Quarterly Report (10-q)

Share Name	Share Symbol	Market	Type
Southern Concepts Restaurant Group Inc (CE)	USOTC:RIBS	OTCMarkets	Common Stock

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT

Commission file number: 000-538-53

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

(Exact name of the registrant as specified in its charter)

Colorado	80-0182193
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

2 N. Cascade Avenue, Suite 1400

Colorado Springs, CO 80903

(Address of principal executive offices)

719-265-5821

Telephone number, including

Area code

Bourbon Brothers Holding Corporation

(Former name or former address if changed since last report)

Securities registered under Section 12(b) of the Exchange Act: None

Title of Each Class		Name of Each Exchange on Which Registered
NONE		NONE

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, no par value

(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 ☒ 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 shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting Company ☒

There were 50,249,653 shares of the issuer's common stock, no par value, outstanding as of May 15, 2015.

SOUTHERN CONCEPTS RESTAURANT GROUP, INC

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED MARCH 31, 2015

CONTENTS

PART I – Financial Information	2

Item 1. Financial Statements	2

Condensed consolidated financial statements (unaudited)

Balance sheets	2

Statements of loss	3

Statements of cash flows	4

Statement of changes in equity	5

Notes to unaudited consolidated financial statements	6

Item 2. Management’s Discussion and Analysis	20

Item 3. Quantitative and Qualitative Disclosures About Market Risk	25

Item 4. Controls and Procedures	25

PART II – Other information	26

Item 1. Legal Proceedings	26

Item 1A. Risk Factors	26

Item 2. Unregistered Sales of Securities and Use of Proceeds	26

Item 3. Defaults Upon Senior Securities	27

Item 4. Mine Safety Disclosures	27

Item 5. Other Information	27

Item 6. Exhibits	27

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			December 31
	2015			2014
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	442,579		$	1,182,099
Prepaid expenses and other		164,287			66,023
Inventory		64,504			64,091
Total current assets		671,370			1,312,213

Deposits		80,525			80,525
Deferred financing costs		21,277			28,369
Related party receivable		25,787			25,787
Intangible asset, net		39,375			40,625
Property and equipment, net		3,599,080			2,986,050
Total assets	$	4,437,414		$	4,473,569

Liabilities and equity
Current liabilities:
Accounts payable	$	150,712		$	91,792
Accrued expenses		329,742			229,539
Related party notes payable and accrued interest		90,000			117,318
Note payable and accrued interest		472,275			218,970
Convertible notes payable and accrued interest, current portion		137,487			129,589
Total current liabilities		1,180,216			787,208

Deferred rent		325,427			303,070
Convertible notes payable and accrued interest, less current portion,
(net of $563,322 (2015) and $528,019 (2014) discount)		815,256			722,439
Related party note payable (net of $640,395 (2015) and $731,880 (2014) discount)		609,604			520,184
Total liabilities		2,930,503			2,232,901

Commitments and contingencies

Equity
Preferred stock - par value $0.001;
Authorized Series A shares - 4,884,859
Issued and outstanding Series A shares - 4,884,859 (2015 and 2014)		248,994			248,994
Common stock - no par value;
Authorized shares - 120,000,000
Issued and outstanding shares - 49,524,653 (2015) and 48,783,363 (2014)		8,074,329			7,916,942
Additional paid-in capital		2,694,555			2,602,171
Accumulated deficit		(9,530,787	)		(8,692,743	)
Total Southern Concepts Restaurant Group, Inc ("SCRG") equity		1,487,090			2,075,364
Noncontrolling interest		19,820			65,304
Total equity		1,506,911			2,140,668
Total liabilities and equity	$	4,437,414		$	4,473,569

See notes to condensed unaudited consolidated financial statements.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF LOSS

(Unaudited)

	Three months ended
	March 31,
	2015			2014

Revenue	$	1,240,666		$	1,269,888
Operating expenses:
Restaurant operating costs, (related party $100,300 (2015) and $85,385 (2014)),
exclusive of depreciation and amortization below		1,267,918			1,345,822
General and administrative		559,118			808,374
Selling and marketing		22,218			90,527
Depreciation and amortization		113,450			100,531
Total operating expenses		1,962,704			2,345,254

Loss from operations		(722,038	)		(1,075,366	)

Other expense:
Interest expense		(181,490	)		(26,779	)

Net loss	$	(903,528	)	$	(1,102,145	)

Net loss attributable to noncontrolling interest	$	(65,484	)	$	(90,139	)

Net loss attributable to SCRG		(838,044	)		(1,012,006	)

Net loss	$	(903,528	)	$	(1,102,145	)

Basic and diluted net loss per share attributable to SCRG common shareholders	$	(0.02	)	$	(0.03	)

Weighted average number of common shares outstanding - basic and diluted		48,998,692			29,284,268

See notes to condensed unaudited consolidated financial statements.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three months ended
	March 31
	2015			2014
Cash flows from operating activities
Net cash used in operating activities	$	(512,557	)	$	(659,871	)
Cash flows from investing activities
Cash acquired in acquisition		-			869,907
Purchase of property and equipment		(725,232	)		(214,860	)
Net cash (used in) provided by investing activities		(725,232	)		655,047
Cash flows from financing activities
Contribution to subsidiary by non-controlling interest		20,000			-
Proceeds from issuance of short-term promissory note		(27,318	)		-
Proceeds from sale of common stock		157,387			275,000
Proceeds from issuance of promissory notes and warrants		80,000			-
Proceeds from issuance of long-term debt		268,200			-
Net cash provided by financing activities		498,269			275,000
Net (decrease) increase in cash and cash equivalents		(739,520	)		270,176
Cash and cash equivalents, beginning		1,182,099			13,611
Cash and cash equivalents, ending	$	442,579		$	283,787
Supplemental disclosure of non-cash investing and financing activities:
Preferred stock converted to common stock	$	-		$	680,884
Acquisition of BBHCLLC in exchange for preferred and common stock	$	-		$	1,963,507

See notes to condensed unaudited consolidated financial statements.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

THREE MONTHS ENDED MARCH 31, 2015

(Unaudited)

