Attached files
file | filename |
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EX-32 - Petron Energy II, Inc. | ex32.htm |
EX-31 - Petron Energy II, Inc. | ex31.htm |
EX-10.4 - Petron Energy II, Inc. | ex10-4.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
[X]
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended November 30,
2009
|
[
]
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
|
For the
transition period from ____________ to ______________
Commission
file number: 333-160517
RESTAURANT CONCEPTS OF
AMERICA INC.
(Name of
registrant in its charter)
Nevada
|
5810
|
26-3121630
|
(State
or jurisdiction
of
incorporation or organization)
|
(Primary
Standard
Industrial
Classification
Code
Number)
|
(IRS
Employer Identification
No.)
|
11301
Lakeline Boulevard
Austin, Texas
78717
(Address
of principal executive offices)
(512)
585-5511
(Registrant's
telephone number)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes ¨ No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, and
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 ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
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 x
No ¨
At January 19, 2010, there were
10,160,003 shares of the Issuer's common stock outstanding, which number
includes 50,000 shares of common stock which the Issuer has agreed to issue, but
which have not been physically issued as of the date hereof (as described
below).
PART I. FINANCIAL
INFORMATION
ITEM 1. FINANCIAL
STATEMENTS
(A
DEVELOPMENT STAGE COMPANY)
|
||||||||
BALANCE
SHEETS
|
||||||||
November
30,
|
August
31,
|
|||||||
2009
|
2009
|
|||||||
ASSETS
|
(UNAUDITED)
|
|||||||
Current
assets
|
||||||||
Cash
|
$ | 2,323 | $ | 2,338 | ||||
Total
current assets
|
2,323 | 2,338 | ||||||
Total
assets
|
$ | 2,323 | $ | 2,338 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accrued expenses
|
$ | 38,742 | $ | 20,292 | ||||
Advances
from Shareholders
|
10,150 | 10,150 | ||||||
Total
current liabilities
|
48,892 | 30,442 | ||||||
Total
liabilities
|
48,892 | 30,442 | ||||||
STOCKHOLDERS'
DEFICIT
|
||||||||
Preferred
stock, $.001 par value, 10,000,000 shares authorized,
|
||||||||
0
shares issued, and outstanding
|
- | - | ||||||
Common
stock, $.001 par value, 100,000,000 shares authorized,
|
||||||||
10,110,003
shares issued and outstanding
|
10,110 | 10,110 | ||||||
Additional
paid in capital
|
23,891 | 16,391 | ||||||
Deficit
accumulated during the development stage
|
(80,570 | ) | (54,605 | ) | ||||
Total
stockholders' deficit
|
(46,569 | ) | (28,104 | ) | ||||
Total
liabilities and stockholders' deficit
|
$ | 2,323 | $ | 2,338 | ||||
See
accompanying notes to financial statements
|
F-1
RESTAURANT
CONCEPTS OF AMERICA INC.
|
||||||||||||
(A
DEVELOPMENT STAGE COMPANY)
|
||||||||||||
STATEMENTS
OF OPERATIONS
|
||||||||||||
FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2009 AND 2008
AND
THE PERIOD FROM AUGUST 1, 2008 (INCEPTION) TO NOVEMBER 30,
2009
|
||||||||||||
(UNAUDITED)
|
||||||||||||
Three
|
Three
|
Inception
|
||||||||||
Months
Ended
|
Months
Ended
|
Through
|
||||||||||
November
30,
|
November
30,
|
November
30,
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
Operating
expenses
|
||||||||||||
General
and administrative
|
$ | 25,965 | $ | 3,040 | $ | 85,570 | ||||||
Net
loss from operations
|
(25,965 | ) | (3,040 | ) | (85,570 | ) | ||||||
Other
Income
|
||||||||||||
Other
income
|
- | - | 5,000 | |||||||||
Net
loss
|
$ | (25,965 | ) | $ | (3,040 | ) | $ | (80,570 | ) | |||
Net
loss per share:
|
||||||||||||
Basic
and diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
average shares outstanding:
|
||||||||||||
Basic
and diluted
|
10,110,003 | 10,000,000 | ||||||||||
See
accompanying notes to financial statements
|
F-2
RESTAURANT
CONCEPTS OF AMERICA INC.
|
||||||||||||
(A
DEVELOPMENT STAGE COMPANY)
|
||||||||||||
STATEMENTS
OF CASH FLOWS
|
||||||||||||
FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2009 AND 2008
AND
THE PERIOD FROM AUGUST 1, 2008 (INCEPTION) TO NOVEMBER 30,
2009
|
||||||||||||
(UNAUDITED)
|
||||||||||||
Three
|
Three
|
Inception
|
||||||||||
Months
Ended
|
Months
Ended
|
Through
|
||||||||||
November
30,
|
November
30,
|
November
30,
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
Loss
|
$ | (25,965 | ) | $ | (3,040 | ) | $ | (80,570 | ) | |||
Adjustment
to reconcile net loss to net cash used
|
||||||||||||
in
operating activities
|
||||||||||||
Share-based
payment for services
|
7,500 | - | 17,500 | |||||||||
Changes
in:
|
||||||||||||
Accounts
payable
|
18,450 | (5,176 | ) | 38,742 | ||||||||
NET
CASH USED IN OPERATING ACTIVITIES
|
(15 | ) | (8,216 | ) | (24,328 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from sales of common stock
|
- | - | 16,501 | |||||||||
Proceeds
from shareholder loan
|
- | 10,150 | 10,150 | |||||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
- | 10,150 | 26,651 | |||||||||
NET
INCREASE (DECREASE) IN CASH
|
(15 | ) | 1,934 | 2,323 | ||||||||
Cash,
beginning of period
|
2,338 | - | - | |||||||||
Cash,
end of period
|
$ | 2,323 | $ | 1,934 | $ | 2,323 | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||||||
Interest
paid
|
$ | - | $ | - | $ | - | ||||||
Income
taxes paid
|
$ | - | $ | - | $ | - | ||||||
See
accompanying notes to financial statements
|
F-3
RESTAURANT
CONCEPTS OF AMERICA INC.
