may hold, purchase, mortgage, lease and convey real and personal property in any of such locations. Part or all of the business of the Corporation may be carried on beyond the limits of the State of Colorado, and the Corporation may have one or more offices out of the State of Colorado.

Section 8: Action of the Shareholders. If a quorum is present, the affirmative vote of a majority of the votes cast on the subject matter shall be the act of the shareholders, unless the vote of a greater proportion or number or voting by classes is otherwise required by statute or by the Articles of Incorporation. Shareholders holding shares having not less than the minimum number of votes that would be necessary to authorize or take at an action at any meeting at which the requisite number of shares entitled to vote thereon were present and voted may consent, in lieu of a meeting, to such action in writing in accordance with the procedures of the Colorado Business Corporation Act, as then currently in place from time to time.

Section 9: Quorum For Voting. A quorum of Shareholders for any matter to come before any meeting of Shareholders of the Corporation shall consist of one-third of the issued and outstanding shares entitled to vote on the matter, except where a greater number is specifically required by the provisions of the Colorado Business Corporation Act, as then currently in place from time to time.

Section 10: Restrictions on Stock. The Directors shall have the right, from time to time, to impose restrictions or to enter into agreements on behalf of the Corporation imposing restrictions on the transfer of all or a portion of the Corporation's shares, provided that no restrictions shall be imposed on the transfer of shares outstanding at the time the restrictions are adopted unless the holder of such shares consents to the restrictions.

Section 11: Indemnification of Directors. A director of the Corporation shall not be personally liable to the Corporation or to its shareholders for damages for breach of fiduciary duty as a director of the Corporation or to its shareholders for damages otherwise existing for (i) any breach of the director's duty of loyalty to the Corporation or to its shareholders; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (iii) acts specified in Section 7-108-403 of the Colorado Business Corporation Act; or

(iv) any transaction from which the director directly or indirectly derived any improper personal benefit. If the Colorado Business Corporation Act is hereafter amended to eliminate or limit further the liability of a director, then, in addition to the elimination and limitation of liability provided by the foregoing, the liability of each director shall be eliminated or limited to the fullest extent permitted under the provisions of the Colorado Business Corporation Act as so amended. Any repeal or modification of the indemnification provided in these Articles shall not adversely affect any right or protection of a director of the Corporation under these Articles, as in effect immediately prior to such repeal or modification, with respect to any liability that would have accrued, but for this limitation of liability, prior to such repeal or modification.

Section 12: Indemnification. The Corporation shall indemnify, to the fullest extent permitted by applicable law in effect from time to time, any person, and the estate and personal representative of any such person, against all liability and expense (including, but not limited to, attorneys' fees) incurred by reason of the fact that he is or was a director or officer of the Corporation, he is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of, or in any similar managerial or fiduciary position of, another domestic or foreign corporation or other individual or entity or of an employee benefit plan. The Corporation shall also indemnify any person who is serving or has served the Corporation as director, officer, employee, fiduciary, or agent, and that person's estate and personal representative, to the extent and in the manner provided in any bylaw, resolution of the shareholders or directors, contract, or otherwise, so long as such provision is legally permissible.

ARTICLE VI

Purposes

The purposes of the Corporation (through its subsidiaries) are:

1. To develop, own and operate, as a franchise, Southern Hospitality restaurants pursuant to franchise agreements (the “Franchise Documents”) entered into with the franchisor of such concept; and

2. To provide restaurant management services to other business.

For the purposes of the Corporation’s directors’ duties of loyalty, the investment and involvement by any directors and officers in any other business shall be considered outside the scope of the purposes of the Corporation, and not a corporate opportunity. Thus, directors and officers of the Corporation will not be deemed to have usurped a corporate opportunity by personally investing or being involved in other businesses, even if involved in the restaurant industry, so long as such activities are outside the scope of the Franchise Documents. Similarly, the provision of management services to a restaurant by any officer or director shall not be deemed to be a usurpation of a corporate opportunity so long as the officer or director has a personal investment in such restaurant.

EX-10.5

Exhibit 10.5

SHOPPING CENTER LEASE

FOR

1000 South Colorado Boulevard

between

The Robford Company, L.L.C.

a Colorado limited liability company

("LANDLORD") 

and 

The Cheesesteak Connection #4, L.L.C ("TENANT")

Dated: February 17, 2010

SHOPPING CENTER LEASE CONTENTS

ARTICLE 1 - DEFINITIONS		1
1.1	Definitions and Certain Basic Provisions	1
1.2	Monthly Payment	4
1.3	Additional Rent	4
1.4	Construction	4
1.5	Re-measurement	4
ARTICLE 2 - GRANTING CLAUSE		4
ARTICLE 3 - CONSTRUCTION AND ACCEPTANCE OFTHEPREMISES; LANDLORD'S  AND TENANT'S WORK		4
3.1	As-Is Delivery	4
3.2	Tenant's Investigation	4
3.3	Failure to Deliver Possession	5
3.4	Landlord's Work, Condition of Premises and Performance of Work	5
3.5	Opening of Tenant's Store	5
3.6	Patio	6
ARTICLE 4 - MONTHLY PAYMENT		6
4.1	Rent	6
4.2	Payment	6
4.3	Minimum Guaranteed Rental Increases	7
ARTICLE 5 - COMMONAREA		7
5.1	Common Area	7
5.2	Use of Common Areas: Parking	7
5.3	CAM Charges	8
5.4	Gross-up	9
5.5	Proportionate Share	9
5.6	Audit	9
5.7	CAM Exclusions	10
ARTICLE 6 - USE AND CARE OF THE PREMISES		10
6.1	Trade Name	10
6.2	Increased Premiums	11
6.3	No Wholesale	11
6.4	No Waste	11
6.5	Displays	11
6.6	Compliance with Laws	11
ARTICLE 7 - MAINTENANCE AND REPAIR OF THE PREMISES		12
7.1	Landlord's Obligation	12
7.2	Tenant's Obligations	12
7.3	Maintenance Contracts	14
7.4	Landlord's Repair Rights	14
7.5	End of Term	14
ARTICLE 8 - ALTERATIONS		15
8.1	Alterations	15
8.2	Removal of Alterations	16
8.3	Removal of Fixtures	16

8.4	Standard of Alterations	16
8.4	Roof Alterations	16
ARTICLE 9 - LANDLORD'S RIGHT OF ACCESS; USE OF ROOF		16
9.1	Right of Access	16
9.2	Use of Roofs and Walls	16
ARTICLE 10 - SIGNS; STORE FRONTS		17
10.1	Signage	17
10.1	Removal of Signage	17
ARTICLE 11 - UTILITIES		17
11.1	Procurement of Utilities	17
11.2	Utilities	17
11.3	Tenant's Costs	18
11.4	Interruption of Services	18
ARTICLE  12 - INDEMNITY,  PUBLIC  LIABILITY  INSURANCE  AND  FIRE  AND EXTENDED COVERAGE INSURANCE		18
12.1	Indemnification	18
12.2	Insurance	19
ARTICLE 13 - NON-LIABILITY FOR CERTAIN DAMAGES		21
13.1	Waiver	21
13.2	Limitation on Recourse	21
ARTICLE 14 - FIRE AND OTHER CASUALTY		21
14.1	Damage	21
14.2	Restoration	21
14.3	Proceeds	22
14.4	Tenant's Payment	22
14.5	Limitations	22
14.6	Prorations	22
ARTICLE 15 - CONDEMNATION		23
15.1	Condemnation	23
ARTICLE 16 - ASSIGNMENT AND SUBLETTING		24
16.1	By Tenant	24
16.2	By Landlord	27
ARTICLE 17 - PROPERTY TAXES		28
17.1	Tenant's Taxes	28
17.2	Tenant's Proportionate Share	28
17.3	Failure to Pay	29
17.4	Changes in Taxation	29
17.5	Tax Year	29
17.6	Tax Consultant	29
ARTICLE 18 - DEFAULT BY TENANT AND REMEDIES		29
18.1	Event of Default	29
18.2	Right to Cure	30
18.3	Landlord's Remedies	30
18.4	No Surrender	31
18.5	Tenant's Liability	31
18.6	No Duty to Mitigate	32

18.7	Landlord's Self-help Action	32
18.8	Landlord's Default	32
18.9	No Liability	32
18.10	Additional Rights	33
18.11	lnjunctive Relief; Cumulative Remedies	33
ARTICLE 19 - SECURITY DEPOSIT; LANDLORD'S LIEN; MECHANICS LIENS		34
19.1	Security Deposit	34
19.2	Landlord's Lien	34
19.3	Mechanics Liens	35
ARTICLE 20 - HOLDING OVER		36
21.1	Subordination	36
ARTICLE 22 - EFFECT OF SALE		37
23.1	Notice	37
23.2	Parties	38
ARTICLE 24 - LATE CHARGES		38
24.1	Late Charges	38
24.2	Interest	38
ARTICLE 25 - RADIUS RESTRICTIONS		38
25.1	Intentionally Omitted	38
ARTICLE 26 - HAZARDOUS MATERIALS		38
26.1	Definitions	38
26.2	Tenant's Restrictions	39
26.3	Environmental Clean-up	39
26.4	Tenant's Indemnity	39
26.5	Survival	40
ARTICLE 27 - MISCELLANEOUS		40
27.1	Joint Venture	40
27.2	Captions	40
27.3	No Waiver	40
27.4	Holder Notice	40
27.5	Quiet Enjoyment	40
27.6	Entire Agreement	40
27.7	Brokers	40
27.8	Estoppel	41
27.9	Governing Law	41
27.10	Binding	41
27.11	Effectiveness	41
27.12	Attorneys' Fees and Jury Trial	41
27.13	Financial Statements	41
27.14	Landlord's Fees	42
27.15	Force Majeure	42
27.16	Counsel Review	42
27.17	Severability	42
27.18	Rules and Regulations	42
27.19	Tax Credits	42
27.20	Shopping Center Occupancy	43

27.21	Guarantor	43
27.22	Recording	43
27.23	Non-Disclosure	43
ARTICLE 28 - OPTION TO RENEW		43
28.1	Option to Renew	43
ARTICLE 29 - BANKRUPTCY		43
29.1	Deemed Rejection of Lease	43
29.2	Adequate Assurance	44
29.3	Lease Assignments in Bankruptcy Proceedings	44
29.4	Authority	45

EXHIBITS

A Site Plan

B Legal Description of the Shopping Center

C Work Letter

D Rules and Regulations

E Guaranty of Lease

F Restrictions on Use of the Shopping Center

G Direct Payment

SHOPPING CENTER LEASE

This lease (this "Lease") is entered into this 17th day of 2010, by and between Landlord and Tenant hereinafter named.

ARTICLE 1 - DEFINITIONS

1.1 Definitions and Certain Basic Provisions.

(a)	Landlord:	The Robford Company, L.L.C., a Colorado limited liability company
(b)	Landlord's Mailing/ Notice Address:	Attn:   The Robford Company, LLC 314 Founders Park Drive PO Box 2624 Rapid City, SD  57709-2624 Telephone No. (605) 394-3310 Fax No. (605) 341-2558 Electronic Mail Address: jda@nwemanagement.com; davec@nwemanagement.com  dennisk@nwemanagement.com kathyl@nwemanagement. com
(c)	Tenant:	The Cheesesteak Connection #4, LLC
(d)	Tenant's Mailing/ Notice Address:	Attn: James A. Smith 805 S Cove Way Denver, CO 80209 Telephone No. (970) 390-4228 Fax No. (970) 337-7007 Electronic Mail Address: tmlr@aol.com
(e)	Tenant's Trade Name: The Cheesesteak Connection
(f)	Tenant's Address in Shopping Center:	1000 South Colorado Blvd. (suite # 103 or TBD) Glendale, CO 80222

(g)     Premises: Landlord and Tenant agree that the Premises are deemed to be 2,500 Usable Square Feet at the east end-cap of Building "A" (computed from measurements to the exterior of outside walls of the building and to the center of interior walls) at the execution of this Lease, the Premises being shown and outlined on the plan attached hereto as Exhibit A and

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being part of the Shopping Center situated upon the property described in Exhibit B attached hereto. "Shopping Center" shall refer to the property described in Exhibit B, together with such buildings, additions, and other changes as Landlord may from time to time designate as included within the Shopping Center.

(h)   Rentable Square Footage of the Premises: square footage as measured from the outside of the exterior walls to halfway through common interior walls, plus a proportionate share of the common areas of the Building "A." Landlord and Tenant agree that the Rentable Square Footage of the Leased Premises is deemed to be 2,598 square feet (inclusive of the 98 square feet of load factor) at the execution of this Lease, and is the square footage which shall be used for all rental calculations under this Lease. Landlord reserves the right to re-measure and adjust the Rentable Square Footage of the Premises from time to time during the Lease Term should the size or location of the Premises or Building "A" change from the time of execution of this Lease.

(i)   Landlord and Tenant agree that the Gross Rentable Square Footage of the Shopping Center at the execution of this Lease is deemed to be 16,134 square feet. Landlord reserves the right to re-measure and adjust the Gross Rentable Square Footage of the Shopping Center from time to time during the Lease Term should the size or number of the buildings or common areas within the Shopping Center change from that at the time of execution of this Lease.

G)   Landlord and Tenant agree that the Gross Rentable Square Footage of Building "A" at the execution of this Lease is deemed to be 10,732 square feet. Landlord reserves the right to re-measure and adjust the Gross Rentable Square Footage of Building "A" from time to time during the Lease Term should the size of Building "A" change from that at execution of this Lease.

(k)  Tenant's Proportionate Share refers to the percentage that is equal to a fraction, the numerator of which shall be the Rentable Square Footage of the Premises, and the denominator of which shall be the Gross Rentable Square Footage of the Shopping Center. Landlord and Tenant agree that the Tenant's Proportionate Share of expenses at the execution of this Lease is deemed to be 16.1%. Tenant's Proportionate Share shall be adjusted as the Rentable Square Footage of the Premises or the Gross Rentable Square Footage of the Shopping Center changes, for whatever reason, or if, in Landlord's reasonable judgment, Tenant's use of any expense, including but not limited to water, sewer, garbage, natural gas, and electricity, exceeds the Proportionate Share stated above, then in that event, Landlord may adjust Tenant's Proportionate Share as it relates to that specific expense alone.

(1)   Lease Term: 120 months, plus any partial month, if any, in which the Commencement Date occurs, as the same may be extended as provided herein.

(m)  Delivery Date: Upon completion of Landlord's work, described herein under exhibit C, in a reasonably acceptable and workmanlike manner, submission of written notice to Tenant providing delivery of Premises to Tenant and completion of all requested and reasonable punch list items, in accordance with exhibit C, and subject to the provisions set forth in Section 3.3 below.

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(n)Commencement Date: The first to occur of: (a) the date on which Tenant opens all or a portion of the Premises for business to the public; or (b) ninety (90) days following the Delivery Date, as extended pursuant to Section 3.3 below.

(o)      Expiration Date: The last day of the 120th month of the Lease Term.

(p)Minimum Guaranteed Rental:

TERM	RATE PER RENTABLE S.F. PER YR	MONTHLY BASE  RENT	ANNUAL  BASE RENT
FIRST LEASE TERM	$36.00	$7,794.00	$93,528.00

(q)     Initial Common Area Maintenance Charge, Initial Insurance Payment and the Initial Tax Payment: $1,732.00 per month ($8.00/Rentable Square Foot./yr.) commencing upon the Delivery Date as set forth in Article 1.1 (m) above.

(r)Security Deposit:  Two month's base rent, or $15,588.00, due upon mutual execution of this Lease, subject to adjustment as set forth in Section 19.1 hereof.

(s)Permitted Use: Tenant will construct and operate a quick-serve restaurant whose primary business is for the preparation and sale for consumption on-premises and/or off- premises of sandwiches and beverages, and for no other purpose.

(t)Exclusive Use: Tenant shall have  the exclusive right to operate a restaurant whose "primary business" is  the service of sandwiches (the "Exclusive Use"); provided, however, this Exclusive Use shall be applicable only so long as the following conditions are met: (i) there is no uncured event of default by Tenant, and (ii) Tenant has not sublet or assigned more than 25% of the Premises, and (iii) Tenant is using the Premises for the Exclusive Use. This Exclusive Use provision shall not be deemed to restrict any existing tenants as of the date of this Lease, nor shall it restrict their successors or assigns. This provision shall not be deemed to restrict Landlord from entering into leases for the Exclusive Use with tenants that have occupancy dates during the last three (3) months of the Term (as it may be extended) or thereafter. For the purpose of this Lease, "primary business" is defined as more than ten percent 10% of a tenant's annual gross revenue from food sales derived from such Exclusive Use.  Any Shopping Center tenant shall be permitted to use its premises for the Exclusive Use if such use is not deemed its primary business as defined above. Landlord and Tenant agree that no part of the Premises shall be used for the preparation and/or sale of (a) frozen yogurt or soft serve dessert items, (b) cereal and (c) blended beverages containing yogurt or ice cream.

(u)     Landlord's Broker: Fuller Real Estate

(v)     Tenant's Broker: David Hicks Lampert

(w)     Guarantor(s): Jim Smith, as set forth in Exhibit E to this Lease

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1.2Monthly Payment. Monthly Payment is defined to be the total sum of Tenant's monthly obligations for the payment of: (a) the Minimum Guaranteed Rental; (b) the Common Area Maintenance Charge; (c) the Insurance Payment; and (d) the Tax Payment; as all such sums may be adjusted herein.

1.3Additional Rent. Any amounts which  this Lease requires Tenant to pay in addition to the Monthly Payment.

1.4Construction. Each of the foregoing definitions and basic provisions shall be construed in conjunction with and limited by references thereto in other provisions of this Lease.

1.5Re-measurement. In the event that the size of the Shopping Center or it common areas changes and Landlord elects to re-measure and adjust the square footage of any areas of the Shopping Center, the Tenant's Proportionate Share of Common Area Maintenance Charges, Insurance Payments and Tax Payments and any other charges herein which are based upon the square footages of such areas shall be recalculated based on such adjusted square footages.

ARTICLE 2 - GRANTING CLAUSE

In consideration of the obligation of Tenant to pay rent and other charges as herein provided and in consideration of the other terms, covenants and conditions hereof, Landlord hereby demises and leases to Tenant, and Tenant hereby takes from Landlord, the Premises, TO HAVE AND TO HOLD the Premises for the Lease Term, all upon the terms and conditions set forth in this Lease.

ARTICLE 3 - CONSTRUCTION AND ACCEPTANCE OF THE PREMISES; LANDLORD'S AND TENANT'S WORK

3.1As-Is Delivery. Except as otherwise set forth in Paragraph 1.l(m) above, Tenant takes the Premises in their "AS-IS" condition as of the date Landlord delivers possession of the Premises to Tenant. Tenant acknowledges that Tenant is not relying upon any representations or warranties made by Landlord or Landlord's agents or employees as to the suitability or fitness of the Premises for the conduct of Tenant's business or for any other purpose. Tenant acknowledges that neither Landlord nor its agents or employees has agreed to undertake any alterations or construct any tenant improvements to the Premises except as expressly provided in this Lease

3.2     Tenant's Investigation. Tenant hereby represents and warrants to Landlord that Tenant has made its own investigation and examination of all the relevant data relating to or affecting the Premises and is relying solely on its own judgment in entering into this Lease. EXCEPT AS OTHERWISE SET FORTH ABOVE IN PARAGRAPH 1.1(m), LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE CONDITION OF THE PREMISES, THE SHOPPING CENTER, OR THE LAND, THE LOCATION, USE, ZONING, DESCRIPTION, DESIGN, MERCHANTABILITY, SUITABILITY, OR FITNESS FOR USE FOR ANY PARTICULAR PURPOSE, CONDITION, OR DURABILITY, OR THE QUALITY OF THE MATERIAL OR WORKMANSHIP IN THE SHOPPING CENTER OR THE PREMISES. ALL INCIDENT TO THOSE MATTERS WILL BE BORNE BY TENANT. LANDLORD

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WILL HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT TO ANY DEFECT OR DEFICIENCY OF ANY NATURE IN THE PREMISES OR ANY PORTION OF THE PREMISES OR A PORTION OF THE SHOPPING CENTER, WHETHER PATENT OR LATENT. THE PROVISIONS OF THIS SECTION 3.2 ARE A PRINCIPAL INCENTIVE FOR LANDLORD TO ENTER INTO THIS LEASE AND HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES OR ANY PORTION OF THE PREMISES, WHETHER ARISING UNDER APPLICABLE LAW NOW IN EFFECT OR IN EFFECT AFTER THE DATE  OF THIS LEASE. TENANT ACKNOWLEDGES AND REPRESENTS THAT NO SUCH REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE  AND ACCEPTS THE PREMISES IN ITS PHYSICAL CONDITION ON THE DELIVERY DATE.

3.3Failure  to  Deliver  Possession. If for any reason, Landlord cannot  deliver possession of the Premises to Tenant on the Delivery Date, this Lease will not be void or voidable, and Landlord will not be liable to Tenant for any resultant loss or  damage. Notwithstanding anything herein to the contrary, if Landlord has not delivered possession of the Premises on or before the date of June 15, 2010 (the "Drop-Dead Date"), then Landlord or Tenant shall have the right to terminate this Lease and thereafter the parties shall have no further rights or obligations to each other. In the event Landlord delivers the Premises to Tenant on a date other than the Delivery Date as set forth in Section l.l (m), the actual date of delivery of the Premises to Tenant shall be the "Delivery Date" for the  purpose of determining the Commencement Date in accordance with Section 1.1(n)

3.4Landlord's Work, Condition of Premises and Performance of Work. All rights of Tenant under this section will be subject to the requirements of all applicable building codes, zoning requirements, and federal, state, and local laws, rules and regulations. Construction of the Premises shall be in accordance with the Work Letter attached hereto as Exhibit C and incorporated by reference herein for all purposes. Upon termination of this Lease, at Landlord's option, Tenant will repair and restore the Premises to its former condition, at Tenant's expense, or any such improvements, additions, or alterations installed or made by Tenant, except Tenant's trade fixtures, shall become part of the Premises and the property of the Landlord. Tenant may remove its trade fixtures at the termination of this Lease provided Tenant is not then in default and provided further that Tenant repair any damage caused by such removal. Tenant shall be permitted entry onto the Premises from and after Landlord delivers possession of the Premises to tenant, but prior to the Commencement Date, for the purpose of installing Tenant's fixtures and for any other purpose permitted by Landlord.  Such early entry will be at Tenant's sole risk and subject to ail of the terms and provisions of this Lease as though the Commencement Date had occurred, including Tenant's obligation to provide insurance as set forth in Article 12, except for the payment of the Monthly Payment, which will commence on the Commencement Date.

3.5       Opening of Tenant's Store. Commencing on the Delivery Date, Tenant shall promptly perform, at its own cost and expense, all of Tenant's Work, shall equip the Premises with trade fixtures and all personal property necessary or proper for the operation of Tenant'sbusiness, and shall open for business as soon thereafter as possible, but in no event later than

5

certificate of occupancy and/or other governmental sign-off or approval with respect to Tenant's Work prior to opening for business in the Premises.

3.6Patio. Tenant shall have the exclusive right to use that certain outdoor seating area as outlined on Exhibit A, attached hereto and incorporated herein by this reference ("Patio Area"). To the extent permitted by applicable law, Tenant shall be entitled to place furniture, umbrellas and other serving fixtures on the Patio Area for the use of their customers, subject to the prior approval of Landlord. Tenant shall place trash receptacles in such areas of the Patio Area as Landlord designates from time to time. Tenant shall empty such receptacles as reasonably required, but no less often than once a day. All property placed on the Patio Area by Tenant shall be high-quality, maintained in good condition, in keeping with the design of the Shopping Center and subject to Landlord's prior written approval. Landlord shall have no obligation to provide maintenance to the Patio Area. Tenant shall be responsible, at Tenant's sole cost and expense, to maintain the Patio Area and all of its personal property located thereon in a good, neat, clean, sanitary and safe condition, including snow removal, and shall keep the Patio Area free from trash, rubbish and dirt caused by its customers. Tenant's use of the Patio Area shall be subject to all terms and conditions of the Lease as if the Patio Area were a part of the Premises (including, without limitation, all insurance, liability and indemnification provisions of the Lease). In addition and without limitation to any other rights and remedies available to Landlord under this Lease, at law or in equity, if Tenant fails to adequately and timely perform its maintenance obligations hereunder, upon reasonable notice Landlord may perform any or ail of such obligations on behalf of Tenant and Tenant agrees to reimburse Landlord for the actual cost incurred thereof within ten (10) days after receipt of an invoice from Landlord

ARTICLE 4 - MONTHLY PAYMENT

4.1Rent. The Monthly Payment shall accrue hereunder with respect to the Premises from the Commencement Date and shall be payable to Landlord by wire transfer in accordance with the provisions of Exhibit G attached hereto, or any in any other manner or at any other address which Landlord may from time to time designate, without demand and without setoff or deductions, for any reason whatsoever, except as herein provided.

4.2Payment. Tenant shall pay to Landlord the Minimum Guaranteed Rental in monthly installments in the amount specified in Section 1.1 above. The first such monthly installment shall be due and payable upon execution of this Lease, and will be credited towards Tenant's first month's rent, and subsequent installments shall be due and payable on or before the first day of each succeeding calendar month during the Lease Term; provided, that if the Commencement Date is a date other than the first day of a calendar month, there shall be due and payable on or before such date as the Minimum Guaranteed Rental for the balance of such calendar month . a sum equal to that proportion of the Minimum Guaranteed Rental due for the first full calendar month, multiplied by a fraction the numerator of which is the number of days from the Commencement Date to the end of the calendar month during which the Commencement Date shall fall and denominator which is the total number of days in such month.

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4.3Minimum Guaranteed Rental Increases. Commencing with the fifth anniversary of the Commencement Date, and every subsequent fifth anniversary thereof,  inclusive of applicable Renewal Terms (as defined in Section 28.1), the Minimum Guaranteed Rental shall be adjusted by an increase equal to twelve and one half percent (12.5%) of the Minimum Guaranteed Rental for the immediately preceding year of the Lease Term.

ARTICLE 5 - COMMON AREA

5.1Common Area. The "Common Area" is that part of the Shopping Center designated by Landlord from time to time for the common use of all tenants, including among other facilities, parking areas, sidewalks, roofs, landscaping, curbs, loading areas, private streets and alleys, lighting facilities, hallways, malls, restrooms, as well as all other areas and improvements of the Shopping Center not leased or intended to be leased to other tenants, all of which shall be subject to Landlord's sole management and control and shall be operated and maintained in such manner as Landlord, in its sole discretion, shall determine. Landlord reserves the right to allow pedestrian access by the general public through the common areas and the right to change from time to time the dimensions and location of the Common Area as well as the location, dimensions, identity and type of any buildings shown on Exhibit A, and to acquire other out-lots or buildings, construct additional buildings or additional stories on existing buildings or other improvements in the Shopping Center, and to include the same as part of the Shopping Center or the Common Area, or both, as the case may be. Landlord may also eliminate buildings from the plan shown on Exhibit A provided that such activities do not materially interfere with access to the Premises by Tenant's employees and visitors.

5.2       Use of Common Areas: Parking.

(a)            Tenant shall have the right, nonexclusive and in common with others, to use the Common Areas for the purposes for which the same were designed and to use the exterior paved driveways and walkways of the land for vehicular and pedestrian access to the Shopping Center. Tenant shall also have the right, non-exclusive and in common with other tenants of the Shopping Center and Landlord, to use the designated free parking areas of the land, if any, for the parking of automobiles and other vehicles of Tenant and its employees and business visitors; provided, that Landlord shall have the right to restrict or limit Tenant's  utilization of such parking areas in the event the same become overburdened and in such case to  allocate on a proportionate basis or assign parking spaces among Tenant and the other tenants of the Shopping Center.Landlord shall have the right to establish reasonable regulations, applicable to all tenants, governing the use of or access to any interior or exterior Common Areas

(b)Tenant covenants that under no circumstances shall Tenant allow freight, merchandise, supplies, vehicles, vendor's delivery trucks, construction materials, trade fixtures or other goods delivered to or from the Premises to be stored on, accumulate on, or obstruct the entrances of the Shopping Center or the roads, trash bay, sidewalks, driveways or parking areas within the Shopping Center. A violation or violations of this sub-paragraph shall constitute a material breach of this Lease.

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(c)Tenant shall not perform or permit work to be done on any Common Areas, including but not limited to, the roads, sidewalks, driveways, parking areas, landscaped areas or any other exterior areas within the Shopping Center unless expressly approved in writing by Landlord in Landlord's sole and absolute discretion. As used herein "work" includes, but is not limited to, assembly, construction, mechanical work, painting, drying, layout, cleaning or repair of goods or materials.

5.3     CAM Charges.

Tenant agrees to pay as an additional charge each month its Proportionate Share of all costs of operating, maintaining, repairing and replacing the Common Areas in a manner deemed by Landlord appropriate, in Landlord's sole discretion ("Common Area Maintenance Charges" or "CAM"). Included among the costs and expenses which constitute CAM, but not limited thereto, shall be, at the option of Landlord, all costs and expenses of protecting, operating, managing, repairing, replacing, repaving, resealing, striping, lighting, cleaning, sweeping, painting, insuring (including, but not limited to, fire and extended coverage insurance on Common Areas, insurance protecting Landlord against liability for personal injury, death and property damage, business income, workers' compensation insurance, and any other insurance Landlord deems reasonable), removing of snow, ice and debris, trash removal (except for trash receptacles which are required to be maintained by the tenants for their respective premises or that are Tenant's sole responsibility), police protection and security and security patrol (provided that Landlord shall have no obligation to provide such services), fire  protection, regulating traffic, inspecting, repairing and maintaining of machinery and equipment used in the operation of the Common Areas, including heating, ventilating and air conditioning machinery and equipment, vehicles used in connection with operation, management or maintenance, cost and expense of inspecting, maintaining, repairing, replacing and cleaning water lines and storm and   sanitary drainage systems, sprinkler  and other fire protection systems, life safety and access systems; mechanical, electrical, gas, water, plumbing, telephone and irrigation systems, cost and expense of installing, maintaining, repairing and replacing the interior common area of the Shopping Center and the exterior of the building in or on the Shopping Center, including, but not limited to floors, non-structural elements of the roofs (including the roof membrane), skylights, walls, stairs and exterior/interior signs (including, without limitation, directional signs, sign pylons, markers and other lines), pest and/or termite control; cost and expense of installing, maintaining and repairing burglar or fire alarm systems in or on the Shopping Center, if installed, cost and expense of all landscaping and shrubbery,  all charges for utility services (excluding those charges which are separately metered to the tenants of the Shopping Center or that are Tenant's sole responsibility), amounts paid to contractors and subcontractors for work or  services performed in connection with any of the foregoing; charges or assessments of any association to which the Shopping Center is subject; total costs of compensation and benefits of personnel to implement the services referenced herein, legal, accounting and consulting fees and expenses (including, without limitation, permits and fees for promotional events), all alterations, additions, improvements and other capital expenditures for the Shopping Center (a) in order to conform to changes subsequent to the date of this Lease in any laws, ordinances, rules, regulations or orders of any applicable governmental authority, (b) which are intended as a cost or labor saving device or to effect other economies in the operation of the Shopping Center, or (c) which are reasonably determined by Landlord to be necessary or appropriate for the operation the Shopping Center, subject to amortization. of such costs at a market rate of interest over the

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useful life thereof, as determined by Landlord; and persona !property taxes, licenses and permits, overhead costs, and management fees for the operation and maintenance of the Shopping Center; During the Lease Term, Tenant shall pay to Landlord on the first day of each month concurrently with the monthly Minimum Guaranteed Rental and for every month thereafter, 1/12th of the amount of such CAM estimated by Landlord for that particular year, as adjusted from time to time, in advance, to be due from Tenant. . Within a reasonable time after the close of each calendar year, Landlord shall give Tenant a statement (the "Statement") of the year's CAM and the total amount of the CAM which is Tenant's obligation, based on Tenant's Proportionate Share, as determined from time to time by Landlord. If such year's CAM is different than the estimated amount paid by Tenant, Tenant shall pay Landlord or Landlord shall credit Tenant, as applicable, within 30 days of the date of the Statement, Tenant's Proportionate Share which has either (1) not been paid by Tenant or (2) been overpaid by Tenant pursuant to the estimate. The estimate for Tenant's Proportionate Share of CAM as of the Delivery Date is $8.00 per square foot of the Premises or $1,732.00 per month. Following the first full calendar year, controllable CAM charges, (excluding but not limited to real estate taxes, insurance, utilities and snow and ice removal, which by their nature are not controllable expenses) shall not increase by more than five percent (5%) per year on a non-cumulative basis. CAM charges shall be paid monthly until such time as Landlord, in writing, reasonably adjusts the estimated CAM pursuant to this Article5. Notwithstanding anything to the contrary contained in this Lease, Landlord's failure to provide a reconciliation of CAM shall in no way release Tenant from its obligation to pay its Proportionate Share of CAM, or constitute a waiver of Landlord's right to assess and collect for CAM from Tenant in accordance with this section.

5.4     Gross-up. If the Shopping Center is less than ninety-five percent (95%) occupied at any time during the term of this lease, the CAM for that period may be grossed up to include all additional costs and expenses of operation, management, insuring, securing, and maintenance of the Property which Landlord determines that it would have paid or incurred during such period if the Shopping Center had been ninety-five percent (95%) occupied. The percent of occupancy of the Shopping Center will be determined based upon the actual number of rentable square feet of the Shopping Center that is under lease, divided by the gross rentable square feet of the Shopping Center. This gross up provision applies only to variable costs directlyattributable to Tenant's occupancy and gross rent levels.

5.5   Proportionate Share. For purposes of calculating CAM, Tenant's ProportionateShare shall be that percentage stated in Article 1.1. Notwithstanding the foregoing, if any other tenant or occupant of the Shopping Center pays the cost of any service or item which is included in CAM directly, then the cost paid by such tenant or occupant as evidenced by a paid receipt shall be deducted from the CAM total cost before computing Tenant's Proportionate Share.

5.6   Audit. Tenant shall have the right, at Tenant's sole cost and expense, for a period of 60 days following receipt of the Statement, to audit the Landlord's records of CAM, provided, that all the following criteria are met: (a) before conducting any audit, Tenant must pay the full amount of any CAM due, and must not be in default of any other provisions of this Lease; (b) in conducting the audit, Tenant must utilize an independent certified public accountant ("CPA") experienced in auditing shopping center records, which CPA will be subject to Landlord's

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such hours that Landlord may deem suitable that shall not interfere with the conduct of business at Landlord's main offices or such other site as Landlord may determine; (d) upon receipt thereof, Tenant will deliver to Landlord a copy of the audit report and all accompanying data; (e) Tenant will keep confidential all agreements involving the rights provided in this section and the results of any audit conducted hereunder, and shall cause the CPA conducting said audit to keep information confidential; (f) Tenant shall not conduct an audit more often than once each calendar year; (g) Tenant's audit rights shall not cover a period of time in excess of the one calendar year immediately preceding the audit; and (h) Tenant shall not use a contingency fee based auditor. Tenant's failure to conduct an audit within 60 days after receipt of the Statement shall be deemed conclusive that Landlord's assessments of CAM are correct. If such audit shall reveal that Landlord has overstated Tenant's Proportionate Share for such Year by 5% or more, Landlord shall pay ail of Tenant's reasonable costs and expenses of such audit. Any amount found by such audit to be due by Tenant shall be immediately paid from Tenant to Landlord, and any amount found by such audit to be due by Landlord to Tenant shall be credited against the next payments of CAM due by Tenant until credited in full.·

5.7CAM Exclusions. Notwithstanding the foregoing, CAM shall not, however, include (a) interest and amortization on mortgages and other debt costs; (b) improvements, repairs or alterations to spaces leased to other tenants; (c) the cost of providing any service directly to and paid directly by, any tenant; (d) costs of items to the extent Landlord receives reimbursement from insurance proceeds; (e) any duplicative charges or expenses; or (f) legal fees incurred in leasing or in disputes with other tenants.