									Additional					Non-
	Common Stock				Preferred Stock				paid-in		Accumulated			Controlling
	Shares		Amount		Shares		Amount		capital		Deficit			Interest			Total
Balances, December 31, 2014		48,783,363	$	7,916,942		4,884,859	$	248,994	$	2,602,171	$	(8,692,743	)	$	65,304		$	2,140,668
Issuance of common stock for cash		741,290		157,387		-		-		-		-			-			157,387
Debt discount on convertible debt allocated to warrants and beneficial conversion feature		-		-		-		-		18,185		-			-			18,185
Stock-based compensation		-		-		-		-		74,199		-			-			74,199
Contribution by non-controlling interest holder		-		-		-		-		-		-			20,000			20,000
Net loss		-		-		-		-		-		(838,044	)		(65,484	)		(903,528	)
Balances, March 31, 2015		49,524,653	$	8,074,329		4,884,859	$	248,994	$	2,694,555	$	(9,530,787	)	$	19,820		$	1,506,911

See notes to condensed unaudited consolidated financial statements.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 1 – ORGANIZATION, RECENT EVENTS, BASIS OF PRESENTATION AND MANAGEMENT’S PLANS

Organization and Recent Events

Southern Concepts Restaurant Group, Inc. (“SCRG” or the “Company”) is a Colorado corporation that was formed on January 29, 2008. The Company, on March 9, 2015, with approval of a majority of the Company’s shareholders, changed its name from Bourbon Brothers Holding Corporation to Southern Concepts Restaurant Group, Inc.

The Company operates and manages restaurants through its wholly-owned and majority-owned subsidiaries, including:

SH Franchisee & Licensing Corp. (“SH”)

Southern Hospitality Denver Holdings, LLC (“SHDH”)

Southern Hospitality Denver, LLC (“SHD”)

Southern Hospitality Lone Tree, LLC (“SHLT”)

SHQ Glendale, LLC (“SHQG”)

Southern Hospitality Tejon, LLC (“SHT”)

Southern Hospitality Southern Kitchen Colorado Springs, LLC (“SHSK”)

Bourbon Brothers Holding Company, LLC (“BBHCLLC”)

Bourbon Brothers Restaurant Group, LLC (“BBRG”)

Bourbon Brothers Franchise, LLC (“BBF”)

Bourbon Brothers Brand, LLC (“BBB”)

The Company began revenue generating activities in late February 2013, with the opening of its first Denver-based restaurant. In January 2014, the Company opened its second restaurant in Colorado Springs, Colorado, and in April 2015, the Company opened its third restaurant in Lone Tree, Colorado.

Additionally, the Company has begun to develop a fast casual, Southern Hospitality-branded restaurant concept, in which the Company plans to open one to two units during 2015.

The Company is a party to a franchise agreement (the “FA” or the “Franchise Agreement”) with SH Franchising & Licensing LLC, dba Southern Hospitality BBQ (the “Franchisor” or “SHFL”). In addition, in February 2015, the Company entered into a Master License Agreement (“MLA”) with SHFL which grants the Company the right to license up to five Southern Hospitality-branded fast casual restaurants (SHQ) in the Denver and Colorado Springs markets over the next 18 months. SHFL and SCRG have agreed to a royalty of 2.5% of gross sales on each of the new SHQ locations. The agreement pertains exclusively to Company’s right to develop the SHQ locations and does not restrict the Company from developing a similar, competitive brand in the future. Finally, in developing the SHQ concept, SCRG will retain joint ownership of this concept, which pertains to the functionality of the restaurant.

In February 2015, the Company also executed a sixth amendment to the Franchise Agreement which specifically grants SCRG the right to develop two new full service Southern Hospitality restaurants during 2015, the locations of which were named in the document to be Lone Tree, Colorado and downtown Colorado Springs, Colorado. Additionally, the sixth amendment grants the Company the right to rebrand its Bourbon Brothers Southern Kitchen restaurant in northern Colorado Springs into a Southern Hospitality-branded full service franchised restaurant operating under the trade name Southern Hospitality Southern Kitchen, a differentiated and slightly more upscale concept to that of the original concept.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION AND MANAGEMENT’S PLANS (CONTINUED)

Basis of Presentation

The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. A description of the Company’s accounting policies and other financial information is included in the audited consolidated financial statements as filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Amounts as of December 31, 2014, are derived from those audited consolidated financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements, accounting policies and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, which has previously been filed with the SEC.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of March 31, 2015, and the results of operations and cash flows for the periods presented. All such adjustments include those that are of a normal recurring nature. The results of operations for the three months ended March 31, 2015, are not necessarily indicative of the results that may be achieved for a full fiscal year and cannot be used to indicate financial performance for the entire year.

Management’s Plans

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of approximately $0.9 million and $1.1 million for the three month periods ended March 31, 2015 and 2014, respectively, and has an accumulated deficit of approximately $9.5 million at March 31, 2015. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company has devoted substantially all of its efforts to developing its business plan, raising capital, and opening and operating its three restaurants in Denver, Colorado Springs and Lone Tree.

The Company began revenue generating activities in late February 2013 with the opening of its first Denver-based restaurant. In January 2014, SHSK opened in Colorado Springs and began generating revenues. The Company’s most recent restaurant, SHLT, opened in Lone Tree on April 27, 2015. The Company’s continued implementation of its business plan is dependent on its future profitability and engaging in strategic transactions, or on additional debt or equity financing, which may not be available in amounts or on terms acceptable to the Company or at all. As a consequence, if the Company is unable to achieve and maintain profitability through current restaurant operations, enter into strategic transactions, or obtain additional financing in the near term, the Company may be required to delay its business plan implementation, which would have a material adverse impact on the Company.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts, transactions and profits are eliminated in consolidation.

Accounting guidance provides a framework for determining whether an entity should be considered a variable interest entity (VIE), and if so, whether the Company’s involvement with the entity results in a variable interest in the entity. If the Company determines that it does have a variable interest in the entity, it must perform an analysis to determine whether it represents the primary beneficiary of the VIE. If the Company determines it is the primary beneficiary of the VIE, it is required to consolidate the assets, liabilities and results of operations and cash flows of the VIE into the consolidated financial statements of the Company.

