ARCI Test S1A5

0001091818-11-000279.txt : 20110516 0001091818-11-000279.hdr.sgml : 20110516 20110516155547 ACCESSION NUMBER: 0001091818-11-000279 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20110331 FILED AS OF DATE: 20110516 DATE AS OF CHANGE: 20110516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN RESTAURANT CONCEPTS INC CENTRAL INDEX KEY: 0001452872 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 000000000 STATE OF INCORPORATION: FL FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54226 FILM NUMBER: 11846625 BUSINESS ADDRESS: STREET 1: 14476 DUVAL PLACE C CITY: JACKSONVILLE STATE: FL ZIP: 32218 BUSINESS PHONE: 904-200-9941 MAIL ADDRESS: STREET 1: 14476 DUVAL PLACE C CITY: JACKSONVILLE STATE: FL ZIP: 32218 10-Q 1 arci05161110q.htm QUARTERLY STATEMENT ARCI Test S1A5

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 27, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission file number 333-161792

AMERICAN RESTAURANT CONCEPTS, INC.

(Exact name of small business issuer as specified in its charter)


FLORIDA	59-3649554
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

14476 Duval Place West, Suite 103, Jacksonville, FL 32218

(Address of principal executive offices)

(904) 741-5500

(Issuer’s telephone number, including area code)

_______________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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. o Yes x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 35,261,667 shares of Common Stock as of May 16, 2011.

AMERICAN RESTAURANT CONCEPTS, INC.

FORM 10-Q REPORT INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Item 4. Controls and Procedures.

PART II. OTHER INFORMATION.

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Item 3. Defaults upon Senior Securities.

Item 4. (Removed and Reserved)

Item 5. Other Information.

Item 6. Exhibits.

SIGNATURES

EXHIBIT INDEX

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMERICAN RESTAURANT CONCEPTS, INC.

BALANCE SHEETS

MARCH 27, 2011 AND DECEMBER 26, 2010



	MARCH 27, 2011	DECEMBER 26, 2010

ASSETS
Cash	$ 14,382	$ 1,606
Accounts receivable, net	16,065	7,780
Total current assets	30,447	9,386

Property and equipment, net of accumulated depreciation of $4,674	-	-

Total Assets	$ 30,447	$ 9,386

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Liabilities:
Accounts payable and accrued expenses	$ 121,479	$ 121,479
Accrued interest	29,538	24,539
Notes payable (Note 5)	11,000	11,000
Bank note payable (Note 5)	284,114	284,114
Total liabilities (all current)	446,131	441,132

Stockholders' deficit:
Class A Common stock, par value $0.01, 100,000,000 shares authorized, 35,261,667 shares issued and outstanding at March 27, 2011 and December 26, 2010, respectively	12,618	11,538
Additional paid in capital	329,716	303,796
Accumulated deficit	(758,018)	(747,080)
Total stockholders' deficit	(415,684)	(431,746)

Total Liabilities and Stockholders' Deficit	$ 30,447	$ 9,386

See accompanying notes to financial statements.

AMERICAN RESTAURANT CONCEPTS, INC.

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 27, 2011 AND MARCH 28, 2010


	2011	2010
	(Unaudited)	(Unaudited)

Revenue	$ 91,458	$ 89,422
Revenue – Related party	14,167	18,304
Total Revenue	105,625	107,726

Expenses

Professional fees	$ 18,122	$ 9,929
Salaries and wages	70,050	42,296
General and administrative	23,392	6,372
	111,564	58,597

Income (loss) from operations	(5,939)	49,129

Interest expense	(4,999)	(4,194)

Net income (loss)	$ (10,938)	$ 44,935

Net income per common share - basic and fully diluted	$ -	$ -

Weighted average number of common shares outstanding - basic and fully diluted	35,187,469	34,866,667

See accompanying notes to financial statements.

MERICAN RESTAURANT CONCEPTS, INC.

STATEMENT OF STOCKHOLDERS' DEFICIT

FOR THE THREE MONTHS ENDED MARCH 27, 2011

(UNAUDITED)


	CLASS A		ADDITIONAL
	COMMON STOCK		PAID IN	ACCUMULATED
	SHARES	AMOUNT	CAPITAL	DEFICIT	TOTAL

Balance as of December 26, 2010	35,153,667	$ 11,538	$ 303,796	$ (747,080)	$ (431,746)

Common stock issued in private placement	108,000	1,080	25,920	-	27,000
Net loss	-	-	-	(10,938)	(10,938)

Balance as of March 27, 2011	35,261,667	$ 12,618	$ 329,716	$ (758,018)	$ (415,684)

See accompanying notes to financial statements.

AMERICAN RESTAURANT CONCEPTS, INC.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 27, 2011 AND MARCH 28, 2010


	2011	2010
	(Unaudited)	(Unaudited)

Cash flows from operating activities

Net income (loss)	$ (10,938)	$ 44,935


Adjustments to reconcile net income (loss) to net cash used in operating activities:
Increase (decrease) in operating assets and liabilities:
Rescission agreement payable	-	(35,000)
Accounts receivable	(8,285)	(22,560)
Accounts payable and accrued liabilities	4,999	(45,476)

Net cash provided by operating activities	(14,224)	(58,101)

Net cash provided by investing activities	-	-

Cash flows from financing activities

Proceeds from sale of common stock	27,000	-
Repayments of bank loans	-	(27,330)

Net cash used in financing activities	27,000	(27,330)

Net increase (decrease) in cash	$ 12,776	$ (85,431)

Cash - beginning of period	$ 1,606	$ 105,782
Cash - end of period	$ 14,382	$ 20,351

See accompanying notes to financial statements.

AMERICAN RESTAURANT CONCEPTS, INC.

NOTES TO FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 27, 2011

NOTE 1 - Nature of Business and Summary of Significant Accounting Policies

(a) Nature of Business

We were organized for the purpose of operating Dick’s Wings restaurants, as well as selling Dick’s Wings restaurant franchises. We franchise two concepts involving Dick’s Wings: Dick’s Wings Express is a limited service restaurant that concentrates on take-out orders, and Dick’s Wings & Grill is a full-service restaurant. In exchange for the initial and continuing franchise fees received, we give franchisees the right to use the name Dick’s Wings.

At March 27, 2011, and March 28, 2010, we had 14 and 18 franchised restaurants, respectively.

(b) Fiscal Year

We operate on a 52 or 53-week fiscal year ending on the last Sunday in December. Our fiscal year allows direct year to year and period to period comparisons of future financial statements.

