Dick's Wings Results

ARC Group, Inc. Announces Record Q2 2017 Financial Results

Revenue increased 265% to $1,091,854 for the three months ended June 30, 2017 from $299,201 for the corresponding period in 2016.

Dick's Wings

ARC Group, Inc. (OTC: ARCK), the owner, operator and franchisor of the award-winning Dick's Wings & Grill concept, announced financial results for its fiscal quarter ended June 30, 2017, reporting record revenue of $1,091,854 for the quarter.

Financial Highlights

The Company achieved the following financial results for its fiscal quarter ended June 30, 2017:

  • Revenue increased 265% to $1,091,854 for the three months ended June 30, 2017 from $299,201 for the corresponding period in 2016. 
  • Revenue was $2,180,650 for the six months ended June 30, 2017 compared to $607,816 for the corresponding period in 2016 
  • Net income and net income per share were $87,764, or $0.01 per share, during the six months ended June 30, 2017compared to $250,174 or $0.04 per share, during the six months ended June 30, 2016. 
  • EBITDA, a non-GAAP measure, was $111,319 during the six months ended June 30, 2017 compared to $247,259during the six months ended June 30, 2016. 
  • Adjusted net income and adjusted earnings per share, which are non-GAAP measures, were $318,171, or $0.05 per share, during the six months ended June 30, 2017 compared to $267,234, or $0.04 per share, during the corresponding period in 2016. 
  • Cash flows from operating activities increased $82,037 to $275,897 during the six months ended June 30, 2017from $193,860 during the corresponding period in 2016.

A reconciliation of EBITDA, adjusted net income and adjusted earnings per share on a GAAP and non-GAAP basis is included in the table below entitled "Reconciliation of GAAP to non-GAAP Financial Measures".

"The first six months of 2017 were a very exciting time for us," stated Richard W. Akam, Chief Executive Officer of ARC Group.  "We generated solid cash flows from operations on record revenue during this period.  We are actively seeking to grow the number of Dick's Wings & Grill restaurants that we have.  We are also currently evaluating several acquisition targets that would add new restaurants of leading brands to our portfolio."

"Our financial results and financial position continued to excel on a comparative basis to last year," added Seenu G. Kasturi, President and Chief Financial Officer of ARC Group.  "We generated $275,897 of cash flow from operations on record revenue of $2,180,650 for the first six months of 2017.  The increase in revenue was due primarily to our December 2016 acquisition of Seediv, which owns two of our highest grossing Dick's Wings & Grill restaurants.  Seediv contributed $1,754,465 of revenue to ARC Group during the first half of 2017.  We ended the second quarter in the strongest cash position that we have been in since becoming a publicly-traded company, and we recently paid down more than $250,000 in debt, leaving us with little outstanding debt."

Dick's Wings restaurants are family fun fooderys® where both families and sports fans can go to enjoy a unique restaurant experience from first bite to last call®.  Dick's Wings offers a variety of boldly-flavored menu items highlighted by its award-winning, Buffalo, New York-style chicken wings and hog wings and its Dick's Blingz® boneless chicken wings, for which it boasts 365 mouth-watering flavors.  It also offers customers a variety of fresh sandwiches, burgers, wraps, salads and signature waffle fries.  Guests enjoy these menu items in an elevated sports-themed environment that includes flat screen TVs located throughout each restaurant and children's areas filled with video games and other forms of children's entertainment. 

Dick's Wings is actively offering franchise opportunities in Florida, Georgia, Alabama, Louisiana, North Carolina and South Carolina.

About ARC Group, Inc.                                                          

ARC Group, Inc., headquartered in Jacksonville, Florida, is the owner, operator and franchisor of the Dick's Wings & Grill concept.  Now in its 23rd year of operation, Dick's Wings prides itself on its award-winning chicken wings, hog wings and duck wings spun in its signature sauces and seasonings.  It also offers its own proprietary line of craft beers under the name "Dick's Craft Beers".  Dick's Wings has 17 restaurants in Florida and five restaurants in Georgia.  It also has two concession stands at EverBank Field, home of the NFL's Jacksonville Jaguars.  

 ARC Group, Inc. 