ARTICLE 6 - USE AND CARE OF THE PREMISES

6.1Trade Name. The Premises may be used only for the Permitted Use, and for no other purpose. Notwithstanding the foregoing, Tenant shall not be entitled to use the Premises for any uses listed on Exhibit F, attached hereto. Tenant may not change the Permitted Use of the Premises except with the express prior written consent of the Landlord, which may be granted or denied in Landlord's sole discretion. Tenant shall pay all of Landlord's costs and expenses incurred in determining whether to consent to a change of use, including but not limited to, costs of reviewing and approving any related documentation and reasonable attorneys' fees. The consent of Landlord to one change of use shall not constitute a waiver of the necessity of Tenant to again obtain Landlord's consent to any subsequent change of use. Any material violation of this use shall be deemed a default by Tenant under this Lease. Tenant shall use in the transaction of business in the Premises the Trade Name specified in Section 1.1 above and no other tradename without the prior written consent of Landlord. Tenant shall not at any time leave thePremises vacant  (closed for longer than a one week time period), but shall in good faith continuously throughout the Term of this Lease conduct and carry on in the entire Premises the type of business for which the Premises are leased. Subject to a standard of reasonableness,Tenant shall operate its business with a complete line of full selection and sufficient stock of firstclass merchandise of current style and type, with attractive displays and in an efficient, high class and reputable manner so as to produce the maximum amount of sales from the Premises, and shall, except during reasonable periods for repairing, cleaning and decorating, keep the Premisesopen to the public for business with adequate and competent personnel in attendance on all days and during all hours (including evenings) established by Landlord from time to time as store hours for the Shopping Center, and during any other days and hours when the Shopping Center

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generally is open to the public for business, except to the extent Tenant may be prohibited from being open for business by applicable law, ordinance or governmental regulation. Tenant shall maintain an adequate number of capable employees and sufficient inventory to run its business in a first-class manner. Violation of this Section must be substantial and continuous in order to be deemed a material breach of this Lease. Tenant's local advertising shall refer to the business conducted at the Premises and shall mention the address of the Premises and the name of the Shopping Center. Tenant acknowledges that the identity of Tenant, the specific character of Tenant's business, the anticipated use of the Premises and the relationship between such use and other uses within the Shopping Center have been material considerations to Landlord's entry into this Lease. Any material change in the use of Tenant's business without the prior written consent of Landlord shall constitute an event of default under this Lease.

6.2Increased Premiums. Tenant shall not keep anything within the Premises for any purpose which increases the insurance premium cost or invalidates any insurance policy carried on the Premises or other part of the Shopping Center. Upon demand, Tenant shall pay as Additional Rent any increased premium cost due to Tenant's use or occupation of the Premises. All property kept stored or maintained within the Premises by Tenant shall be at Tenant's sole risk.

6.3No Wholesale. Tenant shall not conduct within the Premises any fire, auction or bankruptcy sales or operate within the Premises a "Wholesale" or "factory outlet" store, a cooperative store, a "second-hand" store, a "surplus" store or a store commonly referred to as "discount house." Tenant shall not advertise that it sells products or services at a "discount," "cut-price," or "cut-rate" prices. Tenant shall not: (a) permit any objectionable or unpleasant odors to emanate from the Premises, (b) place or permit any radio, television, loudspeaker or amplifier on the roof or outside the Premises or where the same can be seen or heard from outside the Shopping Center or in the Common Area, (c) place an antenna, awning or other projection on the exterior of the Premises, (d) solicit business or distribute leaflets or other advertising material in the Common Area, (e) or take any other action which would constitute a nuisance or would disturb or endanger other tenants of the Shopping Center, or (f) unreasonablyinterfere with other tenants' use of their respective premises, or (g) do anything which according to a reasonable standard would tend to injure the reputation of the Shopping Center.

6.4        No Waste. Tenant shall take good care of the Premises and keep the same free from waste at all times. Tenant shall keep the Premises and sidewalks, service ways and loading areas adjacent to the Premises neat, clean and free from dirt, rubbish, insects and pests at alltimes, and shall store all trash and garbage within the Premises, or within areas designated by Landlord.

6.5Displays. Tenant shall maintain all display windows in a neat, attractive condition, and shall keep all exterior electric signs in front of the Premises lighted from dusk until dawn every day, including Sundays and holidays.

6.6Compliance with Laws. Tenant shall procure, at its sole expense, any permits and licenses required for the transaction of business in the Premises and otherwise comply with all applicable laws, ordinances and governmental regulations concerning the use and operation of the Premises; provided, that such compliance does not require alteration of the Premises, except

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where such alteration is dictated by the applicable authority as a result of Tenant's particular use of the Premises.

ARTICLE 7 - MAINTENANCE AND REPAIR OF THE PREMISES

7.1     Landlord's Obligation. Subject to reimbursement by Tenant pursuant to Article 5 hereof, Landlord shall keep, or cause to be kept, the foundation, the exterior walls (except store fronts, plate glass windows, doors, door closure devices, window and door frames, molding, locks and hardware, and that portion of the sidewalk directly adjacent to Tenant's storefront including snow removal therefrom, all of which are Tenant's responsibility and Tenant's sole expense), the roof of the Premises and structural components of the building in good repair, except for damage due to the negligence, acts or omissions of Tenant, its agents, employees, subtenants, licensees, invitees and concessionaires, which repairs shall be made by Tenant, at Tenant's sole expense. In the event that the Premises should become in need of repairs required to be made by Landlord hereunder, Tenant shall give prompt written notice thereof to Landlord, and Landlord shall commence required repairs as soon as reasonably practicable. This section shall not apply in case of damage or destruction by fire or other casualty or condemnation or eminent domain or force majeure, in which event the obligations of Landlord shall be controlled by Articles 14 and 15. Except as otherwise provided in this section, Landlord shall not be obligated to make repairs, replacements or improvements of any kind upon the Premises, or to any equipment, merchandise, stock in trade, facilities or fixtures therein, all of which shall be Tenant's responsibility, but Tenant shall give Landlord prompt written notice of any accident, casualty, damage or other similar occurrence in or to the Premises or the Common Area of which Tenant has knowledge. Landlord's costs and expenses to comply with this section may be included in CAM. Notwithstanding anything to the contrary contained herein, Landlord's obligation hereunder is limited to repairs specified in this Section 7.1 only, and Landlord shall have no liability for any damages or injury arising out of any condition or occurrence causing a need for such repairs unless such damage or injury occurred as a result of the gross negligence of Landlord, its agents, employees or assigns.

7.2   Tenant's Obligations.

(a)            Tenant, at its sole cost and expense, shall at all times keep the Premises (including all entrances and vestibules) and all partitions, windows and window frames and moldings, signs, glass, doors, door openers, fixtures, equipment and appurtenances thereof (including lighting, electrical, plumbing, heating, ventilating and air conditioning fixtures and systems (the "HVAC") servicing the Premises exclusively and any other mechanical equipment and  appurtenances serving the Premises exclusively), and all other parts of the Premises not required herein to be maintained by Landlord, in good order, condition and repair, clean (including redecorating), orderly, sanitary and safe, damage by ordinary wear and tear and unavoidable casualty excepted (including, but not limited to, doing such things, at Tenant's sole cost and expense, as are necessary to cause the Premises to comply with the applicable laws, ordinances, rules, regulations, directions, requirements and orders of governmental and public bodies and agencies which are now in force or which may hereafter be in force, which shall impose any duty upon Landlord or Tenant with respect to the use, occupation or alteration of the Premises, such as, but not limited to, OSHA and ADA). Tenant shall furnish, maintain and

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replace all electric light bulbs, ballasts, tubes and tube casings within the Premises and serving the Patio.

(b)        Tenant shall arrange for the regular pickup of such trash and garbage at Tenant's expense. The size, design and color of any receptacles may be prescribed by Landlord. Receiving and delivery of goods and merchandise, and removal of garbage and trash, shall be made only in the manner and areas prescribed by Landlord. All of Tenant's refuse and other waste materials shall be segregated by category of waste in accordance with such regulations as Landlord may from time to time adopt. Notwithstanding anything to the contrary contained in this Lease, Landlord may, at its sole option, arrange for collection of all trash and garbage in the Shopping Center and should Landlord exercise such election, Tenant's Proportionate Share of the cost thereof will be part of the CAM. Tenant shall not operate an incinerator or hum trash or garbage within the Shopping Center. Tenant shall, at its sole cost and expense, provide its own janitorial service.

(c)        Tenant shall maintain in a clean condition its signs, metal work, doors and the interior and exterior of all windows in the Premises. In the event Landlord determines that windows for which Tenant is responsible are not being so maintained, it shall have the right to clean the same or cause the same to be cleaned at Tenant's expense. Tenant, shall be responsible for the maintenance, repair and restoration (including replacement, if necessary) of any windows or other glass surfaces within the Premises. Tenant shall remove any graffiti from the Premises or the Patio Area within forty-eight (48) hours from the occurrence of such graffiti, and shall repair any damage caused by vandalism to the Premises or Patio Area within ten (10) days after the occurrence of such damage.

(d)      Tenant shall be responsible for the cleaning and maintenance of any grease trap serving the Premises and shall enter into, and furnish Landlord a copy of upon request, a grease trap cleaning contract reasonably acceptable to Landlord. Any grease-hood ventilation equipment in the Premises shall include fire protection devices approved by Landlord and a fine pre-filter and activated charcoal filters or their equivalent. All kitchen ventilating equipment shall be so operated and maintained as to prevent the emission of odors and smoke from the Premises, and if the exhaust requirements of Tenant's use exceed the capacity of the kitchen ventilating equipment, Tenant shall install and use an electrostatic precipitator or comparable state of the art equipment to achieve the requisite standard of emission control, as determined by Landlord, so that no such emissions shall enter into the Shopping Center's air conditioning system or be discharged into any other vents or flues of the Shopping Center or annoy any of the tenants of the Shopping Center or adjacent properties. The design, location and installation of such equipment shall be subject to Landlord's approval. The discharge of any fumes, vapors and odors, which by law or by rule or regulation of any department or agency having jurisdiction must be discharged into a separate stack or flue, will not be permitted unless Tenant, at Tenant's sole expense, shall provide for such discharge in a proper manner to the outside air if legally permissible and if not legally permissible, then in some other lawful manner. Tenant shall not discharge or permit to be discharged any acids, vapors or other materials into the waste lines, vents or exterior surfaces of the Shopping Center which will damage them. The discharge of fumes, vapors and odors will only be permitted on the Shopping Center exterior at Shopping Center mechanical room floors and only at such locations on these floors where space and

(ventilation capacity is available without contaminating the intake or other mechanical systems.

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If Landlord so elects, Tenant shall enter into maintenance and service contracts for the filter and exhaust elements of the heat, ventilating and air conditioning equipment with maintenance and service companies approved by Landlord, and Tenant shall not terminate or amend the contracts without Landlord's prior approval, which approval shall not be unreasonably withheld.

(e)     Tenant shall install and maintain an impervious membrane in the floor areas of the kitchen, dishwashing, bar and restroom areas in the Premises and shall otherwise take such action and conduct its operations in such a manner that no liquid seeps from the Premises to the space of any other tenant or to any other portion of the Shopping Center. Tenant shall cause to be maintained, at its expense and in good operating condition and repair, all grease traps and other equipment installed in the Premises for kitchen waste disposal. If Landlord determines in its reasonable judgment that such equipment is not being so maintained, Tenant shall retain the services of Landlord or a maintenance company retained by Landlord to perform such maintenance and Tenant shall reimburse Landlord for the cost thereof upon demand.

7.3      Maintenance Contracts. Landlord may, at Landlord's sole discretion, enter into a mechanical system inspection contract with a reputable service company, and Tenant shall pay its Proportionate Share of the costs of said service contract. Tenant shall pay its Proportionate Share of all costs of any replacements or repairs resulting from determinations made by the inspection service.

Landlord may, in its sole discretion, require Tenant to enter into a regularly scheduled preventive maintenance/service contract with a maintenance contractor for servicing the HVAC equipment within the Premises. The maintenance contractor must be approved by Landlord. The service contract must include all services suggested by the equipment manufacturer within the operation/maintenance manual and must become effective within 30 days of notification from landlord that the HVAC contract shall be Tenant's responsibility. A copy of the contract is to be delivered to Landlord within the 30-day period. Should Tenant fail to enact such maintenance contract, Landlord may do so on Tenant's behalf, and Tenant shall pay Landlord upon demand such associated costs plus fifteen percent (15%). Within the thirty (30) day period preceding

move-out by Tenant, Tenant shall have the systems and equipment checked and serviced to ensure proper functioning and shall furnish Landlord satisfactory proof thereof upon request.

7.4     Landlord's Repair Rights. If Tenant refuses or neglects to make repairs or to maintain the Premises, or any part thereof, in a manner reasonably satisfactory to Landlord, Landlord shall have the right, but not the obligation, upon giving Tenant written notice of its election to do so, to make such repairs or perform such maintenance on behalf of, and for the account of, Tenant. Such work shall be paid for by Tenant, as Additional Rent, promptly upon receipt of a bill therefore, with a 15% administration charge added to the total.

7.5     End of Term. At the end of this Lease, or upon Landlord's exercise of its right, upon an event of default, to repossess the Premises without terminating this Lease, Tenant will promptly quit and surrender the Premises broom-clean, in good order and repair, ordinary wear and tear excepted, and shall surrender all keys for the Premises to Landlord and shall inform Landlord of all combinations on locks, safes and vaults, if any, in the Premises. Upon move-out by Tenant, should the Premises require any repairs which are the responsibility of Tenant hereunder, Landlord shall have the right to make such repairs at Tenant's sole cost. If Tenant is

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not then in default, Tenant may remove from the Premises any trade fixtures, equipment and movable furniture placed in the Premises by Tenant pursuant to Article 8, whether or not such trade fixtures or equipment are fastened to the Premises, so long as such removal is done in accordance with plans approved by Landlord. Notwithstanding the foregoing, Tenant will not remove any trade fixtures or equipment without Landlord's prior written consent if the removal of such fixtures or equipment will result in impairing the structural strength of the Premises. Whether or not Tenant is in default, Tenant will remove such alterations, additions, improvements, trade fixtures, equipment and furniture as Landlord has requested in accordance with Article 8 and in accordance with  plans approved by Landlord.All trade fixtures, equipment, furniture, inventory, effects, alterations, additions and improvements on the Premises after the end of the Lease Term will be deemed conclusively to have been abandoned and may be appropriated, sold, stored, destroyed or otherwise disposed of by Landlord without written notice to Tenant or any other person and without obligation to account for them or to pay any proceeds to Tenant for such items. Tenant will pay Landlord for all expenses incurred in connection with the removal of such property, including, but not limited to, the cost of repairing any damage to the Shopping Center or Premises caused by the removal of such property. Tenant's obligation to observe and perform this covenant will survive the expiration or other termination of this Lease.

ARTICLE 8 - ALTERATIONS

8.1    Alterations. Tenant will not make or allow to be made any alterations, additions or improvements (collectively "Alterations") in or to the Premises without the prior written consent of Landlord. Alterations to the Premises shall be done by Landlord or by contractors approved in writing by Landlord, at Tenant's sole cost and expense. If Landlord approves Tenant's proposed Alterations and agrees to permit Tenant's contractor to do the work, Tenant's contractor must first furnish to Landlord insurance coverage against such risks and in such amounts as Landlord may reasonably require, including, but not limited to, General Liability, Builder's Risk, and Workman's Compensation Insurance (as required under the Workman's Compensation Act of Colorado), issued by such companies as Landlord may approve and naming Landlord as an additional insured on all such policies. All Alterations permitted by Landlord must conform to all requirements of all governmental entities having jurisdiction. Tenant's contractor shall obtain all applicable building and occupancy permits required by law. Landlord shall have the right, at Tenant's expense, not to exceed $500.00 per each such inspection, to have Tenant's contractor's work inspected by architects and engineers. At any time Tenant either desires to, or is required to, make repairs or Alterations in accordance with this Lease, Landlord may, in addition to its other options, require Tenant, at Tenant's sole cost  and expense, to obtain and provide to Landlord a lien and completion bond (or such other applicable bond as reasonably determined by Landlord) in an amount equal to one and one-half times the estimated cost of such improvements to insure Landlord against risk and liability, including but not limited to liability for mechanics and materialman's lien, and to insure the' completion of the work. Tenant agrees to indemnify Landlord and hold it harmless against any\ loss, liability or damage resulting from Tenant's repairs or alterations and to conform with all the requirements of Section 19.3. Tenant further agrees that plans and drawings for installation or revision of mechanical, electrical or plumbing systems shall be designed by an engineer approved by Landlord, and bear an engineer's seal, such design work to be done at Tenant's expense. Notwithstanding anything to the contrary contained herein, in no event shall Tenant be permitted to remove or substantially alter any restrooms in the Premises.

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8.2      Removal of Alterations. All Alterations (which do not include equipment or furniture of Tenant), whether made with or without Landlord's consent, made in or upon the Premises, either by Landlord or Tenant, shall be Landlord's property upon installation and shall remain on the Premises without compensation to Tenant unless Landlord shall, by written notice within 30 days after the expiration or termination of this Lease, elect to have the Alterations removed. If Landlord elects to have the Alterations removed and Tenant fails to remove the same and restore the Premises to the condition that existed prior to the installation of the Alterations, then Landlord may cause same to be removed and the Premises restored at Tenant's expense, and Tenant agrees to reimburse Landlord, on demand, for the cost of such removal and restoration, together with any and all damages which Landlord may suffer and sustain by reason of the failure of Tenant to remove the same.

8.3      Removal of Fixtures. Upon the expiration or other termination of this Lease, Tenant will remove all furniture, movable trade fixtures and persona! property (collectively "Fixtures") of Tenant. If Tenant fails to remove its Fixtures on or before the date of expiration or termination of this Lease, the Fixtures shall, at the option of Landlord, either become the property of Landlord, or be removed from the Premises and disposed of by Landlord, at Tenant's sole cost and expense.        

8.4     Standard of Alterations. All Alterations, installations, removals and restoration shall be accomplished in a good and workmanlike manner so as not to damage the Premises or the Shopping Center, in compliance with all governmental requirements, and the requirements of any contract or deed of trust to which the Landlord may be a party, and in such manner as not to disturb other tenants in their use and occupancy of the Shopping Center.  

8.5      Roof Alterations. Tenant agrees that all venting, opening, sealing, waterproofing of the roof made in connection with any Alterations requested by Tenant shall be performed by Landlord's roofing contractor, at Tenant's expense. Upon completion of any Alterations to the roof, Tenant shall furnish to Landlord a certificate from Landlord's roofing contractor that all such Alterations approved by Landlord have been completed in accordance with the plans and specifications approved by  Landlord. 

ARTICLE 9 - LANDLORD'S RIGHT OF ACCESS; USE OF ROOF

9.1      Right  of Access. Landlord, its agents, representatives and designees shall have the right to enter the Premises, at any time, to examine and inspect the same, or to make such repairs, additions or alterations as Landlord may deem necessary or proper for the safety, improvement or preservation thereof. Landlord shall also have the right to enter the Premises upon reasonable prior notice during Tenant's regular business hours, and to exhibit the same to prospective purchasers, mortgages, lessees and tenants. During the 180 days prior to the Expiration Date, Landlord may place upon the Premises "For Lease" or other similar signs which Tenant shall permit to remain thereon displayed.

9.2      Use of Roofs and Walls. Notwithstanding anything to the contrary contained in this Lease, Landlord shall have the exclusive right to use all or any part of the roof or exterior walls of the Premises for any purpose, including, but not limited to: (a) erecting signs or other  structures on or over all or any part of the same; (b) erecting scaffolds and other aids to the

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construction, maintenance and installation of the same; and (c) installing, maintaining, using, repairing and replacing pipes, ducts, conduits, and wires and all other mechanical equipment leading through, to or from the Premises and serving other parts of the Shopping Center in locations which do not materially interfere with Tenant's use of the Premises. Use of the roof above the Premises is reserved for Landlord.

ARTICLE 10 - SIGNS; STORE FRONTS

10.1    Signage. Tenant shall be allowed to install the maximum signage allowed by the local governing authorities, subject to Landlord's approval. In addition, Tenant  shall have signage on the pylon sign fronting Colorado Boulevard, subject to Landlord's approval. Tenant shall not, without Landlord's prior written consent, which shall not be unreasonably withheld in light of the agreements set forth in this paragraph: (a) make any changes to or paint the store front; (b) install any exterior lighting, decorations or paintings; or (c) erect or install any signs, window or door lettering, placards, decorations or advertising media of any type which can be viewed from the exterior of the Premises, excepting only dignified displays of customary type for its display windows. All signs, decorations and advertising media shall conform in all respects to the sign criteria established by Landlord, in its sole discretion, for the Shopping Center, and shall be subject to the prior written approval of Landlord as to construction, method of attachment, size, shape height, lighting, color and general appearance. All signs shall be kept in good condition and in proper operating order at ail times. Landlord reserves the right to designate a uniform type of sign for the Shopping Center to be installed and paid for by Tenant. The signage criteria for the Shopping Center, as the same may be amended from time to time in Landlord's sole discretion, is set forth on Exhibit D attached hereto. If, however, Tenant bas installed a Sign to Landlord's requirements and approval, Tenant shall not be required to modify that sign for five (5) years, provided that any such sign remains in compliance with governing codes and ordinances. If Tenant is in default hereunder and such default remains uncured for at least 30 days, Landlord shall have the right to erect on the Premises signs indicating that the Premises are available "for lease."

10.2Removal of Signage. Tenant agrees to have erected and installed fully operative signage prior to Tenant's opening for business. All signs shall be in accordance with Landlord's sign criteria. Tenant, upon vacation of the Premises, or the removal or alteration of its sign for any reason, shall be responsible for the repair, painting, and/or replacement of the building fascia surface where Tenant's signs are attached.

ARTICLE 11 - UTILITIES

11.1        Procurement of Utilities. Landlord agrees to cause to be provided and maintained the necessary mains, conduits and other facilities necessary to supply water, electricity, natural gas, telephone service and sewerage service to the boundary of the Premises.

11.2       Utilities. Tenant shall promptly pay all charges for electricity, water, gas, telephone service, sewerage service  and other utilities furnished to the Premises and shall promptly pay any maintenance charges therefore. Tenant shall reimburse Landlord (as part of CAM) for its Proportionate Share as set forth in Section 1.1 of any utilities paid by Landlord which are allocable to Tenant but not directly metered to Tenant. Landlord reserves the right to

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directly meter Tenant's consumption of utilities. Landlord may, at its option, furnish one or more utility services to Tenant, and in such event Tenant shall purchase the services from Landlord, and shall pay on demand as Additional Rent the rates established therefore by Landlord. Landlord may at any time discontinue furnishing any such service without obligation to Tenant other than to connect the Premises to the public utility, if any, furnishing such service.

11.3Tenant's Costs. Whenever equipment or lighting is used in the Premises by Tenant and such equipment or lighting affects the temperature otherwise normally maintained by the design of the Shopping Center's air conditioning system, Landlord shall have the right, after prior written notice to Tenant, to install supplementary air conditioning facilities in the Premises or otherwise modify the ventilating and air conditioning system serving the Premises; and the cost of such facilities, modifications, and additional service will be paid by Tenant as Additional Rent. In the event that Tenant requires more power than is otherwise made available to the Premises pursuant to Section 11.1, Tenant shall pay for the cost of installing any risers, meters or other facilities that may be necessary to furnish or measure such excess power to the Premises.

11.4Interruption of Services. Landlord shall not be in default under this Lease or be liable for any damages directly or indirectly resulting from, nor shall the Rent be abated by reason of (a) the installation, use or interruption of use of any equipment in connection with the furnishing of any of such services, (b) failure to furnish or delay in furnishing any such services when such failure or delay is caused by accident, strike or any other condition beyond the reasonable control of Landlord, or by the making of necessary repairs or improvements to the Premises or the Shopping Center, (c) the limitation, curtailment, rationing, or restrictions on use of water, electricity, gas, or any other form of energy serving the Premises or the Shopping Center. Landlord and Tenant shall each use reasonable efforts to remedy diligently any interruption in the furnishing of such services. Landlord shall not be liable for any damages to Tenant resulting from any interruption or failure of utility services unless such interruption was a result of the gross negligence of Landlord, its employees, agents or assigns.

ARTICLE 12 - INDEMNITY, PUBLIC LIABILITY INSURANCE AND FIRE AND EXTENDED COVERAGE INSURANCE

12.1Indemnification. Landlord shall not be liable to Tenant or to Tenant's employees, agents, visitors, customers, co-signees or invitees or to any other person or entity, whomsoever, for any injury to person or damage to or loss of property: (a) occurring within the Common Area if caused by the negligence or misconduct of Tenant, its employees, subtenants, licensees or concessionaires, or occurring within the Premises if caused by any other person entering the Shopping Center under the express or implied invitation of Tenant; (b) arising out of the use ofthe Premises by Tenant and the conduct of its business therein; (c) arising out of any breach or default by Tenant in the performance of its obligations hereunder; or (d) resulting from any othercause  within the Premises except Landlord's gross negligence.  Tenant hereby agrees to indemnify and hold harmless Landlord, and Landlord's employees and agents from and against, any and all demands, claims, causes of action, fines, penalties, damages (including consequential damages), liabilities, judgments, and expenses (including, without limitation, attorneys' fees) and hereby agrees to indemnify Landlord and hold it harmless from any loss, expense or claimsarising out of any such damage or injury where such damage or injury was not caused by Landlord's gross negligence or willful neglect. If any action or proceeding is brought against

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Landlord, its employees or agents by reason of any such claim for which Tenant has indemnified Landlord, Tenant, upon written notice from Landlord, will defend the same at Tenant's expense, with counsel satisfactory to Landlord, but at a reasonable hourly expense. As a material part of the consideration to Landlord for this Lease, Tenant hereby assumes all risk of damage to property or injury to persons in, upon and about the Premises from any cause, except due to the gross negligence of Landlord or its agents, employees or assigns, and Tenant hereby waives ail claims with respect thereto against Landlord.

12.2     Insurance.

(a)Tenant's Insurance. Tenant shall obtain and keep in effect throughout the Lease Term, at its sole cost and expense:

(i)           Bodily injury and property damage liability insurance, with a combined single occurrence limit of not less than $2,000,000 written on an "occurrence basis". All such insurance will be equivalent to coverage offered by a Commercial General Liability form including, without limitation, personal injury and contractual liability coverage for the performance by Tenant of the indemnity agreements set forth in this Lease;

(ii)Insurance covering ail of Tenant's furniture and fixtures, machinery, equipment, stock and any other personal property owned and used in Tenant's business and found in, on or about the Shopping Center, and any leasehold improvements to the Premises in excess of the allowance, if any, provided pursuant to a work letter in an amount not less than the full replacement cost. Property forms will provide coverage on a broad form basis insuring against "all risks of direct physical loss." All policy proceeds will be used for the repair or replacement of the property damaged or destroyed; however, if this Lease ceases under the provisions of Article 14, Tenant will be entitled to any proceeds resulting from damage to Tenant's furniture and fixtures, machinery and equipment, stock and any other personal property;

(iii)        Worker's compensation insurance insuring against and satisfying Tenant's obligations and liabilities under the worker's compensation laws of the state in which the Premises are located, including employer's liability insurance in the limits required by the laws of the state in which the Shopping Center is located; and

(iv)        If Tenant operates owned, hired or non-owned vehicles on the Shopping Center, comprehensive automobile liability will be carried at a limit of liability not less than $500,000 combined bodily injury and property damage.

(b)Delivery of Policy.    Prior to the Delivery Date,  Tenant shall provide Landlord with original certificates or duplicate originals of the policy or policies of insurance referred to in subparagraph (a) with evidence that premiums have been paid in full for the respective policy periods and that coverage was in place and in effect upon the Delivery Date. Tenant shall furnish to Landlord throughout the Lease Term, replacement certificates or renewal polices, together with evidence of like premium payment at least 10 days prior to the respective expiration dates of the then current policy or policies. All such insurance shall name Tenant as the named insured and Landlord, Landlord's mortgagees, and the management company shall be named as additional insureds on each policy. In addition to the remedies set forth in this Lease,

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Landlord may, but shall not be obligated to, obtain on behalf of Tenant any insurance that Tenant is obligated, but fails, to obtain under this Lease, and recover from Tenant the cost thereof plus interest at the rate of 12% per annum from the date of payment by Landlord until repaid in full by Tenant.

(c)        Insurance Rating.  Any insurance required by Tenant hereunder shall be in companies rated "A" or better in "Bests Insurance Guide." If in the opinion of Landlord, the amount of liability insurance required hereunder or the coverage under such policy is not adequate, then Tenant shall reasonably increase said insurance coverage. Tenant's failure to comply with the requirements of this section relating to insurance shall constitute an event of default hereunder. In addition to the remedies provided in Article 18 of this Lease, Landlord may, but is not obligated to, obtain such insurance and Tenant shall pay to Landlord upon demand as additional rental the premium cost thereof plus interest thereon at the rate equal to the lesser of the highest rate permitted by law or twelve percent (12%) per annum from the date of payment by Landlord until repaid by Tenant.

(d)Waiver of Subrogation.  Landlord and Tenant each waives any and all rights to recover against the other, or against the officers, directors, shareholders, partners, joint ventures, employees, agents, customers, invitees or business visitors of such other party, for any loss or damage to such waiving party arising from any cause covered by any property insurance required to be carried pursuant to this section or any other property insurance actually carried by such party. Landlord and Tenant, from time to time, will cause their respective insurers to issue appropriate waiver of subrogation rights endorsements to all property insurance policies carried in connection with the Shopping Center or the Premises or the contents of either.

(e)Landlord's Insurance and Tenant's Insurance Payment. Tenant agrees to pay its Proportionate Share as set forth in Section 1.1 of Landlord's cost of insurance as carried by Landlord from time to time with respect to the Shopping Center, including without limitation fire and extended coverage insurance, commercial general liability insurance, and any other insurance and in such amounts as Landlord deems necessary or desirable ("Insurance") on the Shopping Center. Insurance as stated herein may include, without limitation, liability insurance for personal injury, death and property damage, insurance against fire, flood, extended coverage, theft or other casualties, fidelity bonds for personnel, insurance against liability for assault and battery, and defamation and claims for false arrest. During the Lease Term, Tenant shall pay, as additional rent, a monthly payment ("Insurance Payment") to Landlord equal to 1/121 of its Proportionate Share of the insurance on the Shopping Center estimated to be due and payable for that particular year. Each Insurance Payment shall be due and payable at the same time and manner of the payment as the Minimum Guaranteed Rental. The initial monthly Insurance Payment is based upon Tenant's Proportionate Share of the estimated insurance on the Shopping Center for the year in question, and the monthly Insurance Payment is subject to increase or decrease from time to time as determined by Landlord to reflect Tenant's estimated Proportionate Share of the Insurance. Tenant's Insurance payments shall be reconciled annually at the same time as the CAM is reconciled. If Tenant's total Insurance Payments are less than Tenant's actual Proportionate Share of the Insurance on the Shopping Center, Tenant shall pay to Landlord, within thirty (30) days after receipt of written notice, the difference. If the total Insurance Payments of  Tenant are more  than Tenant's actual Proportionate Share  of the Insurance on the Shopping Center, Landlord shall retain such excess and credit it to Tenant's

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account. Tenant's Proportionate Share of the cost of Insurance on the Shopping Center shall be computed by multiplying the cost of Insurance by Tenant's Proportionate Share as set forth in Section 1.1 Notwithstanding anything to the contrary contained in the Lease, Landlord's failure to provide a reconciliation of Insurance as required by this section shall in no way release Tenant from its obligation to pay its Proportionate Share of Insurance, or constitute a waiver of Landlord's right to assess and collect for such Proportionate Share of Insurance from Tenant in accordance with this section.

ARTICLE 13-NON-LIABILITY FOR CERTAIN DAMAGES

13.1Waiver. Landlord, its agents and employees shall not be liable to Tenant, its employees, agents, invitees, licensees or visitors, or any other person or entity whomsoever for any injury to person or damage to property caused by: (a) the failure of any service provided by Landlord (including security service and devices (b) any defects in, or failure of, equipment, pipes or wiring, or broken glass" or (c) the backing up, or leaking of, drains, gas, water, steam, electricity or oil, into the Premises. Landlord shall not be liable to Tenant or any other person or entity whomsoever for any loss or damage that may be occasioned by or through the acts or omissions of other tenants of  the Shopping Center, or of any other persons or entities whomsoever, excepting only duly authorized employees and agents of Landlord. With respect to latent or patent defects in the Premises, Landlord's liability shall extend only to work performed by Landlord, if any, and shall not extend beyond eighteen months from the Commencement Date, whether or not such defects are discovered within such one-year period. Tenant shall indemnify and hold Landlord harmless from any loss, cost, expense or claims arising out of any injury or damage referred to in this section for which Landlord is stated not to be liable.

13.2       Limitation on Recourse. Tenant specifically agrees to look solely to Landlord's interest in the Shopping Center for the recovery of any judgments from Landlord. It is agreed that Landlord (and its shareholders, joint venturers, and partners, and their shareholders, joint venturers and partners and all of their officers, directors and employees) will not be personally liable for any such judgments. The provisions contained in the preceding sentences are not intended to, and will not, limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord or relief in any suit or action in connection with enforcement or collection of amounts which may become owing or payable under or on account of insurance maintained by Landlord.

ARTICLE 14 - FIRE AND OTHER CASUALTY

14.1       Damage. Except as provided below, in case of damage to the Premises or other portions of the Shopping Center by tire or other insured casualty, Landlord shall repair the damage. Such repair work shall be commenced promptly following notice of the damage and completed with reasonable diligence, taking into account the time required for Landlord to effect a settlement with and procure insurance proceeds from the insurer, except for delays due to Force Majeure.

14.2Restoration. If the damage is of a nature or extent that, in Landlord's reasonable judgment, the repair and restoration work would require more than 270 days to complete after commencement of work, assuming normal work crews not engaged in overtime, Landlord shall

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so notify Tenant within a reasonable time (but in no event more than 90 days) after such determination and either Landlord or Tenant shall be entitled to immediately terminate this Lease. Further, if Landlord reasonably determines that the Shopping Center is damaged to such extent as to make repair thereof unfeasible or that the length of the Lease Term remaining after restoration would make restoration impractical (in either case, whether for economic or other reasons), Landlord shall have the right to terminate this Lease upon written notice to Tenant delivered within 30 days after the casualty.

14.3Proceeds. If the insurance proceeds received or to be received by Landlord (excluding any rental interruption insurance proceeds) fall materially short of the funds required to pay for repairing the damage or are required to be applied on account of any Mortgage or Underlying Lease (as defined in Section 21.1), or if the nature of loss is not covered by Landlord's hazard insurance coverage, Landlord may elect either to (a) repair the damage as above provided notwithstanding such fact, or (b) terminate this Lease, by giving Tenant notice of termination within 60 days after Landlord's knowledge of the casualty and determination of availability or sufficiency of insurance proceeds. If Landlord elects to terminate this Lease, the termination date shall be the date specified on Landlord's notice, which termination date shall be not earlier than 30 nor later than 60 days thereafter.

14.4Tenant's Payment. All injury or damage to the Premises caused by Tenant or Tenant's customers, agents, employees, vendors, clients or invitees shall, to the extent not reimbursed by Landlord's casualty insurance, be repaired at Tenant's sole cost and expense. Additionally, all injury or damage to the Shopping Center caused by  Tenant or Tenant's customers, agents,  employees, clients or invitees entering the Shopping Center under the invitation of Tenant shall be repaired, at Tenant's sole cost and expense, to the extent not reimbursed by Landlord's casualty insurance. Tenant shall pay all amounts required herein to Landlord on demand, with interest thereon at 12% per annum from the due date until paid

14.5Limitations. Landlord shall not be obligated to repair any Alterations which Tenant may have installed (whether or not Tenant has the right or the obligation to remove the same or is required to leave the same on the Premises as of the expiration or earlier termination of this Lease) unless Tenant, in a manner satisfactory to Landlord, assures payment in full of all costs which may be incurred by Landlord in connection therewith. Landlord shall not be required to insure any Alterations to the Premises (other than building standard tenant improvements), or any fixtures, equipment or other property of Tenant. Tenant shall have the right, at its sole expense, to insure the value of its leasehold improvements, fixtures, equipment or other property located in the Premises, for the purpose of providing funds to Landlord to repair the Premises. Except as otherwise provided in this Lease, any insurance which may be carried by Landlord or Tenant against loss or damage to the Shopping Center or to the Premises shall be for the sole benefit of the party carrying insurance and under its sole control.

14.6Prorations. If this Lease is terminated pursuant to this Article, all rent shall be apportioned equitably and paid in full by Tenant to Landlord to the date of the casualty, regardless of whether the termination is effective subsequent to the casualty. This provision shall not relieve Tenant from liability to Landlord for damages (including damages arising due to early termination of this Lease) arising out of Tenant's negligence or other tortious conduct. In the event of a fire or other casualty damage not arising out of the negligence or other tortious

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conduct of Tenant, its customers, agents, employees, vendors, clients or invitees which deprives Tenant of the use of all or a portion of the Premises, there shall be a proportionate reduction in the Monthly Payment, as reasonably determined by Landlord ..

ARTICLE 15 - CONDEMNATION

15.1      Condemnation.

(a)       If any taking by condemnation, or sale in lieu thereof, pursuant to an exercise of a power of eminent domain ("Condemnation") occurs with respect to the Shopping Center, or any portion thereof, which would leave the remainder of the Shopping Center unsuitable for use comparable (economically or otherwise) to its use prior to the Condemnation in Landlord's reasonable judgment, then either Landlord or Tenant may terminate this Lease.

