RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the following factors and other information in this prospectus before deciding to invest in our Company. If any of the following risks actually occur, our business, financial condition, results of operations and prospects for growth would likely suffer. As a result, you could lose all or part of your investment.

 

Risks Related To Our Business

We Will Require Additional Financing To Continue Our Business Operations And Continue Our Business Plan.

 

The Company anticipates the need for approximately $1,050,000 of additional funding over the next twelve months (as described in greater detail below under “Plan of Operations”, below), which includes $750,000 to make acquisitions and open additional restaurants and $300,000 of additional funding to continue to operate its current restaurants and franchises and pay its expenses associated with being a fully reporting company over the next twelve months.   We anticipate raising this funding through the sale of debt or equity securities (subsequent to the effectiveness of our Registration Statement) and/or through traditional bank funding. If we are unable to raise the additional funding, the value of our securities, if any, would likely become worthless and we may be forced to abandon our business plan.

We May Have Difficulty Obtaining Future Funding Sources, If Needed, And We May Have To Accept Terms That Would Adversely Affect Shareholders

We will need to raise funds from additional financing. We have no commitments for any financing and any financing commitments may result in dilution to our existing stockholders. We may have difficulty obtaining additional funding, and we may have to accept terms that would adversely affect our stockholders. For example, the terms of any future financings may impose restrictions on our right to declare dividends or on the manner in which we conduct our business. Additionally, we may raise funding by issuing convertible notes, which if converted into shares of our common stock would dilute our then shareholders’ interests. Lending institutions or private investors may impose restrictions on a future decision by us to make capital expenditures, acquisitions or significant asset sales. If we are unable to raise additional funds, we may be forced to curtail or even abandon our business plan.

Our Ability To Grow And Compete In The Future Will Be Adversely Affected If Adequate Capital Is Not Available.

The ability of our business to grow and compete depends on the availability of adequate capital, which in turn depends in large part on our cash flow from operations and the availability of equity and debt financing. Our cash flow from operations may not be sufficient or we may not be able to obtain equity or debt financing on acceptable terms or at all to implement our growth strategy. As a result, adequate capital may not be available to finance our current growth plans, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.

Our Auditor Has Expressed Uncertainty About Our Ability To Continue As A Going Concern.

In their audit report for the period ending December 31, 2010, our auditor expressed an opinion that substantial concern exists as to whether we can continue as an ongoing business.  As of December 31, 2010, we had total assets of $336, a retained deficit of $2,961,454, and a working capital deficit of $2,157,631.  As of September 30, 2011, we had $97,056 of current assets, a retained deficit of $3,262,272 and a working capital deficit of $2,797,168. For the nine months ended September 30, 2011 and 2010, we had a net loss of $300,818 and $120,491, respectively.  For the years ended December 31, 2010 and 2009, we had a net loss of $283,956 and $174,121, respectively. Included in our current liabilities is a note payable entered into in February 2011 with our Chairman and Chief Executive Officer, Edward Sigmond.  The note payable evidenced $737,729 of principal due to Mr. Sigmond in connection with advances previously made to the Company by Mr. Sigmond from 2001 to 2011 and an additional $377,031 in accrued interest on such advances. The note payable also provided that any future amounts loaned by Mr. Sigmond would be subject to the note payable and as such, as of September 30, 2011, the note payable evidenced an aggregate of $737,876 in principal owed to Mr. Sigmond and an aggregate of $424,425 of interest.  The note payable accrued interest at the rate of 7% per annum and was due and payable on December 31, 2011; provided that Mr. Sigmond and the Company have verbally agreed to extend such note payable. Additionally, we have approximately $110,500 in past due loans outstanding as of the date of this prospectus.

As of September 30, 2011, the Company owed an aggregate of $694,926 under the Amici Notes (defined below under “Liquidity and Sources of Capital”, which are secured by a security interest covering the assets acquired in connection with the Asset Purchase Agreement with AEL.  Additionally, in July 2011, the Company acquired an 80% interest in YTG for an aggregate of $200,000, of which $175,000 remains outstanding as of September 30, 2011.