 Consolidated Balance Sheets (Unaudited) 

 June 30, 

 December 31, 

2017

2016

Assets

Cash and cash equivalents

$               294,585

$                 50,923

Restricted cash and cash equivalents

33,060

-

Accounts receivable, net

33,635

67,395

Accounts receivable, net – related party

3,186

14,568

Other receivables, net

12,368

-

Inventory

46,770

45,250

Notes receivable, net

40,026

63,742

Interest receivable, net

44

838

Other current assets

15,594

1,806

     Total current assets

479,268

244,522

Notes receivable, net of current portion

7,309

29,379

Property and equipment, net

95,476

80,948

Other assets

3,287

-

          Total assets

$               585,340

$               354,849

Liabilities and stockholders' deficit

Accounts payable and accrued expenses

$               667,384

$               735,331

Accounts payable and accrued expenses – related party

17,254

98,434

Accrued interest

10,735

2,594

Ad fund liability

45,428

-

Settlement agreements payable

259,314

253,724

Accrued legal settlement

151,987

148,105

Notes payable – in default

7,000

7,000

Notes payable – related party

255,256

232,572

Contingent consideration

20,897

20,897

Other current liabilities

4,373

5,096

     Total current liabilities

1,439,628

1,503,753

          Total liabilities

1,439,628

1,503,753

Stockholders' deficit:

Class A common stock – $0.01 par value: 100,000,000 shares authorized,

     6,883,001 and 6,647,464 shares issued and outstanding at 

     June 30, 2017 and December 31, 2016, respectively

68,830

66,475

Additional paid-in capital

3,939,098

3,747,953

Stock subscriptions payable

213,215

199,863

Accumulated deficit

(5,075,431)

(5,163,195)

     Total stockholders' deficit

(854,288)

(1,148,904)

          Total liabilities and stockholders' deficit

$               585,340

$               354,849

 

 ARC Group, Inc. 

 Consolidated Statements of Operations (Unaudited) 

 For the Three Months Ended 

 For the Six Months Ended 

June 30, 2017

June 30, 2016

June 30, 2017

June 30, 2016

Revenue:

Restaurant sales

$                 885,989

$                           -

$              1,754,465

$                           -

Franchise and other revenue

165,825

167,499

343,127

302,332

Franchise and other revenue – related party

40,040

131,702

83,058

305,484

Total net revenue

1,091,854

299,201

2,180,650

607,816

Operating expenses:

Restaurant operating costs:

    Cost of sales

311,748

-

594,754

-

    Labor

296,419

-

564,898

-

    Occupancy

63,820

-

94,535

-

    Other operating expenses

187,258

-

357,310

-

Professional fees

257,590

32,740

283,210

68,900

Employee compensation expense

74,270

119,574

159,593

249,982

General and administrative expenses

16,237

26,704

31,446

47,565

Total operating expenses

1,207,342

179,018

2,085,746

366,447

Income / (loss) from operations

(115,488)

120,183

94,904

241,369

Other income / (expense):

Interest income / (expense)

(8,299)

-

(16,224)

2,915

Income from investment in Paradise on Wings

-

29,349

-

5,026

Other income

5,474

-

9,084

864

Total other income / (expense)

(2,825)

29,349

(7,140)

8,805

Net income / (loss)

$                (118,313)

$                 149,532

$                   87,764

$                 250,174

Net income / (loss) per share – basic and fully diluted

$                      (0.02)

$                       0.02

$                       0.01

$                       0.04

Weighted average number of shares 

outstanding – basic and fully diluted

6,734,534

6,592,464

6,691,239

6,592,072

 

 ARC Group, Inc. 

 Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) 

Table 1: EBITDA

 For the Three Months Ended June 30, 

 For the Six Months Ended June 30, 

2017

2016

2017

2016

Net income / (loss) (as reported)

$              (118,313)

$               149,532

$                 87,764

$               250,174

Interest (income) / expense

8,299

-

16,224

(2,915)

Depreciation expense

4,185

-

7,331

-

EBITDA

$              (105,829)

$               149,532

$               111,319

$               247,259

Table 2: Adjusted Net Income and Earnings Per Share

 For the Three Months Ended June 30, 

 For the Six Months Ended June 30, 

2017

2016

2017

2016

EBITDA

$              (105,829)

$               149,532

$               111,319

$               247,259

Stock-based compensation expense

193,537

12,432

206,852

25,001

Income from investment in Paradise on Wings

-

(29,349)

-

(5,026)

Adjusted net income

$                 87,708

$               132,615

$               318,171

$               267,234

Adjusted earnings per share – basic and fully diluted

$                     0.01

$                     0.02

$                     0.05

$                     0.04

Weighted average number of shares 

outstanding – basic and fully diluted

6,734,534

6,592,464

6,691,239

6,592,072



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