A company is the primary beneficiary of a VIE if it has a controlling financial interest in the VIE. A company is deemed to have a controlling financial interest in a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company has concluded that there are no VIE’s subject to consolidation at March 31, 2015 and December 31, 2014. While the Company believes its evaluation is appropriate, future changes in estimates, judgments and assumptions in the case of an evaluation triggered by a reconsideration event as defined in the accounting standard may affect the determination of primary beneficiary status and the resulting consolidation, or deconsolidation, of the assets, liabilities and results of operations of a VIE on the Company’s consolidated financial statements.

Use of Estimates

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. Actual results could differ from the estimates. Changes in estimates are recorded in the period of change.

Fair Value Measurements

The Company accounts for financial instruments pursuant to accounting guidance which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair measurements. To increase consistency and comparability in fair value measurements, the accounting guidance established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 – quoted prices (unadjusted) in active markets of identical assets or liabilities;

Level 2 – observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 – assets and liabilities whose significant value drivers are unobservable.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value Measurements (continued):

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgments or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. There were no financial assets or liabilities measured at fair value, with the exception of cash and cash equivalents as of March 31, 2015.

The carrying amounts of accounts payable and notes payable approximate their fair values due to their interest rates and/or short-term maturities. The carrying amounts of related party receivables and payables are not practicable to estimate based on the related party nature of the underlying transaction.

Non-controlling Interest

The non-controlling interest represents capital contributions, income and loss attributable to the owners of less than wholly-owned consolidated entities (SHD, SHSK and SHLT), and are reported in equity. From inception through March 31, 2015, in exchange for their interest in SHD, the non-controlling members contributed $897,465 in cash (no contributions in 2014). The non-controlling members of SHSK contributed $20,000 in cash for the three months ended March 31, 2015.

Pre-opening Costs

Pre-opening costs, such as employee payroll and related training costs are expensed as incurred and include direct and incremental costs incurred in connection with the opening of each restaurant. Pre-opening costs also may include non-cash rental costs under operating leases incurred during a construction period.

Cash and Cash Equivalents

Cash equivalents include short-term highly liquid investments with an original a maturity of three months or less when purchased. In addition, the majority of payments due from financial institutions for the settlement of debit card and credit card transactions process within two business days, and therefore these payments due are classified as cash and cash equivalents.

Inventory

Inventory consists of food and beverages and is stated at the lower of cost (first-in, first-out) or market.

Property and Equipment

Management reviews property and equipment, including leasehold improvements, for impairment when events or circumstances indicate these assets might be impaired. The Company's management considers, or will consider, such factors as the Company's history of losses and the disruptions in the overall economy in preparing an analysis of its property, including leasehold improvements, to determine if events or circumstances have caused these assets to be impaired. Management bases this assessment upon the carrying value versus the fair value of the asset and whether or not that difference is recoverable. Such assessment is performed on a restaurant-by-restaurant basis and includes relevant facts and circumstances including the physical condition of the asset. If management determines the carrying value of the restaurant assets exceeds the projected future undiscounted cash flows, an impairment charge would be recorded to reduce the carrying value of the restaurant assets to their fair value. Management determined that no impairment existed at March 31, 2015 and December 31, 2014.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment (continued):

Leasehold improvements are stated at cost. Property and equipment costs directly associated with the acquisition, development and construction of a restaurant are capitalized. Expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, and leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Property and equipment are not depreciated/amortized until placed in service. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings.

Capitalized Interest

Interest on funds used to finance the acquisition and construction of a restaurant to the date the asset is placed in service is capitalized.

Leases and Deferred Rent

The Company leases and intends to lease substantially all of its restaurant properties. For leases that contain rent escalation clauses, the Company records the total rent payable during the lease term and recognizes expense on a straight-line basis over the initial lease term, including the "build-out" or "rent-holiday" period where no rent payments are typically due under the terms of the lease. Any difference between minimum rent and straight-line rent is recorded as deferred rent. Additionally, contingent rent expense based on a percentage of revenue is accrued and recorded to the extent it is expected to exceed minimum base rent per the lease agreement based on estimates of probable levels of revenue during the contingency period. Long-term deposits on leases in the amount of $80,525 are recorded as of March 31, 2015 and December 31, 2014, respectively. Deferred rent also includes a tenant improvement allowance which is amortized as a reduction of rent expense, also on a straight-line basis over the initial term of the lease.

Revenue Recognition

The Company recognizes revenues pursuant to SEC Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition, and applicable related guidance. Revenue is derived from the sale of prepared food and beverage and select retail items. Revenue is recognized at the time of sale and is reported on the Company's consolidated statements of income (loss) net of sales taxes collected. The amount of sales tax collected is included in accrued expenses until the taxes are remitted to the appropriate taxing authorities.

Advertising Expenses

Advertising costs are expensed as incurred. Total advertising expenses were approximately $22,200 and $90,500 for the three months ended March 31, 2015 and 2014, respectively.

Stock-Based Compensation

The Company accounts for stock-based compensation under Accounting Standards Codification (“ASC”) 718, Share-Based Payment. ASC 718 requires the recognition of the cost of services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. ASC 718 also requires the stock-based compensation expense to be recognized over the period of service in exchange for the award (generally the vesting period). The Company estimates the fair value of each stock option at the grant date by using an option pricing model, typically the Black-Scholes model.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their financial statement reported amounts, and for tax loss and credit carry-forwards. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized.

The Company determines its income tax expense (benefit) in each of the jurisdictions in which it operates. Income tax includes an estimate of the current income tax expense (benefit), as well as deferred income tax expense, which results from the determination of temporary differences arising from the different treatment of items for book and tax purposes. The Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions. Periods subject to examination for the Company’s federal and state income tax returns are 2011 through the 2014 tax year.

Certain of the Company’s subsidiaries are limited liability companies (“LLC’s”), which are treated for tax purposes as pass-through entities. As a result, any taxes are the responsibility of the respective members.

The Company assesses the likelihood of the financial statement effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying consolidated financial statements. The Company recognizes tax related interest and penalties, if any, as a component of income tax expense.