NOTES
TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -
BASIS OF PRESENTATION
The accompanying unaudited interim financial statements
of Restaurant Concepts of America Inc. (the
"Company") have been prepared in accordance with accounting
principles generally accepted in the United States of
America and the rules of
the Securities and Exchange Commission ("SEC"), and should be read in
conjunction with the audited financial statements and notes thereto contained in
the latest report of Restaurant Concepts of America Inc. filed with
the SEC in its Form 10-K for the year ended August 31, 2009. In the opinion of
management, all adjustments, consisting of
normal recurring adjustments, necessary for a
fair presentation of financial position and
the results of operations for the
interim periods presented have been
reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the financial statements
which
would substantially duplicate the disclosure
contained in the audited financial statements for the fiscal year ended August
31, 2009, as reported in the Form 10-K, have been omitted.
The
Company has evaluated subsequent events for recognition or disclosure through
the date these financial statements were available to be issued, January 18,
2010.
NOTE 2 –
LOAN PAYABLE – RELATED PARTY
The
Company entered into a promissory note with the President/CEO of the Company,
David Cho, for ten thousand one hundred fifty US dollars ($10,150) dated October
7, 2008. The note and accrued interest at eight percent (8%) per
annum is due and payable on October 7, 2009, and is
unsecured. Interest expense accrued through November 30, 2009
is $947 and is included in accounts payable and accrued expenses. This note was
not paid on October 7, 2009 and has been extended by the President/CEO until
October 7, 2010.
NOTE 3 –
COMMITMENT
On
October 1, 2009, the Company entered into an agreement with a transfer agent,
for services to be rendered over a one year term. The agreement required an
upfront fee of $7,500, payable within 60 days (not yet paid), and the issuance
of $7,500 of restricted shares of common stock (50,000 shares). These shares
have not been issued to date and are required to be included in any registration
statement filed by the Company in the future. There are no penalties associated
with any failure to register the shares.
The
Company recognized $15,000 of expense associated with this agreement in the
period ended November 30, 2009.
NOTE 4 –
SUBSEQUENT EVENT
On
December 21, 2009, the Company entered into a new promissory note with Mr. Cho
for five thousand US dollars ($5,000). The note accrues interest at
eight percent (8%) per annum and is due and payable by the Company on December
21, 2010, and is unsecured.
F-4
ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS
ALL
STATEMENTS IN THIS DISCUSSION THAT ARE NOT HISTORICAL ARE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED. STATEMENTS PRECEDED BY, FOLLOWED BY OR THAT OTHERWISE INCLUDE
THE WORDS "BELIEVES", "EXPECTS", "ANTICIPATES", "INTENDS", "PROJECTS",
"ESTIMATES", "PLANS", "MAY INCREASE", "MAY FLUCTUATE" AND SIMILAR EXPRESSIONS OR
FUTURE OR CONDITIONAL VERBS SUCH AS "SHOULD", "WOULD", "MAY" AND "COULD" ARE
GENERALLY FORWARD-LOOKING IN NATURE AND NOT HISTORICAL FACTS. THESE
FORWARD-LOOKING STATEMENTS WERE BASED ON VARIOUS FACTORS AND WERE DERIVED
UTILIZING NUMEROUS IMPORTANT ASSUMPTIONS AND OTHER IMPORTANT FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING
STATEMENTS. FORWARD-LOOKING STATEMENTS INCLUDE THE INFORMATION CONCERNING OUR
FUTURE FINANCIAL PERFORMANCE, BUSINESS STRATEGY, PROJECTED PLANS AND OBJECTIVES.
THESE FACTORS INCLUDE, AMONG OTHERS, THE FACTORS SET FORTH BELOW UNDER THE
HEADING "RISK FACTORS." ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS REFLECTED IN
THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT GUARANTEE FUTURE
RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS. MOST OF THESE FACTORS
ARE DIFFICULT TO PREDICT ACCURATELY AND ARE GENERALLY BEYOND OUR CONTROL. WE ARE
UNDER NO OBLIGATION TO PUBLICLY UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE
OCCURRENCE OF UNANTICIPATED EVENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM 10-Q,
UNLESS ANOTHER DATE IS STATED, ARE TO NOVEMBER 30, 2009. AS USED HEREIN, THE
"COMPANY," “RESTAURANT CONCEPTS,” “ROCA”, "WE," "US," "OUR" AND WORDS OF SIMILAR
MEANING REFER TO RESTAURANT CONCEPTS OF AMERICA INC.
Overview
The
Company was incorporated in Nevada on August 1, 2008. We are
currently a development stage company and plan to operate as a restaurant
holding company specializing in the development and expansion of proven
independent restaurant concepts into multi-unit locations through
corporate-owned stores, licensing, and franchising opportunities, funding
permitting. We have not generated any significant revenues to date,
nor do we currently have any significant assets. Our mailing address
is 11301 Lakeline Boulevard, Austin, Texas 78717, our telephone number is (512)
585-5511 and our fax number is (512) 331-5896.
Business
Overview
We
believe there are compelling opportunities in the restaurant industry to acquire
proven independent restaurant concepts and expand through the opening of
corporate-owned stores offering franchise opportunities. The Company
envisions that there will be acquisition opportunities in the sandwich,
bakery-cafe, quick-casual, casual dining and family dining segments of the
restaurant industry, and the Company hopes to actively pursue acquisitions in
such dining segments in the future, funding permitting. The Company
will not, however, actively pursue quick service restaurant (“QSR”), or “fast
food” restaurant opportunities, but will evaluate potential QSR acquisitions on
a case-by-case basis.