Due to the fact that we have no commitment to extend any loans, and no commitments from investors to inject capital sufficient to repay the loans, we may have to sell some or all of our assets in order to generate capital in the future to repay the loans and you could lose your entire investment in the Company.  We may also have to allocate any capital we raise to repayment of the loans, in which event we may not have capital to implement our business strategies.  See the December 31, 2010 Audited Financial Statements - Auditors' Report. Because we have been issued an opinion by our auditors that substantial concern exists as to whether we can continue as a going concern, it may be more difficult to attract investors.

Shareholders Who Hold Unregistered “Restricted Securities” Will Be Subject To Resale Restrictions Pursuant To Rule 144, Due To The Fact That We Are Deemed To Be A Former “Shell Company.”

Pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell company” is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets. While we do not believe that we are currently a “shell company”, we were previously a “shell company” and as such are deemed to be a former “shell company” pursuant to Rule 144, and as such, sales of our securities pursuant to Rule 144 may not be able to be made until we are subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all of our required periodic reports for at least the previous one year period prior to any sale pursuant to Rule 144; and a period of at least twelve months has elapsed from the date “Form 10 information” has been filed with the Commission reflecting the Company’s status as a non-“shell company.” Because we are deemed to be a former “shell company”, none of our non-registered “restricted securities” will be eligible to be sold pursuant to Rule 144, until at least a year after the date that our Registration Statement is filed with the Commission, any non-registered securities we sell in the future or issue to consultants or employees, in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered with the Commission and/or until a year after we have complied with the requirements of Rule 144. As a result, it may be harder for us to fund our operations and pay our consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the Commission, which could cause us to expend additional resources in the future. Our status as a former “shell company” could prevent us from raising additional funds, engaging consultants, and using our securities to pay for any acquisitions (although none are currently planned), which could cause the value of our securities, if any, to decline in value or become worthless.

We Lack A Significant Operating History Focusing On Our Current Business Strategy Which You Can Use To Evaluate Us, Making Share Ownership In Our Company Risky.

Our Company lacks a long standing operating history focusing on our current business strategy which investors can use to evaluate our Company’s previous earnings. Therefore, ownership in our Company is risky because we have no significant business history and it is hard to predict what the outcome of our business operations will be in the future.

Risk Factors Related to Our Company and Franchisees’ Restaurants

Because part of our business plan is based upon the concept of franchising restaurants, our success depends in part upon the success of our franchised restaurants.  Difficulties experienced in our franchisees opening or operating existing or new restaurants could hinder our ability to implement our business plan and reduce our revenues.  We have described each of these risks below.

 

We Must Identify And Obtain A Sufficient Number Of Suitable New Restaurant Sites For Us To Sustain Our Revenue Growth Rate.

We require that all proposed restaurant sites meet our site-selection criteria. There may be errors made in selecting these criteria or applying these criteria to a particular site, or there may be an insignificant number of new restaurant sites meeting these criteria that would enable us to achieve our planned expansion in future periods. Our Company and franchisees face significant competition from other restaurant companies and retailers for sites that meet our criteria and the supply of sites may be limited in some markets. Further, our Company and franchisees may be precluded from acquiring an otherwise suitable site due to an exclusivity restriction held by another tenant. As a result of these factors, costs to obtain and lease sites may increase, or our Company and franchisees may not be able to obtain certain sites due to unacceptable costs. Inability to obtain suitable restaurant sites at reasonable costs may reduce our growth rate.

Our Franchising And Our Franchisees’ Restaurants May Not Achieve Market Acceptance In The New Geographic Regions We Enter Which Could Reduce Revenues We Receive From Franchisees.

Our expansion plans depend on franchising and our franchisees’ opening restaurants in new markets where we or our franchisees have little or no prior operating experience. We or our franchisees may not be successful in operating restaurants in new markets on a profitable basis. The success of these new restaurants will be affected by the different competitive conditions, consumer tastes and discretionary spending patterns of the new markets as well as the ability to generate market awareness of our brands. Sales at restaurants opening in new markets may take longer to reach average annual restaurant sales, if at all, thereby affecting their and our profitability.

New Restaurants Added To Our Existing Markets May Take Sales Away From Existing Restaurants Which Could Reduce Revenues We Receive From Franchisees.

Our Company and franchisees intend to open new restaurants in our existing markets, which may reduce sales performance and guest visits for existing restaurants in those markets. In addition, new restaurants added in existing markets may not achieve sales and operating performance at the same level as established restaurants in those markets.