(c) Interim Financial Information

The interim financial statements as of March 27, 2011 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the balance sheets, operating results, and cash flows for the periods presented in accordance with U.S. generally accepted accounting principles. The balance sheet at December 26, 2010 has been derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted in accordance with the rules and regulations of the SEC. These financial statements should be read in conjunction with the audited financial statements, and accompanying notes, included in the Company’s Annual Report on Form 10-K, for the year ended December 26, 2010.

(d) Restaurant Sales Concentration

As of March 27, 2011, we had 13 franchised restaurants in the state of Florida and one in the state of Georgia. The restaurants in Florida aggregated 93.5%% and 90% of our total franchise network sales in the three-month periods ending March 27, 2011 and March 28, 2010, respectively. We are subject to adverse trends and economic conditions in the state of Florida.

(e) Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

(f) Accounts Receivable

Accounts receivable – consists primarily of royalty receivables from our franchisees. In addition, accounts receivable may include contractually-determined receivables for leasehold improvements, credit cards, vendor rebates, and purchased interest on investments.

(g) Property and Equipment

Property and equipment are recorded at cost. Leasehold improvements include the cost of improvements funded by landlord incentives or allowances and during the build-out period leasehold improvements are amortized using the straight-line method over the lesser of the term of the lease, without consideration of renewal options, or the estimated useful lives of the assets, which typically range from five to ten years. Furniture and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, which range from two to eight years. Maintenance and repairs are expensed as incurred. Upon retirement or disposal of assets, the cost and accumulated depreciation are eliminated from the respective accounts and the related gains or losses are credited or charged to earnings.

(h) Revenue Recognition

Franchise agreements have terms ranging from ten to twenty years. These agreements also convey multiple extension terms of five or ten years, depending on contract terms and if certain conditions are met. We provide the use of the Dick’s Wings trademarks, system, training, pre-opening assistance, and restaurant operating assistance in exchange for area development fees, franchise fees, and royalties of 5% of a restaurant’s sales.

Franchise fee revenue from individual franchise sales is recognized upon opening of the franchised restaurant when all material obligations and initial services to be provided by us have been performed. Because franchise fees are deemed fully earned and non-refundable under our franchise agreements, we recognize franchisee fee revenue from franchisors who abandon their effort to open a store at the time of abandonment.

Royalties are accrued as earned and are calculated each period based on restaurant sales as reported by the franchisees.

License fees from area development agreements are recorded as deferred revenue, and are amortized ratably based on the total number of restaurants in the development schedule of the agreement. The amount is derived by dividing the total amount of the license fee by the number of restaurants in the development schedule. When a new restaurant is opened under the area development agreement, a proportionate amount of the license fee is recognized as revenue.

With respect to one area development partner, we agreed to allow the partner to retain all franchise fees paid by franchisees procured by the partner, and to share a percentage of royalties paid by franchisees procured by or supervised by the partner. We do not record as revenue any franchise fees paid by franchisees procured by the partner because we are not allowed to retain any portion of that revenue. With respect to royalties in which the partner is entitled to a share, we record as revenue the full royalty paid by the franchisee and record the partner’s share of the revenue as a professional fee expense.

All sales taxes are presented on a net basis and are excluded from revenue.

(i) Franchise Operations

We enter into franchise agreements with unrelated third parties to build and operate restaurants using the Dick’s Wings brand within a defined geographical area. We believe that franchising is an effective and efficient means to expand the Dick’s Wings brand. The franchisee is required to operate their restaurants in compliance with their franchise agreement, which includes adherence to operating and quality control procedures that we establish. We do not provide loans, leases, or guarantees to the franchisee or the franchisee’s employees and vendors. If a franchisee becomes financially distressed, we do not provide any financial assistance. If financial distress leads to a franchisee’s noncompliance with the franchise agreement and we elect to terminate the franchise agreement, we have the right but not the obligation to acquire the assets of the franchisee at fair value as determined by an independent appraiser. We receive a 5% royalty of gross sales as defined in the franchise agreement and in most cases, allowances directly from the franchisees’ vendors that generally are less than 0.5% of the franchisees’ gross sales. We have financial exposure for the collection of the royalty payments. Franchisees generally remit franchise payments weekly for the prior week’s sales, which substantially minimizes our financial exposure. Historically, we have experienced insignificant write-offs of franchisee royalties; however, starting in 2009 we began to waive or reduce franchise fees on a case by case basis due to economic problems experienced by some franchisees resulting from factors outside their control, such as the vacancy of an anchor tenant, or excessive vacancies, in the shopping center in which they are located. Franchise and area development fees are paid upon the signing of the related agreements.

(j) Payments Received from Vendors

Vendor allowances include allowances and other funds received from vendors. Certain of these funds are determined based on various quantitative contract terms. We also receive vendor allowances from certain manufacturers and distributors calculated based upon purchases made by franchisees. Franchisee purchase allowances are recorded as Other Income. Amounts that represent a reimbursement of costs incurred, such as advertising, are recorded as a reduction of the related expense. Amounts that represent a reduction of inventory purchase costs are recorded as a reduction of inventoriable costs.

(k) Advertising Costs and National Advertising Fund

We maintain a system-wide marketing and advertising fund. Our franchised restaurants are required to remit a designated portion of sales to the advertising fund that is used for marketing and advertising efforts throughout the system. Our franchise agreements permit us to assess each franchisee a maximum of 3% of sales for the advertising fund. In 2010, we charged a flat rate of $250 per month per store. We have since discontinued charging franchisees an advertising fee, and now they are responsible for their own advertising. Certain payments received from various vendors are deposited into the National Advertising Fund. These funds are used for development and implementation of system-wide initiatives and programs. In accordance with SFAS No. 45, “Accounting for Franchisee Fee Revenue”, the revenue, expenses and cash flows of the advertising funds are not included in our Statements of Income or Consolidated Statements of Cash Flows because the contributions to these advertising funds are designated for specific purposes, and we act as an, in substance, agent with regard to these contributions. The assets held by these advertising funds are considered restricted. The current restricted assets and related restricted liabilities are identified on our Balance Sheets.

(l) Basic and Diluted Per Common Share

Under Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings Per Share,” basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. When income available for common shareholders is negative, basic and diluted loss per share are the same since additional potential common shares would be anti-dilutive.

(m) Use of Estimates

Our Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our Financial Statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

(n) Stock Based Compensation

We issue stock in lieu of cash for certain transactions. The fair value of the stock, which is based on comparable cash purchases, third party quotations, or the value of services, whichever is more readily determinable, is used to value the transaction.