The
Company believes that the ideal independent restaurant concept acquisition
candidate has the following characteristics:
•
|
Average
unit volumes (“AUVs”) higher than comparable concepts within its
segment;
|
|
•
|
Unit
build-out costs which are less than the AUV’s historically generated by
the concept;
|
|
•
|
Unit-level
earnings before interest, taxes, depreciation, amortization and rent
(“EBITDAR”) that is higher than comparable concepts within its
segment;
|
|
•
|
Prime
costs, equal to food and variable labor costs, that are lower than
comparable concepts within its segment;
|
|
•
|
A
strong presence in a desirable demographic marketing area (“DMA”) that can
act as a strong foundation from which to grow; and
|
|
•
|
Appeal
across multiple day-parts (i.e. breakfast, lunch and
dinner).
|
-2-
The
Company’s current business plan anticipates franchising its future concepts once
they have been incubated and sufficiently developed to generate interest from
potential franchisees, of which there can be no assurance. The
Company plans to weigh the advantages and disadvantages of franchising for any
of its future portfolio concepts assuming each concept has been developed
through corporate-owned locations, of which there can be no assurance, to a
point where franchising is feasible. It is important to note that we
have had no discussions pertaining to any acquisitions and none have been
identified to date. Furthermore, we do not currently have sufficient
cash on hand to complete any acquisitions, in the event any are located, and
will need to raise significant additional capital in the future to complete any
proposed acquisitions. The Company offers no assurances that it will
complete any acquisitions in the future.
The
Company believes that franchising typically provides the most cost-effective way
to rapidly expand successful concepts by mitigating the risk involved with new
concepts and providing a steady stream of cash flow to the franchisor in the
form of royalty payments. Our management typically sees royalty
payments of 3% to 6% of gross restaurant revenue, which are not affected by cost
increases at the franchisee level. In fact, based on the Company’s
discussions with various finance groups and private equity firms, the revenue
stream from franchisee royalty payments to the franchisor is predictable and
steady enough that many restaurant concept buyouts are being financed through
securitization of future royalty payments from the concept’s franchisees, a
trend that the Company can make no assurances will continue in the
future.
The
Company plans to weigh the advantages and disadvantages of franchising for each
of future portfolio concepts (if any) once such concept has been developed
through corporate-owned locations to a point where franchising is feasible, of
which there can be no assurance. It is important to note that we have
had no discussions pertaining to any acquisitions and none have been identified
to date. Additionally, the Company offers no assurances that it will
complete any acquisitions in the future.
On or
around August 4, 2009, the Company entered into a Consulting Agreement with
Restaurant Growth Partners (“Restaurant Growth” and the “Consulting
Agreement”). Pursuant to the Consulting Agreement, Restaurant Growth
agreed to retain our services for a term of three months, subject to extension
as provided below. We agreed to perform services for Restaurant
Growth as an independent contractor including: making recommendations of
prospective acquisition targets for Restaurant Growth; analyzing any such
prospective targets; providing consultation on new concept development;
assistance with preparing presentation materials to potential targets or funding
sources; and assistance with the preparation of operational and marketing plans,
and other consulting services as requested by Restaurant Growth from time to
time.
Pursuant
to the Consulting Agreement, Restaurant Growth agreed to pay us a $5,000
non-refundable retainer fee for the first three months of the Consulting
Agreement, which funds we have received to date. The Consulting
Agreement has since expired and the Company does not anticipate receiving any
additional consideration in connection with the Consulting Agreement moving
forward.
Blank Check Company
Issues
Rule 419
of the Securities Act of 1933, as amended (the “Act”) governs offerings by
“blank check companies.” Rule 419 defines a “blank check company” as
a development stage company that has no specific business plan or purpose or has
indicated that its business plan is to engage in a merger or acquisition with an
unidentified company or companies, or other entity or person; and issuing “penny
stock,” as defined in Rule 3a51-1 under the Securities Exchange Act of 1934, as
amended.
-3-
Our
management believes that the Company does not meet the definition of a “blank
check company,” because, while we are in the development stage, we do have a
specific business plan and purpose as described above, and our current purpose
is not to engage in a merger or acquisition, and as such, we should not
therefore be characterized as a “blank check company.”
Critical
Accounting Policies:
Development Stage
Policy
The
Company complies with the Financial Accounting Standards Board Statement
(“FASB”) Accounting Standards Codification (“ASC”) Topic 915-205 “Development
Stage Entities” in its characterization of the Company as a development stage
enterprise.
Cash and Cash
Equivalents
The
Company considers all highly liquid investments with an original maturity of
three months or less when purchased to be cash equivalents.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the balance sheet. Actual results could
differ from those estimates.
Revenue
Recognition
Revenue
from restaurant sales is recognized when food and beverage products are sold.
Revenues from the sales of franchises are recognized as income when
substantially all of our material obligations under the franchise agreement have
been performed. Continuing royalties, which are a percentage of net sales of
franchised restaurants, are accrued as income when earned. Sales taxes collected
from customers and remitted to governmental authorities are presented on a net
basis within net sales.
Basic Loss Per
Share
Basic
loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.
Share-Based
Payment
The
Company accounts for employee and non-employee stock awards under ASC Topic 718,
whereby equity instruments issued to employees for services are recorded based
on the fair value of the instrument issued and those issued to non-employees are
recorded based on the fair value of the consideration received or the fair value
of the equity instrument, whichever is more reliably measurable.
Income
Taxes
The
Company has adopted ASC Topic 740 “Income Taxes.” This standard requires the use
of an asset and liability approach for financial accounting, and reporting on
income taxes. If it is more likely then not that some portion or all of a
deferred tax asset will not be realized, a valuation allowance is
recognized.
-4-
The asset
and liability approach is used to account for income taxes by recognizing
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax basis of assets
and liabilities. The Company records a valuation allowance to reduce
any deferred tax assets to the amount that is more likely than not to be
realized.