(b)      If any Condemnation occurs with respect to the entire Premises, or more than 25% thereof, or such portion of the Premises as renders the remainder thereof unsuitable for use comparable (economically or otherwise) to its use prior to the Condemnation in Landlord's reasonable judgment, then Landlord or Tenant may terminate this Lease upon written notice to Tenant within 30 days after the date of the Condemnation.

(c)       If Landlord determines that the compensation awarded for Condemnation, available for restoration of the Shopping Center or the Premises falls materially below the cost to pay the cost of restoration, or if such award is required to be applied on account of any Mortgage or Underlying Lease, or if Landlord determines that the length of the Lease Term remaining after restoration would make restoration impractical (whether for  economic or  other reasons), Landlord may terminate this Lease upon written notice to Tenant given within 30 days after the date of the Condemnation. 

(d)     Any termination of this Lease pursuant to this section shall be effective upon the earlier of the date title to or possession of the condemned real estate vests in the condemnor. All rent shall be apportioned equitably and paid in full by Tenant to Landlord to that  date of termination. If this Lease is not terminated as set forth herein and the event of a Condemnation deprives Tenant of the use of a portion of the Premises, there shall be a proportionate reduction in the Monthly Payment, as reasonably determined by Landlord.

(e)      All compensation awarded for any Condemnation of the Shopping Center, the Premises or any portion thereof, shall be the property of Landlord, and Tenant shall have no claim thereto, the same being expressly waived by Tenant. Tenant assigns to Landlord all rights to compensation for damages, if any, sustained by Tenant on any Condemnation, except for a claim relating to Condemnation of equipment, fixtures and/or improvements which Tenant, on expiration of the Lease Term, is entitled to remove, and only so long as a separate award is made by the condemnor to Tenant for such items.

(f)      If this Lease is not terminated as provided above, Landlord shall make such repairs, if any, as are reasonably necessary to restore the remaining part of the Premises and the Common Area not condemned to tenantable condition. Landlord, in so doing, shall not be required to expend more than the net amount Landlord reasonably expects to be available for 7storation of the Premises, unless Tenant agrees to pay the amount of the excess expenditure

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and before commencement of the restoration, provides Landlord with reasonable security for such payment by Tenant. Restoration, if any, shall begin promptly after Tenant vacates that part of the Premises condemned. The repairs shall be completed with reasonable diligence, subject, however, to delays incident to Force Majeure.

ARTICLE 16 - ASSIGNMENT AND SUBLETTING

16.l      By Tenant.

(a)Without the prior written consent of Landlord, which shall not be unreasonably withheld, Tenant shall not (1) assign or in any manner transfer this Lease or any estate or interest therein (a transfer will not be deemed to have occurred  if the transfer is to another entity  whose ownership is at least  fifty one percent (51%) identical to the Tenant's current ownership); (2) permit any assignment of this Lease or any estate or interest therein by operation of law; (3) sublet the Premises or any part thereof; (4) grant any license, concession or other right of occupancy of any portion of the Premises; or (5) permit the use of the Premises by any parties other than Tenant, its agents and employees, and any such acts without Landlord's prior written consent shall be void and of no effect. Consent by Landlord to one or more assignments or sublettings shall not operate as a consent to, or a waiver of Landlord's rights with respect to, any subsequent assignments and sublettings. Notwithstanding any assignment or subletting, Tenant and any guarantor of Tenant's obligations under this Lease shall at all times remain fully responsible and liable for the payment of the Monthly Payments and for compliance with all of Tenant's other obligations under this Lease. If an event of default should occur while the Premises or any part thereof is then assigned or sublet, Landlord, in addition to any other remedies herein provided or provided by law, may at its option collect directly from such assignee or sublessee all payments becoming due to Tenant under such assignment or sublease and apply such payments against any sums due to Landlord by Tenant hereunder, and Tenant hereby authorizes and directs any such assignee or sublessee to make such payments directly to Landlord upon receipt of notice from Landlord. No direct collection by Landlord from any such assignee or sublessee (regardless of whether or not such assignee or sublessee shall be deemed to be void and of no effect as stated in the first sentence of this subsection (a)) shall be construed to constitute a novation or release of Tenant or any guarantor of Tenant from the further performance of its obligation hereunder. Receipt by Landlord of payments from any assignee, sublessee or occupant of the Premises shall not be deemed  a waiver of the covenants in this Lease against  assignment and  subletting,  or  a  release  of  Tenant  under  thisLease. Notwithstanding the foregoing, Tenant shall have no right whatsoever to sublease all or a portion of the subleased premises unless Tenant charges a market sublease rent for same.

(b)Tenant shall not mortgage, pledge or otherwise encumber this Lease or any estate or interest therein or in the Premises.

(c)Tenant shall give Landlord at least 60 days' advance written notice of any proposed assignment or subletting, such notice to be accompanied by a copy of the proposed sublease or assignment agreement setting forth all terms of such agreement. If Tenant requests Landlord's consent to an assignment of this Lease or subletting of all or part of the Premises, Tenant will submit in writing to Landlord (i) the name and address of the proposed assignee or subtenant; (ii) the business terms of the proposed assignment or sublease; (iii) reasonably

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satisfactory information as to the nature and character of the business of the proposed assignee or subtenant, and as to the nature of its proposed use of the space; (iv) banking, financial, or other credit information reasonably sufficient to enable Landlord to determine the financial responsibility and character of the proposed assignee or subtenant; and (v) the proposed form of assignment or sublease for Landlord's approval. Landlord shall notify Tenant in writing within 15 days after receipt of Tenant's written request as to whether Landlord shall grant Tenant's request for an assignment or subletting. At Landlord's option, Landlord may terminate this Lease in lieu of giving its consent to any proposed assignment of this Lease or subletting of the Premises (which termination may be contingent upon the execution of a new lease with the proposed assignee or subtenant). If Landlord elects to cancel this Lease in whole or in part as of such date, then the Lease Term, and the tenancy and occupancy of the Premises by Tenant under this Lease, shall terminate with respect to that portion of the Premises proposed to be so assigned or sublet as if the cancellation date were ending date of the Lease Term, and Tenant shall pay to Landlord all costs or charges which are the responsibility of Tenant hereunder with respect to that portion  of the Premises . 0 Thereafter, Landlord may lease the Premises to any person, including the prospective subtenant or assignee, without liability to Tenant. If Landlord does not thus cancel this Lease, the terms and provisions of subparagraph (a) hereof will apply.

(d)Landlord's withholding of consent must be reasonable. Without limiting the other instances in which it may be reasonable for Landlord to withhold its consent to an assignment or sublease, Landlord and Tenant acknowledge and agree that it shall be reasonable for Landlord to withhold its consent if the information required by subsection (c) above has not been submitted to Landlord or is otherwise unsatisfactory. lt shall also be reasonable for Landlord to withhold its consent if:

(i)The proposed transferee fails to satisfy Landlord's then-current credit standards for retail tenants of the Shopping Center, and in Landlord's reasonable opinion, does not have the financial strength, business experience or stability to perform all obligations under this Lease to be performed by Tenant as and when they fall due;

(ii)The proposed transferee's use of the Premises, in Landlord's opinion, (1) is not lawful, or (2) is not consistent with the Permitted Use of the Premises under this Lease, or (3) is not consistent with the general character of business carried on by tenants of a first-class retail building, or (4) conflicts with any exclusive rights or covenants not to compete in favor of any other tenant or proposed tenant in the Shopping Center, or (5) increases the likelihood of damage or destruction, or (6) is likely to cause an increase in insurance premiums for insurance policies applicable to the Shopping Center, or (7) will require new tenant improvements incompatible with then existing Shopping Center systems and components, or (8) is not compatible with Landlord's desired tenant mix for the Shopping Center;

(iii)Tenant refuses to pay Landlord any increase in the Security Deposit that is required by Landlord based upon its then current leasing guidelines; under this Lease;

(iv)         At the time of the proposed transfer there is an event of default

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(v)The proposed transferee is a governmental entity and holds no exemption from the payment of ad valorem or other taxes that would prohibit Landlord :from collecting from such transferee any amounts otherwise payable under this Lease;

(vi)At least 25% or more of the Gross Rentable Square Footage of the Shopping Center remains un-leased to paying tenants;

(vii)The transfer results in a division of the Premises or will otherwise have or cause a material adverse impact on Landlord's interests, in the Premises or the Shopping Center.

(e)     If Landlord consents to a proposed assignment or sublease, Landlord will have the right to approve the form of assignment or sublease, as the case may be, which will provide among other things that Tenant will remain liable under this Lease. Further, if Landlord consents to any subletting or assignment by Tenant as above provided, and subsequently any payments received by Tenant under any such sublease are in excess of the Monthly Payments payable by Tenant under this Lease, or any additional consideration (other than consideration which is directly or indirectly related to the sale of the business) is paid to Tenant by the assignee under any such assignment, then 100% of such excess payments under such sublease or such additional consideration for such assignment shall be due and payable by Tenant to Landlord as Additional Rent. In determining whether payments under any approved sublease exceed the Monthly Payments under this Lease, all amounts paid or payable and received or receivable by Tenant under or in connection with such sublease, including but not limited to commissions and shall be taken into account.

(f)In the event Landlord consents to any assignment of this Lease by Tenant as provided herein, Landlord shall have the right, in its sole determination, to increase theSecurity Deposit required in this Lease.

(g)Any sublease will require that the subtenant will comply with all applicable terms and conditions of this Lease. Any assignment will include, without limitation, an assumption by the assignee of all of the terms, covenants and conditions which this Leaserequires Tenant to perform. Landlord's consent will not be effective unless and until Tenant delivers to Landlord an original duly executed assignment or sublease, as the case may be, in theform approved by Landlord, and pays Landlord the amounts required herein. In the event ofdefault by any assignee of Tenant or any successor of Tenant in the performance of any of the terms hereof, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against such assignee or successor. No permitted subtenant may assign or encumber its sublease or further sublease ail or any portion of its subleased space, or otherwise permit the subleased space or any part of its subleased space to be used or occupied by others, without Landlord's prior written consent in each instance. No permitted assignee (or subtenant) at this Lease may further assign this Lease (or sublet the subleased premises) without Landlord's prior written consent.

(h)      Tenant agrees to reimburse Landlord for all reasonable expenses incurred in connection with any assignment or subletting, including but not limited to, attorneys' fees, lender approval fees or such other reasonable and customary fees incurred.

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(i) In addition to reimbursement of expenses as set forth in subsection (h) above, at the time of Tenant's request for Landlord's consent to an assignment of this Lease, or subletting of all or a portion of the Premises, Tenant shall deliver to Landlord a processing fee which constitutes the actual reasonable expenses of Landlord in processing the request, but in no event shall Tenant pay to Landlord more than $5,000.00 for the processing fee. Furthermore, Landlord shall attempt to keep its processing costs to a reasonable minimum. The Processing Fee shall be nonrefundable when paid regardless of whether Landlord consents to, or objects to, the proposed assignment or sublease.

(j)  The transfer of a majority of the issued and outstanding capital stock of any corporate tenant or subtenant  of this Lease or a majority of the total interest in any partnership tenant or subtenant, however accomplished, and whether in a single transaction or in a series of related or unrelated transactions, will be deemed an assignment of this Lease or of such sublease requiring Landlord's prior written consent in each instance. For purposes of this Article 16, the transfer of outstanding capital stock of any corporate tenant will not include any sale of such stock by persons (other than those deemed "insiders" within the meaning of the Securities Exchange Act of 1934, as amended) effected through "over-the-counter-market" or through any recognized stock exchange.

(k) If Tenant believes that Landlord has unreasonably withheld its consent pursuant to this Article 16, Tenant's sole remedy will be to seek a declaratory judgment that Landlord has unreasonably withheld its consent or an  order of specific performance or mandatory injunction of the Landlord's agreement to give its consent.

16.2    By Landlord. In the event of the transfer and assignment by Landlord of its interest in this Lease and in the Shopping Center containing the Premises to a person expressly assuming Landlord's obligations under this Lease, Landlord shall thereby be released from any further obligations hereunder, and Tenant agrees to look solely to such successor in interest of the Landlord for performance of such obligations. Any security given by Tenant to secure performance of Tenant's obligations hereunder shall be assigned and transferred by Landlord to such successor in interest, provided however that Tenant is not in default at the time of any such transfer or assignment, and Landlord shall thereby be discharged of any further obligation relating thereto. The term "Landlord" shall mean only the owner for the time being of the Shopping Center, and in the event of transfer by such owner of its interest in the Shopping Center, such owner shall thereupon be released and discharged from all covenants and obligations of Landlord thereafter accruing, but such covenants and obligations that arise  duringany owner's period of ownership shall be binding during the Lease Term upon such new owner; provided, however, that Tenant's failure to disclose any outstanding obligations of Landlord pursuant to any notification required to be made by this Lease to any prospective buyer shall constitute a waiver of Tenant's rights against that prospective buyer and any successors or assigns thereof. Upon such an assignment, Tenant shall retain its rights against the transferor Landlord for obligations arising under this Lease during the period of the transferor Landlord's ownership of the Shopping  enter.

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ARTICLE 17 - PROPERTY TAXES

17.1Tenant's Taxes. Tenant shall be liable for all taxes levied against personal property and trade fixtures placed by Tenant in the Premises. If any such taxes are levied against Landlord or Landlord's property, and if Landlord elects to pay the same or if the assessed value of Landlord's property is increased by inclusion of personal property and trade fixtures placed by Tenant in the Premises and Landlord elects to pay the taxes based on such increase, Tenant shall pay to Landlord, upon demand, that part of such taxes for which Tenant is liable hereunder.

17.2Tenant's Proportionate Share. Tenant agrees to pay its Proportionate Share as set forth in Section 1.1 of all real estate and/or ad valorem taxes and assessments, governmental charges and other impositions, general or special, ordinary or extraordinary, of every kind and nature which may be levied, assessed or imposed upon or with respect to the Shopping Center, or any part thereof, or upon any building, improvement or personal property at any time situated thereon (collectively referred to 0as "Taxes"). If any governmental taxing authority shall levy, assess, or impose any tax, excise or assessment (other than income or franchise tax) upon or against the rents payable by Tenant to Landlord ("Rent Tax"), either by way of substitution for or in addition to any existing tax on land, buildings or otherwise, Tenant shall directly pay, or reimburse Landlord for, the Rent Tax, as the case may be. Landlord may contest by appropriate legal proceedings the amount, validity, or application of any Taxes or liens thereof and Tenant shall receive the benefit of, after deduction of Landlord's expenses, Tenant's Proportionate Share of all reductions, refunds, or rebates of Taxes paid or payable by Tenant due to the result of any contesting of Taxes by Landlord.  If because of any change in the taxation of real estate any other tax or assessment (including, without limitation, any occupancy, gross receipts or rental tax) is imposed upon Landlord or the owner of the land and/or buildings, or upon or with respect to the land and/or building or the occupancy, rents or income therefrom, in lieu of, or in the substitution for, or in addition to, any of the foregoing Taxes, such other tax or assessment shall be deemed part of Taxes and Tenant shall be responsible for the payment of its Proportionate Share thereof.  Taxes shall not include any income, franchise, estate or inheritance taxes of Landlord. If any tax or excise is levied or assessed directly against Tenant, then Tenant shall be responsible for and shall pay the same at such times and in such manner as the taxing authority shall require. Tenant shall be liable for all taxes levied or assessed against any personal property or trade fixtures placed in the Premises, whether levied or assessed against Landlord or Tenant. During each month of the Lease Term, Tenant shall pay, as additional rent, a monthly payment ("Tax Payment") to Landlord equal to 1/12th of its Proportionate Share of the Taxes on the Shopping Center that  are estimated to be be levied, assessed or imposed upon  the Shopping Center for that particular calendar year. Each Tax Payment shall be due and payable at the same time and in the same manner as the time and manner of the payment of the Minimum Guaranteed Rental  as provided  herein.The initial  monthly  Tax Payment  is based  upon  Tenant's Proportionate Share of the estimated  taxes  on the Shopping Center for the calendar year in question, and the monthly Tax Payment is subject to increase or decrease from time to time as determined by Landlord to more accurately reflect Tenant's estimated Proportionate Share of the Taxes. Tenant's Tax Payments shall be reconciled annually by Landlord at the same time as the CAM is reconciled. If Tenant's total Tax Payments are less than Tenant's actual Proportionate Share of the Taxes on the Shopping Center, Tenant shall pay the difference to Landlord within 30 days after  receipt of written notice.  If the total Tax Payments of Tenant are more  than Tenant’s actual Proportionate Share of the Taxes on the Shopping Center, Landlord shall retain

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such excess and credit it to Tenant's account. Tenant's Proportionate Share of the Taxes on the Shopping Center shall be computed by multiplying the Taxes by Tenant's Proportionate Share as set forth in Section 1.1. Notwithstanding anything to the contrary contained in the Lease, Landlord's failure to provide a reconciliation of Taxes as required by this section shall in no way excuse Tenant from its obligation to pay its Proportionate Share of Taxes or constitute a waiver of Landlord's right to assess and collect for Proportionate Share of Real Estate Taxes from Tenant in accordance with this section.

17.3Failure to Pay. If Tenant should fail to pay any Taxes, in addition to any other remedies provided herein, Landlord may, if it so elects, pay such Taxes. Any sums so paid by Landlord shall be deemed to be Additional Rent  owing by Tenant to Landlord and due and payable, upon demand, as Additional Rent, plus interest at the rate of 10% per annum from the date of payment by Landlord until repaid by Tenant.

17.4Changes in Taxation. If at any time during the Lease Term, the present method of taxation shall be changed so that in lieu of the whole or any part of any taxes, assessments, levies or charges levied, assessed or imposed on real estate and the improvements thereon, there shall be levied, assessed or imposed on Landlord a capital levy or other tax directly on the rents received therefrom and/or a franchise tax, assessment, levy or charge measured by or based, in whole or in part, upon such rents or the present or  any future building or buildings on the Shopping Center, but excluding any tax on Landlord's  net income from the Shopping Center, then all such taxes, assessments, levies or charges, or the part thereof so measured or based, shall be deemed to be included within the term "Taxes" for the purposes hereof. In such event, the Taxes allocable to the Shopping Center shall be calculated as though the Shopping Center were the only property owned by Landlord.

17.5Tax Year. Any payment to be made pursuant to this section with respect to the real estate tax year in which this Lease commences or terminates shall bear the same ratio to the payment which would be required to be made for the full tax year as that part of such tax year covered by the term of this Lease bears to a full tax year.

17.6Tax Consultant. Landlord shall have the right to employ a tax consulting firm to attempt to assure a fair tax burden on the Shopping Center. Tenant shall pay to Landlord upon demand from time to time, as additional rent, the amount of Tenant's Proportionate Share as aforesaid of the cost of such service.

ARTICLE 18 - DEFAULT BY TENANT AND REMEDIES

18.1Event of Default. The following events shall be deemed to be events of default by Tenant under this Lease:

(a)Tenant shall fail to pay any installment of rental or any other monetary obligation under this Lease Agreement when due.

(b)Tenant shall be adjudicated insolvent, or shall make an intentional transfer in fraud of creditors, or shall make an assignment for the benefit of creditors.

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(c)Tenant shall file a petition under any section or chapter of the Federal Bankruptcy Code, as amended, or under any similar law or statute of the United States or any State thereof; or Tenant shall be adjudged bankrupt or insolvent in proceedings filed against Tenant and such judgment shall not be stayed or vacated within 90 days after the entry thereof.

(d)A receiver or trustee shall be appointed for the Premises or for ail or substantially all of the assets of Tenant.

(e)Tenant shall desert or vacate any portion of the Premises (leave the Premises permanently or close down for more than a one week period).

(f)         Tenant shall do or permit to be done anything which creates a lien upon the Premises unless such lien is discharged or bonded against to Landlord's reasonable satisfaction within 30 days after Tenant learns of the existence thereof.

(g)The business operated by Tenant shall be closed for failure to pay any State sales tax as required.

(h)        Tenant fails to take possession of the Premises on the Commencement Date of the Term. 

(i)Tenant purports to assign this Lease, or sublet all or a portion of the Premises, in a manner that violates the provisions of Section 16.1 above.

(j)Tenant fails to obtain or maintain the insurance required pursuant to Section 12.2 of this Lease.

18.2Right to Cure. A default shall have occurred if Tenant fails to comply with section (a) through (j) above or with any other term, provision or covenant of this Lease not specifically referenced in subsections (a) through (j) above, where such failure continued for a period of 10 days after written notice thereof; provided, that if such failure cannot as a practical matter be remedied within such 10-day period, then no event of default shall be deemed to exist if Tenant begins within such  10-day period to remedy the failure and continues to exercise all due diligence in completing such remedy. Notwithstanding the forgoing, this Right to Cure shall exclude any monetary default by Tenant, any of which must be cured within a 10-day period.

18.3Landlord's Remedies. Upon occurrence of any events of default, by Tenant, Landlord shall have the option to pursue any one or more of the following remedies:

(a)Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, in accordance with applicable law, and without prejudice to any other remedy which it may have for possession or arrearages in rental, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying said Premises or any part thereof

(b)Enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof in

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it so elects, relet the Premises on Landlord's terms and receive the rent therefore; and Tenant agrees to pay to Landlord, on demand, any deficiency that may arise by reason of such reletting for the remainder of this Lease term.

(c)Enter upon the Premises and do whatever Tenant is obligated to do under the terms of this Lease, and Tenant agrees to reimburse Landlord on demand for any expenses which Landlord may incur in thus effecting compliance with Tenant's obligations under this Lease, plus interest thereon at the lesser of the highest rate permitted by law or twelve percent (12%) per annum. Tenant further agrees that Landlord shall not be liable for any damages resulting to Tenant from such action provided Landlord proceeds in accordance with applicable law.

18.4No Surrender. Exercise by Landlord, in accordance with applicable law, of any one or more remedies hereunder granted or otherwise available shall not be deemed to be an acceptance of surrender of the Premises by Tenant, whether by agreement or by operation of law, it being understood that such surrender can be effected only by the written agreement of Landlord and Tenant. No such alteration of locks or other security devices and no removal or other exercise of dominion by Landlord over the property of Tenant or others at the Premises shall be deemed unauthorized or constitute a conversion, Tenant hereby consenting, after any event of default, to the aforesaid exercise of dominion over Tenant's property within the Premises. All claims for damages by reason of such re-entry and/or repossession and/or alteration of locks or other security devices in accordance with applicable law are hereby waived. Tenant agrees that any re-entry by Landlord may be pursuant to judgment obtained in forcible detainer proceedings or other legal proceedings as Landlord may elect, and Landlord shall not be liable in trespass or otherwise for proceeding in accordance with applicable law.

18.5       Tenant's Liability.

(a)In the event Landlord elects to terminate the Lease by reason of an event of default, then notwithstanding such termination, and subject to applicable Colorado law, Tenant shall be liable for and shall pay to Landlord, at the address specified for notice to Landlord herein the sum of all rental and other indebtedness accrued to date of such termination, plus, as damages, an amount equal to the excess, if any, of (1) the total rental (Minimum Guaranteed Rental computed as stated below) plus Tenant's CAM, Insurance Payment and Tax Payment hereunder for the remaining portion of the Lease Term (had such term not been terminated by Landlord prior to the Expiration Date stated in Section 1.1) discounted to present value at the rate of eight percent per year, over (2) the then present value (again discounted at eight percent per year) of the then fair rental value of the Premises for such period.

(b)In the event that Landlord elects to repossess  the Premises without terminating this Lease in accordance with applicable law, then Tenant shall be liable for and shall pay to Landlord at the address specified for notice to Landlord herein all rental and other indebtedness accrued to the date of such repossession, plus rental required to be paid by Tenant to Landlord during the remainder of the Lease Term until the date of expiration stated in Section 1.1 diminished by arty net sums thereafter received by Landlord through reletting the Premises during said period (after deducting expenses incurred by Landlord as provided in subsection (c) below). In no event shall Tenant be entitled to any excess of any rental obtained by reletting

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over and above the rental herein reserved. Actions to collect amounts due by Tenant to Landlord as provided in this section may be brought from time to time, on one or more occasions, without the necessity of Landlord's waiting until expiration of the Lease Term.

(c)In case of any event of default or breach by Tenant, Tenant shall also be liable for and shall pay to Landlord, at Landlord's Mailing Address, in addition to any sum provided to be paid above, brokers' fees incurred by Landlord in connection with reletting the whole or any part of the Premises; the reasonable costs of removing and storing Tenant's or other occupant's property; the value of any free or waived rent received by Tenant in connection with this Lease; the reasonable costs of repairing, altering, remodeling or otherwise putting the Premises into condition acceptable to a new tenant or tenants, subject to Landlord's duty to mitigate its damages and all reasonable expenses incurred by Landlord in enforcing or defending Landlord's rights and/or remedies including reasonable attorneys' fees.

18.6No Duty to Mitigate. Except as otherwise provided by applicable law, in the event of termination or repossession of the Premises for an event of default, Landlord shall not have any obligation to relet or attempt to relet the Premises, or any portion thereof, or to collect rental after reletting; and in the event of reletting, Landlord may relet the whole or any portion of the Premises for any period, to any tenant, and for any use and purpose.

18.7Landlord's Self-help Action. If Tenant should fail to make any payment or cure any default hereunder within the time herein permitted, Landlord, in accordance with applicable law, and without being under any obligation to do so and without thereby waiving such default, may make such payment and/or remedy such other default for the account of Tenant (and enter the Premises for such purpose), and thereupon Tenant shall be obligated to, and hereby agrees to pay Landlord, upon demand, all costs, expenses and disbursements (including reasonable attorneys' fees) incurred by Landlord in taking such remedial action.

18.8Landlord's Default. Tenant may bring a separate action against Landlord for any claim Tenant may have against Landlord under this Lease, provided Tenant shall first give written notice thereof to Landlord specifying such default with particularity, and Landlord shall thereupon have thirty (30) days after receipt of such notice in which to cure any default; provided, that if such failure cannot as a practical matter be remedied within such 30-day period, then no event of default shall be deemed to exist if Landlord begins within such 30-day period to remedy the failure and continues to exercise reasonable diligence in completing such remedy. Unless and until Landlord fails to so cure any default after such notice, Tenant shall not have any remedy or cause of action by reason thereof. All obligations of Landlord hereunder will be construed as covenants, not conditions; and all such obligations will be binding upon Landlord only to the extent they arise during the period of its possession of the Shopping Center and not thereafter. In no event shall Landlord be responsible for any consequential damages incurred by Tenant including, but not limited to, loss of profits or interruption of business as a result of any default by Landlord hereunder, except those that occur as a result of the gross negligence of Landlord, its agents, employees or assigns.

18.9No Liability. Notwithstanding any other provision hereof, except as a result of the gross negligence of Landlord, its agents, employees or assigns, Landlord shall not have any Personal Liability hereunder. ln the event of any breach or default by Landlord in any term or

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provision of this Lease, or in the event of any other liability of Landlord arising under this Lease, Tenant agrees to look solely to the equity or interest then owned by Landlord in the land and improvements which constitute the Shopping Center, and in no event shall any deficiency judgment of any kind be sought or obtained against Landlord if the equity or interest then owned by Landlord in the land and improvements which constitute the Shopping Center is insufficient to cover any judgment against Landlord.

18.10Additional Rights. In the event that Landlord shall have taken possession of the Premises pursuant to the authority herein granted and in accordance with applicable law, and should litigation occur between Landlord and Tenant, and a court of competent jurisdiction authorizes Landlord, then Landlord shall have the right to keep in place and use all of the furniture, fixtures and equipment of the Premises, including that which is owned by or leased to Tenant at all times prior to any foreclosure thereon by Landlord or repossession thereof by any lessor thereof or third party having a lien thereon. Landlord shall also have the right to remove from the Premises, provided a c9urt of competent jurisdiction has authorized such removal, ail or any portion of such furniture, fixtures, equipment and other property located thereon and place same in storage at any premises within the County in which the Premises are located; and in such event, Tenant shall be liable to Landlord for costs incurred by Landlord in connection with such removal and storage. Landlord shall also have the right to relinquish possession of all or any portion of such furniture, fixtures, equipment and other property to any person ("Claimant") claiming to be entitled to possession thereof and who presents a court order to Landlord granting Claimant the right under various circumstances to take possession of such furniture, fixtures, equipment or other property, without the necessity on the part of Landlord to inquire into the authenticity of said instrument's copy of Tenant's or Tenant's predecessor's signature thereon and without the necessity of Landlord's making any nature of investigation or inquiry as to the validity of the factual or legal basis upon which Claimant purports to act; and Tenant agrees to indemnify and hold Landlord harmless from all cost, expense, loss, damage and liability incident to Landlord's relinquishment of possession of all or any portion of such furniture, fixtures, equipment or other property to Claimant. The rights of Landlord herein stated shall be in addition to any and ail other rights herein granted Landlord and, to the extent they are in accordance with applicable law, are commercially reasonable.

18.11Injunctive Relief; Cumulative Remedies. In the event of any breach or threatened breach by Tenant of any of the terms contained in this Lease, Landlord shall be entitled to enjoin such breach or threatened breach. Any suit or suits for the recovery of the amounts and damages set forth in this Article 18 may be brought by Landlord,  from time to time, at Landlord’s election, and nothing in this Lease will be deemed to require Landlord to await the date upon which this Lease or the Term would have expired had there occurred no event of default. Each right and remedy provided for in this Lease is cumulative and is in addition to every other right or remedy provided for in this Lease and the exercise or beginning of the exercise by Landlord of any one or more of the rights or remedies provided for in this Lease will not preclude the simultaneous or later exercise by Landlord of any or all other rights or remedies provided for in this Lease. The prevailing party in any such action shall be entitled to recover all costs incurred by Landlord in collecting any amounts and damages owing by Tenant pursuant to the provisions of this Lease or to enforce any provision of this Lease, including reasonable attorneys' fees and costs from the date any such matter is turned over to an attorney, whether or not one or more

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ARTICLE 19 - SECURITY DEPOSIT; LANDLORD'S LIEN; MECHANICS LIENS

19.l      Security Deposit. Upon receipt from Tenant of the Security Deposit specified in Section 1.1, such Security Deposit shall be held by Landlord without interest as security for the performance by Tenant of Tenant's covenants and obligations under this Lease, it being expressly understood that such deposit is not an advance payment of rental or a measure of Landlord's damages  in case of default by Tenant. The Security Deposit shall be held by Landlord without payment of interest, as security for the faithful performance by Tenant of all of the terms, covenants and conditions of this Lease by said Tenant to be kept and performed during the Lease Term. If the initial Minimum Guaranteed Rental increases during the term of this Lease, Tenant shall, upon written request from Landlord, deposit additional monies with Landlord so that the total amount of the Security Deposit shall at all times bear the same proportion to the increased Minimum Guaranteed Rental as the initial Security Deposit bore to the initial Minimum Guaranteed Rental. If at any time during the Lease Term any of the rental herein reserved shall be overdue and unpaid, or any other sum payable by Tenant to Landlordhereunder shall be overdue and unpaid then Landlord may, at the option of Landlord (but Landlord shall not be required to), appropriate and apply any portion of the Security Deposit to the payment of any such overdue rental or other sum. In the event of the failure of Tenant to keep and perform any of the terms, covenants and conditions of this Lease to be kept and performed by Tenant, then Landlord, at its option, may appropriate and apply the Security Deposit, or so much thereof as may be necessary to compensate Landlord for loss or damage sustained or suffered by Landlord due to such breach on the part of Tenant. Should the Security Deposit, or any portion thereof be appropriated and applied by Landlord for the payment of overdue rental or other sums due and payable to Landlord by Tenant hereunder, then Tenant shall, upon the written demand of Landlord, forthwith remit to Landlord a sufficient amount in cash to restore the Security Deposit to the original sum deposited, and Tenant's failure to do so within ten days after receipt of such demand shall constitute a default under this Lease. Should Tenant comply with all of the terms, covenants and conditions of this Lease, the Security Deposit shall be returned in full to Tenant within 60 days after the expiration or earlier termination of this Lease. Landlord shall deliver the Security Deposit hereunder by Tenant to a purchaser of Landlord's interest in the Premises, in the event that such interest is sold and thereupon Landlord shall be discharged from any further liability with respect to such deposit.

19.2Landlord's Lien. Landlord shall have a Landlord's statutory lien, and in addition thereto, Landlord shall have, and Tenant hereby grants unto Landlord a security interest, in all of the goods, wares, furniture, fixtures, office equipment, supplies and other property of Tenant now or hereafter placed in, upon, or about the Premises and all proceeds thereof, as security for all of the obligations of Tenant under this Lease. Tenant shall not remove any of said personal property from the Premises until all of Tenant's obligations under this Lease have been satisfied in full. Upon the occurrence of an event of default by Tenant as set forth in this Lease, Landlord may, to the extent permitted by applicable law, in addition to any other remedies provided herein enter upon the Premises and take possession of any and all goods, wares, equipment, fixtures, furniture, improvements and other personal property of Tenant situated on the Premises, without liability for trespass or conversion, and sell the same at public or private sale, with or without having such property at the sale, after giving Tenant reasonable notice of the time and place of any public sale or the time after which any private sale is to be made; and at any such sale the Landlord or its assigns may purchase any of Tenant's personal property unless prohibited by

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law. The proceeds of any such disposition, less any and all expenses connected with the taking of possession, holding and selling of the property (including attorneys' fees and other expenses), shall be applied as a credit against the indebtedness secured by the security interest granted in this section. Any surplus shall be paid to Tenant or as otherwise required by law and Tenant shall pay any deficiencies forthwith to Landlord. Upon request by Landlord, Tenant agrees to execute and deliver to Landlord a financing statement in form sufficient to perfect the security interest of Landlord in the aforementioned property and proceeds thereof under the relevant provisions of the Uniform Commercial  Code, as adopted by the jurisdiction in which the Premises are situated. Upon request by Landlord, Tenant shall provide the name and address of any entity that has, or claims to have, an interest (including, without limitation, a security interest in any property located on the Premises and a description of such property). Failure to provide such a list shall result in a presumption that all property located in the Premises belongs to Tenant :free from all claims. Without intending to execute any other manner of giving Tenant any required notice, any requirement of reasonable notice to Tenant of Landlord's intention to dispose of any collateral pursuant to the enforcement of said security interest shall be made if such notice is given in the manner prescribed by this Lease for notices.

19.3Mechanics Liens. Tenant will pay or cause to be paid all costs and charges for work: (a) done by Tenant or caused to be done by Tenant, in or to the Premises, and (b) for all materials furnished for or in connection with such work. Tenant will indemnify Landlord against and hold Landlord, the Premises and the Shopping Center free, clear and harmless of and from all mechanics' liens and claims of liens, and all other liabilities, liens, claims and demands on account of such work by or on behalf of Tenant. If any such lien, at any time, is filed against the Premises, or any part of the Shopping Center, Tenant will cause such lien to be discharged of record within 10 days after the filing of such lien, except that if Tenant desires to contest such lien, it will furnish Landlord, within such 10-day period, security reasonably satisfactory to Landlord of 150% of the amount of the claim, plus estimated costs and interest or comply with such statutory procedures as may be available to release the lien. If a final judgment establishing the validity or existence of a lien for any amount is entered, Tenant will pay and satisfy the same at once. If Tenant fails to pay any charge for which a mechanics' lien has been filed, and has not given Landlord security as described above, or has not complied with such statutory procedures as may be available to release the lien, Landlord may, at its option, pay such charge and related costs and interest, and the amount so paid, together with reasonable attorneys' fees incurred in connection with such lien, (plus 15% of such charge and related costs and interest for Landlord's overhead and related expenses) will be immediately due from Tenant to Landlord as Additional Rent. Nothing contained in this Lease will be deemed the consent or agreement of Landlord to subject Landlord's interest in the Shopping Center to liability under any mechanics' or other lien law. If Tenant receives written notice that a lien has been or is about to be filed against the Premises or the Shopping Center or any action affecting title to the Shopping Center has been commenced on account of work done by or for or materials furnished to or for Tenant, it will immediately give Landlord written notice of such notice. At least 15 days prior to the commencement of any work (including, but not limited to, any maintenance, repairs, alterations, additions, improvements or installations) in or to the Premises, by or for Tenant, Tenant will give Landlord written notice of the proposed work and the names and addresses of the persons supplying labor and materials for the proposed work and shall require any such person to execute and deliver to Landlord a written waiver of construction lien rights waiving any claim of any

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or material. Landlord will have the right to post notices of non-responsibility or similar written notices on the Premises in order to protect the Premises against any such liens. Tenant's obligations under this Article shall survive the expiration or earlier termination of this Lease.