Implementing Our Expansion Strategy May Strain Our Resources Which Could Reduce Our Revenues.

Our expansion strategy may strain our management, financial and other resources. Our Company and franchisees must attract and retain talented operating personnel to maintain the quality and service levels at existing and future restaurants. Our Company and franchisees must also continue to enhance operational, financial and management systems. Our Company and franchisees may not be able to effectively manage these or other aspects of our planned expansion. If our Company and franchisees fail to do so, our business, financial condition, operating results and cash flows could suffer.

Restaurant Quarterly Operating Results May Fluctuate Due To The Timing Of Special Events And Other Factors, Including The Recognition Of Impairment Losses.

Our Company and franchisee restaurants’ quarterly operating results depend, in part, on special events, such as the Super Bowl (R) and other popular events and holidays, and thus are subject to fluctuations based on the dates for such events. Historically, sales in most of our Company and franchisees’ restaurants have been higher during fall and winter months based on the relative popularity of national, regional and local sporting and other events. Further, our quarterly operating results may fluctuate significantly because of other factors, including:

·	Increases or decreases in same-store sales;

·	Fluctuations in food costs, particularly fresh chicken wings and cheese products;

·	The timing of new restaurant openings, which may impact margins due to the related preopening costs and initially higher restaurant level operating expense ratios;

·	Labor availability and costs for hourly and management personnel;

·	Changes in competitive factors;

·	Disruption in supplies;

·	General economic conditions and consumer confidence;

·	Claims experience for self-insurance programs;

·	Increases or decreases in labor or other variable expenses;

·	The impact from natural disasters;

·	Fluctuations in interest rates; and

·	The timing and amount of asset impairment loss and restaurant closing charges.

As a result of the factors discussed above, our quarterly and annual operating results are dependent upon Company and franchisee revenues which may fluctuate significantly. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year. These fluctuations may cause future operating results to fall below the expectations of securities analysts and investors. In that event, the price of our common stock would likely decrease.

Our Company And Franchisees Are Susceptible To Adverse Trends And Economic Conditions In Texas And Georgia Which Could Reduce Revenues We Receive From Franchisees.

As of the date of this prospectus, all of our Company and franchised restaurants are located in Texas and Georgia. As a result, our Company and franchisees restaurants are susceptible to adverse trends and economic conditions in those states. In addition, given our geographic concentration in the Southeast and Southwest, negative publicity regarding any of restaurants could have a material effect on our business and operations throughout the region, as could other regional occurrences such as local strikes, new or revised laws or regulations, or disruptions in the supply of food products.

Changes In Consumer Preferences Or Discretionary Consumer Spending Could Harm Our Company And Franchisees’ Restaurants Performance Which Could Reduce Revenues We Receive.

Our Company and franchisees’ success depends, in part, upon the continued popularity of pizza and chicken wings, our other menu items, sports bars and casual dining restaurant styles. Our Company and franchisees also depend on consumers eating away from home. Shifts in these consumer preferences could negatively affect our future profitability. Such shifts could be based on health concerns related to the cholesterol, carbohydrate or fat content of certain food items, including items featured on our menu. Negative publicity over the health aspects of such food items may adversely affect consumer demand for our menu items and could result in a decrease in guest traffic to our Company and franchisees’ restaurants, which could materially harm our business. Smoking bans imposed by state or local laws could also adversely impact our Company and franchisees’ restaurants' performance. In addition, our success depends to a significant extent on numerous factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. A decline in consumer spending or in economic conditions could reduce guest traffic or impose practical limits on pricing, either of which could harm our business, financial condition, operating results or cash flow.

Changes In Public Health Concerns May Impact Our Company And Franchisees’ Restaurants Performance Which Could Reduce The Revenues We Receive.

Changes in public health concerns may affect consumer preferences for our products. For example, if incidents of the avian flu occur in the United States, consumer preferences for poultry products may be negatively impacted, resulting in a decline in demand for our products. Similarly, public health concerns over smoking have seen a rise in smoking bans. Such smoking bans may adversely affect our operations to the extent that such bans are imposed in specific locations, rather than state-wide, or that exceptions to the ban are given to bars or other establishments, giving patrons the ability to choose nearby locations that have no such ban. Further, growing movements to lower legal blood alcohol levels may result in a decline in alcohol consumption at our stores or increase the number of dram shop claims made against us, either of which may negatively impact operations.  Under dram shop liability laws, a party injured by an intoxicated person can sue establishments contributing to that person’s intoxication.