The
amounts reported in the balance sheets for cash, and accounts payable are
short-term in nature and their carrying values approximate fair
values.
COMPARISON
OF OPERATING RESULTS
FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2009 COMPARED TO THE THREE MONTHS ENDED
NOVEMBER 30, 2008
We had no
revenues for the three months ended November 30, 2009 or for the three months
ended November 30, 2008. The Company is currently in the development
stage of its business development and has had only limited operations to
date.
We had
operating expenses consisting entirely of general and administrative expenses of
$25,965 for the three months ended November 30, 2009, compared to general and
administrative expenses of $3,040 for the three months ended November 30, 2008,
an increase in total expenses of $22,925 from the prior period. The
general and administrative expenses were mainly attributable to professional
fees, including legal and accounting fees, and filing fees in connection with
the Company’s ongoing public company reporting obligations and transfer agent
expenses associated with the Company’s entry into an agreement with Island Stock
Transfer (“Island”) to serve as the Company’s transfer agent, which included the
requirement to pay Island $7,500 and issue Island 50,000 shares of the Company’s
common stock.
We had a
net loss of $25,965 for the three months ended November 30, 2009, compared to a
net loss of $3,040 for the three months ended November 30, 2008, an increase in
net loss of $22,925 from the prior period. Net loss increased mainly due to the
one-time expenses associated with our entry into the agreement with Island, as
well as additional expenses associated with our status as a reporting company
with the SEC, for the three months ended November 30, 2009, compared to the
three months ended November 30, 2008, when we had limited operations and no
filing requirements with the SEC.
LIQUIDITY
AND CAPITAL RESOURCES
We had
total assets, consisting solely of cash of $2,323 as of November 30,
2009.
We had
total liabilities consisting solely of current liabilities of $48,892 as of
November 30, 2009, which included $38,742 of accounts payable in connection with
legal, accounting and auditing fees (which included $15,000 of expenses
associated with the Island agreement, including $7,500 in cash and $7,500
representing the value of the 50,000 restricted shares of common stock that the
Company agreed to issue to Island, as described above) and $10,150 of loan
payable to related party, which amount was due to the Company’s President and
Chief Executive Officer, David Cho (as described below).
We had
negative working capital of $46,569 and a total accumulated deficit of $80,570
as of November 30, 2009.
We had
net cash used in operating activities of $15 for the three months ended November
30, 2009, which was due to $25,965 of net loss offset by $18,450 of accounts
payable, and $7,500 of common stock issued for services, representing the 50,000
restricted shares of common stock due to Island (as described
above).
-5-
On or
around October 7, 2008, the Company entered into a $10,150 Promissory Note with
its President, Chief Executive Officer and Director, David Cho, to evidence
amounts loaned to the Company by Mr. Cho. The Promissory Note bears
interest at the rate of eight percent (8%) per annum and was due and payable on
October 7, 2009. Prior to the maturity date of the Promissory Note, Mr. Cho
agreed to extend the due date of such Promissory Note for an additional year to
October 7, 2010.
On
December 21, 2009, the Company entered into an additional $5,000 Promissory Note
with its President, Chief Executive Officer and Director, David Cho, to evidence
amounts loaned to the Company by Mr. Cho. The Promissory Note bears
interest at the rate of eight percent (8%) per annum and is due and payable on
December 21, 2010.
The
Company estimates the need for approximately $500,000 of additional funding
during the next 12 months to continue its business operations and expand its
operations as planned (i.e., by building out corporate owned restaurant concepts
in and around Texas), which amount does not include any funds we will require to
repay Mr. Cho’s promissory notes (as described above) and we can provide no
assurances that such funding can be raised on favorable terms, if at all.
We anticipate the need for approximately $150,000 to $250,000 to construct and
implement each restaurant concept which we choose to acquire in the
future. As such, in the event we raise more than approximately
$150,000 to $250,000 in additional funds, but less than $500,000, we will seek
to build out at least one corporate owned restaurant concept.
We
believe we can continue our operations for approximately the next six (6) months
if no additional financing is raised; provided however that we will not be able
to expand our business operations or acquire any restaurant concepts, and will
need to actively seek to keep our expenses associated with being a public
company and marketing expenses as low as possible until such time as we can
raise additional funding, if ever. If we are unable to raise
adequate working capital for fiscal 2010, we will continue to market our
services as funding permits and will continue to actively seek out additional
funding for the Company’s planned expansion (as described above), but we will be
restricted in the implementation of our business plan.
Moving
forward, we plan to seek out additional debt and/or equity financing; however,
we do not currently have any specific plans to raise such additional financing
at this time. The sale of additional equity securities, if
undertaken by the Company and if accomplished, may result in dilution to our
shareholders. We cannot assure you, however, that future financing will be
available in amounts or on terms acceptable to us, or at all.
ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant
to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide
the information required by this Item as it is a “smaller reporting company,” as
defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND
PROCEDURES
(a) Evaluation
of disclosure controls and procedures. Our Chief Executive Officer and Principal
Financial Officer, after evaluating the effectiveness of our "disclosure
controls and procedures" (as defined in the Securities Exchange Act of 1934
Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this
Quarterly Report on Form 10-Q (the "Evaluation Date"), has concluded that as of
the Evaluation Date, our disclosure controls and procedures were effective to
provide reasonable assurance that information we are required to disclose in
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.
(b) Changes
in internal control over financial reporting. There were no changes in our
internal control over financial reporting during our most recent fiscal quarter
that materially affected, or were reasonably likely to materially affect, our
internal control over financial reporting.
-6-
PART II - OTHER
INFORMATION
ITEM 1. LEGAL
PROCEEDINGS
From time
to time, we may become party to litigation or other legal proceedings that we
consider to be a part of the ordinary course of our business. We are not
currently involved in legal proceedings that could reasonably be expected to
have a material adverse effect on our business, prospects, financial condition
or results of operations. We may become involved in material legal proceedings
in the future.