ARTICLE 20 - HOLDING OVER

20.1     Holdover. Tenant will, at the expiration of this Lease, whether by lapse of time or termination, give up immediate possession to Landlord. If Tenant fails to give up possession, Tenant's holdover shall create a tenancy at sufferance and, at Landlord's option served by written notice, a month-to-month tenancy. In any such event the tenancy shall be upon the terms and conditions  of this Lease, except that the total monthly rent shall be 150% of the last Minimum Guaranteed Rental due under this Lease immediately prior to termination (in the case of tenancy at sufferance such Minimum Guaranteed Rental shall be prorated for each day Tenant remains in possession); excepting further that in the case of a tenancy at sufferance, no notices shall be required prior to commencement of any legal action to gain repossession of the Premises. In the case of a tenancy at sufferance, Tenant shall also pay to Landlord all damages (including consequential damages) sustained by Landlord resulting from retention of possession by Tenant. The provisions of this paragraph shall not constitute a waiver by Landlord of any right of re-entry as otherwise available to Landlord; nor shall receipt of any rent or any other act in apparent affirmance of the tenancy operate as a waiver of the right to terminate this Lease for a breach by Tenant hereof.

ARTICLE 21 - SUBORDINATION

21.1     Subordination.

(a)            This Lease and all rights of Tenant hereunder are subject and subordinate to any first deed of trust, first mortgage or other first instrument of security (a "Mortgage"), and at Landlord's option, this Lease and all rights of Tenant hereunder are subject and subordinate to any junior deed of trust, junior mortgage or other junior instrument of security, as well as to any ground lease or primary lease (an "Underlying Lease") that now or thereafter covers all or any part of the Shopping Center, the land, or any interest of Landlord therein, and to any and all advances made on the security thereof and to any and all increase, renewals, modifications, consolidations, replacements and extensions of such Mortgage or Underlying Lease. This provision is self-operative and no further instrument shall be required to effect such subordination of this Lease. Tenant shall, however, within 10 days after receipt of a written request from Landlord, execute, acknowledge and deliver to Landlord or to the holder ("Holder") of any Mortgage, or lessor ("Lessor") in any Underlying Lease, all instruments and certificates that in the judgment of Landlord, Holder or Lessor may be necessary or desirable to confirm or evidence such subordination. Not in limitation of the generality of the foregoing, Tenant agrees that any Holder shall have the right at any time to subordinate any Mortgage to this Lease on such terms and subject to such conditions as such Holder may deem appropriate in its sole discretion. Tenant further covenants and agrees upon demand by Holder or Lessor at any time, before or after the  institution of  any proceedings for foreclosure or sale pursuant to any Mortgage, or termination of any Underlying Lease, to  attorn to the purchaser upon suchforeclosure or sale or to Lessor upon such termination, and to recognize such purchaser or Lessor

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preceding sentence shall survive any such foreclosure, sale or termination. Tenant, upon demand, before or after any such foreclosure, sale or termination, shall execute, acknowledge and deliver to Holder or Lessor any and all instruments that in the judgment of Holder or Lessor may be necessary or desirable to confirm or evidence such attornment and Tenant hereby irrevocably authorizes Holder or Lessor to execute, acknowledge and deliver any such instruments on Tenant's behalf. It is understood and agreed that Tenant's obligation to furnsh to Landlord any instrument described in this Article 21 promptly as requested is a material inducement for Landlord's execution of this Lease. No cure or grace period provided in this Lease shall apply to Tenant's obligations to timely deliver such instruments. Tenant acknowledges that it may be difficult, if not impossible, for Landlord to finance or sell the Shopping Center without such instruments from Tenant. Tenant's failure to deliver said instruments in the time and manner provided herein shall constitute an event of default. In addition to any other remedies set forth herein, Landlord shall be entitled all remedies available at law with respect to such breach.

(b)            If Landlord shall be or is alleged to be in default of any of its obligations owing to Tenant under this Lease, Tenant agrees to give to Holder and Lessor a copy of any written notice (by registered or certified mail or by delivery service) of any such default which Tenant shall have served upon Landlord, provided that prior thereto Tenant has been notified in writing (by way of notice of assignment of rents and/or leases, or otherwise) of the name and addresses of any such Holder and Lessor. Tenant shall not be entitled to exercise any right or remedy as may exist because of any default by Landlord without having given such notice to Holder and Lessor. Tenant further agrees that if Landlord shall fail to cure such default, Holder or Lessor shall have an additional 30 days (measured from the later of the date on which the default should have been cured by Landlord, or the date of Holder's or Lessor's receipt of such notice from Tenant), provided that if such default cannot be cured within such 30-day period and Holder or Lessor is diligently pursuing the remedies necessary to effectuate the cure (including, but not limited to, foreclosure or termination proceedings, if appropriate) such cure period shall be extended to allow the cure to be completed.

ARTICLE 22 - EFFECT OF SALE

22.1Sale. A sale, conveyance or assignment of Landlord's interest in the Shopping Center will operate to release Landlord from liability from and after the effective date of such sale, conveyance or assignment upon all of the covenants, terms and conditions of this Lease, express or implied, except those liabilities which arose prior to such effective date, and, after the effective date of such sale, conveyance or assignment, Tenant will look solely to Landlord's successor-in-interest in and to this Lease. This Lease will not be affected by any such sale, conveyance or assignment, and Tenant will attorn to Landlord's successor-in-interest to this Lease, so long as such successor-in-interest assumes Landlord's obligations under the Lease from and after such effective date.

ARTICLE 23 - NOTICES

23.l       Notice. Wherever any notice is required or permitted hereunder, such notices shall be in writing. Any notice or document required or permitted to be delivered hereunder shall be addressed to the relevant party hereto at the respective address set out in Section 1.1

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above, or at such address as that party may have hereafter specified by written notice. Any such notice may be sent by: (a) personal or messenger delivery, (b) U.S. Postal Service certified mail, return receipt requested, or (c) nationally recognized overnight courier, or (d) by facsimile transmission, or (e) by electronic mail. Any such notice shall be deemed delivered upon receipt, refusal of receipt, or return on account of the relevant party no longer being located at the relevant address.

23.2     Parties. If and when included within the term "Landlord" as used in this instrument there are more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of such notice specifying some individual at some specific address for the receipt of notices and payments to Landlord. If and when included within the term "Tenant" as used in this instrument there are more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of such a notice specifying some individual at some specific address for the receipt of notices and payments to Tenant. All parties included with terms "Landlord" and "Tenant," respectively, shall be bound by notices and payments given in accordance with the provisions of this Article to the same effect as if each had received such notice or payment.

ARTICLE 24 - LATE CHARGES

24.1Late Charges. In the event Tenant fails to pay Landlord when due any installment of rental or other sum to be paid to Landlord which may become due hereunder, Tenant will pay Landlord on demand a late charge of 10% of the past due amount, but in no event less than $100.00 ("Late Charge"). Tenant agrees that in the event of any such late payment by Tenant, the damages resulting to Landlord will be difficult to ascertain precisely, and that the Late Charge constitutes a reasonable and good faith estimate by the parties of the extent of such damages.

24.2Interest. In addition to the Late Charge, Tenant agrees to pay Landlord interest in the amount of 12% of any installment of the Monthly Payment not paid when due, but in no event more than the interest charge allowed by law. This provision for Late Charges and any interest charge shall be in addition to all other rights  and remedies available to Landlord hereunder or at law or in equity and shall not be construed as liquidated damages or limiting Landlord's remedies in any manner.

ARTICLE 25 - RADIUS RESTRICTIONS

25.1Intentionally Omitted.

ARTICLE 26 - HAZARDOUS MATERIALS

26.1Definitions. The term "Hazardous Substances" as used in this Lease, shall include,without limitation, flammables,explosives, radioactive materials, asbestos, polychlorinated biphenyls (PCBs), chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, petroleum and petroleum products, and substances declared to be hazardous or toxic under any law or regulation now or hereafter enacted or promulgated by any governmental authority.

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26.2     Tenant's Restrictions. Tenant shall not cause or permit to occur:

(a)Any violation of any federal, state, or local law, ordinance, or regulation now or hereafter enacted, related to Hazardous Substances or environmental conditions on, under, or about the Premises, or arising from Tenant's use or occupancy of the Premises, including, but not limited to, soil and ground water conditions; or

(b)The use, generation, release, manufacture, refining, production, processing, storage, or disposal of any Hazardous Substance on, under, or about the Premises, or the transportation to or from the Premises of any Hazardous Substance.

26.3     Environmental Clean-up.

(a)Tenant shall comply with all laws regulating the use, generation, storage, transportation, or disposal of Hazardous Substances.

(b)Tenant shall, make all submissions to, provide all information required by, and comply with all requirements of all governmental authorities ("Authority") concerning Hazardous Substances in, on or about the Premises.

(c)Should any Authority demand that a cleanup plan be prepared and that a cleanup be undertaken because of any deposit, spill, discharge, or other release of Hazardous Substances that occurs during the Lease Term, at or from the Premises, or which arises at any time from Tenant's use or occupancy of the Premises, then Tenant shall, at Tenant's own expense, provided the deposit, spill, discharge, or release was caused by Tenant or Tenant's agents, employees, affiliates, customers, clients or invitees, prepare and submit the required plans and all related bonds and other financial assurances; and shall promptly carry out all such cleanup plans.

(d)Tenant shall, where appropriate, promptly provide all information regarding the use, generation, storage, transportation, or disposal of Hazardous Substances that is requested by Landlord. If Tenant fails to fulfill any duty imposed under this section within a reasonable time, Landlord may do so; and in such case, Tenant shall cooperate with Landlord in order to prepare all documents Landlord deems necessary or appropriate to determine the applicability of the laws to the Premises and Tenant's use thereof, and for compliance therewith, and Tenant shall execute all documents promptly upon Landlord's request. No such action by Landlord and no attempt made by Landlord to mitigate damages under any environmental laws and regulations shall constitute a waiver of any of Tenant's obligations under this Article.

26.4    Tenant's Indemnity. Tenant shall indemnify, defend, and hold harmless Landlord, the manager of the property, and their respective officers, directors, beneficiaries, shareholders, partners, agents, and employees from all fines, suits, procedures, daims, and actions of every kind, and all costs associated therewith (including attorneys' and consultants' fees) arising out of or in any way connected with any use, generation, storage, deposit, spill, discharge, or other release of Hazardous Substances that occurs during the Lease Term, at or from the Premises, or which arises at any time from Tenant's use or occupancy of the Premises or the use of occupancy of the Premises, by Tenant's agents, employees, affiliates, customers,

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clients or invitees, or from Tenant's failure to provide all information, make all submissions, and take all steps required by all Authorities under all environmental laws and regulations.

26.5           Survival. Tenant's obligations and liabilities under this Article shall survive the expiration of this Lease.

ARTICLE 27 -MISCELLANEOUS

27.l        Joint Venture. Nothing herein contained shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture between parties hereof, it being understood and agreed that neither the method of computation of rental nor any other provisions contained herein, nor any acts of the parties hereto, shall be deemed to create any relationship between the parties hereto other than the relationship of Landlord and Tenant. Whenever herein the singular number is used, the same shall include the plural, and words of any gender shall include each other gender.

27.2Captions. The captions used herein are for convenience only and do not limit or amplify the provisions hereof.

27.3No Waiver. One or more waivers of any covenant, term or condition of this Lease by either party shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition. The consent or approval by either party to or of any act by the other party requiring such consent or approval shall not be deemed to waive or render unnecessary consent to or approval of any subsequent similar act.

27.4Holder Notice. At any time when there is outstanding a mortgage, deed of trust or similar security instrument covering Landlord's interest in the Premises of whose name and address Tenant has been notified in writing, Tenant may not exercise any remedies for default by Landlord hereunder unless and until the holder of the indebtedness secured by such mortgage, deed of trust or similar security instrument shall have received written notice of such default and a reasonable time for curing such default shall thereafter have elapsed.

27.5Quiet Enjoyment. Landlord agrees that if Tenant shall perform all of the covenants and agreements herein required to be performed by Tenant, Tenant shall, subject to the terms of this Lease, at all times during the continuance of this Lease, have the peaceable and quiet enjoyment and possession of the Premises.

27.6Entire Agreement. This Lease and the exhibits attached hereto contain the entire agreement between the parties, and no agreement shall be effective to change, modify or terminate this Lease in whole or in part unless such agreement is in writing and duly signed by the party against whom enforcement of such change, modification or termination is sought.

27.7Brokers. Landlord and Tenant respectively represent and warrant to each other that neither of them has consulted or negotiated with any broker or finder with regard to the Premises except the Brokers named in Section 1.1. Landlord shall be responsible for and pay all commissions arising from this Lease to Fuller Real Estate, Landlord's Broker. Landlord shall have no obligation to pay any commission due to David Hicks Lampert, Tenant's Broker.

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27.8Estoppel. Tenant agrees that at any time, and from time to time during the Lease Term, within 10 days after request by Landlord hereto, Tenant will execute, acknowledge and deliver to Landlord or to any prospective purchaser, assignee or mortgagee designated by Landlord, an estoppel certificate in a form acceptable to Landlord. No cure or grace period provided in this Lease shall apply to Tenant's obligations to timely deliver an estoppel certificate as provided herein. Tenant acknowledges that it may be difficult, if not impossible, for Landlord to finance or sell the Shopping Center without such instrument from Tenant. Tenant's failure to deliver said instrument in the time and manner provided herein shall constitute an event of default. Notwithstanding the foregoing, failure by Tenant to timely execute and deliver such estoppel certificate or other instruments shall constitute an acceptance of the Premises and an acknowledgement by Tenant that statements in the estoppel certificate are true and correct, without exception.

27.9Governing Law. The laws of the State of Colorado shall govern the interpretation, validity, performance and enforcement of this Lease. If any provision of this Lease should be held to be invalid or unenforceable, the validity and enforceability of the remaining provisions of this Lease shall not be affected thereby.

27.10Binding. The terms, provisions and covenants contained in this Lease shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors in interest and legal representatives except as otherwise herein expressly provided.

27.11Effectiveness. The submission of this Lease for examination and negotiation does not constitute an offer to lease, or a reservation  of, or option for, the Premises, and this Lease shall become effective and binding only upon the execution and delivery hereof by bath Landlord and Tenant. All negotiations, considerations, representations,  and understandings  between Landlord and Tenant are incorporated herein and may be modified or altered only by agreement in writing between Landlord and Tenant, and no act or omission of any employee or agent of Landlord of Tenant shall alter, change or modify any of the provisions hereof.

27.12       Attorneys' Fees and Jury Trial. In the event of any litigation or arbitration between the parties relating to this Lease, the Premises or the Shopping Center (including pretrial, trial, appellate, administrative, bankruptcy or insolvency proceedings), the prevailing party shall be awarded, as part of the judgment or  settlement, all attorneys' fees, costs and expenses incurred in connection with such litigation, except as may be limited by applicable law. In any situation where a default by Tenant occurs and is resolved without litigation, Tenant shall also pay all of Landlord's reasonable costs and attorneys' fees relating thereto, up to $5,000.00.  In the interest of obtaining a speedier and less costly hearing of any dispute, the parties hereby each irrevocably waive the right to trial by jury.

27.13       Financial Statements. Tenant agrees to furnish to Landlord copies of its Colorado State Sales Tax Return on a quarterly basis. Tenant agrees to furnish to Landlord from time to time (but no less than once annually) a balance sheet showing the then current net worth of Tenant together with  a profit and loss statement for Tenant's most recently completed fiscal year. Such statements shall be certified by an independent certified public accountant and prepared in accordance with generally accepted accounting principles.

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27.14Landlord's Fees. Whenever Tenant requests Landlord to take any action or give any consent required or permitted under this Lease, Tenant will reimburse Landlord for all of Landlord's reasonable costs incurred in reviewing the proposed action or consent, including, without limitation, reasonable attorneys', engineers' or architects' fees, within  10 days after Landlord's delivery to Tenant of a statement of such costs. In no event, however, shall Tenant be required to reimburse Landlord expenses in excess of $5,000.00 per each request of Tenant. Additionally, Landlord shall attempt to minimize its cost and ensure that its expenses are reasonable. Tenant will be obligated to make such reimbursement without regard to whether Landlord consents to any such proposed action.

27.15Force Majeure. Landlord will have no liability to Tenant, nor will Tenant have any right to terminate this Lease or abate Monthly Payment or assert a claim of partial or total actual or constructive eviction, because of Landlord's failure to perform any of its obligations in this Lease if the failure is due to reasons beyond Landlord's reasonable  control, including without limitation, strikes or other labor difficulties, inability to obtain necessary governmental permits and approvals (including building permits or certificates of occupancy), war, riot, civil insurrection, accidents, terrorism, acts of God and governmental preemption in connection with a national emergency (collectively referred to as "Force Majeure").

27.16Counsel Review. Landlord and Tenant acknowledge that each of them and their counsel have had an opportunity to review this Lease and that this Lease will not be construed against Landlord merely because Landlord has prepared it.

27.17Severability. If any provision of this Lease shall be determined to be invalid or unenforceable by a court of competent jurisdiction, such determination shall in no way affect, impair or invalidate any other provision of this Lease, and all other provisions hereof shall remain in full force and effect.

27.18Rules and Regulations. Tenant and its employees, agents, licensees and visitors will at all times observe faithfully, and comply strictly with, the rules and regulations set forth on Exhibit D attached hereto. Landlord may from time to time reasonably amend, delete or modify existing rules and regulations, or adopt reasonable new rules and regulations for the use, safety, cleanliness and care of the Premises and the Shopping Center, and for the comfort, quiet and convenience of occupants of the Shopping Center. Modifications or additions to the rules and regulations will be effective upon 30 days' prior written notice to Tenant from Landlord. In the event of any breach of any rules or regulations or any amendments or additions to such rules and regulations, Landlord will have all remedies which this Lease provides for default by Tenant, and will, in addition, have any remedies available at law or in equity, including the right to enjoin any breach of such rules and regulations. Landlord will not be liable to Tenant for violation of such rules and regulations by any other tenant, visitors, licensees or any other person. In the event of any conflict between the provisions of this Lease and the rules and regulations, the provisions of this Lease will govern.

27.19Tax Credits. Landlord is entitled to claim all  tax credits and depreciation attributable to leasehold improvements in the Premises. Promptly after Landlord's demand, Landlord and Tenant will prepare a detailed list of the leasehold improvements and fixtures andtheir respective costs for which Landlord or Tenant has paid. Landlord will be entitled to all

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credits and depreciation for those items for which Landlord has paid by means of any tenant finish allowance or otherwise. Tenant will be entitled to any tax credits and depreciation for all items for which Tenant has paid with funds not provided by Landlord.

27.20Shopping Center Occupancy. Tenant in executing this Lease does not rely upon the fact, nor does Landlord represent, that any specific tenant or number of tenants shall occupy any Shopping Center space during the term of this Lease.

27.21Guarantor. This Lease shall not be effective unless the persons, if any, listed in Section 1.1(w) hereof shall execute the Guaranty attached as Exhibit E of this Lease.

27.22Recording. Tenant agrees not to record this Lease or any memorandum hereof. Any such unauthorized recording will give Landlord the right to declare a breach of this Lease and pursue the remedies provided herein for an event of default by Tenant.

27.23Non-Disclosure. "Confidential Information" means any and all information pertaining to the terms of this lease, and neither Landlord nor Tenant shall disclose Confidential Information to any third party, without the prior written consent of the other. This provision shall not apply to any Confidential Information that (a) was or becomes generally available to the public, (b) becomes available to the public from a third party source, other than as a consequence of a breach of any obligation of confidentiality, or (c) is disclosed in response to a valid order by a court or other governmental body if no suitable protective order or equivalent remedy is available.

ARTICLE 28 - OPTION TO RENEW

28.1Option to Renew. Tenant will have the option to renew the Lease Term for two (2)additional terms of five (5) years each (the "Renewal Term"), subject to the further provisions of this section.

(a)Tenant must exercise the option with respect to each Renewal Term, if at all, by giving notice of exercise ("Tenant's Notice") to Landlord on or before the date that is not greater than two hundred seventy (270) days prior to the then applicable Expiration Date, and not less than one hundred eighty (180) days prior to the then-applicable Expiration Date. Tenant will have no right to renew the Lease Term if Tenant's Notice is not timely delivered, or if Tenant is in default under this Lease at the time Tenant's Notice is delivered or on the then applicable Expiration Date.

(b)       The Renewal Term will be on the same terms and conditions as this Lease.

ARTICLE 29 - BANKRUPTCY

29.1Deemed  Rejection of Lease. If the Tenant becomes a debtor under Chapter 7 of the United States Bankruptcy Code (the "Bankruptcy Code"), or in the event that a petition for reorganization or adjustment of debts is filed concerning the Tenant under Chapter 11 or Chapter 13 of the Bankruptcy Code, or a proceeding filed under Chapter 7 is transferred to Chapter 11 or 7,the "Trustee" or the Tenant, as "Debtor-in-Possession," shall be deemed to have rejected this

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Lease. No election by the Trustee or Debtor-in-Possession to assume this Lease shall be effective unless each of the following conditions, which Landlord and Tenant hereby acknowledge to be commercially reasonable in the context of a bankruptcy proceeding, has been satisfied, and the Landlord has so acknowledged in writing: (i) the Trustee or Debtor-in-Possession has cured, or has provided the Landlord "adequate assurance" (as hereinafter defined) that from the date of such assumption the Trustee or Debtor-In-Possession will promptly cure, all monetary and non-monetary defaults under the Lease; (ii) the Trustee or Debtor-in-Possession has compensated, orhas provided to the Landlord adequate assurance that within ten (10) days of the date of assumption the Landlord will be compensated, for any pecuniary loss incurred by the landlordarising from default of the Tenant, the Trustee, or the Debtor-in-Possession as recited in theLandlord's written statement of pecuniary loss sent to the Trustee or Debtor-in-Possession; and (iii) the Trustee or Debtor-in-Possession has provided the Landlord with adequate assurance of future performance of each of the Tenant's, the Trustee's, or the Debtor-in-Possession's obligations under this Lease; provided, however, that: (x) the Trustee or Debtor-in-Possession shall also deposit with the Landlord, as security for the timely payment of rent and other sums due hereunder, an amount equal to three months Base Rent, Additional Rent, and other monetary charges accruing under this Lease; and (y) the obligations imposed upon the Trustee or Debtor- in-Possession shall continue with respect to the Tenant or any assignee of this Lease after the completion of the bankruptcy proceedings.

29.2Adequate Assurance. For purposes of this Section, Landlord and Tenant acknowledge that, in the context of the bankruptcy proceedings of the Tenant, at a minimum, "adequate assurance" shall mean: (i) the Trustee or Debtor-in-Possession will continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure the Landlord that the Trustee or Debtor-in-Possession will have sufficient funds to fulfill all of the obligations of Tenant under this Lease; or (ii) the Bankruptcy Court shall have entered an order segregating sufficient cash payable to the Landlord, and the Trustee or Debtor-in-Possession shall have granted to the Landlord a valid and perfected first lien and security interest or mortgage in property of the Tenant, the Trustee, or the Debtor-in-Possession, acceptable as to value and kind to the Landlord, in order to secure to the Landlord the obligation of the Tenant, Trustee, or Debtor-in-Possession to cure the monetary or non-monetary defaults under the Lease within the time period set forth above.

29.3Lease Assignments in Bankruptcy Proceedings. The following conditions shall apply to any assignments of this Lease in bankruptcy proceedings if the Trustee or Debtor-in- Possession has assumed this Lease and elects to assign the Lease to any other person, such interest or estate of Tenant in this Lease may be so assigned only if the Landlord has acknowledged in writing that the intended assignee can provide to the Landlord "adequate assurance of future performance" (as herein defined) of all of the  terms, covenants and conditions of this Lease to be performed by the Tenant. For the purposes of this provision, Landlord and Tenant acknowledge that, in the context of a bankruptcy proceeding, at  a minimum, "adequate assurance of future performance" shall mean that each of the following conditions has been satisfied, and the Landlord has so acknowledged in writing: (i) the proposed assignee has submitted a current financial statement audited by a Certified Public Accountant which shows the net worth and working capital and amounts determined by Landlord to be sufficient to assure the future performance by such assignee of all of Tenant's obligations under this lease; (ii) the proposed assignee, if requested by the Landlord, bas obtained guaranties in

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form and substance satisfactory to the Landlord from one or more persons who satisfy the Landlord's standards of creditworthiness; and (iii) the Landlord has obtained all consents or waivers from any third party required under any lease, mortgage, financing arrangement, or other agreement by which the Landlord is bound, in order to permit the Landlord to consent to such assignment.

29.4 Authority. Each of the parties executing this Lease on behalf of Tenant or Landlord represents to the other party that such party is authorized to do so by requisite action of the party to this Lease. If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each party shall, within 30 days after request, deliver to the other party satisfactory evidence of such authority.

LANDLORD:		TENANT:
THE ROBFORD COMPANY, L.L.C., a Colorado limited liability company		The Cheesesteak Connection #4, LLC a Colorado limited liability company
By:	/s/ James Adelstein	By:	/s/ James A. Smith
Name:	James Adelstein	Name:	James A. Smith
Title:	Vice President	Title:	As Manager
Date:	2-17-10	Date:	2/2/2010

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EXHIBIT A

Site Plan

EXHIBIT B

Legal Description of the Shopping Center

The North 1/2 of Block 13, Jersey Subdivision, except the West 10 feet, as described in Book 462 at Page 244, County of Arapahoe, State of Colorado.

EXHIBIT C

WORK LETTER

Landlord:The Robford Company, L.L.C., a Colorado limited liability company

Tenant:The Cheesesteak Connection #4, LLC

Premises:as more particularly described in the Lease

Shopping Center:     as more particularly described in the Lease

1.Landlord shall complete, at Landlord's cost and expense, the work itemized on Schedule 1 attached to this Work Letter, which items of work shall be known as "Landlord's Work":

2.All work, except as identified as Landlord's Work on Schedule 1 hereto, that is necessary to permit Tenant to commence its business in the Premises shall be completed by Tenant at Tenant's cost and expense ("Tenant's Work"). All permanent fixtures installed in the Premises by Tenant shall be deemed part of the Premises upon installation and the property  of the Landlord unless otherwise specifically agreed in writing between the parties.

A.Services requested by Tenant in connection with plan and specification preparation shall be at Tenant's sole cost and expense. Landlord makes no representation or guarantee with respect to  fees, services, schedules or other items to be provided by the architect/engineer and shall in no way be responsible for such architect/engineer's work product. Tenant's architect/engineer shall prepare plans and specification stamped by the architect/engineer for Tenant's Work to be completed in the Premises (the "Plans and Specifications"). Such Plans and Specifications shall be delivered to Landlord within thirty (30) days after the date of this Lease. All Plans and Specifications are subject to review and approval by Landlord, Landlord's architect and Landlord's engineer and Tenant is required to submit the Plans and Specifications for such review and obtain approval prior to commencement of Tenant's Work. All costs of preparation, review and approval, including review and approval by Landlord, Landlord's architect, and/or Landlord's engineer, shall be borne by Tenant. Landlord shall, within thirty (30) working days after receipt of the Plans and Specifications by Landlord for its review and approval, submit to Tenant the Plans and Specifications with the required approvals noted thereon, or submit comments to Tenant setting forth changes to be made in the Plans and Specifications. If changes are required by Landlord, Tenant shall have the Plans and Specifications modified and resubmitted to Landlord for approval within fifteen (15) days after the date Landlord submits its requested changes to Tenant and such process shall be repeated until Landlord, Landlord's architect, and/or Landlord's architect, and/or Landlord's engineer have approved the Plans and Specifications for the Premises (hereinafter referred to as "Approved Plans and Specifications"). Changes to the Approved Plans and Specifications shall be made only upon prior written approval of Landlord and shall be at Tenant's sole cost and expense.

B.Tenant shall contract directly for the Tenant's Work to be completed in accordance with the approved Plans and Specifications. Tenant's contractor shall bill Tenant and

Tenant shall be solely responsible for paying all costs for Tenant's Work. Tenant and Tenant's contractor will be required to adhere to the requirements set forth in Addendum 1 attached hereto in connection with performance of Tenant's Work and the contract between Tenant and Tenant's contractor shall incorporate all of the provisions of Addendum 1.

3.Notwithstanding any provision herein or in the Lease to the contrary, the Commencement Date and Tenant's other obligations under the Lease will not be delayed or extended by any Tenant Delay, as defined below. Notwithstanding any provision herein or in the Lease to the contrary, the Drop-Dead Date set forth in Section 3.3 of the Lease shall be delayed and extended one day for each day of Tenant Delay. The term "Tenant Delay" shall include but not be limited to delay: (i) caused by Tenant's failure to timely deliver its Plans and Specifications to Landlord; (ii)in the finalization or approval of the Plans and Specifications caused by Tenant, its agents or employees; (iii) caused by modifications, revisions, and changes to the Approved Plans and Specifications requested by Tenant, its agents or employees; (iv) in the delivery, installation, or completion of any items specified by Tenant to the extent that such items require ordering or work deadlines inconsistent with the scheduled Commencement Date; or (v) of any other kind or nature in completion of Tenant's Work caused by Tenant, its agents or employees.

4.Landlord agrees to pay (jointly to Tenant and Tenant's contractor) for completion of Tenant's Work an allowance (the "Allowance) up to a maximum amount of $20.00 per square foot of floor area (as measured from finished surface of exterior walls to furnished surface of interior walls) of the Premises for work actually completed. The Allowance shall be payable as follows:

A.     Prior to commencement of Tenant's Work by Tenant's contractor, Tenant shall provide Landlord with evidence satisfactory to Landlord that Tenant has made financial arrangements to fulfill its obligations to pay for Tenant's Work, and install its fixtures and furniture as described in Paragraph 2 above. Landlord's payment of the Allowance shall be subject to ail of the following items (i)-(vii) being completed to Landlord's satisfaction and the Allowance shall be due and payable by Landlord on the 45th day after the last-to-be-completed item has occurred to Landlord's satisfaction: (i) Tenant submits to Landlord an affidavit that all payrolls, bills for materials and any equipment and other indebtedness connected with Tenant's Work for which Landlord or its property might in any way be responsible, have been paid or otherwise satisfied unless disputed and if disputed presentation of appropriate lien waivers; (ii) Tenant submits to Landlord any other data, to the extent and in such form as may be designated by Landlord, which establishes the final cost of Tenant's Work and the payment or satisfaction of all Tenant's construction obligations, such as receipts,  releases and waivers of liens arising out of Tenant's Work; (iii) Landlord is provided with the certificate by Landlord's architect that the Tenant's Work is complete in accordance with the Approved Plans and Specifications and the provisions hereof; (iv) Landlord is provided with ail certificates necessary for occupancy of the Premises issued by the appropriate governmental authority permitting use of the Premises in accordance with the Approved Plans and Specifications; (v) Tenant has opened for business to the public; (vi) Tenant has paid first month's rent; and (vii) Tenant has executed such other close-out documents as may be requested by Landlord to include, but not be limited to, an estoppel certificate and an attornment and subordination agreement.

B.Any cost of Tenant's Work in excess of the Allowance shall be paid by Tenant as and when due.

C.If Tenant elects to have Landlord's contractor perform all or any portion of the Tenant's Work, the Allowance shall be paid by Landlord to Landlord's contractor or others entitled to payment in accordance with Landlord's standard disbursement procedures upon receipt of documentation as Landlord may reasonably require including, without limitation, lien waivers and architect's certificates. To the extent that the cost of Tenants Work exceeds the Allowance, Tenant shall pay all such amounts within ten (10) calendar days after billing therefor from Landlord. Partial billing may be made periodically as the Work progresses.

D.      All costs attributable to design and construction of Tenant's Work including, but not limited to, services, fees and expenses of Landlord's architect or engineers, costs of permits and licenses required for completion of Tenant's Work, labor, material, fees, and expenses of Landlord's contractor in completing Tenant's Work shall be paid from the Allowance. To the extent that such costs exceed the Allowance, Tenant shall pay all such amounts within ten (10) calendar days after receipt of billing therefor from Landlord or as and when due if billed directly to Tenant. Partial billing may be made periodically as the Work progresses.

SCHEDULE 1 LANDLORD'S WORK

1.1     Preferred Shell Conditions

Landlord to be required to complete the following work or provide a credit to the Tenant:

Floor•	●	Landlord to provide Tenant a rent credit in lieu of a concrete slab in the amount of $3.85 per square foot.
Fire Sprinklers:	●	Distributed to caver raw shell per code when existing or required.
Plumbing:	●	4" sanitary waste line stubbed into or across the space deep enough to allow for tie-in from any location within the unit.
	●	4" grease waste line stubbed into or across the space deep enough to allow for tie-in :from any location within the unit. 1,000-gallon minimum exterior grease trap or as per code or credit.
	●	l" cold water line stubbed into the space with local shut off valve.
	●	1-112" gas line into or above the space from unit meter.
	●	Landlord to pay all tap fees
HVAC:	●	One (1) ton per 200 SF. Roof top HVAC units with economizers. Ductwork stubbed into the space only, no other distribution. Gas lines and power connected. Unit(s) started and running. Temporary thermostat.
Electrical:	●	102/208 3-phase 400 amp service.
	●	HVAC units wired.
	●	Circuit, wire and j-box for sign(s) connections installed .
	●	Outlets per code at storefront.
Fire Alarm:	●	Available zones on house panel if existing or required. Sprinkler system alarm wired where existing or required.
Storefront	●	Standard storefront consistent with the project including glass and front entrance
and Walls:		Drywall on all four walls, except where glass is located

ADDENDUM 1 TO WORK LETTER

PROCEDURE AND SCHEDULES FOR COMPLETION

OF TENANT FINISH WORK BY TENANT

Tenant and Tenant's Work contractors and the contracts between Tenant and Tenant's contractors, to be entered into in connection with the performance of Tenant's Work, shall conform to the following rules, regulations, and requirements, which shall be incorporated into such contracts. In the event of any conflict between any other terms or provisions of Tenant's contracts with Tenant's contractors for the performance of Tenant's Work and the terms  and provisions set forth below, the terms and provisions set forth below shall control.

1.      Commencement of Construction

Tenant shall start construction of Tenant's Work in the Premises not later than ten (10) days from either of the following dates, whichever shall be the later to occur and shall carry such construction to completion with all due diligence:

A.The date of receipt by Tenant of written notice from the Landlord that Landlord has substantially completed (excepting a standard punch list which does not interfere with Tenant's ability to commence its work) any of the work on the shell or surrounding areas to be perfom1ed by Landlord (other than such work which cannot be performed by Landlord until Tenant makes the Premises ready for the performance thereof) and that the Premises are ready for Tenant's Work; or

B. The date on which Plans and Specifications are approved by Landlord for the Premises.

2.      General Requirements

A.Tenant shall submit to Landlord, in writing, at least ten (10) days prior to the commencement of construction, the following information:

(i)The names and addresses of the general, mechanical and electrical contractors Tenant intends to engage in the construction of Tenant's Work and copies of proposed contracts executed by Tenant. (The term "Contractor" as used hereinafter shall mean Tenant's general contractor or, if Tenant does not use a general contractor, then all contractors with whom Tenant contracts directly for Tenant's Work. The term "Subcontractors" shall mean and refer to all entities contracting with the Contractor to complete Tenant's Work.)

(ii)A schedule setting forth the commencement date of construction of Tenant's Work and the date of completion of construction of Tenant's Work, fixturing work, and the date of projected opening.

(iii)Copies of performance and/or labor and material bonds, if so required by Tenant from the Contractor and Subcontractors.

(iv)Itemized statement of estimated construction costs, including architectural, engineering and contracting fees.

(v)Evidence of insurance as called for herein. Tenant shall secure, pay for and maintain, or cause its contractor(s) to secure, pay for and maintain, during the continuance of construction and fixturing work within the Premises, all of the insurance policies required and in the amounts as set forth herein. Tenant shall not permit, and Tenant's Work Contracts shall prohibit its Contractor to commence any work until all required insurance has been obtained and certified copies of policies have been delivered to Landlord.

(vi)       A copy of,the building permit.

B.      Insurance: Tenant shall secure, pay for and maintain, or cause its Contractor to secure, pay for and maintain during the continuance of construction and fixturing work within the Premises, the following insurance and in the amounts as set forth below:

(i)Tenant's Contractor's and Subcontractor's Required Minimum Coverages and Limits of Liability:

(a)Worker's Compensation, Employer's Liability Insurance with limits of not less than $100,000.00 and as required by state law and any insurance required for any employee by state law and any insurance required by any Employee Benefit Acts or other statutes applicable where the work  is to be performed as will protect the Contractor and Subcontractors from any and all liability under the aforementioned acts.

