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.
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.
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ARC Group, Inc. |
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Consolidated Balance Sheets (Unaudited) |
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June 30, |
December 31, |
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|
2017 |
2016 |
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Assets |
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Cash and cash equivalents |
$ 294,585 |
$ 50,923 |
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Restricted cash and cash equivalents |
33,060 |
- |
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Accounts receivable, net |
33,635 |
67,395 |
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Accounts receivable, net – related party |
3,186 |
14,568 |
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Other receivables, net |
12,368 |
- |
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Inventory |
46,770 |
45,250 |
||
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Notes receivable, net |
40,026 |
63,742 |
||
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Interest receivable, net |
44 |
838 |
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Other current assets |
15,594 |
1,806 |
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Total current assets |
479,268 |
244,522 |
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Notes receivable, net of current portion |
7,309 |
29,379 |
||
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Property and equipment, net |
95,476 |
80,948 |
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Other assets |
3,287 |
- |
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Total assets |
$ 585,340 |
$ 354,849 |
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Liabilities and stockholders' deficit |
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Accounts payable and accrued expenses |
$ 667,384 |
$ 735,331 |
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Accounts payable and accrued expenses – related party |
17,254 |
98,434 |
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Accrued interest |
10,735 |
2,594 |
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Ad fund liability |
45,428 |
- |
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Settlement agreements payable |
259,314 |
253,724 |
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Accrued legal settlement |
151,987 |
148,105 |
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Notes payable – in default |
7,000 |
7,000 |
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Notes payable – related party |
255,256 |
232,572 |
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Contingent consideration |
20,897 |
20,897 |
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Other current liabilities |
4,373 |
5,096 |
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Total current liabilities |
1,439,628 |
1,503,753 |
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Total liabilities |
1,439,628 |
1,503,753 |
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Stockholders' deficit: |
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Class A common stock – $0.01 par value: 100,000,000 shares authorized, |
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6,883,001 and 6,647,464 shares issued and outstanding at |
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June 30, 2017 and December 31, 2016, respectively |
68,830 |
66,475 |
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Additional paid-in capital |
3,939,098 |
3,747,953 |
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Stock subscriptions payable |
213,215 |
199,863 |
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Accumulated deficit |
(5,075,431) |
(5,163,195) |
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Total stockholders' deficit |
(854,288) |
(1,148,904) |
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Total liabilities and stockholders' deficit |
$ 585,340 |
$ 354,849 |
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ARC Group, Inc. |
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Consolidated Statements of Operations (Unaudited) |
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For the Three Months Ended |
For the Six Months Ended |
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June 30, 2017 |
June 30, 2016 |
June 30, 2017 |
June 30, 2016 |
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Revenue: |
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Restaurant sales |
$ 885,989 |
$ - |
$ 1,754,465 |
$ - |
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Franchise and other revenue |
165,825 |
167,499 |
343,127 |
302,332 |
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Franchise and other revenue – related party |
40,040 |
131,702 |
83,058 |
305,484 |
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Total net revenue |
1,091,854 |
299,201 |
2,180,650 |
607,816 |
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Operating expenses: |
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Restaurant operating costs: |
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Cost of sales |
311,748 |
- |
594,754 |
- |
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Labor |
296,419 |
- |
564,898 |
- |
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Occupancy |
63,820 |
- |
94,535 |
- |
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Other operating expenses |
187,258 |
- |
357,310 |
- |
|||||
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Professional fees |
257,590 |
32,740 |
283,210 |
68,900 |
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Employee compensation expense |
74,270 |
119,574 |
159,593 |
249,982 |
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General and administrative expenses |
16,237 |
26,704 |
31,446 |
47,565 |
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Total operating expenses |
1,207,342 |
179,018 |
2,085,746 |
366,447 |
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Income / (loss) from operations |
(115,488) |
120,183 |
94,904 |
241,369 |
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Other income / (expense): |
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Interest income / (expense) |
(8,299) |
- |
(16,224) |
2,915 |
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Income from investment in Paradise on Wings |
- |
29,349 |
- |
5,026 |
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Other income |
5,474 |
- |
9,084 |
864 |
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Total other income / (expense) |
(2,825) |
29,349 |
(7,140) |
8,805 |
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Net income / (loss) |
$ (118,313) |
$ 149,532 |
$ 87,764 |
$ 250,174 |
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Net income / (loss) per share – basic and fully diluted |
$ (0.02) |
$ 0.02 |
$ 0.01 |
$ 0.04 |
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Weighted average number of shares |
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outstanding – basic and fully diluted |
6,734,534 |
6,592,464 |
6,691,239 |
6,592,072 |
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ARC Group, Inc. |
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Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) |
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Table 1: EBITDA |
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For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
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2017 |
2016 |
2017 |
2016 |
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Net income / (loss) (as reported) |
$ (118,313) |
$ 149,532 |
$ 87,764 |
$ 250,174 |
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Interest (income) / expense |
8,299 |
- |
16,224 |
(2,915) |
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Depreciation expense |
4,185 |
- |
7,331 |
- |
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EBITDA |
$ (105,829) |
$ 149,532 |
$ 111,319 |
$ 247,259 |
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Table 2: Adjusted Net Income and Earnings Per Share |
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For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
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2017 |
2016 |
2017 |
2016 |
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EBITDA |
$ (105,829) |
$ 149,532 |
$ 111,319 |
$ 247,259 |
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Stock-based compensation expense |
193,537 |
12,432 |
206,852 |
25,001 |
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Income from investment in Paradise on Wings |
- |
(29,349) |
- |
(5,026) |
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Adjusted net income |
$ 87,708 |
$ 132,615 |
$ 318,171 |
$ 267,234 |
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Adjusted earnings per share – basic and fully diluted |
$ 0.01 |
$ 0.02 |
$ 0.05 |
$ 0.04 |
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Weighted average number of shares |
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outstanding – basic and fully diluted |
6,734,534 |
6,592,464 |
6,691,239 |
6,592,072 |
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