ITEM 1A. RISK
FACTORS
Our
securities are highly speculative and should only be purchased by persons who
can afford to lose their entire investment in us. You should carefully consider
the following risk factors and other information in this filing before deciding
to become a holder of our common stock. If any of the following risks actually
occur, our business and financial results could be negatively affected to a
significant extent.
The
Company's business is subject to the following Risk Factors (references to
"our," "we," "RCOA" and words of similar meaning in these Risk Factors refer to
the Company):
WE HAVE FUTURE CAPITAL NEEDS
AND WITHOUT ADEQUATE CAPITAL WE MAY BE FORCED TO CEASE OR CURTAIL OUR BUSINESS
OPERATIONS.
Our
growth and continued operations could be impaired by limitations on our access
to capital markets. Furthermore, we can give no assurances that
the limited capital we have raised and the additional capital available to us
from our principals, if any, will be adequate for our long-term
growth. If financing is available, it may involve issuing securities
senior to our common stock, or equity financings which are dilutive to holders
of our common stock. In addition, in the event we do not raise
additional capital from conventional sources, such as our existing investors or
commercial banks, there is every likelihood that our growth will be restricted
and we may be forced to scale back or curtail implementing our business plan
(see also the description of our required capital for fiscal 2010 as described
above under “Liquidity and Capital Resources”).
Even if
we are successful in raising capital in the future, we will likely need to raise
additional capital to continue and/or expand our operations. If we do
not raise the additional capital, the value of any investment in our Company may
become worthless. In the event we do not raise additional capital from
conventional sources, it is likely that we may need to scale back or curtail
implementing our business plan. As of the date of this filing, we
have only limited operations and have not generated any significant revenues
since the Company’s inception on August 1, 2008.
WE HAVE NOT GENERATED ANY
SIGNIFICANT REVENUES SINCE OUR INCEPTION IN AUGUST 2008.
Since the
our inception in August 2008, we have yet to generate any significant revenues,
and currently have only limited operations, as we are presently in the
development stage of our business development. We make no assurances
that we will be able to generate any significant revenues in the future and/or
that we will be able to gain clients in the future to build our business to the
level of revenue generation.
-7-
SHAREHOLDERS WHO HOLD
UNREGISTERED SHARES OF OUR COMMON STOCK ARE SUBJECT TO RESALE RESTRICTIONS
PURSUANT TO RULE 144, DUE TO OUR STATUS AS A “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. Consequently, we are a “shell company” pursuant to Rule 144,
and as such, sales of our securities pursuant to Rule 144 are not able to be
made until 1) we have ceased to be a “shell company; 2) 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 none of our non-registered securities can be sold
pursuant to Rule 144, until at least a year after we cease to be a “shell
company”, 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 cease to be a “shell
company” and have complied with the other requirements of Rule 144, as described
above. 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 or 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 “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.
OUR AUDITORS HAVE RAISED
SUBSTANTIAL DOUBT AS TO WHETHER WE CAN CONTINUE AS A GOING
CONCERN.
We have
not generated any revenues through November 30, 2009, had a working capital
deficit of $46,569 as of November 30, 2009, had a net loss of $20,300 for the
period from inception (August 1, 2008) to August 31, 2008, a net loss of $34,305
for the year ended August 31, 2009 and a net loss of $25,965 for the three
months ended November 30, 2009. These factors among others indicate
that we may be unable to continue as a going concern, particularly in the event
that we cannot obtain additional financing and/or attain profitable
operations. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty and if we
cannot continue as a going concern, your investment could become devalued or
even worthless.
THE SUCCESS OF THE COMPANY
DEPENDS HEAVILY ON DAVID CHO AND PETE WAINSCOTT AND THEIR INDUSTRY
CONTACTS.
The
success of the Company will depend on the abilities of David Cho, our President,
Chief Executive Officer, and Director, and Pete Wainscott, our Director, to
generate business from their existing contacts and relationships within the
restaurant industry. The loss of Mr. Cho or Mr. Wainscott will have a
material adverse effect on the business, results of operations (if any) and
financial condition of the Company. In addition, the loss of Mr. Cho
or Mr. Wainscott may force the Company to seek a replacement or replacements,
who may have less experience, fewer contacts, or less understanding of the
Company’s business. Further, we can make no assurances that we will
be able to find a suitable replacement for either Mr. Cho or Mr. Wainscott,
which could force the Company to curtail its operations and/or cause any
investment in the Company to become worthless. The Company does not
have an employment agreement with Mr. Cho or Mr. Wainscott.
-8-
OUR OFFICERS AND DIRECTORS
EXERCISE MAJORITY VOTING CONTROL OVER THE COMPANY AND THEREFORE EXERCISE CONTROL
OVER CORPORATE DECISIONS INCLUDING THE APPOINTMENT OF NEW
DIRECTORS.
David
Cho, our President, Chief Executive Officer, and Director, can vote an aggregate
of 5,500,000 shares, equal to 54.1% of our outstanding common stock and Pete
Wainscott, our Director can vote an aggregate of 3,500,000 shares, equal to
34.4% of our outstanding common stock. Therefore, Mr. Cho and Mr.
Wainscott are able to vote an aggregate of 88.5% of our outstanding shares of
common stock and therefore exercise control in determining the outcome of all
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. Any other shareholders
of the Company will be minority shareholders and as such will have little to no
say in the direction of the Company and the election of Directors. Additionally,
it will be difficult if not impossible for other shareholders to remove Mr. Cho
or Mr. Wainscott as Directors of the Company, which will mean they will remain
in control of who serves as officers of the Company as well as whether any
changes are made in the Board of Directors. As a potential investor in the
Company, you should keep in mind that even if you own shares of the Company's
common stock and wish to vote them at annual or special shareholder meetings,
your shares will likely have little effect on the outcome of corporate
decisions.