Net loss per share

Basic net loss per share is computed by dividing the net loss applicable to common shareholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share reflects the potential dilution that could occur if dilutive securities were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect of such inclusion would reduce a loss or increase earnings per share. For each of the periods presented in the accompanying consolidated financial statements, the effect of the inclusion of dilutive shares would have resulted in a decrease in loss per share. Common stock options, warrants and shares underlying convertible debt aggregating 27,014,595 and 6,235,226 for the periods ended March 31, 2015 and 2014, respectively, have been excluded from the calculation of diluted net loss per common share.

Recently Issued Accounting Standards

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern: Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early application permitted. The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts from Customers, which supersedes the revenue recognition in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early adoption not permitted. The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Accounting Standards (continued):

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. Once effective, ASU No. 2015-02 will apply to the consolidation assessment of all entities. This standard is effective for public reporting entities in fiscal periods beginning after December 15, 2015. The Company is evaluating this new standard and its potential impact. Early adoption is permitted.

Management has not identified any other recently issued accounting standards that it believes may have a significant impact on the Company’s unaudited condensed consolidated financial statements.

NOTE 3 – INTANGIBLE ASSETS

The intangible asset at March 31, 2015, represents franchise license costs for the Denver restaurant (net of accumulated amortization of $10,625).

Amortization expense of $1,250 has been recorded for each of the three month periods ended March 31, 2015 and 2014. Amortization expense for the next five years and thereafter is estimated to be as follows:

2015 (remaining nine months)	$	3,750
2016		5,000
2017		5,000
2018		5,000
2019		5,000
Thereafter		15,625
	$	39,375

The Company licenses the rights to the trademark “Bourbon Brothers” and certain intellectual property, as defined, from a related party, Bourbon Brothers LLC (“BBLLC), for use in the Company’s business operations. BBLLC has granted an exclusive license to use and to sublicense the tradename and intellectual property for an initial ten-year term. The agreement shall automatically renew for additional terms of ten-years each without any action required by either party. This license agreement does not require the payment of royalties or any other consideration.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 4 – PROPERTY AND EQUIPMENT

As of March 31, 2015 and December 31, 2014, property and equipment consists of the following:

	March 31,			December 31,
	2015			2014			Useful lives

Leasehold improvements	$	2,528,080		$	2,227,438		10 years
Website development		21,500			21,500		3 years
Equipment		1,679,672			1,299,220		3-7 years
Computers and hardware		162,994			116,275		5 years
		4,392,246			3,664,433
Less accumulated depreciation		(793,165	)		(678,383	)
	$	3,599,081		$	2,986,050

The Company’s first Denver-based restaurant opened in late February 2013, for which the Company began depreciating such assets. The Company’s Colorado Springs-based restaurant opened in late January 2014, for which the Company began depreciating such assets. Depreciation expense was approximately $114,800 and $99,300 for the three months ending March 31, 2015 and 2014, respectively.

NOTE 5 – NOTES PAYABLE

Convertible Notes:

The Company has outstanding promissory notes (the “Notes”) that bear interest at 5% per annum, they are unsecured, and their maturity dates are seven years from their issue date (2018-2019). Quarterly payments are applied against accrued interest first, then principal. The minimum aggregate quarterly payment to Note holders is 2.5% of the Company’s portion of gross quarterly revenues from each Southern Hospitality BBQ restaurant. At March 31, 2015, the Company has not made all required payments of interest on the Notes. The Company may cure this deferral in interest payments within a defined period of time, as provided for in the note agreements, thus preventing the Notes from becoming callable.

The Notes and accrued interest are convertible, at the option of the holder. The conversion price is 80% of the 20-day average closing sales price on the date conversion is elected, but not less than $0.50 per share. The Company is amortizing a discount related to this beneficial conversion feature to interest over the term of the Notes. Approximately $6,310 and $12,000 was amortized for the three months ended March 31, 2015 and 2014, respectively. No Notes were converted as of March 31, 2015 or 2014. At March 31, 2015 and December 31, 2014, the balance of the Notes and accrued interest, net of discount, was approximately $605,000 and $603,400, respectively.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 5 – NOTES PAYABLE (CONTINUED)

Convertible Notes (continued):

Beginning in August 2014, the Company began selling 6.5% promissory notes (the “2014 Notes”) along with warrants to purchase the Company’s common stock. Investors received a warrant to purchase four shares of common stock for each one dollar of principal amount loaned to the Company with an exercise price of $0.40 per share, exercisable for three years. The 2014 Notes bear interest at 6.5% per annum, they are unsecured, and their maturity dates are five years from their issue date. The Company sold $460,000 of notes from August 2014 through December 31, 2014, and $80,000 of notes in the first quarter ended March 31, 2015. The 2014 Notes and accrued interest become convertible, at the option of the holder, after two years from the issue date. The conversion price is the lower of 80% of the 20-day average closing sales price on the date conversion is elected or $0.25 per share.

The 2014 Notes were recorded at $540,000, after discounting the convertible notes based on the relative fair value of the warrants issued with the debt, of approximately $259,600, to a net value at March 31, 2015 of $280,400. The warrants were issued with the convertible debt and their relative fair value was determined using the Black-Scholes option pricing model. Additionally, the convertible notes were further discounted, as the Company determined that the convertible debt contained a beneficial conversion feature and recorded an additional debt discount. The net balances at March 31, 2015 and December 31, 2014 were $259,600 and $182,200.

The assumptions used in the Black-Scholes model to determine the fair value of warrants are as follows: (1) dividend yield of 0%, (2) expected volatility of 205%, (3) weighted average risk-free interest rate of 0.78%, (4) contractual life of 3.0 years, and fair value of the Company’s shares of $0.23 to $0.30 per share. The relative fair value attributable to the warrants and the beneficial conversion feature have been recorded as a discount and deducted from the face value of the convertible debt in the accompanying consolidated balance sheet. The discount applied to the 2014 Notes is being amortized over the five-year term of the convertible notes.