(b)Comprehensive General Liability Insurance (including Contractor's Protective Liability) in an amount not less than $500,000.00 per person and $1,000,000.00 per occurrence whether involving personal injury liability (or death resulting therefrom) or property damage liability or a combination thereof with a minimum aggregate limit of $1,000,000.00. Such insurance shall provide for explosion and collapse coverage, if applicable, and contractual liability coverage and shall insure the Contractor and/or Subcontractors against any and all claims for personal injury, including death resulting therefrom and damage to the property of others and arising from his operations under the Contract and whether such operations are performed by the Contractor, Subcontractors or any of their Subcontractors, or by any one directly or indirectly employed by any of them

(c)Comprehensive Automobile Liability Insurance, including the ownership, maintenance and operation of any automotive equipment owned, hired, and non- owned in the following minimum amounts:

(i) Bodily injury, each person - $500,000.00

(ii) Bodily injury, each occurrence - $1,000,000.00

(iii) Property damage liability - $100,000.00

Such insurance shall insure the Contractor and/or Subcontractors against any and all claims for bodily injury, including death resulting therefrom and damage to the property of others arising from his operations under the Contract and whether such operations are performed by the Contractor, Subcontractors, or any one directly or indirectly employed by any of them.

(ii)      Tenant's Protective Liability Insurance

Tenant or Tenant's Contractor shall provide Owner's Protective Liability Insurance as will insure against any and all liability (or death resulting therefrom) and property damage liability of others for a combination thereof which may arise from work in the completion of the Premises, and any other liability for damages which the Contractor and/or Subcontractor are required to insure under any provisions herein.

Landlord shall be named as additional insured. Said insurance shall be provided in minimum amounts as follows:

(a) Bodily injury each person - $500,000.00

(b) Bodily injury each occurrence - $1,000,000.00

(c) Property Damage each occurrence - $250,000.00

(d) Property Damage, Aggregate - $250,000.00

(iii)            Tenant's Builder's Risk Insurance. Tenant shall provide a complete Value Form "All Physical Loss" Builder's Risk coverage on its work in the Premises as it relates to the building within which the Premises is located, naming the interests of the Landlord, the Contractor and all Subcontractors, as their respective interest may appear, within a radius of 1OO feet of the Premises.

(iv)Insurance policies shall name Landlord as additional insured. Certificates of Insurance shall provide that no change or cancellation of such insurance coverage shall be undertaken without thirty (30) days written notice to Landlord. Tenant's Contractor shall deliver the necessary insurance certificates to Landlord prior to commencing work.

C.As provided above, Tenant shall notify Landlord of the names of the proposed Tenant's Work general, mechanical and electrical contractors and such contractors shall be subject to prior written approval of Landlord which approval shall not be unreasonably withheld. All Contractors and Subcontractors engaged by Tenant shall be bondable, licensed contractors, possessing good labor relations, capable of performing quality workmanship and working in harmony with Landlord's general contractor and other contractors on the job. All work shall be coordinated with the general project work. Landlord shall have the right to require Tenant's Contractors and Subcontractors to provide payment and performance bonds for any or all

Tenant's Work, such bonds to be provided at Tenant's sole cost and expense. Any bond shall be requested and provided prior to the commencement of Tenant's Work.

D.Tenant's Contractor and Tenant's Work construction shall comply in all respects with applicable federal, state, county and/or local statutes, ordinance, regulations, laws and codes. All required building and other permits in connection with the construction and completion of the Premises shall be obtained and paid for by Tenant.

E.All Tenant's Work contracts shall be in writing, and no Tenant's Work shall be done except pursuant to such contracts. All Tenant's Work contracts shall be subject to Landlord's prior written consent. Any approved Tenant's Work contracts (hereinafter referred to collectively as the "Tenant's Work Contract") shall not be amended or modified without approval by Landlord. The Tenant's Work Contract shall conform with the provisions of the Lease, including all provisions herein, and shall obligate the Tenant's Contractor to complete Tenant's Work in accordance with the schedule referred to in Paragraph l .B above.

F.In order to maintain Landlord's warranties and guaranties for the roof and the mechanical, electrical, safety and fire protection systems, all Tenant's Work affecting these systems shall be completed by Landlord's shell subcontractors performing the respective shell work items; provided, however, at Landlord's sole option, Landlord shall have the right to allow other subcontractors to perform work on special systems which may require connection into the foregoing systems. Other work which Landlord shall have the right to have performed on behalf of and for the benefit of Tenant shall be limited to work which Landlord deems necessary to be done on an emergency basis and which pertains to structural components, the general utility systems for the project, and the erection of temporary barricades and temporary signs, per standard project details and criteria, during construction and/or the period following the opening of the center for business.

G.Tenant's Work shall be subject to the inspection and approval of Landlord, Landlord's Architect and general contractor. Such inspection shall be for Landlord's sole benefit and shall in no event be construed as any benefit to, nor may Tenant rely thereon. Ail work performed and material and equipment installed shall be first quality,  new materials and equipment and meet or exceed those standards or qualities (as judged by Architect) presently performed or contemplated at the project. Landlord shall have the right at any time during the performance of Tenant's Work or thereafter to require replacement and reconstruction at Tenant's expense of Tenant's Work not substantially conforming to these standards or to the Tenant' s Work Contract.

H.Tenant shall apply and pay for, at the time of delivery, all utility meters except where metered service is provided by Landlord or public service agency.

I.   The Tenant's Work Contract shall include a statement requiring the Contractor and all subcontractors, laborers, and materialmen to execute a lien waver for any interim and final payments. A copy of the executed waiver or notice of refusal is to be immediately forwarded to the Landlord.

J.Prior to commencement of any Tenant's Work in the Premises, Tenant shall obtain from Landlord the Landlord's notice which provides that Landlord is not responsible for the payment of such work and setting forth such other information as landlord may deem necessary. Tenant shall post copies of the notice in the Premises in locations which will be visible by parties performing any work on the Premises and Tenant shall provide evidence of posting, including a photograph and a notarized statement confirming such posting. Tenant and Tenant's Contractor shall not remove, destruct, deface or otherwise modify the notice.

K.Tenant shall indemnify and hold harmless Landlord and representatives, agents and employees from and against all claims, damages, losses, and expenses, including, but not limited to, reasonable attorney’s fees arising out of or resulting from the performance of Tenant's Work or Tenant's Contractor's performance of the Tenant's Work Contract which are: (a) caused in whole or in part by any negligence or omission  of Tenant's Contractor, used by such Contractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable, regardless of whether or not such claim, loss, damage, or expense is caused in part by a party indemnified hereunder; and (b) attributable to bodily injury, sickness, disease or death, or the destruction of tangible personal property, including loss of use resulting from any of the foregoing acts and all Tenant's Work contracts shall reflect this indemnity. In any and all claims against the Landlord or its representatives or any of their agents or employees or by an employee of Tenant's Contractor, any subcontractor, anyone directly or indirectly employed by any  of them, or anyone for whose acts any of them may be liable,  in the indemnification obligation under this Paragraph K shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable by or for the Tenant's Contractor or any Subcontractor under the Workers Compensation Act, disability benefit acts, or other employee benefit acts.

L.In the event a Subcontractor of materialman files a mechanics' lien as a result of performing Tenant's Work pursuant to Tenant's Work Contract then Tenant's Contractor shallindemnify the Tenant and Landlord from said lien and shall, when requested by the Tenant and/or Landlord, furnish Tenant and Landlord (as Landlord or Tenant may specify) either a bond sufficient to discharge the lien, deposit in an escrow approved by Landlord and Tenant a sumequal to 150% of the amount of such lien or obtain for the Landlord an endorsement through the  Landlord's title insurance commitment or policy insuring against loss or damage resulting from such lien. Subject to any restrictions thereon posed by Landlord's Mortgagee on the Building,Tenant's Contractor shall have the right and opportunity, in cooperation with Landlord and Tenant, to contest the validity of any such mechanics' lien by such legal means as are available, including the right to prosecute any appeals which may be permitted by law so long as during the pendency of any contest or appeal, the Tenant's Contractor shall effectively stay or prevent any official or judicial sale of any of the real property or improvements comprising the building, upon execution of otherwise, and so long as the Tenant's contractor pays any final judgment entered with respect to any such mechanics' lien and thereafter procures, within a reasonable time, record satisfaction thereof. In the event the Tenant and Landlord shall be a party to any such contest or appeal, or any other action resulting from or arising out of the performance of the Tenant's Work by Tenant's Contractor (or any of its subcontractors, agents, or employees), Tenant's Contractor shall be responsible for all legal fees and other costs and expenses incurred by Landlord and Tenant in any such action. Landlord and Tenant shall have the right to obtain

separate counsel of their choice at Tenant's Contractor's expense. In the event that Tenant's Contractor fails to provide a bond, cash escrow or title endorsement, or otherwise fails to fully satisfy and obtain release of any lien or claim in accordance with the provisions hereof, Tenant's contractor shall be obligated to refund Tenant or Landlord, as the case may be, all monies that the latter may pay in discharging any such lien including all costs and reasonable attorneys' fees incurred by Landlord or Tenant in settling, defending against, appealing or in any other manner dealing with any such lien.

M.Tenant shall agree to be responsible for, and to timely pay, all costs directly and indirectly related to Tenant's Work, including, without limitation any fees for architecture, engineering and administration as incurred by Landlord in relation to the Premises.

EXHIBIT D

Rules and Regulations

THESE RULES AND REGULATIONS (the "Rules") have been established by The Robford Company, LLC, as Landlord under the Leases relating to 1000 South Colorado Boulevard Shopping Center (the "Leases"). Under the terms of the Leases, the Landlord is authorized to establish these Rules and such additional rules and regulations as are necessary or advisable in its judgment for the proper and efficient operation and maintenance of the buildings and common areas which make up the 1000 South Colorado Boulevard Shopping Center (suchbuildings and common areas are herein collectively referred to as the "Shopping Center"). These Rules may be changed, altered or amended by Landlord at any time in its sole discretion.

1.Outside Sales and Storage. No tenant may display, sell merchandise, allow carts, portable signs, devices or any other objects to be stored or to remain outside the defined exterior walls or roof and permanent doorways of the Shopping Center, or in hallways.

2.Antenna and Aerials. No aerial, antenna or satellite dish shall be erected on the roof or exterior walls of the Shopping Center without first obtaining, in each instance, the written consent of Landlord, which consent may be withheld. Any aerial, antenna or satellite dish so installed without such written consent shall be subject to removal without notice at any time.

3.Parking Lot Solicitation. In addition, no Tenant may solicit in any manner in any of the automobile parking and sidewalk areas of the Shopping Center.

4.Deliveries. Each Tenant shall use its best efforts to complete, or cause to be completed, all deliveries, loading, unloading and services to the Premises prior to 10:00 a.m. of each day. Each Tenant shall attempt to cause no delivery trucks or other vehicles servicing the Shopping Center to park or stand in front of the Shopping Center from 10:00 a.m. to 9:00 p.m. of each day.

5.Vending Machines. No Tenant shall, without prior written consent of Landlord, sell merchandise from  vending machines or allow any coin-operated vending or gaming machines on the Premises. Landlord hereby grants Tenant permission to install one soda vending machine and one candy vending machine on the Premises.

6.Validated Parking. Landlord may, if in its opinion the same be advisable, establish a system or systems of validation or other type operation, including a system of charges against non-validated parking checks of users, and the Tenant must abide by all such rules and regulations in its use and the use of its customers and patrons with respect to said automobile parking area; provided, however, that all such rules and regulations and such types of operation or validation of parking checks and other matters affecting the customers and patrons of the Tenant shall apply equally and without discrimination to all persons entitled to the use of said automobile parking facilities.

7.Control of Common  Areas. Landlord shall at all times have the sole and exclusive control of the Common Areas, and may at any time and from time to time during the term hereof exclude and restrain any person from use or occupancy thereof, excepting, however, bona fide customers, patrons and service-suppliers of Tenants who make use of Common Areas in accordance with these Rules. It shall be the duty of each Tenant to keep all Common Areas free and clear of any obstructions created or permitted by such Tenant or resulting from such Tenant's operation. Any cost to keep all Common Areas free and clean incurred by Landlord as a result of Tenant's operation will be billed back to said Tenant.

8.Prohibited Advertising. No Tenant shall affix or maintain upon the glass panes and supports of the show windows (and within 12 inches of any window), doors and the exterior walls of its Premises, any signs, advertising placards, names, insignia, trademarks, descriptive material or any other such like item or items except such as shall have first received the written approval of Landlord. No Tenant shall affix any sign to any roof of the Shopping Center. In addition, no advertising medium shall be utilized by any Tenant which can be heard or experienced outside Tenant's Premises, including, without limiting the generality of the foregoing, flashing lights, searchlights, loudspeakers, phonographs, radios or television. No Tenant shall display, paint or place or cause to be displayed, painted or placed, any handbills, bumper stickers or other advertising devices on any vehicle parked in the parking area of the Shopping Center, whether belonging to such Tenant or to any other person; nor shall any Tenant distribute, or cause to be distributed, in the Shopping Center, any handbills or other advertising devices, and such Tenant shall pay to Landlord the cost and expense necessary to remove any such unauthorized material from the Shopping Center.

9.Hours of Operation. Tenant shall open the Premises for business to the general public no later than 11:00 a.m. and continuously remain open for business throughout the day until at least 5:00 p.m., Monday through Saturday; provided, however the Premises may remain open on Sundays and/or national holidays if Tenant so elects and if such opening shall not be in violation of applicable law. Tenant shall use for non-selling purposes ·only such space in the Premises as is required for Tenant's business therein, and shall use no space in the Premises to serve the business of Tenant at other locations. Tenant shall warehouse, store or stock in the Premises only such goods and merchandise as are reasonably required for sale at, in or from the Premises.

10.Keys. Tenant shall not alter or add any lock or bolt or any security access code to the Premises without providing prior written notice to Landlord. Concurrently with such notice, Tenant shall deliver to Landlord a copy of any new keys and access codes for access to the Premises.

11.Approval of Signs. Each Tenant shall not less than thirty (30) days prior to fabrication of any sign submit three (3) copies of drawings of such sign to Landlord for approval. Such drawings must include location, size and style of lettering, color, material, type of illumination, installation details, color selections and logo design. Approval of such sign by Landlord will not be unreasonably withheld or delayed, and will be based upon the standards set forth below. In any event, all signs must also be approved, if necessary, by the appropriate

governmental agency prior to fabrication, and all permits for signs and their installation shall be obtained and paid for by the Tenant.

In no event shall any sign be approved by Landlord if the size, location, design, color, texture, lighting and materials or such sign detracts in any way from the design of the Shopping Center and the surrounding properties.

a. Signs shall consist of internal illuminated individual letters with fiat plastic faces in metal retainers mounted to aluminum or channellume type letters. Signs shall have no audible, flashing or animated figures. Signs shall be mounted on a raceway painted to match the building.

b. Letters shall be five inches (5") deep, fabricated from aluminum, channellume or sheet metal, .900 aluminum or with welded joints, mechanically finished to a satin texture with a baked on enamel finish or a Dur-a-Pox paint finish. All sign lettering shall have a Gold Jewel Lite trim. All store front signs, including plexiglass signs, shall be fabricated of material with a matte finish.

c. No facia sign or wall sign shall exceed 30% of the total facia or signable area, excluding windows and storefront area. Letter sizes shall be governed by the amount of signable area used. In no event shall any sign be less than eight feet (8') above the ground as measured to the lowest edge of the sign. No sign may project higher than the height of the structure to which it is attached.

d. Logo signs will be considered provided that they are a nationally registered trademark or identification sign. Landlord shall review all logo designs for final approval and compliance. The logo sign shall be considered part of the allowable 30% signed area.

e. Vertical copy of signs projecting perpendicular to any building are not permitted.

f. Manufacturer's decals, hours of business, telephone number, etc. are limited to a total of 144 square inches per single door entrance. No "sale" signs, special announcements, et cetera shall be permitted on exterior or interior glass; such advertising material must be set back at least twelve inches (12") from glass surface and suspended from the ceiling.

g. Advertising devices such as attraction boards, posters, banners and flags shall not be permitted.

h. Painted, flashing, animated, audible, revolving or similar signs that create the illusion of animation shall not be permitted.

l. Exposed bulb signs shall not be permitted.

j. No signmay include the product sold except  as part of the Tenant's  name or insignia.

k. The Tenant's name and address may be applied to that Tenant's non-customer door, if any, for receiving merchandise, as directed by Landlord and in two-inch (2") high block letters.

l. If required by the U. S. Postal Service, the Tenant may install on the storefront the number only for the street address of size, type, color and location determined by Landlord.

11. Construction of Signs.

a. The Tenant is required to obtain any and all building and electrical permits.

b. Location of all openings for conduit or sign panels of building walls shall be indicated on drawings submitted to Landlord for approval.

c. All mounting holes must be sealed off and touched up after installation, and the Tenant's Premises must be left free of debris.

d. The Tenant is responsible for the actions of its sign contractor.

e. Letter fastening and clips shall be concealed and shall be of galvanized, stainless or aluminum metals.

f. Electric service to signs shall be included  in the Tenant's metered service and shall include an automatic timer to illuminate the sign. No exposed raceway, crossovers, transformers or conduit will be permitted, except for stubout through the wall. Ali signs shall use P.K. Housings and bear U.L. label, and installation of each sign shall comply with all local building codes and electrical codes.

g. No labels shall be permitted on the exposed surface of signs, except those required by local ordinance, which shall be placed in an inconspicuous location and manner.

h. Design, layout and material for Tenant signs shall conform in all respects with the design drawings provided by Tenant. The height and dimensions for letters in the body of the signs shall be pursuant to approved plans and specifications.

i. All penetrations of the building structure required for sign installation  shall be sealed in a watertight condition and shall be patched to match the adjacent finish.

j. All signs shall be constructed and installed, including electrical hook-ups, at the Tenant's expense.

k. This sign criteria may be changed to reflect the code of governing bodies involved.

EXHIBIT E

Guaranty of Lease

LANDLORD:	Robforo Company LLC
TENANT:	The Cheesesteak Connection IV
LEASE:	1000 S. Colorado Blvd.
GUARANTOR:	James A. Smith
DATE:	2/11/10

Tenant wishes to enter into the Lease with Landlord. Landlord is unwilling to enter into the Lease unless Guarantor assures Landlord of full performance of the Tenant's obligations under the Lease. Guarantor is willing to do so.

Accordingly, in order to induce Landlord to enter into the Lease with Tenant, and for other good and valuable consideration, whose receipt and adequacy are acknowledged by Guarantor:

1.Guarantor unconditionally guaranties to Landlord, and the successors and assigns of Landlord, Tenant's full and punctual performance of its obligations under the Lease. Guarantor waives notice of any breach or default by Tenant under the Lease. If Tenant defaults in the performance of its obligations under the Lease, then upon Landlord's request, Guarantor will perform Tenant's obligations under the Lease.

2.Any act of Landlord, or the successors or assigns of Landlord, consisting of a waiver of any of the terms or conditions of the Lease, or the giving of any consent to any matter or thing relating to the Lease, or the granting of any indulgences or extensions of time to Tenant, may be done without notice to Guarantor and without affecting the obligations of Guarantor under this Guaranty.

3.The obligations of Guarantor under this Guaranty will not be released by Landlord's receipt, application or release of security given for the performance of Tenant's obligations under the Lease, or by any modification of the Lease. In case of any such modification, the liability of Guarantor will be deemed modified in accordance with the terms of any such modification.

4.The liability of Guarantor under this Guaranty will not be affected by (a) the release or discharge of Tenant from its obligations under the Lease in any creditors' receivership, bankruptcy or other proceedings, or the commencement or pendency of any such proceedings; (b) the impairment, limitation or modification of the liability of Tenant or the estate of Tenant in bankruptcy, or of any remedy for the enforcement of Tenant's liability under the Lease, resulting from the operation of any present or future provision of the Bankruptcy Code or other statute, or

from the decision of any court; (c) the rejection or disaffirmance of the Lease in any such proceedings; (d) the assignment or transfer of the Lease by Tenant; (e) any disability or other defense of Tenant; or (f) the cessation from any cause whatsoever of the liability of Tenant under the Lease.

5.Until all of Tenant's obligations under the Lease are fully performed, Guarantor: (a) waives any right to subrogation against Tenant by reason of any payments or acts of performance by Guarantor, in compliance with the obligation of Guarantor under this Guaranty; (b) waives any other right which Guarantor may have against Tenant by reason of any one or more payment or acts in compliance with the obligations of Guarantor under this Guaranty; and (c) subordinates any liability or indebtedness of Tenant held by Guarantor to the obligations of Tenant to Landlord under the Lease.

6.This Guaranty shall be effective for an amount up to the equivalent of one year's total rent, for the first five years of the base term provided that the Tenant is not or has not been in monetary default, with a failure to cure, of the Lease Agreement. If the Tenant has been in monetary default, the Guarantee shall remain in full force and effect throughout the first term of the Lease period and any extensions thereto.

7.This Guaranty may not be changed, modified, discharged or terminated orally or in any manner other than by an agreement in writing signed by Guarantor and Landlord.

8.This Guaranty represents a guaranty of payment and not of collection. Guarantor is primarily obligated under the Lease. Landlord may, at its option, proceed against Guarantor without proceeding against Tenant or anyone else obligated under the Lease.

9.Guarantor will pay on demand the reasonable attorneys' fees and costs incurred by Landlord, or its successors and assigns, in connection with the enforcement of this Guaranty.

Guarantor has executed this Guaranty as of the date first indicated above.

GUARANTOR:

/s/ Jim Smith

___________________________

Jim Smith

SSN____________________________

EXHIBIT F

Restrictions on Use of the Shopping Center

Notwithstanding anything to the contrary in the Lease, Tenant's use of the Premises, or any portion thereof, shall not violate any of the use restrictions set forth below. These use restrictions shall not be construed to expand Tenant's Permitted Use of the Premises. These use restrictions shall not limit Landlord's right to sell or lease portions of the Shopping Center for theuses set forth below.

1.   In no event shall any use of the Premises be made or operation conducted thereon which use or operation is obnoxious to a first-class shopping center, including but not limited to the following:

(a)       any public or private nuisance;

(b)       any noise or sound which is routine to the operation of a business on the Premises that is objectionable due to intermittence, beat, frequency, shrillness or loudness;

(c)       any obnoxious odor which is routine to the operation of a business on the Premises;

(d)any noxious, toxic, caustic or corrosive fuel or gas which presents a hazard to the safety of persons on the Premises or the Shopping Center;

(e)any unusual fire, explosive or other damaging or dangerous hazard, including the storage, display or sale of explosives or fireworks;

(f)any manufacturing (except in connection with and incidental to Tenant's retail sales on Premises), distillation, refining, smelting, agriculture or mining operation;

(g)any mobile home or trailer court, labor camp, junk yard, stock yard or animal-raising shop that boards animals;

(h)any dumping, disposal, incineration, reduction of garbage or refuse (other than pursuant to the normal operation of a business within a first-class shopping center);

(i)        any fire or bankruptcy sale or auction house operation;

(j)any automobile sales, leasing or display, including body repair facilities;

(k)       any living quarters, sleeping apartments or lodging rooms;

(l)        any mortuary;

(m)      any adult bookstore selling as its primary product pornographic material (as that term is understood by the general public and not necessarily as defined by law);

(n)      any trailer rental;

(o)      any auditorium or convention center;

(p)       any second-band, Army, Navy or governmental surplus store; and

(q)       any drilling or other work for removal of subsurface substances.

2.         In no event shall the following specific uses be carried on upon the Premises:

a.        bowling alley;

b.        skating rink;

c.        theater;

d.        amusement park;

e.        carnival;

f.         meeting hall;

g.        banquet facility;

h.        entertainment facility;

i.         disco or other dance hall;

j.         sale, repair or storage of cars, boats, trailers or mobile homes;

k.        video or other game parlor;

l.         pool hall;

m.       billiard parlor

n.        amusement center;1

o.        off-track betting;

p.        flea market;

q.        massage parlor; or

r.         auditorium.

3.         Covenants, Conditions and Restrictions found in documents recorded in the real property records of the City of Glendale and County of Arapahoe, Colorado, and encumbering the Shopping Center as of the effective date of this Lease, as may be amended or modified from time to time.

No portion of the Premises shall be used as:

(a)       A Greek Café for the preparation and sale for consumption on-premises and/or off- premises of Greek food and beverages consistent with the menu items sold throughout the Daphne's Greek Café franchise.

Exhibit G

Direct Payment Form

Authorization for Direct Payment

I authorize NWE Management Company (NWE) and the financial institution named below to initiate entries to my checking/savings account.

● I have attached a voided check from the bank account from which entries are to be made.

● I understand that I control my payments, and if I decide to discontinue this automatic payment service, I must notify NWE in writing. In order to discontinue and cancel the next regularly scheduled payment, NWE must receive written notice at least five (5) business days (excluding weekends and banking holidays), prior to that next payment date.

● I understand that if I stop payment at my financial institution and I fail to notify NWE by the required date, or if I have insufficient funds available in my account for withdrawal, I agree to pay NWE a fee of $40.00 or the maximum amount allowable by law.

● Furthermore, I understand that should my monthly rent/dues increase or decrease that NWE will automatically change my withdrawal amount accordingly.

Initial payment amount $_____________

Regular payment date: 5th day of the month or the first business day thereafter.

Name- please print ____________________________________________________________________

Address for which payment is for: ________________________________________________________

Name of Financial Institution ____________________________________________________________

City ______________________ State  __________          Checking _____ Savings _____

Account No: ______________________________    Financial Institution Routing No.:  _____________________________________________

I hereby authorize NWE Management Company, P.O. Box 2624 Rapid City, SD 57709 (605) 394-3310, to begin electronic entries to my checking/savings account on the  ________  day of  ______________, 2010, and have agreed to the terms listed on the authorization above.

Signature ________________________________ Date ___________________________

EX-10.5.1

Exhibit 10.5.1

SECOND ASSIGNMENT, ASSUMPTION AND

AMENDMENT OF LEASE

THIS SECOND ASSIGNMENT, ASSUMPTION, AND AMENDMENT OF LEASE (this "Second Assignment") is entered into as 24th the day of April, 2015, (herein, the "Effective Date") by and among, Bruxie, LLC, a Delaware limited liability company, successor in interest to Cheesesteak Connection #4, LLC, a Colorado limited liability company (herein, "Assignor"), SHQ Glendale, LLC, a Colorado limited liability company (herein, “assignee"), The Robford Company, LLC, a Colorado limited liability company (herein, "Landlord"), Dean Simon, individually ("Original Guarantor"), and Southern Concepts Restaurant Group, Inc., a Colorado corporation and Jay W. Roth, individually ("New Guarantor").

RECITALS:

A.Landlord and Cheesesteak Connection #4, LLC (as "Tenant") were parties to that certain Shopping Center Lease Agreement made and entered into as: of February 17, 2010 (the "Original Lease") for the Premises located in the shopping center having an address of 1000 South Colorado Blvd., Suite 103, Glendale, Co 80246, which was subsequently amended and assigned by the former Tenant to Bruxie, LLC by the Assignment, Assumption and Amendment of Lease dated December 23, 2013 (herein, "First Amendment") and consented to by the Landlord. A copy of the Original Lease, along with the First Amendment, is attached hereto as Exhibit A, and together shall constitute the "Lease". Any and all defined terms used in this Assignment, unless otherwise defined herein, shall have the same meaning as such te1ms are defined in the Lease.

B.On or about February  17, 2010, Original Guarantor agreed to guaranty the obligations owing pursuant to the te1ins of the Lease pursuant to that certain Guaranty of Lease attached to the original lease as Exhibit "C", subject to the limitations set forth in Paragraph 6 thereof (the "Original Guaranty").

C.Assignor desires to assign its leasehold interests in the Lease and the Premises, and personal property therein, to Assignee (pursuant to a "Bill of Sale" attached hereto as Exhibit X), and assignee desires to accept such assignment and purchase Assignor’s personal property and equipment.

D.Assignor agrees to assign, transfer, and convey to assignee, and Assignee agrees to accept and assume from Assignor, all of Assignor’s right, title, interests, and obligations to and under Lease, subject to the amendments to the Lease expressly set forth and agreed to herein.

E.     Subject to the terms and conditions contained herein, Landlord hereby consents to the assignment of the Lease to Assignee, and joins in this Second Assignment in order to evidence its agreement with, and consent to, the amendments to the Lease more fully set forth herein.

NOW, THEREFORE,  FOR VALUE RECEIVED, and in consideration of the mutual agreements and obligations set forth in this Second Assignment and the Bill of Sale, and for such other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor hereby, as of the "Commencement Date" (defined below), bargains, sells, grants, conveys, transfers, and assigns to

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assignee, and assignee hereby, as of the Commencement Date, accepts and assumes from Assignor, all of Assignor's right, title, obligations and interest in and to the Lease.

THIS SECOND ASSIGNMENT is made on the following terms, covenants, and conditions:

1.Pursuant to Sections 16.l(h) ;md 16.l(i) of the Lease, Assignor shall pay Landlord upon the Effective Date hereof: (i) all of the reasonable expenses incurred by Landlord in connection with the assignment of the Lease, including, without limitation, attorney's fees in the amount of Two Thousand Dollars ($2,500), and (ii) the Processing Fee, which such Processing Fee shall not exceed Five Thousand Dollars ($5,000).

2.Assignee shall pay Assignor upon the Effective Date hereof, the sum of: (i) Fifteen Thousand Five Hundred Fifty-Eight Dollars ($15,588) as replacement of Assignor’s Security Deposit, (ii) all of the reasonable expenses incurred by Landlord in connection with the assignment of the Lease, the amount paid by Assignor to Landlord pursuant to Section 16.l(h) of the Lease as noted hi Paragraph 1 above, and (iii) Five Thousand Dollars ($5,000), the amount paid by Assignor to Landlord for the Processing Fee, pursuant to Section 16.1(i) of the Lease. Such total sum paid to Assignor shall be non- refundable for any and all reasons except failure of Assignor to deliver the Premises with all of the furniture, fixtures, and equipment listed on the Bill of Sale in place, on or before the "Commencement Date" (defined below).

3.In addition to the payments of Paragraph 2 above, assignee shall pay Assignor the purchase price of TwoHundred Thousand Dollars ($200,000) for the Leasehold interest and personal property as shown on Exhibit B, due and payable in the following manner: (i) Seventy-Five Thousand Dollars ($75,000) within five (5) days of the Effective Date, (ii) Forty-Two Thousand Dollars ($42,000) on May 1, 2015, (iii) Forty-Two Thousand Dollars ($42,000) on June 1, 2015, and (iv) the remaining payment of Forty-One Thousand Dollars ($41,000) on July 1, 2015; Further,  on the Effective Date, assignee shall issue stock in Southern Concepts Restaurant Group, Inc., a Colorado corporation to Assignor in an amount having a cash value as of the Effective Date equal to Twenty Thousand Eight Hundred and Thirty-Three Dollars ($20,833). Assignor shall vacate the Premises and deliver the Premise to assignee on April 24, 2015 (the "Commencement Date") in the following condition: assignee shall accept the Promises in its "as-is", "where is” condition, provided however, oil furniture, fixtures and equipment listed on the Bill of Sale and conveyed herein to assignee by Assignor shall remain in the Promises upon the remittance of the Assignment Fee. assignee shall transfer all utilities into Assignee's name no later than May 5, 2015. Assignor has paid Landlord the Minimum Guaranteed Rental payments and all of the additional rental payments in collection with the Premises under the Lease for the month of March, 2015, and on the Commencement Date Assignor shall pay Landlord the Minimum Guaranteed Rental payments and all of the additional rental payments in connection with the Promises under the Lease for the month of April, 2015. Effective on the Commencement Date Assignee shall be responsible for all of the obligations for payment of the Minimum Guaranteed Rental payments and all of the additional rental payments in connection with the Promises under the Lease, and in addition, assignee shall be responsible for all utility bills for services provided on or after the Commencement Date.

4.Except as otherwise expressly provided herein, upon the Commencement Date Assignee agrees to (a) perform directly any and all duties and obligations of; Assignor, as Tenant under the Lease, as amended by the First Amendment, and as further amended hereby, that accrue from and after the Commencement Date, and (b) abide by the terms and conditions of the Lease, from and after the Commencement Date, as if Assignee signed the Lease originally as Tenant.

5.Assignor is represented by CBRE - Retail and Religious Facilities (Thomas Mathews) ("Assignor's Broker"), and Assignee is represented by SullivanHayes Brokerage (Michael DePalma and

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Sean Kulzer) ("Assignee's Broker"), and Assignor and Assignee hereby represents and warrants to the other, that, to its knowledge, no  other broker, agent or finder (a) negotiated or was instrumental in negotiating or consummating this Second Assignment on its behalf, or/and (b) is or might be entitled to a commission or compensation in connection with this Second Assignment. Assignor shall pay any commissions or fees that are payable to Assignor's Broke1·with respect to this Second Assignment in accordance with the provisions of a separate commission contract. Assignee shall pay any commissions or fees that are payable to Assignee's Broker with respect to this Second Assignment in accordance with the provisions of a separate commission contract. Assignor and Assignee affirmatively state that Landlord bas no obligation to pay any commissions in connection with this Second Assignment. Assignor and Assignee agree to indemnify and hold Landlord harmless from any claims for any commissions which may be done and owing in connection with this Second Assignment.

6. Prior to the Commencement Date, and in accordance with Section 10.2 of the Lease, Assignor shall remove its signage from the fascia above the Premises and repair any damage caused by said removal. Within sixty (60)  days following the Commencement Date, Assignee shall install, at Assignee's sole cost and expense, its prototype ·storefront sign on the fascia above the Premises in accordance with all applicable governmental laws, codes, ordinances and regulations, and in accordance with the provisions contained in the Lease, and further subject to the Landlord's signage criteria for the Shopping Center.

7.Notwithstanding the manner in which the rental obligations are apportioned between Assignor and Assignee in Paragraphs 3 and 4 above, Landlord agrees that it shall look solely to Assignee to fulfil1 all obligations under the Lease, as an1ended hereby, that accrue from and after the Commencement Date, and shall look solely to Assignor to cure all defaults and fulfill all obligations that accrued prior to the Commencement Date. Provided there are no defaults under the Lease, as amended hereby, other than Assignor's breach of Paragraph 18.l(e), as of the Commencement Date, Landlord agrees that the Original Guarantor shall be released from any obligations that accrue under the Lease on or after the Commencement Date.

8.As of the Commencement Date the Lease is hereby amended, and the First Amendment is hereby superseded, and restated in its entirety as follows:

(a)Article 1-Definltions:

(i) The reference to "Tenant" under the Lease shall refer to:

SHQ Glendale, LLC

(ii) The reference to "Tenant's mailing/Notice address" shall refer to:

SHQ Glendale, LLC

2 North Cascade Avenue, Suite 1400

Colorado Springs, CO 80903

Attn:Heather Atkinson

Email: heather@southernconcepts.com

(iii) The reference to title "Tenant's Trade Name" shall refer to:   "Southern Hospitality"

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(iv) The "Security Deposit" of $15,558 is hereby assigned to Assignee, and, along with the additional deposit herein below, shall be refunded to Assignee at the end of the Term, subject to the provisions of Section 19.1 of the Lease. On the Effective Date, Assignee shall deliver to Landlord an additional security deposit in the amount of $24,442.00 in the form of a cashier's check, for a total Security Deposit of $40,000.00. Landlord shall have no obligation to return any portion of the Security Deposit to Assignor.

(v) Tenant's "Permitted Use" shall refer to:   The operation of an upscale, quick service, Barbeque restaurant serving any and all of the following: brisket, pulled pork and otherwise BBQ sandwiches ("BBQ Style Fare"), together with salads and traditional BBQ side dishes such as potato salad, baked beaus, and coleslaw, alcoholic and non-alcoholic beverages; and such other items as shown on Tenant's Menu. Any changes in the Permitted Use shall require the prior approval of  Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant acknowledges and agrees that, notwithstanding anything to the contrary contained herein, it may not derive more than 10% of its annual gross revenues from the sale of salads.

(vi) Tenant's "Exclusive Use" shall refer to:   Provided that Tenant is not in default hereunder beyond any applicable notice and cure period, Landlord shall not lease space in the Shopping Center to any entity whose "Primary Business" is BBQ Style Fare. For the purposes of this paragraph only, "Primary Business" shall mean fifteen percent (15%) or more of menu items are BBQ Style Fare. Such Exclusive Use shall not apply to any existing leases or any extensions thereof as of the Effective Date. If any third party commences an action against Landlord arising from the enforcement of Tenant's Exclusive Use, and provided Landlord is not in default hereunder beyond any applicable notice and cure period, then Tenant shall indemnify, defend and hold Landlord harmless from and against any and all such claims in connection therewith or arising therefrom.