OUR OFFICERS AND DIRECTORS
HAVE OTHER EMPLOYMENT OUTSIDE OF THE COMPANY, AND AS SUCH, MAY NOT BE ABLE TO
DEVOTE SUFFICIENT TIME TO OUR OPERATIONS.
David
Cho, our President, Chief Executive Officer, and Director is our only employee,
and he along with Pete Wainscott, our Director, are our only officers and
Directors. Further, Mr. Cho and Mr. Wainscott each currently have employment
outside of the Company. As such, Mr. Cho spends approximately 40
hours per week on Company matters and Mr. Wainscott only spends approximately
5-10 hours per week on Company matters; and as such, they may not be able to
devote a sufficient amount of time to our operations. This may be
exacerbated by the fact that Mr. Cho is currently our only
officer. If Mr. Cho and Mr. Wainscott are not able to spend a
sufficient amount of their available time on our operations, we may never gain
any clients, may not ever generate any significant revenue and/or any investment
in the Company could become worthless.
OUR LIMITED OPERATING
HISTORY MAKES IT DIFFICULT TO FORECAST OUR FUTURE RESULTS, MAKING ANY INVESTMENT
IN US HIGHLY SPECULATIVE.
We have a
limited operating history, and our historical financial and operating
information is of limited value in predicting our future operating
results. We may not accurately forecast customer behavior and
recognize or respond to emerging trends, changing preferences or competitive
factors facing us, and, therefore, we may fail to make accurate financial
forecasts. Our current and future expense levels are based largely on
our investment plans and estimates of future revenue. As a result, we
may be unable to adjust our spending in a timely manner to compensate for any
unexpected revenue shortfall, which could then force us to curtail or cease our
business operations.
OUR INDUSTRY IS HIGHLY
COMPETITIVE.
The
restaurant industry is highly competitive and fragmented. The Company expects
competition to intensify in the future. The Company expects to compete with
numerous national, regional and local restaurants, restaurant holding companies
and restaurant chains, many of which have substantially greater financial,
managerial and other resources than those presently available to the
Company. Further, in the event the Company acquires and/or
establishes restaurant concepts that can be franchised, the Company will compete
with numerous other restaurants for potential franchisees. Numerous
well-established companies are focusing significant resources on building and
establishing profitable restaurant concepts that currently compete and will
compete with the Company's business in the future. The Company can
make no assurance that it will be able to effectively compete with other
restaurant developers or that competitive pressures, including possible downward
pressure on the restaurant industry as a whole, will not arise. In the event
that the Company cannot effectively compete on a continuing basis or competitive
pressures arise, such inability to compete or competitive pressures will have a
material adverse effect on the Company’s business, results of operations and
financial condition.
-9-
OUR GROWTH WILL PLACE
SIGNIFICANT STRAIN ON OUR RESOURCES.
The
Company is currently in the development stage, with only limited operations, and
is currently seeking out potential restaurant concepts and sources of revenue,
and has not generated any significant revenues since inception on August 1,
2008. The Company's growth, if any, is expected to place a
significant strain on the Company's managerial, operational and financial
resources as David Cho is our only officer and employee; and the Company will
likely continue to have limited employees in the future. Furthermore, assuming
the Company is able to acquire and develop successful restaurant concepts, of
which there can be no assurance, it will be required to manage multiple
relationships with various customers, franchisees and other third parties. These
requirements will be exacerbated in the event of further growth of the Company.
There can be no assurance that the Company's systems, procedures or controls
will be adequate to support the Company's operations or that the Company will be
able to achieve the rapid execution necessary to successfully implement its
business plan. The Company's future operating results, if any, will also depend
on its ability to add additional personnel commensurate with the growth of its
business, if any. If the Company is unable to manage growth effectively, the
Company's business, results of operations and financial condition will be
adversely affected.
OUR ARTICLES OF
INCORPORATION, AS AMENDED, AND BYLAWS LIMIT THE LIABILITY OF, AND PROVIDE
INDEMNIFICATION FOR, OUR OFFICERS AND DIRECTORS.
Our
Articles of Incorporation, as amended, generally limit our officers' and
Directors' personal liability to the Company and its stockholders for breach of
fiduciary duty as an officer or Director except for breach of the duty of
loyalty or acts or omissions not made in good faith or which involve intentional
misconduct or a knowing violation of law. Our Articles of Incorporation, as
amended, and Bylaws provide indemnification for our officers and Directors to
the fullest extent authorized by the Nevada General Corporation Law against all
expense, liability, and loss, including attorney's fees, judgments, fines excise
taxes or penalties and amounts to be paid in settlement reasonably incurred or
suffered by an officer or Director in connection with any action, suit or
proceeding, whether civil or criminal, administrative or investigative
(hereinafter a "Proceeding") to which the officer or Director is made a party or
is threatened to be made a party, or in which the officer or Director is
involved by reason of the fact that he is or was an officer or Director of the
Company, or is or was serving at the request of the Company as an officer or
director of another corporation or of a partnership, joint venture, trust or
other enterprise whether the basis of the Proceeding is an alleged action in an
official capacity as an officer or Director, or in any other capacity while
serving as an officer or Director. Thus, the Company may be prevented from
recovering damages for certain alleged errors or omissions by the officers and
Directors for liabilities incurred in connection with their good faith acts for
the Company. Such an indemnification payment might deplete the
Company's assets. Stockholders who have questions regarding the fiduciary
obligations of the officers and Directors of the Company should consult with
independent legal counsel. It is the position of the Securities and Exchange
Commission that exculpation from and indemnification for liabilities arising
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder is against public policy and therefore unenforceable.
-10-
Risks Relating To the
Company’s Securities
WE HAVE NEVER ISSUED CASH
DIVIDENDS IN CONNECTION WITH OUR COMMON STOCK AND HAVE NO PLANS TO ISSUE
DIVIDENDS IN THE FUTURE.