Promissory Note:

During the year ended December 31, 2013, the Company issued a promissory note with an aggregate face value of $200,000, along with a warrant to purchase 50,000 shares of the Company’s common stock. This note bears interest at 5% per annum; it is unsecured. The holder of the note received additional consideration in the form of a fully vested warrant to purchase 50,000 common shares at an exercise price of $0.50 per share exercisable for three years from the date of execution of the note. The Company determined the relative fair value of the warrant to be approximately $44,000, which was recorded as a discount to the note payable, which was amortized over approximately three months.

Bank Financing:

In November 2014, SHLT and Rocky Mountain Bank & Trust entered into a bank financing agreement to purchase kitchen equipment for the restaurant location. The agreement provides for financing up to $280,000, of which the Company had drawn approximately $252,100 by March 31, 2015. This loan bears interest at 6%. Monthly interest-only payments begin in December 2014 for six months. Thereafter, monthly principal and interest payments of approximately $5,500 are due through maturity in May 2020. The agreement was personally guaranteed by two directors of the Company. Their personal guarantees were subsequently released, and the agreement is now collateralized by the kitchen equipment at the SHLT and SHD restaurants.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 5 – NOTES PAYABLE (CONTINUED)

Related Party Promissory Notes:

The Company issued short-term promissory notes totaling $90,000 in the third quarter of 2014 to two shareholders. These notes bear interest at 10% per annum, are unsecured, and had a maturity date of 180 days after the date of execution. These notes with accrued interest were subsequently converted to equity in SHQG in April 2015 at a conversion rate of $1.05. In addition, the Company issued a short-term, unsecured promissory note for $25,000 on November 13, 2014, to a third shareholder. This note was subsequently paid off in full in January 2015.

Related Party Loan Agreement:

On December 31, 2014, the Company entered into a Loan Agreement and associated Promissory Note (the “Loan Agreement”) with Bourbon Brothers #14, LLC (“BB14”) which provides for an unsecured term loan in the aggregate original principal amount of $1,250,000 (the “Loan”). The Company received net proceeds of $1,197,714 after loan closing fees. BB14 is a related party entity, controlled by certain shareholders of the Company. The Company is to pay interest on the Loan at the greater of 9.5% or 6.25% per annum plus the prime rate announced by the Wall Street Journal. In addition, the Company is to pay a monthly loan servicing fee in the amount of 1% of the principal balance of the Loan. The entire principal balance of the Loan, plus any accrued and unpaid interest, is due on December 29, 2016, unless the Company exercises its option to extend the term of the Loan. Extension of the Loan requires certain conditions to be met at the time of the extension. The related party interest expense on this loan for the quarter ended March 31, 2015 was $32,500.

In connection with the Loan, the Company issued a warrant to BB14 for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share with the warrant vesting in one year. BB14 funded the Loan with financing BB14 received from a third-party lender. JW Roth, a director of the Company, personally guaranteed the BB14 Loan to obtain financing to facilitate the Loan. To compensate JW Roth, the Company issued a warrant to Mr. Roth for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share with the warrant vesting in one year. The Company determined the relative fair value of the 15,000,000 warrants to be approximately $731,800, which has been recorded as a discount to the Loan principal balance, and which is being amortized over the term of the Loan. The balance of the discount at March 31, 2015 and December 31, 2014 was $640,395 and $731,800.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Commitments:

Franchise agreement

The Company operates its Denver restaurant property under a franchise agreement with the Franchisor under an initial ten-year term, renewable for two additional five-year terms. Pursuant to the franchise agreement, as amended, the Company is to pay royalty fees based on a percentage of gross revenues (2.5%, subject to a monthly floor of $5,000) , plus additional fees and costs for marketing, training, inventory and other franchisor costs. Two officers of the Company have personally guaranteed royalty payments to the Franchisor.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 6 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

On December 30, 2014, SHD entered into a Fifth Amendment to its FA with the Franchisor in connection with the opening of a new Southern Hospitality restaurant in Lone Tree, Colorado. Under the FA, SHD partially assigned its rights to SHLT to use the Franchisor’s marks, business methods, proprietary products, confidential information and intellectual property to operate a Southern Hospitality restaurant. In addition, pursuant to the FA, the Franchisor waived certain initial fees in connection with SHLT opening a restaurant in Lone Tree, Colorado.

On February 13, 2015, SHD entered into a Sixth Amendment to its FA with the Franchisor in connection with the potential for opening two Southern Hospitality restaurants in Colorado Springs, Colorado. Under the FA, SHD partially assigned its rights to SHSK, a 51% owned subsidiary of the Company, and Southern Hospitality Tejon, LLC, a wholly-owned subsidiary of the Company, to use the Franchisor's marks, business methods, proprietary products, confidential information and intellectual property to operate a Southern Hospitality restaurant.

For the three months ended March 31, 2015 and 2014, the Company incurred franchise royalty expense of $16,700 and $14,300, respectively.

Leases:

In April 2012, the Company entered into a ten-year, non-cancellable lease for the restaurant in Denver, Colorado. This lease provides for two, five-year renewal options. Rent payments are approximately $16,000 per month plus certain common area maintenance charges, as defined, and are subject to escalation provisions. Lease expense was approximately $49,500 and $50,000 for the three months ended March 31, 2015 and 2014, respectively.

The Company has a 10-year lease with BBLLC, a related party, for the real property in connection with the restaurant location in Colorado Springs. The lease commenced upon taking possession of the premises on January 11, 2014. Rent is approximately $33,340 per month for the first 60 months, and thereafter subject to adjustment every 60 months. This lease provides for one, ten-year renewal option. Related party lease expense was approximately $100,300 and $85,385 for the three months ended March 31, 2015 and 2014, respectively.

In July 2014, the Company entered into a ten-year, non-cancellable lease for the restaurant in Lone Tree, Colorado. The lease provides for an initial lease term of ten years and for two, five-year renewal options. Rent payments are approximately $9,900 per month plus certain common area maintenance charges, and are subject to escalation provisions. This location opened April 27, 2015, at which time the lease commenced.

On January 1, 2014, the Company assumed a lease from a related party for the corporate office in Colorado Springs. The lease is for 78 months with an unaffiliated party. Monthly rent is $5,800 per month escalating up to $6,000 per month in year six. Lease expense for the three months ending March 31, 2015 and 2014 was $14,100 and $13,700, respectively.