(o) Significant Recent Accounting Pronouncements:

In June 2009 the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

Accounting Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU’s No. 2009-2 through ASU No. 2010-18 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

In February 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-09, which, among other things, amends Subtopic 855-10 with respect to the date through which evaluation of subsequent events must occur and under which circumstances such date must be disclosed. The update amends subtopic 855-10 so that an SEC filer is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC’s requirements. All of the amendments in this update are effective upon issuance, with limited exceptions. Adoption of this guidance did not have a material impact on our financial statements.

During February 2010, the FASB also issued ASU 2010-08, which corrects existing guidance for various topics. The update is generally effective for the first reporting period (including interim periods) beginning after issuance. We believe these corrections will have minimal, if any, impact on our financial statements.

In January 2010, the FASB issued ASU 2010-06, which amends Subtopic 820-10 to require new disclosures regarding the amounts of and reasons for significant transfers in and out of Levels 1 and 2 fair value measurement categories, and separate information about purchases, sales, issuances, and settlements in Level 3 fair value measurements. ASU 2010-06 also clarifies existing fair value measurement disclosures to provide for fair value measurement disclosures for each class of assets and liabilities, even within a line item in the statement of financial position, and to provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either the Level 2 or Level 3 categories.

ASU 2010-06 also includes conforming amendments to the guidance on employers’ disclosures about post-retirement benefit plan assets (Subtopic 715-20), changes the terminology in Subtopic 715-20 from major categories of assets to classes of assets, and provides a cross reference to the guidance in Subtopic 820-10 on how to determine appropriate classes to present fair value disclosures.

The new disclosures and clarifications of existing disclosures in ASU 2010-06 are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Adoption of this guidance has not had a material impact on our financial statements and is not expected to have a material impact on our financial statements in the future.

NOTE 2 - Commitments & Contingencies

We lease our corporate offices under an operating lease. We are currently operating under a month-to-month office lease for our corporate offices. There are no future lease obligations for the corporate office.

NOTE 3 - Capital Stock; Stockholders’ Deficit

We currently have one class of Common Stock authorized, issued and outstanding — Class A. Common Stock. Par value is $0.01/share. We do not currently have any outstanding stock options, restricted stock, or employee stock purchase plans, other than as described below. As of March 27, 2011, we had 35,261,667 shares of Common Stock outstanding. In June 2010, we commenced a private offering of up to 1,000,000 Units for $0.25 per Unit, with each Unit consisting of one share of common stock, one Class A Warrant and one Class B Warrant. Each Class A Warrant entitles the holder to purchase one share of common stock for $0.50 per share until December 31, 2011. Each Class B Warrant entitles the holder to purchase one share of common stock for $1.25 per share until December 31, 2012. During the three months ending March 27, 2011, we sold 108,000 Units for gross proceeds of $27,000 to four investors.

NOTE 4 - Related Party Transactions

We have entered into a franchise agreement for three restaurants in the Jacksonville, Florida area with Hot Wings Concepts, Inc., which is owned by Michael Rosenberger. The terms of this franchise agreement is identical to our other franchise agreements executed by unrelated franchisees, except that we did not require Hot Wings Concepts, Inc. to pay an initial franchise fee. During the three months ended March 27, 2011, we received revenues of $14,167 from the restaurants operated by Hot Wings Concepts, Inc.

NOTE 5 - Notes Payable

In October 30, 2008, we entered into a loan agreement with Bank of America in the original principal amount of $338,137.92. The loan agreement consolidated five separate loans which Bank of America had made to us previously. The loan bears interest at 7% per year, and requires equal month payments of principal and interest of $6,710.65 per month, until November 3, 2013, when the loan is scheduled to be repaid in full. The loan is secured by substantially all of our assets, and is guaranteed by Michael Rosenberger, Rosalie Rosenberger and Hot Wings Concepts, Inc. On February 22, 2010, we entered into a Forbearance Agreement with Bank of America, N.A. Under the Forbearance Agreement, our monthly payment obligation is reduced to interest only until November 3, 2010, which represents a substantial reduction in our monthly payment. However, the entire loan became due and payable on November 3, 2010. On February 3, 2011, we entered into a First Amendment to Forbearance Agreement with Bank of America, N.A. Under the First Amendment, we are only required to make monthly payments of interest only until December 3, 2011, at which time the entire loan is due and payable.

During the fourth quarter of 2008, we borrowed $11,000 from four unrelated persons and issued each lender a promissory note. The notes bear interest at the rate of 6% per annum, and provide for one balloon payment of all principal and interest three years after the date of the note. The proceeds were used by us to defray costs associated with a planned public offering.

NOTE 6 – Termination of Master License Agreement

On January 13, 2010, we entered into a settlement agreement with DWG Partners, under which the Master License Agreement between us and DWG Partners was rescinded and we agreed to refund DWG Partners $250,000 of the original license fee paid by DWG Partners. We agreed to pay the refund of the license fee by payment of $25,000 upon execution of the agreement, and $5,000 per month until it is paid in full. In addition, we agreed to pay DWG Partners the proceeds of any franchise fees received from the sale to a franchisee of a store location of which DWG Partners is the lessee, which will be applied to the $250,000 obligation. Finally, we agreed to allow DWG Partners to retain any royalties it has collected from three franchisees (of which two are open and operating) that it procured, and to allow it to continue collecting royalties from those franchisees until the $250,000 obligation is paid in full, with the amount of any franchisee fees collected after December 15, 2009 being applied to reduce the $250,000 obligation.

In 2010, DWG Partners breached its obligations under the settlement agreement, and as a result, in the opinion of management and legal counsel, we are no longer liable for any remaining amounts due under the settlement agreement.

NOTE 7 – Going Concern

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We reported net loss of ($10,938) for the three months ended March 27, 2011. We also renegotiated a bank loan in the three months ended March 27, 2011 so that it is no longer in default, but the entire amount is due and payable in the fourth quarter of 2011 unless we negotiate a further extension. We have current assets of $30,447 and current liabilities of $446,131. In addition, we have an accumulated deficit of ($758,018). We intend to raise money from the sale of common stock in a private offering to reduce our indebtedness and provide funds for expansion. Alternatively, we will need to restructure our indebtedness and turn around our operations. Those conditions raise substantial concern about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 8 - Subsequent Events

The Company has evaluated subsequent events as required by ASC 855, Subsequent Events, and has determined that there were no subsequent events requiring disclosure in these interim financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the unaudited financial statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contained in our Annual Report on Form 10-K for the fiscal year ended December 26, 2010.