A Decline In Visitors To Any Of The Business Districts Near The Locations Of Our Company And Franchisees’ Restaurants Could Negatively Affect Our Company And Franchisees’ Restaurant Sales Which Could Reduce Revenues We Receive.

Some of our Company and franchisees’ restaurants are located near high activity areas such as retail centers, big box shopping centers, universities, and entertainment centers. Our Company and franchisees depend on high visitor rates at these businesses to attract guests to their restaurants. If visitors to these centers decline due to economic conditions, road construction, changes in consumer preferences or shopping patterns, changes in discretionary consumer spending or otherwise, our restaurant sales could decline significantly and adversely affect our results of operations.

Complaints Or Litigation May Hurt Our Brands And Our Company And Franchisees’ Restaurants Which Could Reduce Revenues We Receive.

Occasionally, guests file complaints or lawsuits against our Company and franchisees’ restaurants alleging that our Company and franchisees are responsible for an illness or injury they suffered at or after a visit to our Company and franchisees’ restaurants. Our Company and franchisees are also subject to a variety of other claims arising in the ordinary course of business, including personal injury claims, contract claims, employment-related claims, claims by franchisees, and claims arising from an incident at a Company or franchised restaurant. 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. In addition, our Company and franchisees are subject to "dram shop" statutes. 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. Regardless of whether any claims against us are valid or whether our franchisees are liable, claims may be expensive to defend and may divert time and money away from our operations and hurt our performance. A judgment significantly in excess of our insurance coverage or for which our Company and franchisees do not have insurance coverage could materially affect our financial condition or results of operations. Additionally, complaints may adversely affect our brands.  Further, adverse publicity resulting from these allegations, claims and complaints may adversely affect us and our franchisees’ restaurants and ultimately the revenues we generate.

Natural Disasters And Other Events Could Harm Our Company And Franchisees’ Restaurants’ Performance Which Could Reduce Revenues We Receive.

A natural disaster, such as a hurricane, a serious and widespread disease, such as an avian flu pandemic, or other events, such as a serious terrorist attack, could have a material adverse effect on our Company and franchisees’ restaurants’ performance.

 

Government Regulations Concerning Restaurant Operations May Harm Our Company And Franchisees’ Restaurants’ Operations Which Could Reduce Revenues We Receive.

The restaurant industry is subject to numerous federal, state and local governmental regulations, including those relating to the preparation and sale of food and alcoholic beverages, sanitation, public health, fire codes, zoning and building requirements. Termination of the liquor license for any restaurant would adversely affect the revenues of that restaurant and inability to obtain such licenses could adversely affect our expansion plans. Our Company and franchisees’ restaurants are also subject to laws governing relationships with employees, including benefit, wage and hour laws, and laws and regulations relating to workers' compensation insurance rates, unemployment and other taxes, working and safety conditions and citizenship or immigration status. In certain states our Company and franchisees’ restaurants may be subject to "dram-shop" statutes, which generally provide that a person injured by an intoxicated person has the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.  A judgment under a dram shop statute in excess of our insurance coverage, or any inability to continue to obtain insurance coverage at reasonable costs, could have a material adverse effect on us or our franchisees. Failure to comply with any of these regulations or increases in the minimum wage rate, employee benefit costs or other costs associated with employees, could adversely affect operations and the revenues we generate.

Matters Involving Employees At Certain Company-Operated Restaurants Expose Us To Potential Liability.     

We are subject to United States federal, state and local employment laws that expose us to potential liability if we are determined to have violated such employment laws. Failure to comply with federal and state labor laws pertaining to minimum wage, overtime pay, meal and rest breaks, unemployment tax rates, workers' compensation rates, citizenship or residency requirements, child labor requirements, sales taxes and other employment-related matters may have a material adverse effect on our business or operations. In addition, employee claims based on, among other things, discrimination, harassment or wrongful termination may divert financial and management resources and adversely affect operations. The losses that may be incurred as a result of any violation of such employment laws are difficult to quantify.

An Increase In The Cost Of Food Products Could Adversely Affect Our Company And Franchisees’ Operating Results Which Could Reduce Revenues We Receive.