Contingencies:

From time to time, the Company may become party to litigation and other claims in the ordinary course of business. To the extent that such claims and litigation arise, management provides for them if upon the advice of counsel, losses are determined to be both probable and estimable.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 7 – EQUITY

Preferred stock:

The Company authorized the issuance of up to 18,242,700 shares of Series A convertible preferred stock in January 2014, of which 18,242,687 shares were issued on January 22, 2014. As of March 1, 2014, the holders of 13,357,828 Series A preferred shares chose to convert their Series A preferred stock into shares of the Company’s common stock at a ratio of one to one. These Series A preferred shares were then subsequently cancelled. As of March 31, 2015 and December 31, 2014, 4,884,859 Series A convertible preferred shares remain issued and outstanding.

Each share of Series A convertible preferred is entitled to 25 votes and is convertible into shares of common stock on a one-for-one basis. Other rights of the Series A convertible preferred are identical to the common stock rights.

Common stock:

The Company’s issued 91,291 common shares of stock at $0.30 per share for proceeds of $27,387 and 650,000 common shares of stock at $0.20 per share for proceeds of $130,000 between January and March 31, 2015.

Stock options:

Effective November 13, 2012, the Company adopted the 2012 Stock Option Plan (the “Plan”). Under the Plan, the Company may grant stock options, restricted and other equity awards to any employee, consultant, independent contractor, director or officer of the Company. A total of 4 million shares of common stock may be issued under the Plan (as amended on January 22, 2014).

In the three months ended March 31, 2015, the Company granted options to purchase up to 120,000 shares to two of its restaurant managers that vest evenly over three years, with the first tranche vesting on February 2, 2016 and each year thereafter with an exercise price of $0.25 per share. In addition, the Company granted options to another of its store managers to purchase up to 20,000 shares that vest evenly over two years beginning on March 16, 2015, with an exercise price of $0.27.

The stock-based compensation cost related to options that have been included as a charge to general and administrative expense in the statements of operations was approximately $74,200 and $54,500 for the three months ended March 31, 2015 and 2014, respectively. As of March 31, 2015, there was approximately $260,600 of unrecognized compensation cost related to non-vested stock options. The cost is expected to be recognized over a weighted-average period of less than five years.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 7 – EQUITY (CONTINUED)

Stock options (continued):

The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options. The weighted-average fair value of options granted during the three months ended March 31, 2015 and 2014 was $0.25 and $0.20 per share, respectively. The assumptions utilized to determine the fair value of options granted during the three months ended March 31, 2015 and 2014, are as follows:

	2015		2014
Risk free interest rate		0.79%		0.79%
Expected volatility		205%		205%
Expected term	5 years		5 years
Expected dividend yield		0		0

The expected term of stock options represents the period of time that the stock options granted are expected to be outstanding. The expected volatility is based on the historical price volatility of the common stock of similar companies. The risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents the anticipated cash dividend over the expected term of the stock options.

The following tables set forth the activity in the Company's Plan for the three months ended March 31, 2015:

						Weighted
				Weighted		average
	Shares			average		remaining		Aggregate
	under			exercise		contractual		intrinsic
	option			price		life		value
Outstanding at January 1, 2015		2,636,039		$	0.29			$	-
Granted		140,000			0.25		-		-
Exercised		-			*		-		-
Forfeited/cancelled		(281,236	)		0.10		-		-
Outstanding at March 31, 2015		2,494,803			0.31		3.70	$	237,944
Exercisable at March 31, 2015		1,305,042		$	0.33		3.38	$	84,492

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the market price of the Company’s common stock on March 31, 2015, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they exercised their options on March 31, 2015.

Table of Contents

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

NOTE 7 – EQUITY (CONTINUED)

The following table summarizes the activity and value of non-vested options as of and for the three months ended March 31, 2015:

				Weighted
				average
	Number of			grant date
	options			fair value
Non-vested options outstanding at January 1, 2015		1,494,663		$	0.09
Granted		140,000			0.23
Vested		(163,666	)		0.37
Forfeited/cancelled		(281,236	)		0.10
Non-vested options outstanding at March 31, 2015		1,189,761		$	0.07

Warrants:

In May 2014, in connection with services provided to the Company, the Company issued a warrant for 30,000 common shares to exercise at $0.30 per share cancellable by the Company at any time. The Company used the contractual term of the warrant, a risk-free interest rate of 0.39% and a volatility of 105% with a value of $12,247. In September 2014, in connection with appointments to the Board of Directors, the Company issued warrants for 200,000 common shares to exercise at $0.30 per share. The warrants vest on September 15, 2015, a risk-free interest rate of 0.79% and a volatility of 205% with values of $53,924. In December 2014, in connection with appointments to the Board of Directors, the Company issued warrants for 100,000 common shares to exercise at $0.30 per share. The warrants vest on December 5, 2016, a risk-free interest rate of 0.79% and a volatility of 205% with values of $20,942.

In December 2012, the Company entered into an indemnification agreement with JW Roth and Gary Tedder, both directors of the Company, for their personal risk regarding personal guarantees in favor of the Franchisor. The personal guarantees are still in effect for the royalty payments due to the Franchisor. In addition to the indemnification agreements, the Company compensated Messrs. Roth and Tedder for their personal guarantees in the form of a warrant to purchase up to 200,000 shares, per director, exercisable for ten years at $1.00 per share with the warrant vested immediately with a cashless exercise feature.

As of December 31, 2013, the Company had a promissory note with an aggregate face amount of $200,000 outstanding. By the original terms, the holder of the note received additional consideration in the form of an immediately vested stock warrant to purchase 50,000 common shares at an exercise price of $0.50 per share exercisable for three years from the date of execution of the note.

In connection with the Loan the Company has with BB14, the Company issued a warrant to BB14 for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share with the warrant vesting in one year. In addition, to compensate JW Roth, a director of the Company, for his personal guarantee in connection with BB14 obtaining financing to facilitate the Loan, the Company issued a warrant to Mr. Roth for the purchase of 7,500,000 shares of common stock exercisable for a period of five years at $0.10 per share with the warrant vesting in one year. The Company used the Black Scholes pricing model to determine the fair value of the warrants. The Company used the contractual term of the warrant, a risk free interest rate of 0.79% and a volatility of 205%. A relative fair value of approximately $730,880 was calculated and assigned to the warrants based on their fair values.