Disclosure Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Forward Looking Statements”). The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. All statements other than statements of historical fact included in this report are Forward Looking Statements. When words and expressions such as: “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “could,” “should,” “might,” “likely,” “enable,” or similar words or expressions are used in this Form 10-Q, as well as statements containing phrases such as “in our view,” “there can be no assurance,” “although no assurance can be given,” or “there is no way to anticipate with certainty,” Forward Looking Statements are being made, although this is not the exclusive means of identifying such statements.

In the normal course of its business, the Company, in an effort to help keep its shareholders and the public informed about the Company’s operations, may from time-to-time issue certain statements, either in writing or orally, that contain or may contain Forward-Looking Statements. Although the Company believes that the expectations reflected in such Forward Looking Statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, past and possible future, of acquisitions and projected or anticipated benefits from acquisitions made by or to be made by the Company, or projections involving anticipated revenues, earnings, levels of capital expenditures or other aspects of operating results. All phases of the Company operations are subject to a number of uncertainties, risks and other influences, many of which are outside the control of the Company and any one of which, or a combination of which, could materially affect the results of the Company’s proposed operations and whether Forward Looking Statements made by the Company ultimately prove to be accurate. Such important factors and other factors could cause actual results to differ materially from the Company’s expectations are disclosed in this report, in our Annual Report on Form 10-K for the fiscal year ended December 26, 2010 filed with the SEC on April 15, 2011 (including those factors discussed in “Item 1A. Risk Factors”), and in our Registration Statement on Form S-1/A filed with the SEC on October 20, 2010 (including those factors discussed under the heading "Risk Factors"). Such factors also include:

our growth strategy;

anticipated trends in the restaurant franchise industry;

patron demographics;

general market and economic conditions;

access to capital and credit, including our ability to finance future business requirements;

the availability of adequate levels of insurance;

changes in federal, state, and local laws and regulations; and

competitive environment, including increased competition in our target market areas.

All prior and subsequent written and oral Forward Looking Statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors that could cause actual results to differ materially from the Company’s expectations as set forth in any Forward Looking Statement made by or on behalf of the Company.

We undertake no obligation to publicly update or revise any Forward-Looking Statements as a result of future developments, events or conditions. New risks emerge from time to time and it is not possible for us to predict all such risks, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ significantly from those forecast in any Forward-Looking Statements.

Overview

Our business is the franchise of Dick’s Wings restaurants, using the Dick’s Wings product line. Dick’s Wings Express is a limited service restaurant, concentrating on take-out orders. Dick’s Wings & Grill is a full service restaurant.

We currently only offer individual franchise agreements, under which a qualified purchaser may establish and operate a restaurant under the Dick’s Wings marks and system at a single location within a specified territory. We currently have 12 franchisees located in Florida and two franchisees located in Georgia.

Results of Operations

Three Months ended March 27, 2011 and March 28, 2010

During the three months ended March 27, 2011 and March 28, 2010, our revenues were $105,625 and $107,726, respectively, a decrease of $2,101, or 2.0%. We had 18 franchised locations as of March 27, 2011, of which 14 were open.

Our decreased revenues were largely attributable to decreased royalty income and other income, as franchise fees were largely unchanged. Below is a comparison of our revenues by category:


	Three Months Ended March 27, 2011	Three Months Ended March 28, 2010
Royalty income	$ 97,050	$ 91,789
Franchise fees	-	10,000
Other revenue	8,575	5,937
Total revenue	$ 105,625	$ 107,726

Our royalty income from same-store sales (stores opened for all the first three months of both 2011 and 2010) was $71,475 in 2011 as compared to $75,467 in 2010, a decrease of $3,992, or 5.3%. Royalty income from stores that did not meet our criteria for same store sales was $25,575 for this period in 2011 versus $16,322 in 2010, an increase of 56.7%. Our royalty income was adversely affected by lower sales by franchisees as a result of tough economic conditions, increased vacancies of anchor tenants in some shopping centers which reduced overall traffic to the shopping center significantly, and temporary cessation of operations at two stores for remodeling. In addition, we continued to waive or reduce royalties at several locations in the first quarter of 2011 that were experiencing difficulty in their local markets. While we expect sales to increase as the economy improves, sales at locations that are adversely affected by vacancies in their shopping center may not rise until the vacancy rate at the shopping center decreases, particularly among anchor tenants.

Our franchise fees in the first quarter of 2011 decreased compared to the same period in 2010 as a result of decreased activity signing up new franchisees and as a result of our closing two of our franchise locations. Our other revenues in the same time period increased from 2010 to 2011 due to temporary sublease income.

Our operating expenses increased from $58,597 in the first quarter of 2010 to $111,564 in the first quarter of 2011, an increase of $52,967, or 90.4%. Our change in operating expenses for the first three months of the year is attributable to the following factors:

Salaries and wages increased from $42,296 in 2010 to $70,050 in 2011, an increase of $27,754, or 65.6%. The increase is primarily result of hiring a new employee and increased compensation to existing employees in 2011.

Professional fees increased from $9,929 in 2010 to $18,122 in 2011, an increase of $8,193, or 82.5%. In 2010, our professional fees consisted largely of legal and auditing fees resulting from a variety of matters.

General and administrative expenses increased from $6,372 in 2010 to $23,392 in 2011, an increase of 17,020, as a result of increased marketing and travel costs.

We incurred a net loss of ($10,938) in the first three months of 2011 compared to net income of $44,935 in the same period for 2010. The change from net income to net loss in this period is attributable to our incurring an operating loss in 2011 as compared to an operating profit in 2010. This shift is is largely the result of additional salary expenses. Interest expense was slightly higher in the first three months of 2011 as compared to the same period in 2010 as a result of an increase in the average principal balance of our outstanding debt.

Liquidity and Sources of Capital

The following table sets forth the major sources and uses of cash for our last three months ended March 27, 2011 and March 28, 2010:


	Three months ended
	March 27, 2011	March 28, 2010
Net cash provided by (used) in operating activities	$ (14,224)	$ (58,101)
Net cash provided by (used) in investing activities	-	-
Net cash provided by (used) in financing activities	27,000	(27,330)
Net (decrease) increase in unrestricted cash and cash equivalents	$ 12,776	$ (85,431)

Comparison of First Quarter 2011 and 2010

Operating activities used ($14,224) of cash in 2011, as compared to ($58,101) of cash in 2010. Our operating assets and liabilities used ($3,286) of cash in 2011, most of which resulted from a reduction in an increase in accounts receivable of ($8,285), offset by an increase in accounts payable of $4,999.