If the cost of cheese, tomato products, chicken wings or beef increases, cost of sales will increase and operating income could be reduced. Our restaurants’ primary food products are cheese, tomato products, fresh chicken wings, chicken breast tenders and ground beef. Any material increase in the cost of these items could adversely affect operating results. Cost of sales could be significantly affected by increases in the cost of cheese, tomato products, fresh chicken wings and ground beef, which can result from a number of factors, including seasonality, increases in the cost of grain, disease and other factors that affect availability, and greater international demand for domestic chicken and beef products.

We May Experience Shortages Or Interruptions In The Supply Or Delivery Of Food.

Our franchised and company-operated restaurants are dependent on frequent deliveries of fresh produce, groceries and other food and beverage products. This subjects us to the risk of shortages or interruptions in food and beverage supplies which may result from a variety of causes including, but not limited to, shortages due to adverse weather, labor unrest, political unrest, terrorism, outbreaks of food-borne illness, disruption of operation of production facilities or other unforeseen circumstances. Such shortages could adversely affect our revenue and profits. The inability to secure adequate and reliable supplies or distribution of food and beverage products could limit our ability to make changes to our core menus or offer promotional "limited time only" menu items, which may limit our ability to implement our business strategies. Our restaurants bear risks associated with the timeliness of deliveries by suppliers and distributors as well as the solvency, reputation, labor relationships, freight rates, prices of raw materials and health and safety standards of each supplier and distributor. Other significant risks associated with our suppliers and distributors include improper handling of food and beverage products and/or the adulteration or contamination of such food and beverage products. Disruptions in our relationships with suppliers and distributors may reduce the profits generated by company-operated restaurants or the payments we receive from franchisees.

Ability To Meet Projections Could Adversely Affect Our Company And Franchisees’ Operating Results Which Could Reduce Revenues We Receive.

The Company’s operating results may fluctuate significantly due to several factors, including the timing of new restaurant openings and related expenses, profitability of new restaurants, increases or decreases in comparable restaurant sales, interest rates, general economic conditions, consumer confidence in the economy, changes in consumer preferences, competitive factors and weather conditions. As a result, the Company’s operating results and profitability may fall below its expectations.

Failure To Maintain A High Level Of Customer Satisfaction Could Adversely Affect Our Company And Franchisees’ Operating Results Which Could Reduce Revenues We Receive.

Establishing, maintaining and enhancing our brands in new markets depends largely on the Company’s and its franchisees’ success in providing a high-quality dining experience. If the Company and/or its franchisees are unable to provide high-quality products or customer service, our restaurants and those of our franchisees may not continue to attract customers and the business may not succeed.

Unfavorable Publicity Relating To One Or More Of Our Restaurants In A Particular Brand May Taint Public Perception Of Our Brands.

Multi-unit food service businesses such as ours can be materially and adversely affected by widespread negative publicity of any type, but particularly regarding food quality, food-borne illness, food tampering, obesity, injury or other health concerns with respect to certain foods, whether or not accurate or valid. The risk of food-borne illness or food tampering cannot be completely eliminated. Any outbreak of food-borne illness or other food-related incidents attributed to one or more of our Amici Italian Café or Yumi To Go restaurants or within the food service industry or any widespread negative publicity regarding our brands or the restaurant industry in general could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

Changes In Consumer Preferences Or Discretionary Consumer Spending Could Adversely Affect Our Company And Franchisees’ Operating Results Which Could Reduce Revenues We Receive.

The Company’s restaurants feature full-service food and beverage selections served in a casual dining atmosphere. Their continued success depends, in part, upon the popularity of the menu items and this style of casual dining. Shifts in consumer preferences away from casual cuisine or dining style could result in lower revenues and cash flows. Also, the Company’s success depends to a significant extent on numerous factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. Adverse changes in these factors could reduce guest visits or impose practical limits on pricing, either of which could reduce revenues and cash flows.

Ability To Attract Employees Could Adversely Affect Our Company And Franchisees’ Operating Results Which Could Reduce Revenues We Receive.

The Company’s success depends in part upon its ability to attract, motivate and retain qualified employees, including restaurant managers, kitchen staff and wait staff. Qualified individuals needed to fill these positions are in short supply in certain areas, and the inability to recruit and retain such individuals may delay the planned openings of new restaurants or result in high employee turnover in existing restaurants which could limit the Company’s ability to expand operations and provide quality customer service. Additionally, competition for qualified employees could require the Company to pay higher wages to attract sufficient employees, which could result in higher labor costs.