NOTE 8 – SUBSEQUENT EVENTS

In April 2015, SHQG entered into a non-cancellable lease for the Company’s first fast casual restaurant in Glendale, Colorado. the initial term of this lease is to expire July 31, 2020. This lease includes three extension options, with the term of each extension option consisting of five years. Rent payments are approximately $10,534 per month which includes certain common area maintenance charges, and are subject to escalation provisions. This location is anticipated to open August 2015.

From April 1, 2015 through May 15, 2015, the Company’s issued 725,000 common shares of stock at $0.20 per share for proceeds of $145,000.

Table of Contents

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Management’s Discussion and Analysis, we provide a historical and prospective narrative of our general financial condition, results of operations, liquidity and certain other factors that may affect our future results, including:

·	Key events and recent developments within our Company;
·	Our results of operations for the three months ended March 31, 2015 and 2014;
·	Our liquidity and capital resources;
·	Any off balance sheet arrangements we utilize;
·	Any contractual obligations to which we are committed;
·	Our critical accounting policies;
·	The inflation and seasonality of our business; and
·	New accounting standards that affect our Company.

The review of Management’s Discussion and Analysis should be made in conjunction with our consolidated financial statements, related notes and other financial information included elsewhere in this annual report.

Overview

Additionally, the Company has begun to develop a fast casual, Southern Hospitality-branded restaurant concept, in which the Company plans to open one to two units during 2015.

The Company is a party to a franchise agreement (the “FA”) with SH Franchising & Licensing LLC, dba Southern Hospitality BBQ (the “Franchisor” or “SHFL”). In addition, in February 2015, the Company entered into a Master License Agreement (“MLA”) with SHFL which grants the Company the right to license up to five Southern Hospitality-branded fast casual restaurants (SHQ) in the Denver and Colorado Springs markets over the next 18 months. SHFL and SCRG have agreed to a royalty of two and one half percent (2.5%) of gross sales on each of the new SHQ locations. The agreement pertains exclusively to Company’s right to develop SHQ and does not restrict the Company from developing a similar, competitive brand in the future. Finally, in developing the SHQ concept, SCRG will retain joint ownership in the concept, which pertains to the functionality of the restaurant.

In February 2015, the Company also executed a sixth amendment to the Master Franchise Agreement which specifically grants SCRG the right to develop two new full service Southern Hospitality restaurants during 2015, the locations of which were named in the document to be Lone Tree, Colorado and downtown Colorado Springs, Colorado. Additionally, the sixth amendment grants the Company the right to rebrand its Bourbon Brothers Southern Kitchen restaurant in northern Colorado Springs into a Southern Hospitality-branded full service franchised restaurant operating under the trade name Southern Hospitality Southern Kitchen, a differentiated and slightly more upscale concept to that of the original concept.

Table of Contents

Results of Operations – Three Months Ended March 31, 2015 and 2014

Revenues

During the three months ended March 31, 2015 and 2014, the Company generated approximately $1,241,000 and $1,270,000 in net revenue.

Cost of Revenue – Restaurant Operating Expenses

For the three months ended March 31, 2015 and 2014, the Company’s cost of revenue was approximately $1,267,900, and $1,345,800. The cost of revenue was attributable to the two restaurants, including the cost of food, alcohol, labor and other costs of the restaurants.

Cost of revenue, comprised of operating expenses at the SHD and SHSK restaurants, includes variable expenses and fluctuates with sales volumes for expenses such as food and beverage costs, payroll and franchise fees. Fixed expenses, such as lease expenses at both restaurant locations, are also included.

Operating Expenses – General and Administrative, Related Party Management Services and Selling and Marketing

For the three months ended March 31, 2015 and 2014, the Company’s operating expenses were approximately $1,962,700 and $2,345,300. The operating expenses in 2015 and 2014 were primarily related ongoing operations and pre-opening expenses for SHLT. The Company’s largest operating expense, excluding restaurant operating expenses, during the three months ended March 31, 2015 and 2014, were its general and administrative expenses totaling approximately $559,100 and $808,400. The general and administrative costs are due to preopening and ongoing expenses for three restaurant locations primarily, including recurring corporate costs (such as payroll and related expenses). Additionally, the Company incurred approximately $22,200 and $90,500 in selling and marketing expenses during the three months ended March 31, 2015 and 2014. The Company expects to incur general and administrative expenses going forward as it continues to grow its operations. The Company anticipates that its consolidated net loss may continue throughout the remainder of 2015 due to the overall expansion of the store locations and its subsidiaries and parent company overhead.

Depreciation and Amortization

For the three months ended March 31, 2015 and 2014, the Company’s depreciation and amortization was approximately $113,500 and $100,500. Depreciation on fixed assets and amortization of the intangible asset for franchise fees began in February 2013 with the opening of the SH Denver restaurant.

Other income (expense)

For the three months ended March 31, 2015 and 2014, the Company recognized other expense of approximately $181,500 and $26,800. The increase in interest expense comparing three months year over year was primarily due to the increase in the amount of promissory notes in 2015 compared to 2014 in regards to recognition of interest expense.

Table of Contents

Liquidity and Capital Resources

As of March 31, 2015, the Company had working capital deficiency of approximately $508,800 and had approximately $442,600 of cash. The Company’s total assets remained relatively the same as of March 31, 2015, when compared to December 31, 2014, due to the cash paid for SHLT assets during the first quarter of 2015.

As noted above, the Company incurred a net loss during the three months ended March 31, 2015, and 2014. Further, as of March 31, 2015, the Company had an accumulated deficit of approximately $9,530,300. The Company believes its Denver restaurant revenues and its Colorado Springs restaurant revenues, which both are 51% owned by the Company, offset by the overhead of the public company administration, coupled with the high cost of build out required for each restaurant, specifically the SHLT location, requires the Company to seek additional capital to help fund its operations in the near term. However, there can be no assurance that additional financing will be available to the Company on reasonable terms, if at all. The Company’s ability to continue to pursue its plan of operations is dependent upon its ability to increase revenues and/or raise the capital necessary to meet its financial requirements on a continuing basis. The Company’s continued implementation of its business plan is dependent on its future profitability and on additional debt or equity financing, which may not be available in amounts or on terms acceptable to the Company or at all. The Company believes the individual store performances reflect an ongoing effort to curb costs within food and labor, while also pursuing marketing activities to increase revenues during the remainder of 2015.