We have
paid no cash dividends on our common stock to date and it is not anticipated
that any cash dividends will be paid to holders of our common stock in the
foreseeable future. While our dividend policy will be based on the
operating results and capital needs of our business, it is anticipated that any
earnings will be retained to finance our future expansion.
INVESTORS MAY FACE
SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO FEDERAL
REGULATIONS OF PENNY STOCKS.
Our
common stock will be subject to the requirements of Rule 15(g)9, promulgated
under the Securities Exchange Act as long as the price of our common stock is
below $5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock. Generally, the Commission defines a penny stock as any equity
security not traded on an exchange or quoted on NASDAQ that has a market price
of less than $5.00 per share. The required penny stock disclosures include the
delivery, prior to any transaction, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Such requirements could
severely limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market.
In
addition, various state securities laws impose restrictions on transferring
"penny stocks" and as a result, investors in the common stock may have their
ability to sell their shares of the common stock impaired.
SHAREHOLDERS MAY BE DILUTED
SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN FINANCING AND SATISFY OBLIGATIONS
THROUGH THE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON
STOCK.
We have
no committed source of financing. Wherever possible, our Board of Directors will
attempt to use non-cash consideration to satisfy obligations. In many instances,
we believe that the non-cash consideration will consist of restricted shares of
our common stock. Our Board of Directors has authority, without action or vote
of the shareholders, to issue all or part of the authorized but unissued shares
of common stock. In addition, if a trading market develops for our common stock,
we may attempt to raise capital by selling shares of our common stock, possibly
at a discount to market. These actions will result in dilution of the ownership
interests of existing shareholders, may further dilute common stock book value,
and that dilution may be material. Such issuances may also serve to enhance
existing management’s ability to maintain control of the Company because the
shares may be issued to parties or entities committed to supporting existing
management.
STATE SECURITIES LAWS MAY
LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES IN WHICH AND CONDITIONS
UNDER WHICH YOU CAN SELL SHARES.
Secondary
trading in our common stock may not be possible in any state until the common
stock is qualified for sale under the applicable securities laws of the state or
there is confirmation that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. If we fail
to register or qualify, or to obtain or verify an exemption for the secondary
trading of, the common stock in any particular state, the common stock cannot be
offered or sold to, or purchased by, a resident of that state. In the event that
a significant number of states refuse to permit secondary trading in our common
stock, the liquidity for the common stock could be significantly
impacted.
-11-
BECAUSE WE ARE NOT SUBJECT
TO COMPLIANCE WITH RULES REQUIRING THE ADOPTION OF CERTAIN CORPORATE GOVERNANCE
MEASURES, OUR STOCKHOLDERS HAVE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR
TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.
The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the
SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a
result of Sarbanes-Oxley, require the implementation of various measures
relating to corporate governance. These measures are designed to enhance the
integrity of corporate management and the securities markets and apply to
securities that are listed on those exchanges or the Nasdaq Stock Market.
Because we are not presently required to comply with many of the corporate
governance provisions and because we chose to avoid incurring the substantial
additional costs associated with such compliance any sooner than legally
required, we have not yet adopted these measures.
Because
our Directors are not independent directors, we do not currently have
independent audit or compensation committees. As a result, our Directors have
the ability to, among other things, determine their own level of compensation.
Until we comply with such corporate governance measures, regardless of whether
such compliance is required, the absence of such standards of corporate
governance may leave our stockholders without protections against interested
director transactions, conflicts of interest, if any, and similar matters and
any potential investors may be reluctant to provide us with funds necessary to
expand our operations.
We intend
to comply with all corporate governance measures relating to director
independence as and when required. However, we may find it very difficult or be
unable to attract and retain qualified officers, Directors and members of board
committees required to provide for our effective management as a result of the
Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has
resulted in a series of rules and regulations by the SEC that increase
responsibilities and liabilities of Directors and executive officers. The
perceived increased personal risk associated with these recent changes may make
it more costly or deter qualified individuals from accepting these
roles.
WE DO NOT CURRENTLY HAVE A
PUBLIC MARKET FOR OUR SECURITIES. IF THERE IS A MARKET FOR OUR SECURITIES IN THE
FUTURE, SUCH MARKET MAY BE VOLATILE AND ILLIQUID.
In
October 2009, we obtained quotation for our common stock on the Over-The-Counter
Bulletin Board (“OTCBB”) under the symbol RCNC.OB. However, there is
currently no public market for our common stock, and we can make no assurances
that there will be a public market for our common stock in the future. If there
is a market for our common stock in the future, we anticipate that such market
would be illiquid and would be subject to wide fluctuations in response to
several factors, including, but not limited to:
(1)
actual or anticipated variations in our results of operations;
(2) our
ability or inability to generate new revenues;
(3)
increased competition; and
(4)
conditions and trends in the market for restaurants and eateries.
Furthermore,
our stock price may be impacted by factors that are unrelated or
disproportionate to our operating performance. These market fluctuations, as
well as general economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely affect the
market price and liquidity of our common stock.
-12-
IF WE ARE LATE IN FILING OUR
QUARTERLY OR ANNUAL REPORTS WITH THE SEC, WE MAY BE DE-LISTED FROM THE
OVER-THE-COUNTER BULLETIN BOARD.
Pursuant
to Over-The-Counter Bulletin Board ("OTCBB") rules relating to the timely filing
of periodic reports with the SEC, any OTCBB issuer which fails to file a
periodic report (Form 10-Q's or 10-K's) by the due date of such report (not
withstanding any extension granted to the issuer by the filing of a Form
12b-25), three (3) times during any twenty-four (24) month period is
automatically de-listed from the OTCBB. Such removed issuer would not be
re-eligible to be listed on the OTCBB for a period of one-year, during which
time any subsequent late filing would reset the one-year period of de-listing.
If we are late in our filings three times in any twenty-four (24) month period
and are de-listed from the OTCBB, our securities may become worthless and we may
be forced to curtail or abandon our business plan.