Failure To Protect The Integrity And Security Of Individually Identifiable Data Of Customers, Vendors Or Employees May Subject Us To Loss And Harm Our Brands.     

We might receive and maintain, for varying lengths of time, certain personal or business information about customers, vendors and employees. The use of this information by us is regulated by foreign, federal and state laws, as well as by certain third-party agreements. If our security and information systems are compromised or if our employees or franchisees fail to comply with these laws and regulations, and this information is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation and could result in costs to defend or settle litigation, to pay judgments awarded from litigation, or pay penalties resulting from violation of federal and state laws and payment card industry regulations. As privacy and information security laws and regulations change, we may incur additional costs to ensure that we remain in compliance with said laws and regulations.

Competition Could Adversely Affect Our Company And Franchisees’ Operating Results Which Could Reduce Revenues We Receive.

There is considerable competition throughout the foodservice industry, including the casual dining sector, which is often affected by changes in consumer tastes, economic conditions, population and traffic patterns. The Company’s competition within each market will consist of locally-owned restaurants as well as national, regional and international restaurant chains, some of which operate more restaurants and have greater financial resources and longer operating histories than the Company. Additionally many of the local independent restaurants have loyal customers. There is active competition for management personnel and hourly employees in the restaurant industry. There can be no assurance that the Company will be able to compete successfully in this environment.

Growth Could Adversely Affect Our Company And Franchisees’ Operating Results Which Could Reduce Revenues We Receive.

To meet our growth plan, the Company must open new restaurants on a timely and profitable basis. Identification of suitable properties, adherence to construction schedule timelines, training of competent personnel and consumer acceptance of the brands are components that, if not completed successfully, could hinder growth.  The Company may experience delays in restaurant openings from time to time. Delays or failures in opening new restaurants could limit the growth of its business and profitability. The opening of future restaurants is dependent on cash flow from operations.

In addition the Company contemplates entering new markets, in which it has no operating experience. These new markets may have demographic characteristics, competitive conditions, consumer tastes and discretionary spending patterns that are different than research indicated.

The Company cannot assure you that it will be able to expand capacity in accordance with its growth objectives or that the new restaurants will be profitable.

In The Event We Fail To Open Ten New Yumi To Go Restaurants Prior To July 1, 2013 We Could Lose Ownership And Control Of The Intellectual Property Rights And/Or Restaurant(s) Associated With The Yumi To Go  Operations.

The Company agreed to develop and have operational at least ten new Yumi To Go restaurants within two years from the date of the Interest Purchase Agreements (July 1, 2011) (the “Development Schedule”).  In the event YTG Enterprises, LLC (“YTG”), which is 80% owned by the Company, does not meet the Development Schedule, YTG is required to distribute to an entity owned by Tony Molavi, the Company’s current Director and President of YTG Enterprises, LLC (“YTG”) and his wife, Cathy Molavi (the “Molavis”) all of the YTG Intellectual Property Assets (i.e., the intellectual property associated with Yumi To Go)(described below under “Yumi To Go”), provided that YTG receives a license to use the YTG Intellectual Property Assets then used by YTG in restaurants operated in connection with the Development Schedule.

In the event we fail to comply with the Development Schedule and we lose the rights to the YTG Intellectual Property Assets it may have a material adverse effect on our operations, prevent us from paying our debts as they come due or force us to curtail or change our business plan, any of which could have a material adverse effect on the value of our common stock.

The Owners Of The 20% Ownership Interest In AEL Hold A Put Option Which If Exercised Would Require The Company To Purchase Their 20% Ownership Interest.

The Company also granted a put option to the 20% owner of Amici Enterprises, LLC (“AEL”) (which owns all of the rights associated with Amici Italian Café), which 20% interest is owned by an entity which is majority owned by Michael Torino (the Company’s Secretary and Director and the Vice President of AEL) and Christian Torino, his son (the Vice President of Corporate Development of AEL), which gives such entity the right to require the Company to acquire the 20% ownership interest at the option of such owner at any time after December 31, 2015.  The purchase price is calculated as four times EBITDA as of December 31st of the year preceding the exercise of the option, multiplied by the percentage of ownership to be purchased at the time of closing.  The purchase price will be paid 25% in cash and 75% by delivery of a promissory note amortized and payable over five years with interest accruing at the prime rate applicable at the time of closing.  In the event the put option is exercised, the Company may be forced to raise additional funding to pay the amounts due in connection with such put option, which may not be available on favorable terms, if at all.