(vii)    Tenant shall not permit any act and/or omission on or about the Premises which may cause or causes the revocation or suspension of the Colorado and/or local Liquor License associated with the Premises. Tenant shall notify Landlord of any potential Liquor License violation within three (3) days following receipt of notice thereof. Tenant shall not voluntarily surrender the Liquor License to any governmental agency. Effective upon te1wination of this Lease or Tenant's right to possession of the Premises, Tenant hereby assigns to Landlord, or at Landlord's designation, Landlord's designee, all of its interest in any and all licenses relating to the sale of alcoholic beverages from the Premises, and Landlord shall be entitled to seek approval from government agencies issuing such Licenses for the transfer  of such Licenses to Landlord  or Landlord's

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designee. Tenant shall, at its own expense (with Landlord paying all fees and costs associated with the transfer of said license(s)), cooperate reasonably with Landlord's efforts to obtain any necessary government approvals for such transfer and shall promptly execute such further documents as may be reasonably requested by Landlord to give full effect to this Paragraph or to support Landlord's (or Landlord's designee's) application transfer of such license(s). In the event that this Lease or Tenant's right to possession of the Premises is terminated by Landlord for any reason, then in addition to any other amounts that Landlord may be entitled to recover under this Lease, Tenant shall be liable to reimburse all Landlord's costs incurred in connection with such license transfer(s), including, without limitation, reasonable attorney's fees and disbursements and governmental application and transfer fees. The obligations of Tenant under this Paragraph shall survive the expiration or termination of this Lease.

(b)Section 27.8 of the Original Lease (Estoppel) is hereby amended to add the following sentence: Landlord agrees that at any time, and from time to time during the Lease Term, within 10 days after written request by Tenant, Landlord will execute, acknowledge and provide to Tenant or an estoppel certificate in a form reasonably acceptable to Landlord.

(c)Section 28.1 of the Original Lease (Option to Renew) is hereby amended to provide one (1) additional renewal term of five (5) years. Accordingly, there shall be a total of three (3) remaining renewal terms of five (5) years each (the "Renewal Terms"), subject to the provisions of said Section 28.1 and Section 4.3.

(d)Paragraph 5(b) of the First Amendment is hereby deleted and Section 19.2 of the Original Lease is hereby reinstated.

(e)Except as herein amended and/or modified, the Lease shall remain in full force and effect, including without  limitation, Section 1.1(1)Lease Term, and Article 4 - Monthly Payment. On the Effective Date, Assignee shall deliver to landlord a Direct Payment Form in the form attached hereto as Exhibit "B".

9.Landlord is willing to consent to this Second Assignment, provided that Southern Concepts Restaurant Group, Inc., a Colorado corporation and Jay W. Roth, individually, execute, simultaneously with the execution hereof, the personal guaranty attached hereto and incorporated herein as Exhibit Y.

10.      As of the Effective Date of this Second Assignment, Assignor acknowledges, represents, and warrants to Assignee as follows:

(a)The Lease is in full force and effect and is valid and bh1ding, and all broker commissions incurred in connection with the Lease have been paid in full.

(b)There have been no amendments, modifications, extensions, or renewals of the Lease as of the Effective Date, except as expressly set forth in this Second Assignment or Bill of Sale.

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(c)With the exception of Tenant's breach of Article 18.l(e) of the Lease, no default by Landlord or Tenant exists in connection with the Lease.

11.Assignor agrees to defend, indemnify, and hold ha1mless assignee from and against any and all claims, liabilities, and expenses, including reasonable attorney's fees, arising out of events occurring with respect to the Lease and the Premises on or before the Commencement Date, and Assignee, to the extent permitted by law, agrees Io defend, indemnify, and hold harmless Assignor from and against any and all claims, liabilities, and expenses, including reasonable attorney's fees, arising out of events occurring with respect to the Lease and Premises after the Commencement Date.

12.This Second Assignment is binding on all parties who lawfully succeed to the rights or take the place of Assignor, Assignee, or Lan1dlord.

13.      The Lease, as amended by this Second Assignment, is hereby ratified and confirmed and remains in full force and effect. In the event of any inconsistency between the terms and provisions of this Second Assignment and  those tho     of the Lease, the terms and provisions of this Second Assignment shall control. All capitalized terms not defined in this Second Assignment shall have the meaning ascribed to them in the Lease.

14.This Second Assignment may be executed in counterparts, each of which, when taken together, shall constitute one and the same original.

15.In the event either party hereto shall bring suit to enforce any term of this Second Assignment or to recover any damages for and on account of the breach of any term or condition of this Second Assignment, it is mutually agreed that the prevailing party in such action shall recover all costs thereof, including reasonable attorneys' fees.

16.The individuals executing this Second Assignment on behalf of Assignor, Assignee and Landlord, each represent and warrant that they have the legal power, right and actual authority to bind Assignor, Assignee, and/or Landlord respectively, to the terms and conditions hereof and thereof.

17.Assignor further warrants that the representations and the representations and warranties expressed in this Second Assignment and the Bill of Sale with respect to (i ) Section 11(a), (b) and (c) hereof shall survive the consummation of this Second Assignment for a period of one (1) year·, and (ii) the ownership and lien- free conditions of the personal property.

18.This Second Assignment and the Exhibits attached hereto contain the entire agreement between the parties.

19.No agreement shall be effective to change, modify, terminate this Second Assignment, in whole or in part, unless such agreement is in writing and duly signed by the party (or parties) against whom enforcement of such change, modification or termination is sought.

•

20.The laws of the State of Colorado shall govern the interpretation, validity, performance and enforcement of this Second Assignment.

21.If any provisions of this Second Assignment  should be held to. be invalid or unenforceable, the validity or enforceability of the remaining provisions of this Second Assignment shall not be affected thereby.

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22.As of the Effective Date, Assignor hereby unconditionally releases Landlord from any and all obligations or liability of all of the covenants, terms and conditions under the Lease, expressed or implied, except those liabilities which arose prior to the Effective Date.

IN WTINESS WHEREOF, Assignor, Assignee, and Landlord have caused this Second Assignment to be executed as of the Effective Date.

ASSIGNOR:
	BRUXIE, LLC, a Delaware limited liability company
	By:	/s/ Dean Simon
	Name:	Dean Simon
	Title:

ASSIGNEE:
	SHQ GLENDALE, LLC a Colorado limited liability company
	By:	/s/ Mitchell Roth                        4/23/15
	Name:	Mitchell Roth
	Title:	President

LANDLORD:
	THE ROBFORD COMPANY, LLC, a Colorado limited liability company
	By:	/s/ James Adelstein
	Name:	James Adelstein
	Title:	Manager

ORIGINAL GUARANTOR
	By:	/s/ Dean Simon
	Name:	Dean Simon, an individual

NEW GUARANTOR
	SOUTHERN CONCEPTS RESTAURANT GROUP, INC. a Colorado Corporation
	By:	/s/ Mitchell Roth
	Name:	Mitchell Roth
	Title:	President

Jay W. Roth , an individual
By:	/s/ Jay W. Roth
Name:	Jay W. Roth, individually

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Exhibit A

Lease

[SEE ATTACHED)

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Exhibit B

Direct Payment Form

Authorization for Direct Payment

I authorize Northwestern Engineering Company or NWE Management Company (NWE) and the financial institution named below to initiate entries to my checking/savings account.

● I have attached a voided check from the bank account from which entries are to be made. (For savings accounts only, deposit slip may be used in place of voided check.)

● I understand that I control my payments, and if I decide to discontinue this automatic payment service, I must notify NWE in writing. In order to discontinue and cancel the next regularly scheduled payment, NWE must receive written notice at least five (5) business days (excluding weekends and banking holidays), prior to that next payment date.

● I understand that if I stop payment at my financial institution and I fail to notify NWE by the required date, or if I have insufficient funds available in my account for withdrawal, I agree to pay NWE a fee of $100.00 or the maximum amount allowable by law.

● Furthermore, I understand that should my monthly rent/dues increase or decrease that NWE will automatically change my withdrawal amount accordingly.

Initial payment amount $10,634.00

Regular payment date: 5th day of the month or the first business day thereafter.

Name: (please print): _SHQ Glendale LLC_____________________________________________________

Address for which payment is for: 1000 South Colorado Blvd,., Suite 103, Glendale, CO  80246

Phone number in case of questions:   719265-5821

Name of Financial Institution:  Integrity Bank & Trust

City:  Monument      State:   CO         Checking ___X__ Savings _____

Account No: ___1056573__________________   

Financial Institution Routing No.:  __107006994______________________

I hereby authorize NWE Management Company, P.O. Box 2624 Rapid City, SD 57709 (605) 394-3310, to begin electronic entries to my checking/savings account on the   5th  day of    May,  2015, and have agreed to the terms listed on the authorization above.

Signature:  /s/ Heather Atkinson             Date:   4-17-15    

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Exhibit Y

Personal Guaranty

GUARANTY OF LEASE

In order to induce The Robford Company, LLC ("Landlord") to enter into that certain SECOND ASSIGNMENT, ASSUMPTION ANDRESTATEMENTOF AMENDMENT OF LEASE dated April  23,  2015 [on or about 4/23/15 or 4/24/15] (the "Second Assignment"), regarding the assignment of that certain lease agreement which concerns the rental of 1000 South Colorado Blvd., Suite 103, Glendale, Co 80246 (the lease agreement, as amended and assigned, is referred to herein as the "Lease"), Southern Concepts Restaurant Group, Inc., a  Colorado  corporation  and  Jay  W.  Roth,  individually  (collectively,  the Guarantor''), subject to the limitations described below, hereby makes the unconditional and unqualified guaranty, indemnification and agreements with and in favor of Landlord:

a. Guarantor hereby covenants and agrees with Landlord:

i. To make the due and punctual payment of all rent, monies and charges payable under the Lease which accrue under the Lease on or after the Commencement Date (as defined in the Second Assignment);

ii. To effect prompt and complete performance of all and each of the tem1s, covenants, conditions and provisions contained in the Lease to be kept, observed and performed on or after the Commencement Date (as defined in the Second Assignment); and

iii. To indemnify and save Landlord harmless from any loss, costs or damages arising out of any failure to pay the aforesaid rent, moneys and charges or the failure to perform any of the aforesaid terms, covenants, conditions and provisions of the Lease.

b. In the event of a default under the Lease, Guarantor waives any right to require Landlord to:

i. Proceed against Assignee and/or Assignor (as defined in the Second Assignment) or pursue any rights or remedies with respect to the Lease;

ii. Proceed against or exhaust any security that Landlord holds from assignee;

iii. Pursue any remedy whatsoever in Landlord's power; or

12

iv. Proceed against any co-guarantors, if any. Landlord shall have the right to enforce this guaranty regardless of the acceptance of additional security from Assignee and/or Assignor and regardless of the release or discharge of Assignee and/or Assignor by Landlord or by others, or by operation of law.

c. Guarantor hereby expressly waives any right of setoff or compensation against amounts due under this Guaranty and waives all notice of nonperformance, nonpayment, nonobservance or default on the part of Assignee and/or Assignor of the terms, covenants, or conditions and provisions of the Lease.

d. Without limiting the generality of the foregoing, the liability of Guarantor under this Guaranty shall not be deemed to have been waived, released, discharged, impaired, or affected by reason of any waiver or failure to enforce any of the obligations of the Assignee and/or Assignor under the  Lease,  or assignment of the Lease by  Landlord Assignee and/or Assignor, or the subletting of the demised premises by the Assignee and/or Assignor, or by the expiration of the Lease term, or the release or discharge of Assignee and/or Assignor in any receivership, bankruptcy, winding up or other creditors' proceedings, or the rejection, disaffirmance or disclaimer of the Lease by any party in any action or proceeding, or any extension, modification, amendment or alteration of the Lease whatsoever, including but not limited to relocation of Assignee and/or Assignor to substitute premises, and shall continue with respect to the periods prior thereto and thereafter, for and with respect to the term originally contemplated and expressed in the Lease. The liability of the Guarantor shall not be affected by any repossession of the demised premises by Landlord, provided, however, the net payments received by Landlord after deducting all costs and expenses of repossession and/or reletting the same, shall be credited from time to time by Landlord to the account of Guarantor and Guarantor shall pay any balance owing ta Landlord from time to time immediately upon ascertainment.

e. This Guaranty shall be one of payment and performance and not simply of collection. Notwithstanding the use of the word “indemnify” or "guaranty" each guarantor or indemnitor of the Lease shall be jointly and severally liable for the obligations owing pursuant to the terms of the Lease.

f. Guarantor shall, without limiting the generality of the foregoing, be bound by this Guaranty in the same manner as though Guarantor were named in the  ease as Assignee.

13

g. All of the terms, agreements and conditions of this Guaranty shall extend to and be binding upon Guarantor, his heirs, executors, administrators, successors and assigns, and the holder of any mortgage to which the Lease may be subject and subordinate from time to time.

h. Landlord may, without notice, assign or transfer this Guaranty, in whole or in part, and no such assignment or transfer shall operate to extinguish, diminish, waive, release, discharge or otherwise affect Guarantor's liability hereunder.

i. Guarantor agrees to pay to Landlord all reasonable  attorneys' fees and costs or other expenses incurred by Landlord in any legal proceedings for collection, attempted collection, enforcement, attempted enforcement, negotiation or otherwise arising under the Lease or this Guaranty.

j. GUARANTOR HEREBY WAIVES HIS/HER/ITS RIGHT TO DEMAND A TRIAL BY JURY IN ANY CIVIL ACTION THAT INVOLVES THE ENFORCEMENT OF THIS GUARANTY OR THE ENFORCEMENT OF THE LEASE.

k. Each person executing this Guaranty individually and personally represents and warrants that he/she is duly authorized to execute and deliver the same on behalf of the entity for which he/she is signing (whether it be a corporation, general or limited, partnership, or otherwise) and that the Lease is binding upon said entity in accordance with its terms.

The current Lease term expires on July 31, 2020 (the "Current Expiration Date").

Notwithstanding anything to the contrary contained herein, Jay W. Roth's obligations hereunder are limited to those obligations accruing under the Lease on or . after the Commencement Date (as defined in the Second Amendment) and continuing through the Current Expiration Date, July 31, 2020 UNLESS the Lease term is extended beyond the Current Expiration Date by way of holdover, exercise of renewal option, or any other means and there has been a default under the Lease beyond an applicable notice and cure period prior to the Current Expiration Date, whether or not the same was cured, in which case Jay W. Roth's obligations hereunder shall continue through any extensions or option periods.

Notwithstanding anything to the contrary contained herein, Southern Concepts Restaurant Group, Inc.'s obligations hereunder shall remain in full force and effect in the event that the Lease term is extended beyond the Current Expiration Date, by way of holdover, exercise of renewal option, or any other means.

14

Notwithstanding anything to the contrary contained herein, Guarantor's obligations hereunder shall be limited to payment in the sum of $140,000.00 (inclusive of attorney's fees and costs and any other expenses of any kind or nature whatsoever).

[SIGNATURES ON FOLLOWING PAGE]

15

"GUARANTOR"

/s/ Jay W. Roth
Jay W. Roth
SSN:
Address:	15975 Winding Trail Road Colorado Springs, Colorado 80908
Phone:	719.494.2225

SOUTHERN CONCEPTS RESTAURANT GROUP, a Colorado corporation

By:	/s/ Mitchell Roth
Name:	Mitchell Roth
Title:	President
	4/24/15

16

integrity

BANK & TRUST

WIRE INSTRUCTIONS

All incoming and outgoing wires go through our account with Banker's Bank of the West with the following instructions:

Bank Name:	Banker's Bank of the West 1099 18th St, Suite 2700 Denver CO 80202
ABA or Rtg #:	102003743
Account #:	1001421
For credit to:	Integrity Bank & Trust
Address:	1275 Village Ridge Pt. Monument, CO 80132

If an incoming wire is to credit an account within Integrity Bank & Trust, the following information must be available:

wires go through our account with Banker's Bank of the West with the following instructions:

For further credit:	SHQ GLENDALE, LLC
Account #:	1056573
Address:	2 N. CASCADE AVE., STE. 1400 COLORADO SPRINGS, CO 80903

If you have any questions, please contact us at 719-484-0077.

1275 Village Ridge Point, Monument CO 80132

Phone 719-484-0077 Fax 719-488-9160 Toll Free 877-677-2265

www.integritybankandtrnst. com

. ' ··.

Southern Concepts Restaurant Group

April 17, 2015

Corporate Stock Transfer

Attn: Mr. Daniel  Bell

3200 Cherry Creek Drive South, #430

Denver, CO 80209

Dear Mr. Bell,

Please issue a Southern Concepts Restaurant Group, Inc. restricted common stock certificate for  90,578 common shares to the name below. You may deliver this via certified mall to the address listed:

Bruxie,LLC

1295 S. Lewis Street

Anaheim, CA 92805

EIN 27-3858398

Sincerely,

/s/ Mitchell Roth

Mitchell Roth

President

/s/ Heather Atkinson

Heather Atkinson

CFO

EX-10.5X2

Exhibit 10.5.2

THIRD ASSIGNMENT, ASSUMPTION AND AMENDMENT OF LEASE

THIS THIRD ASSIGNMENT, ASSUMPTION AND AMENDMENT OF LEASE (the "Assignment") is made and entered into this 27th day of July 2015, by The Robford Company, LLC, a Colorado limited liability company (the "Landlord" ), SHQ Glendale, LLC, a Colorado limited liability company (the "Assignor"), Carve BBQ Glendale, LLC, a Colorado limited liability company (the "Assignee"), and Southern Concepts Restaurant Group, Inc. and Jay W. Roth (collectively, the "Guarantors").

WHEREAS, Landlord and Assignor are parties to that certain lease agreement governing the rental of the premises located at 1000 South Colorado Blvd, Glendale, CO, as the same has been amended and assigned (the "Lease").;

WHEREAS, Assignor desires to assign and Assignee desires to assume all the rights, duties and liabilities of Assignor under the Lease; and

WHEREAS, Landlord is willing to consent to such assignment, ail as is provided below, provided the parties enter into this Agreement.

NOW THEREFORE, for value received, and in consideration of the mutual agreements and obligations set forth herein, and for such other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.     Defined Terms. Capitalized words used herein shall have the same meanings as set forth in the Lease, except as otherwise defined herein.

2.    Effective Date/Consideration. The Agreement contemplated herein shall be effective on August 1, 2015 (the "Effective Date ") and shall continue for the balance of the Lease term, as the same may be extended.

3.    Lease Expiration Date. The parties hereto acknowledge and agree that the term of the Lease is currently set to expire on July 31, 2020 (the "Expiration Date ").

4.    Assignment. Assignor hereby grants, sells, conveys, transfers, assigns, and delivers ail of its rights, title, and interest in and to the Lease to Assignee as of the Effective Date.

5.   Assumption. Assignee hereby assumes ail of the rights, duties and liabilities of Assignor under the Lease as of the Effective Date and hereby agrees to comply with ail of the terms and conditions of the Lease from and after the Effective Date, including, without limitation, the payment of rent and ail other sums due pursuant to the Lease that are incurred or accrue on and after the Effective Date. Assignee shall not, by this Agreement, assume any duties or obligations of Assignor arising under the Lease prior to the Effective Date.

6.   Liability. By entering into this Agreement, Landlord does not waive any claims it may have against Assignor for any obligations owing pursuant to the terms of the Lease and

Page 1 of 4

accruing prior to the Cut1'ent Expiration Date; instead, all such claims are hereby expressly reserved. Accordingly, Assignor shall be responsible for any and all obligations, defaults, or deficiencies accruing under the Lease prior to the Effective Date and Assignee and Assignor shall be jointly and severally liable for any and all obligations, defaults, or deficiencies accruing under the Lease on or after the Effective Date and continuing through the current Expiration Date.

7.    No Waiver. The consent of Landlord outlined in this Agreement shall not be construed as a waiver or modification of the provisions in the Lease which restricts the assignment and/or subletting of the Premises without Landlord's prior written consent. Any future assignment or sublease must be in accordance with the terms and conditions of the Lease.

8.    Notice. Any notice required or permitted to be given under the terms of this Agreement or the terms of the Lease shall be in writing and shall be deemed given when transmitted in accordance with the Lease to the following addresses:

If to Landlord:	see Lease
If to Assignor:	2 N. Cascade Ave. Ste 1400 Colorado Springs, CO 80903
If to Assignee:	2 N. Cascade Ave. Ste 1400 Colorado Springs, CO 80903

Notwithstanding the foregoing, notices to the Assignee may also be delivered or posted at the Premises. Landlord shall have no obligation to send notices of default to the Assignor.

9.      Ratification. Except as expressly modified herein, all other terms and provisions of the Lease are hereby ratified and confirmed as if set forth in full herein and shall be binding upon the parties hereto, their respective heirs, representatives, successors and assigns. Should any provisions of this Agreement conflict with any provision of the Lease, the provisions set forth herein shall control.

10.    Security Deposit. Any security deposit delivered to Landlord pursuant to the Lease shall continue to be held by Landlord to secure Assignee's performance under the Lease. Landlord shall have no obligation to return any portion of such security deposit to Assignor at the end of the Lease term. Any portion of a security deposit or accounting thereof which is required of Landlord under the terms of the Lease shall be sent only to Assignee.

11.   Additional Consideration. Simultaneously with the execution hereof, and notwithstanding Section 16.1 of the Lease, Assignor shall pay Landlord upon the Effective Date hereof: (i) all of the reasonable expenses incurred by Landlord in connection with the assignment of the Lease, including, without limitation, actual attorney's fees in the amount of $650.00; and (ii) the Processing Fee, in the amount of $2,500.00.

Page 2 of 4

(ii) the Processing Fee, in the amount of $2,500.00.

12.    Acknowledgment. Assignor and Assignee each acknowledge that:

(a) They have had an opportunity to consult with their own independent legal counsel concerning the legal significance of this Agreement;

(b) They are not relying on any legal advice or information provided by Landlord or its counsel;

(c) They have received and read the Lease and they each fully understand the provisions and responsibilities outlined therein.

13.    Release. Assignor, for itself, its employees, agents, assigns, successors in interest and ail other representatives hereby release and fully discharge Landlord, its employees, officers, agents, attorneys, predecessors, successors and assigns from any and all claims, causes of actions, counterclaims, defenses and rights to offset which exist as of the date of this Agreement, whether the same are known or unknown. This is intended to be a general and comprehensive release of all existing claims.

14.    Representation by Signing Parties. The person signing on behalf of Assignor and Assignee each personally represents and warrants to Landlord that he/she has full authority to sign such document on behalf of the respective entity, and agrees to personally indemnify and hold Landlord harmless if he/she signs this document without requisite authority. Such indemnification shall include, without limitation, any and all damages, losses, fees (including attorneys' fees), costs and other expenses of Landlord.

15.    Counterparts/Signatures.   This Agreement may be executed in counterparts. Fax and/or pdf signatures on this Agreement shall be treated as originals.

16.    Captions. The captions used herein are for convenience only and do not limit or amplify the provisions hereof.

17.    Guarantors. Guarantors hereby ratify and confirm their guaranty of the Lease in accordance with the terms of Exhibit Y of the Second Assignment, Assumption and Amendment of Lease dated on or about April 24, 2015 and further acknowledge and agree that said guaranty shall apply to the Lease, as amended and assigned hereby.

SIGNATURES ON FOLLOWING PAGE

Page 3 of 4

The parties have executed this Assignment effective as of the day first written above.

LANDLORD:
THE ROBFORD COMPANY, LLC, a Colorado limited liability company
By:	/s/ James Adelstein
James Adelstein
Manager

ASSIGNOR:
SHQ GLENDALE, LLC a Colorado limited liability company
By:	/s/ Shawn Owen
Name:	Shawn Owen
Title:	Manager

ASSIGNEE:
CRAVE BBQ GELNDALE, LLC a Colorado limited liability company
By:	/s/ Shawn Owen
Name:	Shawn Owen
Title:	Manager

GUARANTORS:
SOUTHERN CONCEPTS RESTAURANT GROUP, INC. a Colorado Corporation
By:	/s/ Mitchell Roth
Name:	Mitchell Roth
Title:	President

Jay W. Roth, individually
By:	/s/ Jay W. Roth

Page 4 of 4

EX-21.1

Exhibit 21.1

Subsidiaries of Southern Concepts Restaurant Group, Inc.

1. Bourbon Brothers Holding Company, LLC, a Colorado limited liability company

2. Bourbon Brothers Restaurant Group, LLC, a Colorado limited liability company

3. Southern Hospitality Southern Kitchen Colorado Springs, LLC, a Colorado limited liability company

4. SH Franchisee & Licensing Corp., a Colorado corporation

5. Southern Hospitality Denver Holdings, LLC, a Colorado limited liability company

6. Southern Hospitality Denver, LLC, a Colorado limited liability company

7. Southern Hospitality Lone Tree, LLC, a Colorado limited liability company

8. Southern Hospitality Licensing, LLC, a Colorado limited liability company

9. Carve BBQ Glendale, LLC, a Colorado limited liability company

10. Carve Restaurant Group, LLC, a Colorado limited liability company

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Mitchell Roth, certify that:

1. I have reviewed this annual report on Form 10-K of Southern Concepts Restaurant Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 16, 2016

/s/ Mitchell Roth

Mitchell Roth

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Heather Atkinson, certify that:

1. I have reviewed this annual report on Form 10-K of Southern Concepts Restaurant Group, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 16, 2016

/s/ Heather Atkinson

Heather Atkinson

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRESIDENT

OF SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350 and in connection with the accompanying report on Form 10-K for the year ended December 31, 2015, that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officer of Southern Concepts Restaurant Group, Inc. (the "Company") hereby certifies that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 16, 2016

/s/ Mitchell Roth

Mitchell Roth

Chief Executive OIfficer

EX-32.2

Exhibit 32.2

CERTIFICATION OF

CHIEF FINANCIAL OFFICER

OF SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350 and in connection with the accompanying report on Form 10-K for the year ended December 31, 2015, that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officer of Southern Concepts Restaurant Group, Inc. (the "Company") hereby certifies that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 16, 2016

/s/ Heather Atkinson

Heather Atkinson

Chief Financial Officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Mar. 07, 2016	Jun. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	Southern Concepts Restaurant Group, Inc.
Entity Central Index Key	0001445918
Amendment Flag	false
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2015
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 18,178,316
Entity Common Stock, Shares Outstanding		70,818,764

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 1,107,330	$ 1,182,099
Prepaid expenses and other	117,499	66,023
Inventory	91,358	64,091
Total current assets	1,316,187	1,312,213
Deposits	$ 120,555	80,525
Deferred financing costs, net		28,369
Related party receivable	$ 25,787	25,787
Intangible asset, net	35,625	40,625
Property and equipment, net	4,279,096	2,986,050
Total assets	5,777,250	4,473,569
Current liabilities:
Accounts payable	256,252	91,792
Accrued expenses	$ 272,347	229,539
Related party notes payable and accrued interest		117,318
Notes payable and accrued interest		218,970
Convertible notes payable and accrued interest, current portion	$ 129,489	$ 129,589
Related party note payable (net of $365,940 (2015))	784,059
Total current liabilities	1,442,147	$ 787,208
Deferred rent	309,895	$ 303,070
Notes payable and accrued interest	$ 482,934
Related party note payable (net of $731,880 discount)		$ 520,184
Convertible notes payable and accrued interest, less current portion, (net of $514,545 (2015) and $528,019 (2014) discount)	$ 1,110,122	722,439
Total liabilities	$ 3,345,098	$ 2,332,901
Commitments and contingencies
Equity
Preferred stock - par value $0.001; Authorized Series A shares - 4,884,859 Issued and outstanding Series A shares - 4,884,859 (2015 and 2014)	$ 248,994	$ 248,994
Common stock - no par value; Authorized shares - 120,000,000 Issued and outstanding shares - 62,398,303 (2015) and 48,783,363 (2014)	9,799,319	7,916,942
Additional paid-in capital	3,873,710	2,602,171
Accumulated deficit	(12,092,077)	(8,692,743)
Total Southern Concepts Restaurant Group, Inc ("SCRG") equity	1,829,946	2,075,364
Noncontrolling interest	602,206	65,304
Total equity	2,432,152	2,140,668
Total liabilities and equity	$ 5,777,250	$ 4,473,569

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Convertible notes payable and accrued interest, discount	$ 514,545	$ 528,019
Related party note payable, discount	$ 365,940	$ 731,880
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	4,884,859	4,884,859
Preferred stock, shares issued	4,884,859	4,884,859
Preferred stock, shares outstanding	4,884,859	4,884,859
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	62,398,303	48,783,363
Common stock, shares outstanding	62,398,303	48,783,363

XML

CONSOLIDATED STATEMENTS OF LOSS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Revenue	$ 6,579,106	$ 5,144,491
Operating expenses:
Restaurant operating costs (related party $401,092 and $383,400 for the years ended December 31, 2015 and 2014), exclusive of depreciation and amortization below	6,754,065	5,490,495
General and administrative	2,054,924	2,405,191
Selling and marketing	350,187	444,216
Depreciation and amortization	579,327	436,228
Total operating expenses	9,738,503	8,776,130
Loss from operations	(3,159,397)	(3,631,639)
Other expense:
Interest expense (related party $130,000 and nil for the years ended December 31, 2015 and 2014)	(729,748)	(137,376)
Net loss	(3,889,145)	(3,769,015)
Net loss attributable to noncontrolling interest	(489,811)	(374,014)
Net loss attributable to SCRG	(3,399,334)	(3,395,001)
Net loss	$ (3,889,145)	$ (3,769,015)
Basic and diluted net loss per share attributable to SCRG common shareholders	$ (0.06)	$ (0.08)
Weighted average number of common shares outstanding - basic and diluted	52,685,296	42,302,121

XML

CONSOLIDATED STATEMENTS OF LOSS (Parenthetical) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Related party expenses	$ 401,092	$ 383,400
Related party interest expense	$ 130,000	$ 130,000

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($)	Common Stock [Member]	Preferred Stock	Additional Paid-In Capital	Accumulated Deficit	Non-Controlling Interest	Total
Balances, beginning at Dec. 31, 2013	$ 4,925,860		$ 1,086,609	$ (5,297,742)	$ 439,318	$ 1,154,045
Balances, beginning, shares at Dec. 31, 2013	9,629,220
Issuance of common stock for cash	$ 1,254,913					1,254,913
Issuance of common stock for cash, shares	4,183,042
Acquisition of BBHCLLC for common and preferred shares	$ 1,033,429	$ 929,878				1,963,307
Acquisition of BBHCLLC for common and preferred shares, shares	20,274,201	18,242,687
Debt discount on convertible debt allocated to warrants and beneficial conversion feature			$ 308,626			308,626
Stock-based compensation			$ 475,056			475,056
Issuance of common stock for services	$ 21,503					$ 21,503
Issuance of common stock for services, shares	51,678					30,000
Exercise of stock options	$ 53					$ 53
Exercise of stock options, shares	192,832
Exercise of warrants	$ 300					$ 300
Exercise of warrants, shares	1,094,562
Conversion of preferred shares to common stock	$ 680,884	$ (68,088)
Conversion of preferred shares to common stock, shares	13,357,828	(13,357,828)
Debt discount on long-term debt allocated to warrants			$ 731,880			$ 731,880
Net loss				$ (3,395,001)	$ (374,014)	(3,769,015)
Balances, ending at Dec. 31, 2014	$ 7,916,942	$ 248,994	$ 2,602,171	$ (8,692,743)	$ 65,304	$ 2,140,668
Balances, ending, shares at Dec. 31, 2014	48,783,363	4,884,859				48,783,363
Issuance of common stock for cash						$ 1,849,019
Issuance of common stock and warrants for cash	$ 1,849,019		837,480			$ 2,686,499
Issuance of common stock and warrants for cash, shares	13,386,852
Acquisition of BBHCLLC for common and preferred shares
Debt discount on convertible debt allocated to warrants and beneficial conversion feature			109,130			$ 109,130
Stock-based compensation			$ 324,929			324,929
Issuance of common stock for services	$ 33,333					33,333
Issuance of common stock for services, shares	136,874
Exercise of stock options	$ 25					25
Exercise of stock options, shares	91,214
Contribution by non-controlling interest holder					$ 1,084,023	1,084,023
Distribution to non-controlling interest holder					(57,310)	(57,310)
Net loss				$ (3,399,334)	(489,811)	(3,889,145)
Balances, ending at Dec. 31, 2015	$ 9,799,319	$ 248,994	$ 3,873,710	$ (12,092,077)	$ 602,206	$ 2,432,152
Balances, ending, shares at Dec. 31, 2015	62,398,303	4,884,859				62,398,303

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities
Net loss	$ (3,889,145)	$ (3,769,015)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount	516,995	76,469
Stock-based compensation	324,929	475,056
Depreciation and amortization	$ 579,327	436,228
Amortization of prepaid management services and guarantees		99,820
Stock issues for services	$ 33,333	21,503
Interest attributed to converted debt		47,556
Changes in operating assets and liabilities
Prepaid expenses	$ (51,476)	226,054
Deposit	(40,030)	(24,614)
Inventory	(27,267)	(32,532)
Accounts payable	164,460	10,777
Accrued expenses and interest	123,494	9,179
Deferred rent	6,825	68,170
Net cash used in operating activities	$ (2,258,555)	(2,355,349)
Cash flows from investing activities
Cash acquired in acquisition		869,907
Note receivable advance		(25,334)
Purchase of property and equipment	$ (1,867,372)	(350,771)
Net cash (used in) provided by investing activities	(1,867,372)	$ 493,802
Cash flows from financing activities
Contribution to subsidiary by non-controlling interest	984,022
Distribution to non-controlling interest holders	(57,310)
Payment of related party promissory notes	(125,000)
Payment of long-term debt	(17,066)
Proceeds from sale of common stock and warrants	2,686,499	$ 1,254,913
Proceeds from issuance of promissory notes and warrants	$ 280,000	460,000
Proceeds from issuance of long-term debt, net		1,197,714
Proceeds from issuance of related party promissory note		115,000
Proceeds from bank loan	$ 299,988	2,055
Proceeds from exercise of a stock options and warrants	25	353
Net cash provided by financing activities	4,051,158	3,030,035
Net (decrease) increase in cash and cash equivalents	(74,769)	1,168,488
Cash and cash equivalents, beginning	1,182,099	13,611
Cash and cash equivalents, ending	$ 1,107,330	1,182,099
Supplemental disclosure of non-cash operating, investing and financing activities:
Preferred stock converted to common stock		680,884
Acquisition of BBHCLLC in exchange for preferred and common stock		$ 1,963,307
Note payable exchanged for subsidiary equity	$ 100,000
Debt discount related to beneficial conversion features and warrants	109,130	$ 1,040,506
Cash paid for interest	$ 130,481	$ 16,215

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ORGANIZATION, RECENT EVENTS, BASIS OF PRESENTATION AND MANAGEMENT'S PLANS

12 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION, RECENT EVENTS, BASIS OF PRESENTATION AND MANAGEMENT'S PLANS

NOTE 1 – ORGANIZATION, RECENT EVENTS, BASIS OF PRESENTATION AND MANAGEMENT’S PLANS

Organization and Recent Events

Southern Concepts Restaurant Group, Inc. (“SCRG” or the “Company”) is a Colorado corporation that was formed on January 29, 2008. The Company, on March 9, 2015, with approval of a majority of the Company’s shareholders, changed its name from Bourbon Brothers Holding Corporation to Southern Concepts Restaurant Group, Inc.

The Company operates and manages restaurants through its wholly-owned and majority-owned subsidiaries, including:

SH Franchisee & Licensing Corp. (“SH”)

Southern Hospitality Denver Holdings, LLC (“SHDH”)

Southern Hospitality Denver, LLC (“SHD”)

Southern Hospitality Lone Tree, LLC (“SHLT”)

Carve Restaurant Group, LLC (“CRG”)

Carve BBQ Glendale, LLC (“CARVEG”)

Southern Hospitality Southern Kitchen Colorado Springs, LLC (“SHSK”)

Bourbon Brothers Holding Company, LLC (“BBHCLLC”)

Bourbon Brothers Restaurant Group, LLC (“BBRG”)

The Company began revenue generating activities in late February 2013, with the opening of its first Denver-based restaurant. In January 2014, the Company opened its second restaurant in Colorado Springs, Colorado, and in April 2015, the Company opened its third restaurant in Lone Tree, Colorado (the “SHLT” restaurant). The Company developed a fast casual concept, called Carve Barbecue, in which the Company entered into a lease in Glendale, Colorado in April 2015 through a newly-formed 66.075% owned subsidiary (the “CARVEG” restaurant). The Company opened this location on November 5, 2015.