Operating activities used ($58,101) of cash in 2010. Our operating assets and liabilities used ($103,036) of cash, most of which resulted from an increase in a decrease accounts payable of ($45,476), an increase in accounts receivable of ($22,560), and a decrease in the recission agreement payable of ($35,000).

Investing activities did not use or supply any cash in the three months ended March 27, 2011 and March 28, 2010.

Financing activities supplied $27,000 of cash in 2011 as compared to using ($27,330) of cash in 2010. In 2011, we raised $27,000 from an offering of common stock and warrants. In 2010, we made repayments to our bank loan of ($27,330).

Current Liquidity

Our balance sheet as of March 27, 2011 reflects cash of $14,382, current assets of $30,447, current liabilities of $446,131, and a working capital deficit of ($415,684). Our accumulated deficit increased during the three months ended March 27, 2011 as a result of the net loss incurred. Our current liabilities include $284,114 that we owe on a bank loan that, after certain extensions negotiated with the bank, matures in December 2011.

Based on our analysis and operating budget for the next twelve months, we believe that cash flows generated from franchise fees and royalties will be sufficient to fund our operating expenses for the next twelve months. These expenses include marketing, advertising, commissions and administrative expenses, as well as increased administrative expenses attributable to increased legal and accounting fees associated with being a reporting company.

However, in order to implement our business plan to expand our franchise system to new geographic areas, we believe we need approximately $1.5 million over the next five years. The additional funds will be needed to hire the personnel to locate, qualify, train and supervise additional franchisees. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could negatively impact our growth and other plans as well as our financial condition and results of operations. Additional equity financing, if available may be dilutive to the holders of our common stock and may involve significant cash payment obligations and covenants and/or financial ratios that restrict our ability to operate and expand.

Going Concern

Our financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We reported net a loss of ($10,938) for the three months ended March 27, 2011. We also renegotiated a bank loan in the three months ended March 27, 2011 so that it is no longer in default, but the entire amount is due and payable in the fourth quarter of 2011 unless we negotiate a further extension. We have current assets of $30,447 and current liabilities of $446,131. In addition, we have an accumulated deficit of ($758,018). We intend to raise money from the sale of common stock in a private offering to reduce our indebtedness and provide funds for expansion. Alternatively, we will need to restructure our indebtedness and turn around our operations. Those conditions raise substantial concern about our ability to continue as a going concern.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that 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 investors.

Critical Accounting Estimates

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Because the Company is a smaller reporting company, it is not required to provide the information called for by this Item.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Michael Rosenberger, our chief executive officer and chief financial officer, is responsible for establishing and maintaining our disclosure controls and procedures. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Mr. Rosenberger evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of March 27, 2011. Based on that evaluation, Mr. Rosenberger concluded that, as of the evaluation date, such controls and procedures were adequate.

Changes in internal controls

There were no changes in our internal controls over financial reporting that occurred during the quarter ended March 27, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION.

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 26, 2010, as filed with the SEC on April 15, 2011.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

In June 2010, we commenced a private offering of up to 1,000,000 Units for $0.25 per Unit, with each Unit consisting of one share of common stock, one Class A Warrant and one Class B Warrant. Each Class A Warrant entitles the holder to purchase one share of common stock for $0.50 per share until December 31, 2011. Each Class B Warrant entitles the holder to purchase one share of common stock for $1.25 per share until December 31, 2012. During the three months ending March 27, 2011, we sold 108,000 Units for gross proceeds of $27,000 to four investors. We believe the issuance of the Units is exempt from registration under Rule 506 of Regulation D under the Securities Act of 1933, based on the following factors:

None of these issuances involved underwriters, underwriting discounts or commissions.

Restrictive legends were and will be placed on all certificates issued as described above.

The distribution did not involve general solicitation or advertising.

The distributions were made only to investors who were sophisticated enough to evaluate the risks of the investment.

In connection with the above transactions, we provided investors with an offering memorandum that consisted of our Form S-1/A Registration Statement and a separate document that included information relevant to the offering that was not contained in the Form S-1/A Registration Statement, such as a summary of the terms of the securities offering, use of proceeds, post-offering capitalization information, information on their right to resale securities under Rule 144, and certain disclaimers required by law, among other things. We also provided investors with the opportunity to discuss the company with management and to obtain any additional information to the extent we possessed such information.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

On November 3, 2010, a loan from Bank of America in the original principal amount of $338,137.92 matured. As a result, we were in technical default under this loan for part of the period covered by this report. On February 3, 2011, we obtained an amendment from the lender that requires us to make monthly payments of interest only until December 3, 2011, at which time the entire loan will become due and payable.

ITEM 4. (REMOVED AND RESERVED)

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Reference is made to the Index to Exhibits following the signature page to this report for a list of all exhibits filed as part of this report.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	AMERICAN RESTAURANT CONCEPTS, INC.
Date: May 16, 2011	/s/ Michael Rosenberger
	Michael Rosenberger, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, President, Director

EXHIBIT INDEX


Exhibit No.	Description
3.1	Articles of Incorporation of American Restaurant Concepts, Inc. (incorporated by reference to the Form S-1/A Registration Statement filed April 29, 2010)
3.2	Amendment to Articles of Incorporation (incorporated by reference to the Form S-1/A Registration Statement filed April 29, 2010)
3.3	Bylaws of American Restaurant Concepts, Inc. (incorporated by reference to the Form S-1/A Registration Statement filed April 29, 2010)
4.1	Form of common stock Certificate of the American Restaurant Concepts, Inc.⁽¹⁾
4.2*	Form of Class A Warrant
4.3*	Form of Class B Warrant
10.1	Form of Franchise Agreement (incorporated by reference to the Form S-1 Registration Statement filed September 8, 2009)
10.2	Trademark License Agreement between Moose River Management, Inc. and American Restaurant Concepts, Inc. (incorporated by reference to the Form S-1 Registration Statement filed September 8, 2009)
10.3	Amended and Restated Employment, Non-Disclosure and Non-Competition Agreement of Michael Rosenberger (incorporated by reference to the Form S-1/A Registration Statement filed April 29, 2010)
10.4	Loan Agreement between Bank of America, N.A. and American Restaurant Concepts, Inc. dated October 28, 2008 (incorporated by reference to the Form S-1/A Registration Statement filed April 29, 2010)
10.5	Forebearance Agreement between Bank of America, N.A. and American Restaurant Concepts, Inc. dated February 22, 2010 (incorporated by reference to the Form S-1/A Registration Statement filed April 29, 2010)
31*	Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934
32*	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Filed herewith

EX-4.2 2 ex42.htm RIGHTS OF SECURITY HOLDERS ARCI Test S1A5

Exhibit 4.2

NEITHER THIS WARRANT CERTIFICATE NOR THE WARRANTS REPRESENTED HEREBY NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF SUCH WARRANTS, NOR ANY INTEREST IN OR RIGHTS UNDER SAME, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE LAWS OF ANY STATE, AND NEITHER THIS WARRANT CERTIFICATE NOR THE WARRANTS REPRESENTED HEREBY NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF SUCH WARRANTS, NOR ANY INTEREST IN OR RIGHTS UNDER SAME, MAY BE SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

W-2010-A-___

AMERICAN RESTAURANT CONCEPTS, INC.