Inflation Could Adversely Affect Our Company And Franchisees’ Operating Results Which Could Reduce Revenues We Receive.

Inflation can cause increased food, labor and benefits costs and can increase operating expenses. As operating expenses increase, the Company, to the extent permitted by competition, will attempt to recover increased costs by increasing menu prices, or by reviewing, then implementing, alternative products or processes, or by implementing other cost reduction procedures. The Company cannot ensure, however, that it will be able to continue to recover increases in operating expenses due to inflation in this manner.

If We Make Any Acquisitions, They May Disrupt Or Have A Negative Impact On Our Business.

 

If we make acquisitions in the future, funding permitting, of which there can be no assurance, we could have difficulty integrating the acquired companies' personnel and operations with our own. We do not anticipate that any acquisitions or mergers we may enter into in the future would result in a change of control of the Company.  In addition, the key personnel of the acquired business may not be willing to work for us. We cannot predict the effect expansion may have on our core business. Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without limitation, the following:

·	the difficulty of integrating acquired restaurants, concepts and operations;
·	the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies;
·	difficulties in maintaining uniform standards, controls, procedures and policies;

·	the potential impairment of relationships with employees and customers as a result of any integration of new management personnel;
·	the potential inability to manage an increased number of restaurants, locations and employees;

·	our ability to successfully manage the companies and/or concepts acquired; or
·	the effect of any government regulations which relate to the business acquired.

 

Our business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with an acquisition, many of which cannot be presently identified. These risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.

If Franchisees Do Not Observe The Required Quality And Trademark Usage Standards, Our Brands May Suffer Reputational Damage, Which Could In Turn Adversely Affect Our Business.

We sublicense our intellectual property to our franchisees and to product suppliers, manufacturers, distributors, advertisers and other third parties. The franchise agreements require that each franchisee use the intellectual property in accordance with established or approved quality control guidelines. However, there can be no assurance that the franchisees will use the intellectual property assets in accordance with such guidelines. Franchisee noncompliance with the terms and conditions of the governing franchise agreement may reduce the overall goodwill associated with our brands. Franchisees may refer to our intellectual property improperly in writings or conversation, resulting in the weakening of the distinctiveness of our intellectual property. There can be no assurance that the franchisees will not take actions that could have a material adverse effect on our intellectual property.

Franchisees May Breach The Terms Of Their Franchise Agreements In A Manner That Adversely Affects Our Brands.

Franchisees are required to conform to specified product quality standards and other requirements pursuant to their franchise agreements in order to protect our brand and to optimize restaurant performance. However, franchisees may receive through the supply chain or produce sub-standard food or beverage products, which may adversely impact the reputation of our brands. Franchisees may also breach the standards set forth in their respective franchise agreements.

Risks Related to the Market for our Stock

Our Chairman And Chief Executive Officer Edward Sigmond Beneficially Owns 3,209,940 Shares Of Our Common Stock, Giving Him The Ability To Vote 42.1% Of Our Outstanding Voting Shares On Any Corporate Actions.

Our Chairman and Chief Executive Officer Edward Sigmond beneficially owns 3,209,940 shares of our common stock, giving him the ability to vote 42.1% of our outstanding voting shares on any corporate actions.   As a result, he possesses significant influence over our voting securities including determining the outcome of corporate transactions or other matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Sigmond may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other shareholders, subject in all cases to Mr. Sigmond’s fiduciary duties to the Company as a result of his position as the Chairman and Chief Executive Officer of the Company.

Our Management Decisions Are Made By Edward Sigmond, Chairman And CEO, Robert Andreottola President And Director, Michael Torino, Secretary and Director And Tony Molavi, Director, If We Lose Their Services, Our Revenues May Be Reduced.