In February 2015, the Company also executed a sixth amendment to the Franchise Agreement which specifically granted SCRG the right to develop two new full service Southern Hospitality restaurants during 2015, the locations of which were named in the document to be Lone Tree, Colorado and downtown Colorado Springs, Colorado. Additionally, the sixth amendment granted the Company the right to rebrand its Bourbon Brothers Southern Kitchen restaurant in northern Colorado Springs into a Southern Hospitality-branded full service franchised restaurant operating under the trade name Southern Hospitality Southern Kitchen, a differentiated and slightly more upscale concept to that of the original concept.

The Company is a party to a franchise agreement (the “FA” or the “Franchise Agreement”) with SH Franchising & Licensing LLC, dba Southern Hospitality BBQ (the “Franchisor” or “SHFL”). In addition, in February 2015, the Company entered into a Master License Agreement (“MLA”) with SHFL which grants the Company the right to license up to five Southern Hospitality-branded fast casual restaurants (SHQ) in the Denver and Colorado Springs markets through August 2016. SHFL and SCRG have agreed to a royalty of 2.5% of gross sales on each of the new SHQ locations. The agreement pertains exclusively to the Company’s right to develop the SHQ locations and does not restrict the Company from developing a similar, competitive brand in the future. Finally, in developing the SHQ concept, SCRG will retain joint ownership of this concept, which pertains to the functionality of the restaurant.  The Company does not anticipate to open a SHQ in the near future.

During 2016, the Company is exploring options for growth for the Company’s two brands, Southern Hospitality and Carve Barbecue.  Specifically, the Company is looking at building the Southern Hospitality growth model on the footprint and profitability similar to its Southern Hospitality Lone Tree location, with real estate between 4,000 to 5,000 square feet.  In regards to the Carve model, the Company is identifying real estate partners and locations for its 2,500 square feet footprint.

Management’s Plans

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.  The Company reported a net loss of approximately $3.9 million and $3.8 million for the years ended December 31, 2015 and 2014, respectively, and has an accumulated deficit of approximately $12.1 million at December 31, 2015. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company has devoted substantially all of its efforts to developing its business plan, raising capital, and opening and operating its four restaurants in Denver, Colorado Springs, Glendale and Lone Tree.

The Company’s continued implementation of its business plan is dependent on its future profitability and engaging in strategic transactions, or on additional debt or equity financing, which may not be available in amounts or on terms acceptable to the Company or at all. As a consequence, if the Company is unable to achieve and maintain profitability through current restaurant operations, enter into strategic transactions, or obtain additional financing in the near term, the Company may be required to delay its business plan implementation, which would have a material adverse impact on the Company.

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SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All material intercompany accounts, transactions and profits are eliminated in consolidation.

Accounting guidance provides a framework for determining whether an entity should be considered a variable interest entity (VIE), and if so, whether the Company’s involvement with the entity results in a variable interest in the entity. If the Company determines that it does have a variable interest in the entity, it must perform an analysis to determine whether it represents the primary beneficiary of the VIE. If the Company determines it is the primary beneficiary of the VIE, it is required to consolidate the assets, liabilities and results of operations and cash flows of the VIE into the consolidated financial statements of the Company.

A company is the primary beneficiary of a VIE if it has a controlling financial interest in the VIE. A company is deemed to have a controlling financial interest in a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company has concluded that there are no VIE’s subject to consolidation at December 31, 2015 and December 31, 2014. While the Company believes its evaluation is appropriate, future changes in estimates, judgments and assumptions in the case of an evaluation triggered by a reconsideration event as defined in the accounting standard may affect the determination of primary beneficiary status and the resulting consolidation, or deconsolidation, of the assets, liabilities and results of operations of a VIE on the Company’s consolidated financial statements.

Use of Estimates

The process of preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. The areas that require management’s most significant estimates are impairment of long-lived assets, allocation of purchase price for business combinations, estimating fair value of debt and equity instruments, assessment of going conern, and share-based compensation. Actual results could differ from the estimates. Changes in estimates are recorded in the period of change.

Fair Value Measurements

The Company accounts for financial instruments pursuant to accounting guidance which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair measurements.  To increase consistency and comparability in fair value measurements, the accounting guidance established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 – quoted prices (unadjusted) in active markets of identical assets or liabilities;

Level 2 – observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 – assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions.  Unobservable inputs require significant management judgments or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy.  In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement.  Such determination requires significant management judgment.  There were no financial assets or liabilities measured at fair value, with the exception of cash and cash equivalents as of December 31, 2015 and 2014.

The carrying amounts of accounts payable and notes payable approximate their fair values due to their short-term maturities.  The carrying amounts of related party receivables and payables are not practicable to estimate based on the related party nature of the underlying transaction.

Non-controlling Interest

The non-controlling interest represents capital contributions, income and loss attributable to the owners of less than wholly-owned consolidated entities (SHD, SHSK, SHLT and CARVEG), and are reported in equity. From inception through December 31, 2015, in exchange for their interest in SHD, the non-controlling members contributed $897,465 in cash (no contributions in 2015 or 2014). The non-controlling members of SHSK contributed $109,022 for the year ended December 31, 2015.  The non-controlling members of SHLT contributed $500,000 in cash for the year ended December 31, 2015.  In April 2015, related party notes and accrued interest were converted into non-controlling CARVEG equity of $100,000 (Note 5), and $375,000 was contributed in cash in the year ended December 31, 2015.  During 2015, the Company distributed cash of $57,310 to the non-controlling members of SHLT and CARVEG.

Pre-opening Costs

Pre-opening costs, such as travel and employee payroll and related training costs are expensed as incurred and include direct and incremental costs incurred in connection with the opening of each restaurant. Pre-opening costs also may include non-cash rental costs under operating leases incurred during a construction period.

Cash and Cash Equivalents

From time to time, the Company maintains cash equivalents that include short-term highly liquid investments with an original a maturity of three months or less when purchased. The Company has no cash equivalents at December 31, 2015 and 2014.  In addition, the majority of payments due from financial institutions for the settlement of debit card and credit card transactions process within two business days, and therefore these payments due are classified as cash and cash equivalents.

Inventory

Inventory consists of food and beverages and is stated at the lower of cost (first-in, first-out) or market.

Deferred Financing Costs

Deferred financing costs are amortized over the term of the related debt using the straight-line method, which is not materially different than the effective-interest method.

Property and Equipment

Management reviews property and equipment, including leasehold improvements, for impairment when events or circumstances indicate these assets might be impaired. The Company's management considers, or will consider, such factors as the Company's history of losses and the disruptions in the overall economy in preparing an analysis of its property, including leasehold improvements, to determine if events or circumstances have caused these assets to be impaired. Management bases this assessment upon the carrying value versus the fair value of the asset and whether or not that difference is recoverable. Such assessment is performed on a restaurant-by-restaurant basis and includes relevant facts and circumstances including the physical condition of the asset. If management determines the carrying value of the restaurant assets exceeds the projected future undiscounted cash flows, an impairment charge would be recorded to reduce the carrying value of the restaurant assets to their fair value. Management determined that no impairment existed at December 31, 2015 and 2014.

Leasehold improvements are stated at cost. Property and equipment costs directly associated with the acquisition, development and construction of a restaurant are capitalized. Expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, and leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Property and equipment are not depreciated/amortized until placed in service. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings.

Capitalized Interest

Interest on funds used to finance the acquisition and construction of a restaurant to the date the asset is placed in service is capitalized.

Leases and Deferred Rent

The Company leases and intends to lease substantially all of its restaurant properties.  For leases that contain rent escalation clauses, the Company records the total rent payable during the lease term and recognizes expense on a straight-line basis over the initial lease term, including the "build-out" or "rent-holiday" period where no rent payments are typically due under the terms of the lease. Any difference between minimum rent and straight-line rent is recorded as deferred rent. Additionally, contingent rent expense based on a percentage of revenue is accrued and recorded to the extent it is expected to exceed minimum base rent per the lease agreement based on estimates of probable levels of revenue during the contingency period.  Long-term deposits on leases in the amount of $120,555 and $80,525 are recorded as of December 31, 2015 and 2014, respectively.  Deferred rent also includes a tenant improvement allowance the Company received in 2012 for $150,000, which is amortized as a reduction of rent expense, also on a straight-line basis over the initial term of the lease. 

Revenue Recognition

The Company recognizes revenues pursuant to SEC Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition, and applicable related guidance. Revenue is derived from the sale of prepared food and beverage and select retail items. Revenue is recognized at the time of sale and is reported on the Company's consolidated statements of income (loss) net of sales taxes collected. The amount of sales tax collected is included in accrued expenses until the taxes are remitted to the appropriate taxing authorities.

The Company sells gift cards which do not have an expiration date, and it does not deduct dormancy fees from outstanding gift card balances. The Company recognizes revenue from gift cards when: (i) the gift card is redeemed by the customer; or (ii) the likelihood of the gift card being redeemed by the customer is remote (gift card breakage), and the Company determines that there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction. The Company did not recognize any revenue related to unredeemed gift card breakage in 2015 or 2014. Unearned gift card revenue (presented within accrued expenses) at December 31, 2015 and 2014, was approximately $18,530 and $22,880, respectively.

Advertising Expenses

Advertising costs are expensed as incurred. Total advertising expenses were approximately $350,200 and $444,200, for the years ended December 31, 2015 and 2014, respectively.

Stock-Based Compensation

The Company accounts for stock-based compensation under Accounting Standards Codification (“ASC”) 718, Share-Based Payment. ASC 718 requires the recognition of the cost of services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. ASC 718 also requires the stock-based compensation expense to be recognized over the period of service in exchange for the award (generally the vesting period). The Company estimates the fair value of each stock option at the grant date by using an option pricing model, typically the Black-Scholes model.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their financial statement reported amounts, and for tax loss and credit carry-forwards. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized.

The Company determines its income tax expense (benefit) in each of the jurisdictions in which it operates. Income tax includes an estimate of the current income tax expense (benefit), as well as deferred income tax expense, which results from the determination of temporary differences arising from the different treatment of items for book and tax purposes.

The Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions.  Periods subject to examination for the Company’s federal and state income tax returns are 2012 through the 2014 tax year.

Certain of the Company’s subsidiaries are limited liability companies (“LLC’s”), which are treated for tax purposes as pass-through entities. As a result, any taxes are the responsibility of the respective members.

The Company assesses the likelihood of the financial statement effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying consolidated financial statements. The Company recognizes tax related interest and penalties, if any, as a component of income tax expense.

Net loss per share

Basic net loss per share is computed by dividing the net loss applicable to common shareholders by the weighted-average number of shares of common stock outstanding for the period. The Series A convertible preferred shares are not included in the computation of basic loss per share, as the Series A convertible preferred shares do not have a contractual obligation to share in the losses of the Company. Diluted net loss per share reflects the potential dilution that could occur if dilutive securities were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect of such inclusion would reduce a loss or increase earnings per share. For each of the periods presented in the accompanying consolidated financial statements, the effect of the inclusion of dilutive shares would have resulted in a decrease in loss per share. Common stock options, warrants and shares underlying convertible debt aggregating 35,652,529 and 9,591,056 for the years ended December 31, 2015 and 2014, respectively, have been excluded from the calculation of diluted net loss per common share.

Recently Issued Accounting Standards

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern: Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.  The guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early application permitted.  The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts from Customers, which supersedes the revenue recognition in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB delayed the effective date by one year. This new standard is now effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied retrospectively, with early adoption now permitted to the original effective date of December 15, 2016. The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. Once effective, ASU No. 2015-02 will apply to the consolidation assessment of all entities. This standard is effective for public reporting entities in fiscal periods beginning after December 15, 2015. The Company does not anticipate any material impact upon adoption of this new standard.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) Simplifying the Measurement of Inventory, which changes the measurement from lower of cost or market to lower of cost and net realizable value. The guidance requires prospective application for reporting periods beginning after December 15, 2016 and permits adoption in an earlier period. The Company intends to adopt this ASU in the first quarter of 2016; the adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company intends to adopt this ASU in the first quarter of 2016, at which time the Company will reclassify debt issuance costs (if any) associated with the Company's debt from other noncurrent assets to debt. A reclassification will also be applied retrospectively to each prior period presented.

In February 2016, the FASB issued ASU No. 2016-02 ("ASU 2016-02"), Leases (Topic 842), which supersedes existing guidance on accounting for leases in "Leases (Topic 840)" and generally requires all leases to be recognized in the statement of financial position. The provisions of ASU 2016-02 are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions of this ASU are to be applied using a modified retrospective approach. The Company is currently evaluating the effect that this ASU will have on our consolidated financial statements.

Management has not identified any other recently issued accounting standards that it believes may have a significant impact on the Company’s consolidated financial statements.

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INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSET

NOTE 3 – INTANGIBLE ASSET

Franchise Agreements

The intangible asset at December 31, 2015 and 2014, represents franchise license costs for the Denver restaurant (net of accumulated amortization of $14,375 and $9,375, respectively).

Amortization expense of $5,000 was recorded for each of the years ended December 31, 2015 and 2014. Amortization expense for the next five years is estimated to be as follows:

2016	$	5,000
2017		5,000
2018		5,000
2019		5,000
2020		5,000
Thereafter		10,625
	$	35,625

The Company licenses the rights to the trademark “Bourbon Brothers” and certain intellectual property, as defined, from a related party, Hospitality Income & Asset, LLC, f/k/a Bourbon Brothers LLC (“HIA”), for use in the Company’s business operations. HIA has granted an exclusive license to use and to sublicense the tradename and intellectual property for an initial ten-year term. The agreement shall automatically renew for additional terms of ten-years each without any action required by either party. This license agreement does not require the payment of royalties or any other consideration. The Company is not currently using this trademark in its operations, nor is it contemplated for use in the foreseeable future.

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 4 – PROPERTY AND EQUIPMENT

As of December 31, 2015 and 2014, property and equipment consists of the following:

	December 31,			December 31,
	2015			2014			Useful lives
Leasehold improvements	$	3,237,345		$	2,227,438		10 years
Website development		45,750			21,500		3 years
Equipment		2,077,889			1,299,220		3-7 years
Computers and hardware		170,822			116,275		5 years
		5,531,806			3,664,433
Less accumulated depreciation		(1,252,710	)		(678,383	)
	$	4,279,096		$	2,986,050

Depreciation expense for the years ended December 31, 2015 and 2014 was approximately $574,300 and $431,200, respectively.

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NOTES PAYABLE

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTE 5 – NOTES PAYABLE

Convertible Notes:

The Company has outstanding 5% promissory notes (the “Notes”) that bear interest at 5% per annum, they are unsecured, and their maturity dates are seven years from their issue date (October 2018 through November 2019). Quarterly payments are applied against accrued interest first, then principal. The minimum aggregate quarterly payment to Note holders is 2.5% of the Company’s portion of gross quarterly revenues from each Southern Hospitality BBQ restaurant.  Payments made in the year ended December 31, 2014 were $2,409; no payments were made in 2015. At December 31, 2015, the Company has not made all required payments of interest on the Notes.  At December 31, 2015 and 2014, quarterly payments in arrears total $108,000 and $64,870.  Accrued interest at December 31, 2015 and 2014 is $119,490 and $77,620, respectively. The Company may cure this deferral in quarterly payments within a defined period of time, as provided for in the note agreements, thus preventing the Notes from becoming callable.

The Notes and accrued interest are convertible, at the option of the holder. The conversion price is 80% of the 20-day average closing sales price on the date conversion is elected, but not less than $0.50 per share. The Company determined that there was a beneficial conversion feature associated with the Notes in the amount of $283,500 related to the intrinsic value of the conversion feature before the Company’s stock became public.  The Company recorded the beneficial conversion feature as a discount to the Notes and is amortizing the amount to interest over the term of the Notes.  Approximately $53,900 and $49,100 was amortized for the years ended December 31, 2015 and 2014, respectively.  No Notes were converted in 2015 or in 2014.  At December 31, 2015 and 2014, the balance of the Notes and accrued interest, net of discount, was approximately $764,100 and $665,900, respectively.

Beginning in August 2014, the Company began selling 6.5% promissory notes (the “2014 Notes”) along with warrants to purchase the Company’s common stock. Investors received a warrant to purchase four shares of common stock for each one dollar of principal amount loaned to the Company. The 2014 Notes bear interest at 6.5% per annum, they are unsecured, and their maturity dates are five years from their issue date. The Company sold $460,000 of 2014 Notes from August through December 2014 and $280,000 of 2014 Notes in 2015.  By their original terms, the 2014 Notes and accrued interest become convertible, at the option of the holder, after two years from the issue date. The conversion price is the lower of 80% of the 20-day average closing sales price on the date conversion is elected or $0.25 per share.

The 2014 Notes were recorded at $322,200 after discounting the convertible notes based on the relative fair value of the warrants issued with the debt, of approximately $274,700.  The warrants were issued with the convertible debt and their relative fair value was determined using the Black-Scholes option pricing model.  Additionally, the convertible notes were further discounted, as the Company determined that the convertible debt contained a beneficial conversion feature and recorded an additional debt discount of approximately $143,100.  The net carrying value of the 2014 Notes and accrued interest at December 31, 2015 and 2014 was $467,700 and $159,200, respectively.

The assumptions used in the Black-Scholes model to determine the fair value of warrants are as follows: (1) dividend yield of 0%, (2) expected volatility of 205%, (3) weighted average risk-free interest rate of 0.79%, (4) contractual life of 3.0 years, and fair value of the Company’s shares of $0.14 to $0.30 per share.  The relative fair value attributable to the warrants and the beneficial conversion feature have been recorded as a discount and deducted from the face value of the convertible debt in the accompanying consolidated balance sheet.  The discount applied to the 2014 Notes is being amortized over the five-year term of the convertible notes.

Promissory Note:

During the year ended December 31, 2013, the Company issued a promissory note with an aggregate face value of $200,000, along with a warrant to purchase 50,000 shares of the Company’s common stock. This note bears interest at 5% per annum, it is unsecured and due on demand. The holder of the note received additional consideration in the form of a fully vested warrant to purchase 50,000 common shares at an exercise price of $0.50 per share exercisable for three years from the date of execution of the note.  The Company determined the relative fair value of the warrant to be approximately $44,000, which was recorded as a discount to the note payable, which was amortized over approximately three months.  In February 2016, the Company paid $50,000 in principal and issued a new promissory note for $150,000 which bears interest at 5% per annum, is unsecured and is due on February 3, 2017.

Bank Financing:

In November 2014, SHLT and Rocky Mountain Bank & Trust entered into a bank financing agreement to purchase kitchen equipment for the Lone Tree restaurant location.  A board member of the Company is also a board member of Rocky Mountain Bank & Trust. The agreement provides for financing up to $300,000, of which the Company had drawn $282,900 by December 31, 2015 and $2,055 by December 31, 2014. This loan bears interest at 6%.  Monthly interest-only payments began in December 2014 and continued through August 2015.  Beginning in September 2015, monthly principal and interest payments of approximately $5,800 are due through maturity in August 2020.   This agreement is collateralized by the kitchen equipment at the SHLT and SHD restaurants.

Related Party Promissory Notes:

The Company issued short-term promissory notes totaling $90,000 in the third quarter of 2014 to two shareholders.  These notes bear interest at 10% per annum, are unsecured, and had a maturity date of 180 days after the date of execution. These notes with accrued interest were subsequently converted to equity in CARVEG in April 2015 at a conversion rate of $1.05 per membership unit. In addition, the Company issued a short-term, unsecured promissory note for $25,000 on November 13, 2014, to a third shareholder.  This note was subsequently paid off in full in January 2015.

Related Party Loan Agreement:

On December 31, 2014, the Company entered into a Loan Agreement and associated Promissory Note (the “Loan Agreement”) with Bourbon Brothers #14, LLC (“BB14”) which provides for an unsecured term loan in the aggregate original principal amount of $1,250,000 (the “Loan”). The Company received net proceeds of $1,197,714 after loan closing fees.  BB14 is a related party entity, controlled by certain shareholders of the Company. The Company is to pay interest on the Loan at the greater of 9.5% or 6.25% per annum plus the prime rate announced by the Wall Street Journal. In addition, the Company is to pay a monthly loan servicing fee in the amount of 1% of the principal balance of the Loan. The entire principal balance of the Loan, plus any accrued and unpaid interest, is due on December 29, 2016. The related party interest expense on this loan for the year ended December 31, 2015 was $130,300.  The Company paid $100,000 towards prepayment of this Loan to BB14 at December 31, 2015.  Subsequently, the Company prepaid an additional $400,000 towards this Loan to BB14 in January 2016.

In connection with the Loan, the Company issued a warrant to BB14 for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share with the warrant vesting in one year. BB14 funded the Loan with financing BB14 received from a third-party lender.  JW Roth, a director of the Company, personally guaranteed the BB14 Loan to obtain financing to facilitate the Loan. To compensate JW Roth, the Company issued a warrant to Mr. Roth for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share with the warrant vesting in one year.  The Company determined the relative fair value of the 15,000,000 warrants to be approximately $731,800, which has been recorded as a discount to the Loan principal balance, and which is being amortized over the term of the Loan.  The balance of the discount at December 31, 2015 and December 31, 2014 was $365,940 and $731,800, respectively.

Scheduled maturities of notes payable for the next five years and thereafter as of December 31, 2015, are as follows:

Year ending December 31,
2016	$	1,150,000
2017		200,000
2018		837,425
2019		740,000
2020		282,934
Thereafter		-
		3,210,359
Less total discount on notes payable		(880,485	)
Add accrued interest at December 31, 2015		176,730
		2,506,604
Less current portion		(913,548	)
Non-current portion	$	1,593,056

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Commitments:

Franchise agreement

The Company operates its Denver restaurant property under a franchise agreement with the Franchisor under an initial ten-year term, renewable for two additional five-year terms. Pursuant to the franchise agreement, as amended, the Company is to pay royalty fees based on a percentage of gross revenues (2.5%, subject to a monthly floor of $5,000) , plus additional fees and costs for marketing, training, inventory and other franchisor costs. Two officers of the Company have personally guaranteed royalty payments to the Franchisor.

On December 30, 2014, SHD entered into a Fifth Amendment to its FA with the Franchisor in connection with the opening of a new Southern Hospitality restaurant in Lone Tree, Colorado. Under the FA, SHD partially assigned its rights to SHLT to use the Franchisor’s marks, business methods, proprietary products, confidential information and intellectual property to operate a Southern Hospitality restaurant. In addition, pursuant to the FA, the Franchisor waived certain initial fees in connection with SHLT opening a restaurant in Lone Tree, Colorado.

On February 13, 2015, SHD entered into a Sixth Amendment to its FA with the Franchisor in connection with the potential for opening two Southern Hospitality restaurants in Colorado Springs, Colorado.  Under the FA, SHD partially assigned its rights to SHSK, a 51%-owned subsidiary of the Company, and Southern Hospitality Tejon, LLC, a wholly-owned subsidiary of the Company, to use the Franchisor's marks, business methods, proprietary products, confidential information and intellectual property to operate a Southern Hospitality restaurant.

For the years ended December 31, 2015 and 2014, the Company incurred franchise royalty expense of approximately $139,300 and $59,000, respectively.

Leases:

In April 2012, the Company entered into a ten-year, non-cancellable lease for the restaurant in Denver, Colorado. This lease provides for two, five-year renewal options. Rent payments are approximately $16,000 per month plus certain common area maintenance charges, as defined, and are subject to escalation provisions.  Lease expense was approximately $188,800 and $194,120 for the years ended December 31, 2015 and 2014, respectively.  

The Company has a ten-year lease with HIA, a related party, for the real property in connection with the restaurant location in Colorado Springs.  The lease commenced upon taking possession of the premises in January 2014.  Rent is approximately $33,340 per month for the first 60 months, and thereafter is subject to adjustment every 60 months. This lease provides for one, ten-year renewal option.  Related party lease expense was approximately $401,000 and $383,000 for each of the years ended December 31, 2015 and 2014, respectively.

The Company has a ten-year, non-cancellable lease for the restaurant in Lone Tree, Colorado. The lease provides for an initial lease term of ten years and for two, five-year renewal options.  Rent payments are approximately $8,900 per month plus certain common area maintenance charges, and are subject to escalation provisions.  In addition to base rent, this lease requires contingent rent payments equal to 5% of gross sales above predetermined thresholds, as defined. This location opened April 27, 2015, at which time the lease commenced.  Lease expense was approximately $74,400 for the year ended December 31, 2015 (none in 2014).

In April 2015, CARVEG entered into a non-cancellable lease for the Company’s first fast casual restaurant in Glendale, Colorado. The initial term of this lease provides for expiration on July 31, 2020. This lease includes three, five-year extension options. Rent payments are approximately $11,100 per month, which includes certain common area maintenance charges, and are subject to escalation provisions.  This location opened November 5, 2015. Lease expense was approximately $84,960 for the year ended December 31, 2015 (none in 2014).

On January 1, 2014, the Company assumed a lease from a related party for the corporate office in Colorado Springs.  The lease is for 78 months with an unaffiliated party.  Monthly rent is $5,800 per month escalating up to $6,000 per month in year six.  The initial term of the lease provides for expiration on December 31, 2016. Lease expense for the years ended December 31, 2015 and 2014 was $71,200 and $69,600, respectively.

The future minimum lease payments are as follows:

	Third Party		Related Party		Total
2016	$	492,089	$	401,092	$	893,181
2017		424,843		401,092		825,935
2018		431,206		401,092		832,298
2019		437,761		401,092		838,853
2020		409,629		401,092		810,721
Thereafter		893,731		1,219,988		2,113,719
	$	3,089,259	$	3,225,448	$	6,314,707

Contingencies:

From time to time, the Company may become party to litigation and other claims in the ordinary course of business. To the extent that such claims and litigation arise, management provides for them if upon the advice of counsel, losses are determined to be both probable and estimable.

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INCOME TAXES

12 Months Ended

Dec. 31, 2015

Income Taxes

INCOME TAXES

NOTE 7 – INCOME TAXES

At December 31, 2015, the Company has approximately $8,699,000 of net operating loss carry-forwards which expire between 2031 and 2035. The net operating loss carry-forwards may be subject to certain restrictions in the future, particularly in the event of a change in ownership under Internal Revenue Code Section 382.

Deferred tax assets and liabilities are recorded based on the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, as measured by the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are carried on the balance sheet with the presumption that they will be realizable in future periods when pre-tax income is generated. A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities represent the future impact of temporary differences between the financial statement and tax bases of assets and liabilities.  The Company’s net deferred tax assets have been fully reserved, effectively by a valuation allowance, because management does not believe realization of the deferred tax assets is more likely than not at the balance sheet date.

The deferred tax assets (liabilities) and associated valuation allowance at December 31, 2015 and 2014, are as follows:

	2015			2014
Current assets:
Stock based compensation	$	490,000		$	370,000
		490,000			370,000
Non-current assets:
Intangible assets		4,900			7,000
Property and equipment		840,000			157,000
Net operating loss carryforwards		3,219,000			2,598,000
		4,553,900			3,132,000
Valuation allowance		(4,553,900	)		(3,132,000	)
Net deferred tax assets	$	-		$	-

No income tax benefit was recognized for the years ended December 31, 2015 and 2014, as indicated below:

	2015			2014
Deferred tax benefit:
Federal	$	(1,307,000	)	$	(1,204,000	)
State		(115,000	)		(106,000	)
		(1,422,000	)		(1,310,000	)
Increase in valuation allowance		1,422,000			1,310,000
	$	-		$	-

A reconciliation of income tax computed at the U.S. statutory tax rate of 34% to the effective income tax rate is as follows:

	2015			2014
Statutory rate		34	%		34	%
State taxes		3			3
Permanent differences and other		(4	)		(7	)
Valuation allowance		(33	)		(30	)
Effective rate		-			-

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EQUITY

12 Months Ended

Dec. 31, 2015

Stockholders' Equity Note [Abstract]

EQUITY

NOTE 8 –  EQUITY

Preferred stock:

The Company authorized the issuance of up to 18,242,700 shares of Series A convertible preferred stock ("Series A Stock”) January 2014, of which 18,242,687 shares were issued on January 22, 2014. As of March 1, 2014, the holders of 13,357,828 Series A preferred shares chose to convert their Series A preferred stock into shares of the Company's common stock at a ratio of one to one. These Series A preferred shares were then subsequently cancelled. The Certificate of Designation of the Company’s Series A Stock requires that any shares of Series A Stock that are converted into Common Stock be cancelled and are not available for reissuance by the Company.  On February 3, 2016, 4,428,791 shares of Series A Preferred Stock, converted to common shares, leaving 456,068 Series A Preferred Stock issued and outstanding.

Each share of Series A convertible preferred is entitled to 25 votes and is convertible into shares of common stock on a one-for-one basis.  Other rights of the Series A convertible preferred are identical to the common stock rights.

Common stock:

In 2015, the Company issued 13,386,852 common shares of stock for proceeds of $1,849,019, along with 6,265,000 warrants to purchase shares of common stock, exercisable at $0.40 per warrant.  In 2014, the Company issued 4,183,042 units (each unit consisted of one share of common stock and one warrant to purchase common stock) for cash of $1,254,913, at $0.30 and $0.50 per unit.

In connection with services provided to the Company, the Company issued 30,000 common shares valued at $15,000 ($0.50 per share) and 21,678 common shares valued at $6,503 ($0.30 per share) during the year ended December 31, 2014.  In connection with services provided to the Company, the Company issued 136,874 common shares valued at $33,333 (at $0.24 and $0.27 per share) during the year ended December 31, 2015.

Stock options:

Effective November 13, 2012, the Company adopted the 2012 Stock Option Plan (the “Plan”). Under the Plan, the Company may grant stock options, restricted and other equity awards to any employee, consultant, independent contractor, director or officer of the Company. A total of 4 million shares of common stock may be issued under the Plan (as amended on January 22, 2014).

During the year ended December 31, 2015, the Company granted options to purchase up to 120,000 common shares to two of its restaurant managers that vest evenly over three years, with the first tranche vesting on February 2, 2016 and each year thereafter with an exercise price of $0.25 per share.  In addition, the Company granted options to another of its store managers to purchase up to 20,000 shares that vest evenly over two years beginning on March 16, 2015, with an exercise price of $0.27 per share. In June 2015, the Company granted options to purchase up to 600,000 common shares to six members of its board of directors that vest on March 9, 2016, with an exercise price of $0.30 per share.  In 2015, the Company also issued options to purchase up to 43,500 shares of common stock to restaurant management which vest in full on November 9, 2016, exercisable at $0.20 per option.

The stock-based compensation cost related to options that have been included as a charge to general and administrative expense in the statements of operations was approximately $324,900 and $475,056 for the years ended December 31, 2015 and 2014, respectively.  As of December 31, 2015, there was approximately $241,200 of unrecognized compensation cost related to non-vested stock options. The cost is expected to be recognized over a weighted-average period of less than five years.

The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options.  The weighted-average fair value of options granted during the years ended December 31, 2015 and 2014 was $0.33 and $0.47 per share.  The assumptions utilized to determine the fair value of options granted during the years ended December 31, 2015 and 2014 are as follows:

	2015			2014
Risk free interest rate		0.79	%		0.79	%
Expected volatility		168	%		205	%
Expected term	5 years			5 years
Expected dividend yield		0			0

The expected term of stock options represents the period of time that the stock options granted are expected to be outstanding. The expected volatility is based on the historical price volatility of the common stock of similar companies. The risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents the anticipated cash dividend over the expected term of the stock options.

The following tables set forth the activity in the Company's Plan for the year ended December 31, 2015:

						Weighted
				Weighted		average
	Shares			average		remaining	Aggregate
	under			exercise		contractual	intrinsic
	option			price		life	value
Outstanding at January 1, 2015		2,636,039		$	0.29
Granted		783,500			0.29
Exercised		(91,214	)		-
Forfeited/cancelled		(460,449	)		0.22
Outstanding at December 31, 2015		2,867,876			0.30	3.40	$	-
Exercisable at December 31, 2015		1,501,949		$	0.30	2.99	$	-

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the estimated fair value of the Company’s common stock on December 31, 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they exercised their options on December 31, 2015.  The total value of all options exercised during the years ended December 31, 2015 and 2014 was $25 and $53.

The following table summarizes the activity and value of non-vested options as of and for the year ended December 31, 2015:

				Weighted
				average
	Number of			grant date
	options			fair value
Non-vested options outstanding at January 1, 2015		1,494,663		$	0.09
Granted		783,500			0.29
Vested		(451,788	)		0.46
Forfeited/cancelled		(460,449	)		0.22
Non-vested options outstanding at December 31, 2015		1,365,926		$	0.18

Warrants:

The Company uses the Black-Scholes pricing model to determine the weighted average fair value of warrants. The assumptions utilized to determine the fair value of warrants granted during the years ended December 31, 2015 and 2014, are as follows:

	2015			2014
Risk free interest rate		0.79	%		0.79	%
Expected volatility		168	%		205	%
Expected term	5 years			5 years
Expected dividend yield		0			0

The following table sets forth the activity regarding warrants for the year ended December 31, 2015:

						Weighted
				Weighted		Average
	Shares			Average		Remaining		Aggregate
	Underlying			Exercise		Contractual		Intrinsic
	Warrants			Price		Life		Value
Outstanding at January 1, 2015		20,184,614		$	0.18
Granted		7,563,000			0.40
Forfeited/cancelled		(30,000	)		0.30
Outstanding at December 31, 2015		27,717,614			0.25		2.96	$	-
Exercisable at December 31 , 2015		27,544,614		$	0.25		2.96	$	-

The following table sets for the activity regarding non-vested warrants for the twelve months ended December 31, 2015:

	Non-vested			Weighted		Weighted
	Shares			Average		Average
	Underlying			Exercise		Grant Date
	Warrants			Price		Fair Value
Non-vested at January 1, 2015		30,000		$	0.18	$	0.05
Granted		7,563,000			0.40	$	0.24
Vested		(7,390,000	)		0.40		0.40
Forfeited/cancelled		(30,000	)		0.30	$	0.30
Non-vested at December 31, 2015		173,000		$	0.18	$	0.24

During the year ended December 31, 2015, the Company issued warrants to purchase up to 6,265,000 shares of common stock in connection with its common stock offering. These warrants have a three-year term and are exercisable at $0.40 per share. In 2015, approximately $837,500 was allocated to warrants (additional paid in capital) based on the relative fair value of such warrants. The Company used the Black Scholes pricing model to determine the fair value, and used the expected exercisable term of such warrants, a risk free interest rate of  0.78% and a volatility of 168%.

In addition, during the year ended December 31, 2015, the Company granted warrants in connection to services provided to the Company to purchase up to 178,000 shares of the Company’s common stock at $0.25-$0.31 per share. These warrants have a three-year term and vest over one year. The Company used the Black Scholes pricing model to determine the fair value of these warrants, using a risk free interest rate of 0.79% and a volatility of between 168-205%.

During the year ended December 31, 2014, the Company granted warrants to certain officers, board members and others, to purchase up to 330,000 shares of the Company’s common stock at $0.30 per share. In December 2014, in connection with the loan the Company has with BB14, the Company issued a warrant to BB14 for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share. In addition, to compensate JW Roth, a director of the Company, for his personal guarantee in connection with BB14 obtaining financing to facilitate the Loan, the Company issued a warrant to Mr. Roth for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share. Both of these warrants are fully vested as of December 31, 2015.  The Company used the Black Scholes pricing model to determine the fair value of the warrants.  The Company used the contractual term of the warrant, a risk free interest rate of 0.79% and a volatility of 205%.  A relative fair value of approximately $730,880 was calculated and assigned to the warrants based on their fair values.

During the year ended December 31, 2014, existing warrants were exercised in exchange for 1,094,562 shares of common stock. No warrants were exercised in 2015.

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 9 – RELATED PARTY TRANSACTIONS

Related Party Note Receivable

In 2014, the Company advanced $25,334 to the non-controlling interest holder of SHD to fund certain of its liabilities, in exchange for a 10%, unsecured promissory note receivable.  The note receivable and accrued interest is due January 2017.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 10 – SUBSEQUENT EVENTS

In February 2016, the Company received $25,000 from Touch 4 Partners, LLC, in exchange for a promissory note, with an aggregate face value of $25,000, which bears interest at 5% per annum and is unsecured.  The note is due in full one year from the issuance date, February 3, 2017.  The Company, in turn, used these proceeds to partially pay $50,000 in principal on the outstanding promissory note (Note 5) of $200,000, along with paying accrued interest totaling $10,833. At the same time, a new promissory note was issued for the remaining $150,000 in principal, which bears interest at 5% per annum, is unsecured and due on February 3, 2017.

On February 3, 2016, three shareholders converted Series A Preferred shares totaling 4,428,791 into shares of common stock of the Company.  In January and February 2016, the Company sold 1,075,000 shares of common stock and warrants for $215,000. On March 11, 2016, the Company filed an amendment to its Articles of Incorporation with the Colorado Secretary of State, (i) decreasing the authorized preferred stock to 456,068 and (ii) increasing authorized capital stock of the Company to 125,456,068 shares, consisting of 125,000,000 shares of Common Stock and 456,068 shares designated as Series A Stock.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All material intercompany accounts, transactions and profits are eliminated in consolidation.