COMMON STOCK PURCHASE WARRANT – CLASS A

American Restaurant Concepts, Inc., a Florida corporation (the “Company”), for value received and subject to the terms set forth below hereby grants to _________________________________________, or its registered successors and assigns (the “Holder”), the right to purchase from the Company at any time or from time to time until the date and time permitted under Section 2.1 below, ________________________ fully paid and nonassessable shares of the Common Stock, par value $0.01 per share, at the purchase price of fifty cents ($0.50) per share (the “Exercise Price”). The Exercise Price and the number and character of such shares of Common Stock purchasable pursuant to the rights granted under this Warrant are subject to adjustment as provided herein.

1. Definitions. As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a)

“Common Stock” means the Company’s common stock, par value $0.01 per share, and stock of any other class of securities into which such securities may hereafter have been reclassified or changed into, including any stock (other than Common Stock) and other securities of the Company or any other person (corporate or other) which the Holder of this Warrant at any time shall be entitled to receive, or shall have received, upon the exercise of this Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock pursuant to Section 3.2 hereof or otherwise..

(b)

“Market Value” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market (other than the OTC Bulletin Board or Pink Sheets), the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a trading day from 9:30 a.m. Eastern Time to 4:00 p.m. Eastern Time); (b) if the Common Stock is then listed or quoted on the OTC Bulletin Board, the average of the high and low price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on a Trading Market other than the Pink Sheets (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) if the Common Stock is not then listed on a Trading Market, then the fair market value of the Common Stock as determined by the board of directors of the Company.

(c)

“Termination Date” means December 31, 2011.

(d)

“This Warrant” means, collectively, this Warrant and all other stock purchase warrants issued in exchange therefor or replacement thereof.

(e)

“Trading Market” means any one of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq SmallCap Market, the NYSE Alternext US, the New York Stock Exchange, the Nasdaq National Market, the OTC Bulletin Board or the Pink Sheets.

2. Exercise.

2.1 Exercise Period. The Holder may exercise this Warrant at any time on or before the close of business in Jacksonville, Florida on the Termination Date (the “Exercise Period”).

2.2 Exercise Procedure.

(a) This Warrant will be deemed to have been exercised at such time as the Company has received all of the following items (the “Exercise Date”):

(i) a completed Subscription Agreement as described in Section 2.4 hereof, executed by the person exercising all or part of the purchase rights represented by this Warrant (the “Purchaser”);

(ii) this Warrant;

(iii) if this Warrant is not registered in the name of the Purchaser, an Assignment or Assignments in the form set forth in Exhibit B hereto, evidencing the assignment of this Warrant to the Purchaser together with any documentation required pursuant to Section 8(a) hereof; and

(iv) a check payable to the order of the Company in an amount equal to the product of the Exercise Price multiplied by the number of shares of Common Stock being purchased upon such exercise.

(b) As soon as practicable after the exercise of this Warrant in full or in part, and in any event within ten (10) days after the Exercise Date, the Company at its expense will cause to be issued in the name of and delivered to the Purchaser, or as the Purchaser (upon payment by the Purchaser of any applicable transfer taxes) may direct, a certificate or certificates for the number of fully paid and non-assessable shares of Common Stock to which the Purchaser shall be entitled upon such exercise, together with any other stock or other securities and property (including cash, where applicable) to which the Purchaser is entitled upon exercise.

(c) Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company at its expense will, within ten (10) days after the Exercise Date, issue and deliver to or upon the order of the Purchaser a new Warrant or Warrants of like tenor, in the name of the Purchaser or as the Purchaser (upon payment by the Purchaser of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock remaining issuable under this Warrant.

(d) The Common Stock issuable upon the exercise of this Warrant will be deemed to have been issued to the Purchaser on the Exercise Date, and the Purchaser will be deemed for all purposes to have become the record holder of such Common Stock on the Exercise Date.

(e) The issuance of certificates for shares of Common Stock upon exercise of this Warrant will be made without charge to the Holder or the Purchaser for any issuance tax in respect thereof or any other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock.

(f) The holder represents and warrants that at the time of any exercise of this warrant the holder is an “accredited investor,” as such term is defined in Rule 501 promulgated under the Securities Act and acknowledges and agrees that the Company may, in its sole discretion, (i) require, as a condition to the exercise of this Warrant, that the holder provide such written evidence that such holder is an accredited investor as the time of exercise, and (ii) decline to issue the shares of Common Stock issuable upon such exercise if the Company is not satisfied that this warrant may be exercised by the holder pursuant to a valid registration exemption from the Securities Act and any applicable state securities law.

2.3 Acknowledgement of Continuing Obligations. The Company will, at the time of the exercise of this Warrant, upon the request of the Purchaser, acknowledge in writing its continuing obligation to afford to the Purchaser any rights to which the Purchaser shall continue to be entitled after such exercise in accordance with the provisions of this Warrant, provided that if the Purchaser shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to the Purchaser any such rights.

2.4 Subscription Agreement. The Subscription Agreement will be substantially in the form set forth in Exhibit A hereto, except that if the shares of Common Stock issuable upon exercise of this Warrant are not to be issued in the name of the Purchaser, the Subscription Agreement will also state the name of the person to whom the certificates for the shares of Common Stock are to be issued, and if the number of shares of Common Stock to be issued does not include all the shares of Common Stock issuable hereunder, it will also state the name of the person to whom a new Warrant for the unexercised portion of the rights hereunder is to be delivered.

2.5 Fractional Shares. If a fractional share of Common Stock would, but for the provisions of Section 2.1 hereof, be issuable upon exercise of the rights represented by this Warrant, the Company will, within ten (10) days after the Exercise Date, deliver to the Purchaser a check payable to the Purchaser in lieu of such fractional share, in an amount equal to the Market Value of such fractional share as of the close of business on the Exercise Date.