The success of our business is dependent upon the expertise of Edward Sigmond, Chairman and CEO, Robert Andreottola, President and Director, Michael Torino, Secretary and Director of the Company and Vice President of AEL, and Tony Molavi, Vice President of YTG and Director of the Company. Because Messrs. Sigmond, Andreottola, Torino and Molavi are essential to our operations, we rely significantly on their management decisions. Messrs. Sigmond, Andreottola, Torino and Molavi will continue to control our business affairs after this filing. We do not have any other members of management that could effectively take over their responsibilities if they left us for any reason, including as a result of a termination of employment, death or disability.  Therefore, if we lose their services, we likely would not be able to hire and retain other management with comparable experience without significant delays and risk.  As a result, the loss of the services of Messrs. Sigmond, Andreottola, Torino and Molavi could reduce our revenues and profitability, without any insurance to compensate us for the loss.  We have not obtained any key man life insurance relating to Messrs. Sigmond, Andreottola, Torino and Molavi.  We have an employment agreement in place with Mr. Molavi, as described below under “Executive Compensation”, which prevents him from competing with us following his termination, but not with Mr. Andreottola, Mr. Torino or Mr. Sigmond.   If we were to lose the services of Messrs. Sigmond, Andreottola, Torino and Molavi for any reason, your securities in our Company could become devalued or become worthless and we could be forced to scale back or curtail our business plan.

Our Officers And Directors Do Not Devote All Of Their Time To Us Because Of Outside Business Interests, Which Could Impair Our Ability To Implement Our Business Strategies.

Edward Sigmond, our Chief Executive Officer and Chairman, is also an owner in other companies which own and operate restaurants and bars.  Mr. Sigmond estimates that he spends 60 hours per week on our business affairs and 10 hours per week working for the other companies.  Robert Andreottola, our President and Director, estimates that he spends about 40 hours per week working for us and 5 hours per week working on other business interests.  Michael Torino, the Vice President of AEL and our Secretary and Director, estimates that he spends about 50 hours per week working for us and 5 hours per week working on other business interests.  Tony Molavi, the Vice President of YTG and our Director estimates that he spends about 60 hours per week working for us and 10 hours per week working on other business interests.  The fact that Messrs. Sigmond, Andreottola, Torino and Molavi have outside business interests could lessen their focus on our business, and jeopardize our ability to implement our business strategies.

Potential Conflicts Of Interest Exist Between the Company, Mr. Molavi And Mr. Torino our Directors And the Company And Our Chairman And Chief Executive Officer, Edward Sigmond.

Pursuant to the transactions described below under “Description of Business”, the Company (a) purchased 80% of an entity which owns the rights to the intellectual property and franchise associated with Amici Italian Café, as well as one Amici Italian Café location in February 2011 from Michael Torino, our Secretary and Director and his son, Christian Torino (the Vice President of Corporate Development of AEL); and (b) the rights to the intellectual property and franchise rights associated with Yumi To Go, as well as one Yumi To Go location from Tony Molavi, our Director and his wife Cathy Molavi (the “Molavis”) in July 2011.  The Torino’s retained ownership of one previously operational Amici Italian Café location and the Molavis related ownership of one previously operational Yumi To Go location.  Additionally, the Company is required to transfer the intellectual property assets acquired from the Molavis in July 2011 back to the Molavis in the event the Company doesn’t meet the Development Schedule (described in greater detail below under “Yumi To Go”) and the Torino’s were provided a put option which if exercised would require the Company to purchase the remaining 20% ownership of AEL (as described in greater detail below under Amici Italian Café).

The fact that certain of our Directors own and operate restaurants with whom we have franchise agreements and the fact that such individuals may receive rights and/or assets associated with our previously consummated acquisitions if, in the case of the Yumi To Go Assets, we fail to meet the Development Schedule and in the case of the Amici Italian Café assets, the Torino’s exercise their put option, may cause conflicts of interest or perceived conflicts of interest between such Directors and the Company.

Additionally, Mr. Sigmond, our Chairman and Chief Executive Officer, owns two bars in Dallas, Texas, one of which serves food, which are owned outside of the Company and which may cause actual or perceived conflicts of interest with the Company’s operations or concepts.

Such perceived or actual conflicts of interest may cause potential investors to not be willing to invest in the Company, which could make it harder for the Company to raise funds through the sale of debt and/or equity securities and/or cause the Company’s securities to be devalued. As a result of these perceived and/or actual conflicts of interest, the value of the Company’s securities may decrease in value and/or be valued less than similarly situated publicly-traded companies without such potential or actual conflicts of interest.