Accounting guidance provides a framework for determining whether an entity should be considered a variable interest entity (VIE), and if so, whether the Company’s involvement with the entity results in a variable interest in the entity. If the Company determines that it does have a variable interest in the entity, it must perform an analysis to determine whether it represents the primary beneficiary of the VIE. If the Company determines it is the primary beneficiary of the VIE, it is required to consolidate the assets, liabilities and results of operations and cash flows of the VIE into the consolidated financial statements of the Company.

A company is the primary beneficiary of a VIE if it has a controlling financial interest in the VIE. A company is deemed to have a controlling financial interest in a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company has concluded that there are no VIE’s subject to consolidation at December 31, 2015 and December 31, 2014. While the Company believes its evaluation is appropriate, future changes in estimates, judgments and assumptions in the case of an evaluation triggered by a reconsideration event as defined in the accounting standard may affect the determination of primary beneficiary status and the resulting consolidation, or deconsolidation, of the assets, liabilities and results of operations of a VIE on the Company’s consolidated financial statements.

Use of Estimates

Use of Estimates

The process of preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. The areas that require management’s most significant estimates are impairment of long-lived assets, allocation of purchase price for business combinations, estimating fair value of debt and equity instruments, assessment of going conern, and share-based compensation. Actual results could differ from the estimates. Changes in estimates are recorded in the period of change.

Fair Value Measurements

Fair Value Measurements

The Company accounts for financial instruments pursuant to accounting guidance which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair measurements.  To increase consistency and comparability in fair value measurements, the accounting guidance established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 – quoted prices (unadjusted) in active markets of identical assets or liabilities;

Level 2 – observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 – assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions.  Unobservable inputs require significant management judgments or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy.  In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement.  Such determination requires significant management judgment.  There were no financial assets or liabilities measured at fair value, with the exception of cash and cash equivalents as of December 31, 2015 and 2014.

The carrying amounts of accounts payable and notes payable approximate their fair values due to their short-term maturities.  The carrying amounts of related party receivables and payables are not practicable to estimate based on the related party nature of the underlying transaction.

Non-controlling Interest

Non-controlling Interest

The non-controlling interest represents capital contributions, income and loss attributable to the owners of less than wholly-owned consolidated entities (SHD, SHSK, SHLT and CARVEG), and are reported in equity. From inception through December 31, 2015, in exchange for their interest in SHD, the non-controlling members contributed $897,465 in cash (no contributions in 2015 or 2014). The non-controlling members of SHSK contributed $109,022 for the year ended December 31, 2015.  The non-controlling members of SHLT contributed $500,000 in cash for the year ended December 31, 2015.  In April 2015, related party notes and accrued interest were converted into non-controlling CARVEG equity of $100,000 (Note 5), and $375,000 was contributed in cash in the year ended December 31, 2015.  During 2015, the Company distributed cash of $57,310 to the non-controlling members of SHLT and CARVEG.

Pre-opening Costs

Pre-opening Costs

Pre-opening costs, such as travel and employee payroll and related training costs are expensed as incurred and include direct and incremental costs incurred in connection with the opening of each restaurant. Pre-opening costs also may include non-cash rental costs under operating leases incurred during a construction period.

Cash and Cash Equivalents

Cash and Cash Equivalents

From time to time, the Company maintains cash equivalents that include short-term highly liquid investments with an original a maturity of three months or less when purchased. The Company has no cash equivalents at December 31, 2015 and 2014.  In addition, the majority of payments due from financial institutions for the settlement of debit card and credit card transactions process within two business days, and therefore these payments due are classified as cash and cash equivalents.

Inventory

Inventory

Inventory consists of food and beverages and is stated at the lower of cost (first-in, first-out) or market.

Deferred Financing Costs

Deferred Financing Costs

Deferred financing costs are amortized over the term of the related debt using the straight-line method, which is not materially different than the effective-interest method.

Property and Equipment

Property and Equipment

Management reviews property and equipment, including leasehold improvements, for impairment when events or circumstances indicate these assets might be impaired. The Company's management considers, or will consider, such factors as the Company's history of losses and the disruptions in the overall economy in preparing an analysis of its property, including leasehold improvements, to determine if events or circumstances have caused these assets to be impaired. Management bases this assessment upon the carrying value versus the fair value of the asset and whether or not that difference is recoverable. Such assessment is performed on a restaurant-by-restaurant basis and includes relevant facts and circumstances including the physical condition of the asset. If management determines the carrying value of the restaurant assets exceeds the projected future undiscounted cash flows, an impairment charge would be recorded to reduce the carrying value of the restaurant assets to their fair value. Management determined that no impairment existed at December 31, 2015 and 2014.

Leasehold improvements are stated at cost. Property and equipment costs directly associated with the acquisition, development and construction of a restaurant are capitalized. Expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, and leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Property and equipment are not depreciated/amortized until placed in service. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings.

Capitalized Interest

Capitalized Interest

Interest on funds used to finance the acquisition and construction of a restaurant to the date the asset is placed in service is capitalized.

Leases and Deferred Rent

Leases and Deferred Rent

The Company leases and intends to lease substantially all of its restaurant properties.  For leases that contain rent escalation clauses, the Company records the total rent payable during the lease term and recognizes expense on a straight-line basis over the initial lease term, including the "build-out" or "rent-holiday" period where no rent payments are typically due under the terms of the lease. Any difference between minimum rent and straight-line rent is recorded as deferred rent. Additionally, contingent rent expense based on a percentage of revenue is accrued and recorded to the extent it is expected to exceed minimum base rent per the lease agreement based on estimates of probable levels of revenue during the contingency period.  Long-term deposits on leases in the amount of $120,555 and $80,525 are recorded as of December 31, 2015 and 2014, respectively.  Deferred rent also includes a tenant improvement allowance the Company received in 2012 for $150,000, which is amortized as a reduction of rent expense, also on a straight-line basis over the initial term of the lease. 

Revenue Recognition

Revenue Recognition

The Company recognizes revenues pursuant to SEC Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition, and applicable related guidance. Revenue is derived from the sale of prepared food and beverage and select retail items. Revenue is recognized at the time of sale and is reported on the Company's consolidated statements of income (loss) net of sales taxes collected. The amount of sales tax collected is included in accrued expenses until the taxes are remitted to the appropriate taxing authorities.

Advertising Expenses

Advertising Expenses

Advertising costs are expensed as incurred. Total advertising expenses were approximately $350,200 and $444,200, for the years ended December 31, 2015 and 2014, respectively.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for stock-based compensation under Accounting Standards Codification (“ASC”) 718, Share-Based Payment. ASC 718 requires the recognition of the cost of services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. ASC 718 also requires the stock-based compensation expense to be recognized over the period of service in exchange for the award (generally the vesting period). The Company estimates the fair value of each stock option at the grant date by using an option pricing model, typically the Black-Scholes model.

Income Taxes

Income Taxes

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their financial statement reported amounts, and for tax loss and credit carry-forwards. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized.

The Company determines its income tax expense (benefit) in each of the jurisdictions in which it operates. Income tax includes an estimate of the current income tax expense (benefit), as well as deferred income tax expense, which results from the determination of temporary differences arising from the different treatment of items for book and tax purposes.

The Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions.  Periods subject to examination for the Company’s federal and state income tax returns are 2012 through the 2014 tax year.

Certain of the Company’s subsidiaries are limited liability companies (“LLC’s”), which are treated for tax purposes as pass-through entities. As a result, any taxes are the responsibility of the respective members.

The Company assesses the likelihood of the financial statement effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying consolidated financial statements. The Company recognizes tax related interest and penalties, if any, as a component of income tax expense.

Net loss per share

Net loss per share

Basic net loss per share is computed by dividing the net loss applicable to common shareholders by the weighted-average number of shares of common stock outstanding for the period. The Series A convertible preferred shares are not included in the computation of basic loss per share, as the Series A convertible preferred shares do not have a contractual obligation to share in the losses of the Company. Diluted net loss per share reflects the potential dilution that could occur if dilutive securities were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect of such inclusion would reduce a loss or increase earnings per share. For each of the periods presented in the accompanying consolidated financial statements, the effect of the inclusion of dilutive shares would have resulted in a decrease in loss per share. Common stock options, warrants and shares underlying convertible debt aggregating 35,652,529 and 9,591,056 for the years ended December 31, 2015 and 2014, respectively, have been excluded from the calculation of diluted net loss per common share.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern: Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.  The guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early application permitted.  The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts from Customers, which supersedes the revenue recognition in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB delayed the effective date by one year. This new standard is now effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied retrospectively, with early adoption now permitted to the original effective date of December 15, 2016. The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. Once effective, ASU No. 2015-02 will apply to the consolidation assessment of all entities. This standard is effective for public reporting entities in fiscal periods beginning after December 15, 2015. The Company does not anticipate any material impact upon adoption of this new standard.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) Simplifying the Measurement of Inventory, which changes the measurement from lower of cost or market to lower of cost and net realizable value. The guidance requires prospective application for reporting periods beginning after December 15, 2016 and permits adoption in an earlier period. The Company intends to adopt this ASU in the first quarter of 2016; the adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company intends to adopt this ASU in the first quarter of 2016, at which time the Company will reclassify debt issuance costs (if any) associated with the Company's debt from other noncurrent assets to debt. A reclassification will also be applied retrospectively to each prior period presented.

In February 2016, the FASB issued ASU No. 2016-02 ("ASU 2016-02"), Leases (Topic 842), which supersedes existing guidance on accounting for leases in "Leases (Topic 840)" and generally requires all leases to be recognized in the statement of financial position. The provisions of ASU 2016-02 are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions of this ASU are to be applied using a modified retrospective approach. The Company is currently evaluating the effect that this ASU will have on our consolidated financial statements.

Management has not identified any other recently issued accounting standards that it believes may have a significant impact on the Company’s consolidated financial statements.

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INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Estimated Future Amortization Expense

Amortization expense for the next five years is estimated to be as follows:

2016	$	5,000
2017		5,000
2018		5,000
2019		5,000
2020		5,000
Thereafter		10,625
	$	35,625

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PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

As of December 31, 2015 and 2014, property and equipment consists of the following:

	December 31,			December 31,
	2015			2014			Useful lives
Leasehold improvements	$	3,237,345		$	2,227,438		10 years
Website development		45,750			21,500		3 years
Equipment		2,077,889			1,299,220		3-7 years
Computers and hardware		170,822			116,275		5 years
		5,531,806			3,664,433
Less accumulated depreciation		(1,252,710	)		(678,383	)
	$	4,279,096		$	2,986,050

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NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Scheduled maturities of notes payable

Scheduled maturities of notes payable for the next five years and thereafter as of December 31, 2015, are as follows:

Year ending December 31,
2016	$	1,150,000
2017		200,000
2018		837,425
2019		740,000
2020		282,934
Thereafter		-
		3,210,359
Less total discount on notes payable		(880,485	)
Add accrued interest at December 31, 2015		176,730
		2,506,604
Less current portion		(913,548	)
Non-current portion	$	1,593,056

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum lease payments

The future minimum lease payments are as follows:

	Third Party		Related Party		Total
2016	$	492,089	$	401,092	$	893,181
2017		424,843		401,092		825,935
2018		431,206		401,092		832,298
2019		437,761		401,092		838,853
2020		409,629		401,092		810,721
Thereafter		893,731		1,219,988		2,113,719
	$	3,089,259	$	3,225,448	$	6,314,707

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

Income Taxes

Schedule of Deferred Tax Assets (Liabilities)

The deferred tax assets (liabilities) and associated valuation allowance at December 31, 2015 and 2014, are as follows:

	2015			2014
Current assets:
Stock based compensation	$	490,000		$	370,000
		490,000			370,000
Non-current assets:
Intangible assets		4,900			7,000
Property and equipment		840,000			157,000
Net operating loss carryforwards		3,219,000			2,598,000
		4,553,900			3,132,000
Valuation allowance		(4,553,900	)		(3,132,000	)
Net deferred tax assets	$	-		$	-

Schedule of Income Tax Benefit

No income tax benefit was recognized for the years ended December 31, 2015 and 2014, as indicated below:

	2015			2014
Deferred tax benefit:
Federal	$	(1,307,000	)	$	(1,204,000	)
State		(115,000	)		(106,000	)
		(1,422,000	)		(1,310,000	)
Increase in valuation allowance		1,422,000			1,310,000
	$	-		$	-

Schedule of the Reconciliation of Income Taxes

A reconciliation of income tax computed at the U.S. statutory tax rate of 34% to the effective income tax rate is as follows:

	2015			2014
Statutory rate		34	%		34	%
State taxes		3			3
Permanent differences and other		(4	)		(7	)
Valuation allowance		(33	)		(30	)
Effective rate		-			-

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EQUITY (Tables)

12 Months Ended

Dec. 31, 2015

Warrant [Member]

Schedule of Fair Value Assumptions

The assumptions utilized to determine the fair value of warrants granted during the years ended December 31, 2015 and 2014, are as follows:

	2015			2014
Risk free interest rate		0.79	%		0.79	%
Expected volatility		168	%		205	%
Expected term	5 years			5 years
Expected dividend yield		0			0

Schedule of Activity

The following table sets forth the activity regarding warrants for the year ended December 31, 2015:

						Weighted
				Weighted		Average
	Shares			Average		Remaining		Aggregate
	Underlying			Exercise		Contractual		Intrinsic
	Warrants			Price		Life		Value
Outstanding at January 1, 2015		20,184,614		$	0.18
Granted		7,563,000			0.40
Forfeited/cancelled		(30,000	)		0.30
Outstanding at December 31, 2015		27,717,614			0.25		2.96	$	-
Exercisable at December 31 , 2015		27,544,614		$	0.25		2.96	$	-

Schedule of Nonvested Share Activity

The following table sets for the activity regarding non-vested warrants for the twelve months ended December 31, 2015:

	Non-vested			Weighted		Weighted
	Shares			Average		Average
	Underlying			Exercise		Grant Date
	Warrants			Price		Fair Value
Non-vested at January 1, 2015		30,000		$	0.18	$	0.05
Granted		7,563,000			0.40	$	0.24
Vested		(7,390,000	)		0.40		0.40
Forfeited/cancelled		(30,000	)		0.30	$	0.30
Non-vested at December 31, 2015		173,000		$	0.18	$	0.24

Stock Option [Member]

Schedule of Fair Value Assumptions

The assumptions utilized to determine the fair value of options granted during the years ended December 31, 2015 and 2014 are as follows:

	2015			2014
Risk free interest rate		0.79	%		0.79	%
Expected volatility		168	%		205	%
Expected term	5 years			5 years
Expected dividend yield		0			0

Schedule of Activity

The following tables set forth the activity in the Company's Plan for the year ended December 31, 2015:

						Weighted
				Weighted		average
	Shares			average		remaining	Aggregate
	under			exercise		contractual	intrinsic
	option			price		life	value
Outstanding at January 1, 2015		2,636,039		$	0.29
Granted		783,500			0.29
Exercised		(91,214	)		-
Forfeited/cancelled		(460,449	)		0.22
Outstanding at December 31, 2015		2,867,876			0.30	3.40	$	-
Exercisable at December 31, 2015		1,501,949		$	0.30	2.99	$	-

Schedule of Nonvested Share Activity

The following table summarizes the activity and value of non-vested options as of and for the year ended December 31, 2015:

				Weighted
				average
	Number of			grant date
	options			fair value
Non-vested options outstanding at January 1, 2015		1,494,663		$	0.09
Granted		783,500			0.29
Vested		(451,788	)		0.46
Forfeited/cancelled		(460,449	)		0.22
Non-vested options outstanding at December 31, 2015		1,365,926		$	0.18

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ORGANIZATION, RECENT EVENTS, BASIS OF PRESENTATION AND MANAGEMENT'S PLANS (Narrative) (Details)	1 Months Ended		12 Months Ended
	Feb. 28, 2015 item	Feb. 13, 2015 item	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($)	Apr. 30, 2015
Franchisor Disclosure [Line Items]
Number of restaurants to be opened			4
Franchisor agreement, number of restaurants	5	2	2
Royalty percentage			2.50%
Net loss | $			$ (3,889,145)	$ (3,769,015)
Accumulated deficit | $			$ (12,092,077)	$ (8,692,743)
Southern Hospitality Denver Holdings [Member] | Minimum [Member]
Franchisor Disclosure [Line Items]
Number of restaurants to be opened			1
Southern Hospitality Denver Holdings [Member] | Maximum [Member]
Franchisor Disclosure [Line Items]
Number of restaurants to be opened			2
Carve BBQ Glendale LLC [Member]
Franchisor Disclosure [Line Items]
Ownership percentage					66.075%

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SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	12 Months Ended		47 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015
Noncontrolling Interest [Line Items]
Anti-dilutive securities	35,652,529	9,591,056
Contribution to subsidiary by non-controlling interest	$ 984,022		$ 897,465
Convertible related party notes and accrued interest converted into equity	100,000
Deposits	120,555	$ 80,525	120,555
Advertising expenses	350,200	444,200
Tenant improvement allowance	150,000
Unearned gift card revenue	18,530	$ 22,880	18,530
Southern Hospitality Denver, LLC [Member]
Noncontrolling Interest [Line Items]
Contribution to subsidiary by non-controlling interest			897,465
Southern Hospitality Southern Kitchen [Member]
Noncontrolling Interest [Line Items]
Contribution to subsidiary by non-controlling interest	109,022
Carve BBQ Glendale LLC [Member]
Noncontrolling Interest [Line Items]
Contribution to subsidiary by non-controlling interest	375,000
Convertible related party notes and accrued interest converted into equity	100,000
Cash distributed to non-controlling members	57,310		57,310
Southern Hospitality Lone Tree LLC [Member]
Noncontrolling Interest [Line Items]
Contribution to subsidiary by non-controlling interest	500,000
Cash distributed to non-controlling members	$ 57,310		$ 57,310

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INTANGIBLE ASSETS (Details)	Dec. 31, 2015 USD ($)
Estimated future amortization expense:
2016	$ 5,000
2017	5,000
2018	5,000
2019	5,000
2020	5,000
Thereafter	10,625
Total	$ 35,625

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INTANGIBLE ASSETS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Intangible Assets Details Narrative
Accumulated amortization	$ 14,375	$ 9,375
Amortization expenses	$ 5,000	$ 5,000

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PROPERTY AND EQUIPMENT (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Property and equipment	$ 5,531,806	$ 3,664,433
Less accumulated depreciation	(1,252,710)	(678,383)
Property and equipment, net	4,279,096	2,986,050
Depreciation expense	574,300	431,200
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	$ 3,237,345	2,227,438
Estimated useful lives	10 years
Website development [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	$ 45,750	21,500
Estimated useful lives	3 years
Computers and hardware [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	$ 170,822	116,275
Estimated useful lives	5 years
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	$ 2,077,889	$ 1,299,220
Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years

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NOTES PAYABLE (Details Narrative) - USD ($)	1 Months Ended				3 Months Ended		12 Months Ended
	Feb. 29, 2016	Nov. 30, 2014	Nov. 13, 2014	Aug. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Fair value of warrants					$ 274,700		$ 274,700		$ 44,000
Notes payable					482,934		482,934
Debt Instrument, Interest Rate, Stated Percentage		6.00%				10.00%		10.00%	5.00%
Debt term				5 years
Quarterly payments			$ 5,800
Accrued interest					$ 129,489	$ 129,589	$ 129,489	$ 129,589
Debt Instrument, Convertible, Conversion Price					$ 1.05		$ 1.05
Class of Warrant or Right, Exercise Price of Warrants or Rights									$ 0.50
Warrants Term				5 years					3 years
Debt discount on convertible debt allocated to warrants and beneficial conversion feature							$ 109,130	308,626
Payments made							$ 0	2,409
Fair value of discounted convertible notes								322,200
Warrants, number of shares called by warrant		300,000			15,000,000		15,000,000		50,000
Financing provided by agreement		$ 300,000
Withdrawal through agreement							$ 282,900	2,055
Proceeds from issuance of promissory notes and warrants			$ 25,000			90,000	280,000	460,000
Beneficial conversion feature							109,130	1,040,506
Subsequent Event [Member]
Debt Instrument [Line Items]
Notes payable	$ 150,000
Conversion price, percentage	5.00%
Warrants Term	2 years
Payments made	$ 50,000
Promissory Convertible Notes [Member]
Debt Instrument [Line Items]
Notes payable					$ 764,100	665,900	$ 764,100	665,900
Debt Instrument, Interest Rate, Stated Percentage					5.00%		5.00%
Debt term							7 years
Quarterly payment, percentage of quarterly revenue							2.50%
Quarterly payments							$ 108,000	64,870
Accrued interest					$ 119,490	77,620	$ 119,490	77,620
Conversion price, percentage							80.00%
Conversion expense							$ 53,900	49,100
Proceeds from issuance of promissory notes and warrants					$ 90,000
Promissory Convertible Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt Instrument, Convertible, Conversion Price					$ 0.50		$ 0.50
Promissory Notes Having Interest 6.5 Percent [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage				6.50%
Accrued interest					$ 467,700	159,200	$ 467,700	159,200
Conversion price, percentage				80.00%
Debt Instrument, Convertible, Conversion Price					$ 0.25		$ 0.25
Number of shares issued per dollar loaned				4
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.40
Warrants Term				2 years
Notes purchased by related party					$ 280,000	$ 460,000	$ 280,000	$ 460,000
Debt discount on convertible debt allocated to warrants and beneficial conversion feature				$ 143,100

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NOTES PAYABLE (Details Narrative 1) - USD ($)	1 Months Ended				3 Months Ended		9 Months Ended	12 Months Ended
	Feb. 29, 2016	Jan. 31, 2016	Nov. 13, 2014	Aug. 31, 2014	Dec. 31, 2014	Sep. 30, 2014	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 28, 2014	Nov. 30, 2014
Related Party Transaction [Line Items]
Quarterly payments			$ 5,800
Debt Instrument, Face Amount										$ 200,000		$ 300,000
Proceeds from Issuance of Debt			$ 25,000		$ 90,000			$ 280,000	$ 460,000
Franchisor agreement, term								10 years
Debt Instrument, Interest Rate, Stated Percentage					10.00%				10.00%	5.00%		6.00%
Interest Expense, Related Party								$ 130,000	$ 130,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								15,000,000		50,000		300,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights, amount								$ 731,800
Balance of the discount					$ 731,880			365,940	731,880
Class of Warrant or Right, Exercise Price of Warrants or Rights										$ 0.50
Warrants Term				5 years						3 years
Fair value assumption, risk-free interest rate				0.79%
Fair value assumption, expected term				3 years
Balance of discount					731,880			$ 365,940	731,880
Warrants, number of shares called by warrant								15,000,000		50,000		300,000
Minimum [Member]
Related Party Transaction [Line Items]
Share price				$ .14
Maximum [Member]
Related Party Transaction [Line Items]
Share price				$ .30
Director [Member]
Related Party Transaction [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								7,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period								1 year
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.10
Warrants Term								5 years
Warrants, number of shares called by warrant								7,500,000
Subsequent Event [Member]
Related Party Transaction [Line Items]
Warrants Term	2 years
Bourbon Brothers Holding Company Llc [Member]
Related Party Transaction [Line Items]
Debt Instrument, Face Amount					$ 1,250,000				1,250,000
Proceeds from Issuance of Debt									$ 1,197,714
Debt Instrument, Interest Rate, Stated Percentage											9.50%
Debt Instrument, Interest Rate, Effective Percentage					6.25%				6.25%
Interest Expense, Related Party								$ 130,300
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								7,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period								1 year
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.10
Warrants Term								5 years
Warrants, number of shares called by warrant								7,500,000
Prepayment of Loan								$ 100,000
Bourbon Brothers Holding Company Llc [Member] | Subsequent Event [Member]
Related Party Transaction [Line Items]
Prepayment of Loan		$ 400,000

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NOTES PAYABLE (Schedule of Maturities) (Details)	Dec. 31, 2015 USD ($)
Debt Disclosure [Abstract]
2016	$ 1,150,000
2017	200,000
2018	837,425
2019	740,000
2020	$ 282,934
Thereafter
Total notes payable	$ 3,210,359
Less total discount on notes payable	(880,485)
Add accrued interest at December 31, 2014	176,730
Total	2,506,604
Less current portion	(913,548)
Non-current portion	$ 1,593,056

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COMMITMENTS AND CONTINGENCIES (Details)	1 Months Ended				12 Months Ended
	Apr. 30, 2015	Feb. 28, 2015 item	Feb. 13, 2015 item	Apr. 30, 2012 USD ($)	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($)
Property, Plant and Equipment [Line Items]
Franchisor agreement, number of restaurants | item		5	2		2
Ownership percentage held in SHSK			51.00%
Monthly royalty floor					$ 5,000
Franchisor agreement, term					10 years
Franchisor agreement, renewal term					5 years
Royalty expense					$ 139,300	$ 59,000
Rent expenses					$ 188,800	194,120
Royalty percentage					2.50%
Fast Casual Restaurant in Glendale Colorado [Member]
Property, Plant and Equipment [Line Items]
Lease renewal term	5 years
Monthly rent					$ 11,100
Rent expenses					$ 84,960	0
Restaurant in Denver Colorado [Member]
Property, Plant and Equipment [Line Items]
Lease Term				10 years
Lease renewal term				5 years
Monthly rent				$ 16,000
Majority-Owned Subsidiary, Unconsolidated [Member]
Property, Plant and Equipment [Line Items]
Lease Term					10 years
Lease renewal term					10 years
Monthly rent					$ 33,340
Rent expenses					$ 401,000	383,000
Restaurant in Lone Tree Colorado [Member]
Property, Plant and Equipment [Line Items]
Lease Term					10 years
Lease renewal term					5 years
Monthly rent					$ 8,900
Rent expenses					$ 74,400	0
Corporate Headquarters [Member]
Property, Plant and Equipment [Line Items]
Lease Term					78 months
Monthly rent					$ 5,800
Monthly rent in year six					6,000
Rent expenses					$ 71,200	$ 69,600

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COMMITMENTS AND CONTINGENCIES (Schedule of Future Minimum Payments) (Details)	Dec. 31, 2015 USD ($)
2016	$ 893,181
2017	825,935
2018	832,298
2019	838,853
2020	810,721
Thereafter	2,113,719
Total future minimum lease payments	6,314,707
Third Party [Member]
2016	492,089
2017	424,843
2018	431,206
2019	437,761
2020	409,629
Thereafter	893,731
Total future minimum lease payments	3,089,259
Related Party [Member]
2016	401,092
2017	401,092
2018	401,092
2019	401,092
2020	401,092
Thereafter	1,219,988
Total future minimum lease payments	$ 3,225,448

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INCOME TAXES (Schedule of Deferred Tax Assets (Liabilities) (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Stock based compensation	$ 490,000	$ 370,000
Total current assets	490,000	370,000
Non-current assets:
Intangible assets	4,900	7,000
Property and equipment	840,000	157,000
Net operating loss carryforwards	3,219,000	2,598,000
Deferred tax assets (liabilities)	4,553,900	3,132,000
Valuation allowance	$ (4,553,900)	$ (3,132,000)
Net deferred tax assets

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INCOME TAXES (Details)	12 Months Ended
	Dec. 31, 2015 USD ($)
Federal Income Tax [Line Items]
Net operating loss carryforwards	$ 8,699,000
Minimum [Member]
Federal Income Tax [Line Items]
Net operating loss carryforward expiration date	Dec. 31, 2031
Maximum [Member]
Federal Income Tax [Line Items]
Net operating loss carryforward expiration date	Dec. 31, 2035

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INCOME TAXES (Schedule of Income Tax Benefit) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Deferred tax benefit:
Federal	$ (1,307,000)	$ (1,204,000)
State	(115,000)	(106,000)
Deferred tax benefit	(1,422,000)	(1,310,000)
Increase in valuation allowance	$ 1,422,000	$ 1,310,000
Income tax benefit

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INCOME TAXES (Schedule of Income Tax Reconciliation) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Statutory rate	34.00%	34.00%
State taxes	3.00%	3.00%
Permanent differences and other	(4.00%)	(7.00%)
Valuation allowance	(33.00%)	(30.00%)
Effective rate

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EQUITY (Details) - Stock Option [Member]	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate	0.79%	0.79%
Expected volatility	168.00%	205.00%
Expected term	5 years	5 years
Expected dividend yield	0.00%	0.00%

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EQUITY (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Weighted average exercise price
Granted	$ 0.33	$ 0.47
Stock Option [Member]
Shares under options
Outstanding, beginning balance	2,636,039
Granted	783,500
Exercised	(91,214)
Forfeited/cancelled	(460,449)
Outstanding, ending balance	2,867,876	2,636,039
Exercisable	1,501,949
Weighted average exercise price
Granted	$ 0.29
Exercised
Forfeited/cancelled	$ 0.22
Outstanding, ending balance	0.30
Exercisable	$ 0.30
Aggregate intrinsic value
Outstanding, ending balance
Exercisable
Weighted average remaining contractual life, outstanding	3 years 4 months 24 days
Weighted average remaining contractual life, exercisable	2 years 11 months 27 days

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EQUITY (Details 2) - Stock Option [Member]	12 Months Ended
	Dec. 31, 2015 $ / shares shares
Non-vested Stock Option Activity
Outstanding, beginning balance | shares	1,494,663
Granted | shares	783,500
Vested | shares	(451,788)
Forfeited/cancelled | shares	(460,449)
Outstanding, ending balance | shares	1,365,926
Weighted average exercise price
Outstanding, beginning balance | $ / shares	$ 0.09
Granted | $ / shares	0.29
Vested | $ / shares	0.46
Forfeited/cancelled | $ / shares	0.22
Outstanding, ending balance | $ / shares	$ 0.18

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EQUITY (Details 3) - Warrant [Member]	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate	0.79%	0.79%
Expected volatility	168.00%	205.00%
Expected term	5 years	5 years
Expected dividend yield	0.00%	0.00%

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EQUITY (Details 4) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Weighted average exercise price
Granted	$ 0.33	$ 0.47
Warrant [Member]
Shares Underlying Warrants
Outstanding, beginning balance	20,184,614
Granted	7,563,000
Forfeited/cancelled	(30,000)
Outstanding, ending balance	27,717,614	20,184,614
Exercisable	27,544,614
Weighted average exercise price
Outstanding, beginning balance	$ 0.18
Granted	0.40
Forfeited/cancelled	0.30
Outstanding, ending balance	0.25	$ 0.18
Exercisable	$ 0.25
Aggregate intrinsic value
Outstanding, ending balance
Exercisable
Weighted average remaining contractual life, outstanding	2 years 11 months 16 days
Weighted average remaining contractual life, exercisable	2 years 11 months 16 days

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EQUITY (Details 5) - Warrant [Member]	12 Months Ended
	Dec. 31, 2015 $ / shares shares
Non-vested Shares Underlying Warrants
Outstanding, beginning balance | shares	30,000
Granted | shares	7,563,000
Vested | shares	(7,390,000)
Forfeited/cancelled | shares	(30,000)
Outstanding, ending balance | shares	173,000
Weighted Average Exercise Price
Outstanding, beginning balance	$ 0.18
Granted	0.40
Vested	0.40
Forfeited/cancelled	0.30
Outstanding, ending balance	0.18
Weighted Average Grant Date Fair Value
Outstanding, beginning balance	0.05
Granted	0.24
Vested	0.4
Forfeited/cancelled	0.3
Outstanding, ending balance	$ 0.24

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EQUITY (Details Narrative)			1 Months Ended			12 Months Ended
	Feb. 03, 2016 shares	Mar. 01, 2014 shares	Feb. 29, 2016	Aug. 31, 2014	Jan. 22, 2014 shares	Dec. 31, 2015 USD ($) item $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 31, 2013	Mar. 11, 2016 shares	Jan. 31, 2014 shares
Preferred stock, shares authorized						4,884,859	4,884,859			18,242,700
Number of shares issued					18,242,687
Conversion of preferred shares to common, shares	456,068	13,357,828
Preferred stock, shares issued						4,884,859	4,884,859
Preferred stock, shares outstanding						4,884,859	4,884,859
Votes per share						25
Sale of common stock for cash | $						$ 1,849,019	$ 1,254,913
Issuance of common stock for services, shares							30,000
Issuance of common stock for services | $						$ 33,333	$ 21,503
Stock option plan, shares authorized					4,000,000
Exercise price | $ / shares						$ 0.33	$ 0.47
Stock-based compensation | $						$ 324,929	$ 475,056
Unrecognized share-based compensation expense | $						$ 329,100
Warrants issued, term				5 years				3 years
Warrants issued to purchase common stock						6,265,000	4,183,042
Common units issued						30,000	21,678
Common units issued, value						15,000	6,503
Risk free interest rate				0.79%
Shares issued for service, shares						136,874
Shares issued for service | $						$ 33,333
Warrants exercised						0	1,094,562
Subsequent Event [Member]
Preferred stock, shares authorized									456,068
Conversion of preferred shares to common, shares	4,428,791
Preferred stock, shares issued	456,068
Preferred stock, shares outstanding	456,068
Warrants issued, term			2 years
Stock Option [Member]
Options granted						783,500
Exercise price | $ / shares						$ 0.29
Stock-based compensation | $						$ 324,900	$ 475,056
Unrecognized share-based compensation expense | $						$ 241,200
Warrants issued, term						5 years
Value of options exercise | $						$ 25	$ 33
Stock Option [Member] | Director [Member]
Issuance of common stock for services | $						$ 330,000
Number of Board of Directors to who Awards Granted | item						6
Exercise price | $ / shares						$ 0.30
Warrants issued to purchase common stock						7,500,000
Fair value of warrants | $						$ 730,880
Stock Option [Member] | Restaurant Managers [Member]
Issuance of common stock for services | $						$ 330,000
Number of Board of Directors to who Awards Granted | item						2
Exercise price | $ / shares						$ 0.30
Vesting term						3 years
Stock Option [Member] | Store Managers [Member]
Issuance of common stock for services | $						$ 330,000
Exercise price | $ / shares						$ 0.30
Vesting term						2 years
Maximum [Member] | Stock Option [Member] | Director [Member]
Options granted						600,000
Warrants issued to purchase common stock						43,500
Maximum [Member] | Stock Option [Member] | Restaurant Managers [Member]
Options granted						120,000
Warrant [Member]
Issuance of common stock for services | $						$ 178,000
Options granted						7,563,000
Exercise price | $ / shares						$ 0.40
Warrants issued, term						3 years
Warrants issued to purchase common stock						6,265,000
Fair value of warrants | $						$ 837,500
Risk free interest rate						0.78%
Volatility						168.00%
Warrant [Member] | 2014 Note [Member]
Number of shares issued						1,120,000
Exercise price | $ / shares						$ 0.40
Warrants issued, term						3 years
Warrant [Member] | Minimum [Member]
Exercise price | $ / shares						$ 0.25
Vesting term						1 year
Risk free interest rate						0.79%
Volatility						168.00%
Warrant [Member] | Maximum [Member]
Exercise price | $ / shares						$ 0.31
Volatility						205.00%

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended
	Feb. 29, 2016	Dec. 31, 2015	Dec. 31, 2014	Mar. 11, 2016	Feb. 03, 2016	Jan. 31, 2014
Subsequent Event [Line Items]
Sale of common stock for cash		$ 1,849,019	$ 1,254,913
Decreased authorized preferred stock		4,884,859	4,884,859			18,242,700
Increased authorized capital stock		120,000,000	120,000,000
Common Stock [Member]
Subsequent Event [Line Items]
Sale of common stock for cash, shares			4,183,042
Sale of common stock for cash			$ 1,254,913
Subsequent Event [Member]
Subsequent Event [Line Items]
Conversion of Series A Preferred shares into shares of common stock					4,428,791
Sale of common stock and warrants, amount					$ 215,000
Sale of common stock and warrants, shares					1,075,000
Decreased authorized preferred stock				456,068
Increased authorized capital stock				125,456,068
Subsequent Event [Member] | Series A Stock [Member]
Subsequent Event [Line Items]
Increased authorized capital stock				456,068
Subsequent Event [Member] | Common Stock [Member]
Subsequent Event [Line Items]
Increased authorized capital stock				125,000,000
Subsequent Event [Member] | Touch 4 Partners, LLC [Member]
Subsequent Event [Line Items]
Proceeds from exchange of unsecured promissory note	$ 25,000
Proceeds from exchange of unsecured promissory note, face value	$ 25,000
Unsecured promissory note interest rate	5.00%
Payment of outstanding promissory note	$ 50,000
Payment of accrued interest	200,000
Payment of accrued interest, total	10,833
Promissory note issued for remaining principal	$ 150,000
Unsecured Promissory note due date	Feb. 03, 2017