3. Adjustments.

3.1 Adjustments for Stock Splits, Etc. If the Company shall at any time after the issue date subdivide its outstanding Common Stock, by split-up or otherwise, or combine its outstanding Common Stock, or issue additional shares of its capital stock in payment of a stock dividend in respect of its Common Stock, the number of shares issuable on the exercise of the unexercised portion of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Exercise Price then applicable to shares covered by the unexercised portion of this Warrant shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of combination.

3.2 Adjustment for Reclassification, Reorganization, etc. In case of any reclassification, capital reorganization, or change of the outstanding Common Stock (other than as a result of a subdivision, combination or stock dividend), or in the case of any consolidation of the Company with, or merger of the Company into, another person (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or change of the outstanding Common Stock of the Company), or in case of any sale or conveyance to one or more persons of the property of the Company as an entirety or substantially as an entirety at any time prior to the expiration of this Warrant, then, as a condition of such reclassification, reorganization, change, consolidation, merger, sale or conveyance, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder of this Warrant, so that the Holder of this Warrant shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, the kind and amount of shares of stock and other securities and property receivable upon such reclassification, reorganization, change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock of the Company as to which this Warrant was exercisable immediately prior to such reclassification, reorganization, change, consolidation, merger, sale or conveyance, and in any such case appropriate provision shall be made with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for the adjustment of the Exercise Price and of the number of shares purchasable upon exercise of this Warrant) shall thereafter be applicable in relation to any shares of stock, and other securities and property, thereafter deliverable upon exercise hereof. If, as a consequence of any such transaction, solely cash, and no securities or other property of any kind, is deliverable upon exercise of this Warrant, then, in such event, the Company may terminate this Warrant by giving the Holder hereof written notice thereof. Such notice shall specify the date (at least thirty (30) days subsequent to the date on which notice is given) on which, at 3:00 P.M., Jacksonville, Florida time, this Warrant shall terminate. Notwithstanding any such notice, this Warrant shall remain exercisable, and otherwise in full force and effect, until such time of termination.

3.3 Certificate of Adjustment. Whenever the Exercise Price or the number of shares issuable hereunder is adjusted, as herein provided, the Company shall promptly deliver to the registered Holder of this Warrant a certificate of the Treasurer of the Company, which certificate shall state (i) the Exercise Price and the number of shares of Common Stock issuable hereunder after such adjustment, (ii) the facts requiring such adjustment, and (iii) the method of calculation for such adjustment and increase or decrease.

3.4 Small Adjustments. No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease in the Exercise Price of at least one percent; provided, however, that any adjustments which by reason of this Section 3.4 are not required to be made immediately shall be carried forward and taken into account at the time of exercise of this Warrant or any subsequent adjustment in the Exercise Price which, singly or in combination with any adjustment carried forward, is required to be made under Sections 3.1 or 3.2.

4. Reservation of Stock, etc., Issuable on Exercise of Warrant. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, all shares of Common Stock from time to time issuable upon the exercise of this Warrant.

5. Disposition of This Warrant, Common Stock, Etc.

(a) The Holder of this Warrant and any transferee hereof or of the Common Stock with respect to which this Warrant may be exercisable, by their acceptance hereof, hereby understand and agree that this Warrant and the Common Stock with respect to which this Warrant may be exercisable have not been registered under the Securities Act, and may not be sold, pledged, hypothecated, donated, or otherwise transferred (whether or not for consideration) without an effective registration statement under the Act or an opinion of counsel satisfactory to the Company and/or submission to the Company of such other evidence as may be satisfactory to counsel to the Company, in each such case, to the effect that any such transfer shall not be in violation of the Act. It shall be a condition to the transfer of this Warrant that any transferee thereof deliver to the Company its written agreement to accept and be bound by all of the terms and conditions of this Warrant.

(b) Except to the extent the resale of the shares of Common Stock issuable upon exercise hereof are registered for resale, or may be sold to the public pursuant to Rule 144(b)(1) under the Securities Act, the certificates of the Company that will evidence the shares of Common Stock with respect to which this Warrant may be exercisable will be imprinted with a conspicuous legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND/OR SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT.”

The Company has not agreed to register any of the Holder’s shares of Common Stock of the Company with respect to which this Warrant may be exercisable for distribution in accordance with the provisions of the Securities Act, and the Company has not agreed to comply with any exemption from registration under the Act for the resale of the Holder’s shares of Common Stock with respect to which this Warrant may be exercised. Hence, it is the understanding of the Holder of this Warrant that by virtue of the provisions of certain rules respecting “restricted securities” promulgated by the SEC, the shares of Common Stock of the Company with respect to which this Warrant may be exercisable may be required to be held indefinitely, unless and until registered under the Securities Act, unless an exemption from such registration is available, in which case the Holder may still be limited as to the number of shares of Common Stock of the Company with respect to which this Warrant may be exercised that may be sold from time to time.

6. Rights and Obligations of Warrant Holder. The Holder of this Warrant shall not, by virtue hereof, be entitled to any voting rights or other rights as a stockholder of the Company. No provision of this Warrant, in the absence of affirmative actions by the Holder to purchase Common Stock of the Company by exercising this Warrant, and no enumeration in this Warrant of the rights or privileges of the Holder, will give rise to any liability of such Holder for the Exercise Price of Common Stock acquirable by exercise hereof or as a stockholder of the Company.

7. Transfer of Warrants. Subject to compliance with the restrictions on transfer applicable to this Warrant referred to in Section 5 hereof, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the registered Holder, upon surrender of this Warrant with a properly executed Assignment (in substantially the form attached hereto as Exhibit B), to the Company, and the Company at its expense will issue and deliver to or upon the order of the Holder hereof a new Warrant or Warrants in such denomination or denominations as may be requested, but otherwise of like tenor, in the name of the Holder or as the Holder (upon payment of any applicable transfer taxes) may direct.

8. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

9. Company Records. Until this Warrant is transferred on the books of the Company, the Company may treat the registered Holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

10. Miscellaneous.

10.1 Notices. All notices and other communications from the Company to the Holder of this Warrant shall be mailed by first class mail, postage prepaid, to such address as may have been furnished to the Company in writing by such Holder, or, until an address is so furnished, to and at the address of the last Holder of this Warrant who has so furnished an address to the Company. All communications from the Holder of this Warrant to the Company shall be mailed by first class mail, postage prepaid, to American Restaurant Concepts, Inc., 14476 Duval Place West, Suite 103, Jacksonville, Florida 32218: Chief Executive Officer, or such other address as may have been furnished to the Holder in writing by the Company.