NEVADA LAW AND OUR ARTICLES
OF INCORPORATION AUTHORIZE US TO ISSUE SHARES OF STOCK, WHICH SHARES MAY CAUSE
SUBSTANTIAL DILUTION TO OUR EXISTING SHAREHOLDERS.
We have
authorized capital stock consisting of 100,000,000 shares of common stock,
$0.001 par value per share and 10,000,000 shares of preferred stock, $0.001 par
value per share. As of the date of this filing, we have 10,160,003 shares of
common stock outstanding, which number includes 50,000 shares of common stock
which we have agreed to issue, but which have not been physically issued as of
the date hereof (as described below) and no shares of preferred stock issued and
outstanding. As a result, our Board of Directors has the ability to
issue a large number of additional shares of common stock without shareholder
approval, which if issued could cause substantial dilution to our then
shareholders. Additionally, shares of preferred stock may be issued
by our Board of Directors without shareholder approval with voting powers, and
such preferences and relative, participating, optional or other special rights
and powers as determined by our Board of Directors, which may be greater than
the shares of common stock currently outstanding. As a result, shares
of preferred stock may be issued by our Board of Directors which cause the
holders to have super majority voting power over our shares, provide the holders
of the preferred stock the right to convert the shares of preferred stock they
hold into shares of our common stock, which may cause substantial dilution to
our then common stock shareholders and/or have other rights and preferences
greater than those of our common stock shareholders. Investors should keep in
mind that the Board of Directors has the authority to issue additional shares of
common stock and preferred stock, which could cause substantial dilution to our
existing shareholders. Additionally, the dilutive effect of any
preferred stock, which we may issue may be exacerbated given the fact that such
preferred stock may have super majority voting rights and/or other rights or
preferences which could provide the preferred shareholders with voting control
over us subsequent to this filing and/or give those holders the power to prevent
or cause a change in control. As a result, the issuance of shares of
common stock and/or Preferred Stock may cause the value of our securities to
decrease and/or become worthless.
IN THE FUTURE, WE WILL INCUR
SIGNIFICANT INCREASED COSTS AS A RESULT OF OPERATING AS A FULLY REPORTING
COMPANY IN CONNECTION WITH SECTION 404 OF THE SARBANES OXLEY ACT, AND OUR
MANAGEMENT WILL BE REQUIRED TO DEVOTE SUBSTANTIAL TIME TO NEW COMPLIANCE
INITIATIVES.
Moving
forward, we anticipate incurring significant legal, accounting and other
expenses in connection with our status as a fully reporting public company. The
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and new rules subsequently
implemented by the SEC have imposed various new requirements on public
companies, including requiring changes in corporate governance practices. As
such, our management and other personnel will need to devote a substantial
amount of time to these new compliance initiatives. Moreover, these rules and
regulations will increase our legal and financial compliance costs and will make
some activities more time-consuming and costly. In addition, the Sarbanes-Oxley
Act requires, among other things, that we maintain effective internal controls
for financial reporting and disclosure of controls and procedures. Our
compliance with Section 404 will require that we incur substantial accounting
expense and expend significant management efforts. We currently do not have an
internal audit group, and we will need to hire additional accounting and
financial staff with appropriate public company experience and technical
accounting knowledge. Moreover, if we are not able to comply with the
requirements of Section 404 in a timely manner, or if we or our independent
registered public accounting firm identifies deficiencies in our internal
controls over financial reporting that are deemed to be material weaknesses, the
market price of our stock could decline, and we could be subject to sanctions or
investigations by the SEC or other regulatory authorities, which would require
additional financial and management resources.
-13-
ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS
In
October 2009, we entered into an agreement with Island Stock Transfer (“Island”)
to serve as the Company’s Transfer Agent. In connection with the
agreement, we agreed to pay Island $7,500 and to issue Island 50,000 shares of
our restricted common stock, which shares have not been physically issued to
date. We claim an exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended since the foregoing issuance did
not involve a public offering, the recipient took the shares for investment and
not resale and we took appropriate measures to restrict transfer. No
underwriters or agents were involved in the foregoing issuance and we paid no
underwriting discounts or commissions.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES.
None.
ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER
INFORMATION
None.
ITEM 6.
EXHIBITS
Exhibit
Number
|
Description
of Exhibit
|
Exhibit
3.1(1)
|
Articles
of Incorporation
|
Exhibit
3.2(1)
|
Bylaws
|
Exhibit
10.1(1)
|
Promissory
Note with David Cho
|
Exhibit
10.2(2)
|
Consulting
Agreement with Restaurant Growth Partners
|
Exhibit
10.3(3)
|
Amendment
to Promissory Note with David Cho
|
Exhibit
10.4*
|
Promissory
Note with David Cho
|
Exhibit
31*
|
Certificate
of the Chief Executive Officer and Principal Accounting Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
|
Exhibit
32*
|
Certificate
of the Chief Executive Officer and Principal Accounting Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002
|
* Attached
hereto.
(1) Filed
as exhibits to the Company’s Form S-1 Registration Statement filed with the
Commission on July 10, 2009, and incorporated herein by reference.
(2) Filed
as an exhibit to the Company’s Form S-1/A Registration Statement filed with the
Commission on September 4, 2009, and incorporated herein by
reference.
(3) Filed
as an exhibit to the Company’s Annual Report on Form 10-K, filed with the
Commission on December 15, 2009, and incorporated herein by
reference.
-14-
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.
RESTAURANT
CONCEPTS OF AMERICA INC.
|
|
|
|
DATED:
January 19, 2010
|
|
By:
/s/ David
Cho
|
|
David
Cho
|
|
Chief
Executive Officer
|
|
(Principal
Executive Officer,
|
|
Principal
Accounting Officer and
|
|
Principal
Financial Officer),
|
|
President,
Treasurer and Director
|
-15-