10.2 Amendment and Waiver. Except as otherwise provided herein, this Warrant and any term hereof may be amended, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such amendment, waiver, discharge or termination is sought.

10.3 Governing Law; Descriptive Headings. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of Florida. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

Dated: _____________, 2010.



AMERICAN RESTAURANT CONCEPTS, INC.

By:
Name:		James Robert Shaw
Title:		Vice President

EXHIBIT A

SUBSCRIPTION AGREEMENT

[To be signed only upon exercise of Warrant]



To:		Date:

The undersigned, the Holder of the within Warrant, pursuant to the provisions set forth in the within Warrant, hereby irrevocably elects to exercise the purchase rights represented by such Warrant for, and agrees to subscribe for and purchase thereunder, shares of the Common Stock covered by such Warrant and herewith makes payment of $ therefor, and requests that the certificates for such shares be issued in the name of, and delivered to, whose address is: . If said number of shares is less than all the shares covered by such Warrant, a new Warrant shall be registered in the name of the undersigned and delivered to the address stated below.



Signature

		(Signature must conform in all respects to name of Holder as specified on the face of the Warrant or on the form of Assignment attached as Exhibit B thereto.)

Address



[Signature Guarantee]

EXHIBIT B

ASSIGNMENT

[To be signed only upon transfer of Warrant]

For value received, the undersigned hereby sells, assigns and transfers all of the rights of the undersigned under the within Warrant with respect to the number of shares of the Common Stock covered thereby set forth below, unto:



Name of Assignee	Address	No. of Shares



Dated:	Signature

		(Signature must conform in all respects to name of Holder as specified on the face of the Warrant.)

	Address



	[Signature Guarantee]

EX-4.3 3 ex43.htm RIGHTS OF SECURITY HOLDERS ARCI Test S1A5

Exhibit 4.3

W-2010-B-___

AMERICAN RESTAURANT CONCEPTS, INC.

COMMON STOCK PURCHASE WARRANT – CLASS B

American Restaurant Concepts, Inc., a Florida corporation (the “Company”), for value received and subject to the terms set forth below hereby grants to _________________________________________, or its registered successors and assigns (the “Holder”), the right to purchase from the Company at any time or from time to time until the date and time permitted under Section 2.1 below, ________________________ fully paid and nonassessable shares of the Common Stock, par value $0.01 per share, at the purchase price of fifty cents ($1.25) per share (the “Exercise Price”). The Exercise Price and the number and character of such shares of Common Stock purchasable pursuant to the rights granted under this Warrant are subject to adjustment as provided herein.

1. Definitions. As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a)

(b)

low price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on a Trading Market other than the Pink Sheets (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) if the Common Stock is not then listed on a Trading Market, then the fair market value of the Common Stock as determined by the board of directors of the Company.

(c)

“Termination Date” means December 31, 2012.

(d)

“This Warrant” means, collectively, this Warrant and all other stock purchase warrants issued in exchange therefor or replacement thereof.

(e)

2. Exercise.

2.1 Exercise Period. The Holder may exercise this Warrant at any time on or before the close of business in Jacksonville, Florida on the Termination Date (the “Exercise Period”).

2.2 Exercise Procedure.

(a) This Warrant will be deemed to have been exercised at such time as the Company has received all of the following items (the “Exercise Date”):

(i) a completed Subscription Agreement as described in Section 2.4 hereof, executed by the person exercising all or part of the purchase rights represented by this Warrant (the “Purchaser”);

(ii) this Warrant;

(iv) a check payable to the order of the Company in an amount equal to the product of the Exercise Price multiplied by the number of shares of Common Stock being purchased upon such exercise.

3. Adjustments.

5. Disposition of This Warrant, Common Stock, Etc.

10. Miscellaneous.

Dated: _____________, 2010.



AMERICAN RESTAURANT CONCEPTS, INC.

By:
Name:		James Robert Shaw
Title:		Vice President

EXHIBIT A

SUBSCRIPTION AGREEMENT

[To be signed only upon exercise of Warrant]



To:		Date:

The undersigned, the Holder of the within Warrant, pursuant to the provisions set forth in the within Warrant, hereby irrevocably elects to exercise the purchase rights represented by such Warrant for, and agrees to subscribe for and purchase thereunder, shares of the Common Stock covered by such Warrant and herewith makes payment of $ therefor, and requests that the certificates for such shares be issued in the name of, and delivered to, , whose address is: . If said number of shares is less than all the shares covered by such Warrant, a new Warrant shall be registered in the name of the undersigned and delivered to the address stated below.



Signature

		(Signature must conform in all respects to name of Holder as specified on the face of the Warrant or on the form of Assignment attached as Exhibit B thereto.)

Address



[Signature Guarantee]

EXHIBIT B

ASSIGNMENT

[To be signed only upon transfer of Warrant]



Name of Assignee	Address	No. of Shares



Dated:	Signature

		(Signature must conform in all respects to name of Holder as specified on the face of the Warrant.)

	Address



	[Signature Guarantee]

EX-31.1 4 ex311.htm CERTIFICATION EXHIBIT 31.1 Blaser (A0040430-3).DOC

Exhibit 31.1

CERTIFICATIONS

I, Michael Rosenberger, hereby certify that:

(1) I have reviewed this quarterly report on Form 10-Q for the period ended March 27, 2011 (the “report”) of American Restaurant Concepts, 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 small business issuer as of, and for, the periods presented in this report;

(4) The small business issuer's other certifying officers 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)) for the small business issuer 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 small business issuer, 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 small business issuer'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 small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

(5) The small business issuer's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer'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 small business issuer's internal control over financial reporting.

Dated: May 16, 2011

/s/ Michael Rosenberger

Michael Rosenberger

Chief Executive Officer

(principal executive officer and principal financial and accounting officer)

EX-32.1 5 ex321.htm CERTIFICATION EXHIBIT 32.1 Blaser (A0040432-2).DOC

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of American Restaurant Concepts, Inc., a Florida corporation (the "Company"), does hereby certify, to the best of his knowledge, that:

1. The Quarterly Report on Form 10-Q for the period ending March 27, 2011 (the "Report") of the Company complies in all material respects with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael Rosenberger

Michael Rosenberger,

Chief Executive Officer

(principal executive officer and principal financial and accounting officer)

Date: May 16, 2011