The Company’s consolidated financial statements for the three months ended March 31, 2015, have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Report of our Independent Registered Public Accounting Firm on the Company’s consolidated financial statements as of and for the year ended December 31, 2014, includes a “going concern” explanatory paragraph which means that the auditors stated that conditions exist that raise doubt about the Company’s ability to continue as a going concern.

Liabilities

The Company’s liabilities for notes payable and accrued interest as of March 31, 2015, is approximately $2,124,600 compared to approximately $1,708,500 as of December 31, 2014. Accounts payable as of March 31, 2015, is approximately $150,700 compared to approximately $91,800 as of December 31, 2014. These increases are due to the pre-opening of SHLT and the issuance of additional debt.

Operating Activities

Net cash used in operating activities was approximately $512,600 in the three months ended March 31, 2015, as compared to net cash used in operating activities of approximately $659,900 in the same period of 2014. The decrease in net cash used in operating activities in 2015 (compared to 2014) was primarily due to the increases in accounts payable, accrued liabilities and deferred rent offset by the increase in prepaid expenses, as compared to the 2014 period.

Investing Activities

Net cash used in investing activities in the three months ended March 31, 2015, was approximately $725,200, as compared to net cash provided by investing activities of approximately $655,000 for the three months ended March 31, 2014. Net cash used in investing activities for the three months ended March 31, 2015, was primarily the result of cash used for purchases of property and equipment while cash provided by investing activities for the three months ended March 31, 2014, was primarily the result of cash acquired in the BBHCLLC acquisition.

Table of Contents

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2015, was approximately $498,300, compared to approximately $275,000 in the three months ended March 31, 2014. Cash provided by financing activities in 2015 and 2014 was primarily due from the sale of common stock while also issuing promissory notes.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our shareholders.

Contractual Cash Obligations

In April 2012, the Company entered into a lease that expires in August 2022, with the option to extend for two, five year periods, and requires lease payments of approximately $15,550 per month for the first year, escalating up to approximately $20,289 per month in the tenth year.

In January 2014, the Company entered into a lease with an unrelated party for its corporate office. The Company will pay approximately $6,000 per month with the lease expiring on December 31, 2016.

In January 2014, the Company entered into a 120 month lease with a related party for its Colorado Springs-based restaurant. The Company will pay $33,424 per month escalating by approximately 10% every 60 months.

In July 2014, the Company entered into a ten-year, non-cancellable lease for the restaurant in Lone Tree, Colorado. The lease provides for an initial lease term of ten years for two, five-year renewal options. Rent payments are approximately $9,900 per month plus certain common area maintenance charges, and are subject to escalation provisions. This location opened April 27, 2015.

Critical Accounting Policies

The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make a variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements. and (ii) the reported amounts of revenues and expenses during the reporting periods covered by the financial statements.

Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates. Changes in estimates and assumptions based upon actual results may have a material impact on our results of operation and/or financial condition. Our significant accounting policies are disclosed in Note 2 to the Financial Statements included in this Form 10-Q. Our critical accounting policies are outlined below.

Fair Value Measurements

The carrying value of cash and non-related party payables approximates fair value due to their short maturities. The carrying value of non-related party notes payable approximates fair value based on effective interest rates estimated to approximate market. The carrying amount of payables to related parties are not practicable to estimate based on the related party nature of the underlying transactions.

Table of Contents

Intangible assets

Intangible assets at March 31, 2015, represent franchise license costs for the Denver restaurant. These costs are amortized beginning with the restaurant opening over the ten-year term of the franchise agreement using the straight line method. The Company assesses potential impairment to intangible assets when there is evidence that events or changes in circumstances indicate that the recovery of the assets’ carrying value is not recoverable.

Property and Equipment

The Company began capitalizing certain leasehold improvements, as well as equipment the Company purchased in 2015 and 2014. Management reviews property and equipment, including leasehold improvements, for impairment when events or circumstances indicate these assets might be impaired.

The Company's management considers, or will consider, such factors as the Company's history of losses and the disruptions in the overall economy in preparing an analysis of its property, including leasehold improvements, to determine if events or circumstances have caused these assets to be impaired. Management bases this assessment upon the carrying value versus the fair value of the asset and whether or not that difference is recoverable. Such assessment is to be performed on a restaurant-by-restaurant basis and is to include other relevant facts and circumstances including the physical condition of the asset. If management determines the carrying value of the restaurant assets exceeds the projected future undiscounted cash flows, an impairment charge would be recorded to reduce the carrying value of the restaurant assets to their fair value. Leasehold improvements, property and equipment are stated at cost. Internal costs directly associated with the acquisition, development and construction of a restaurant are capitalized. Expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, and leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Construction in process (leasehold improvements in process) and other property and equipment are not depreciated/amortized until placed in service. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings.

The estimated useful lives are as follows:

Leasehold improvements 10 years

Furniture and fixtures 3-10 years

Equipment 3-7 years

Leases and Deferred Rent

The Company intends to lease substantially all of its restaurant properties. For leases that contain rent escalation clauses, the Company records the total rent payable during the lease term and recognizes expense on a straight-line basis over the initial lease term, including the "build-out" or "rent-holiday" period where no rent payments are typically due under the terms of the lease. Any difference between minimum rent and straight-line rent is recorded as deferred rent. Additionally, contingent rent expense based on a percentage of revenue is accrued and recorded to the extent it is expected to exceed minimum base rent per the lease agreement based on estimates of probable levels of revenue during the contingency period. Deferred rent also includes tenant improvement allowances the Company may receive, which is amortized as a reduction of rent expense, also on a straight-line basis over the initial term of the lease.

Revenue Recognition

The Company began revenue generating activities through the Denver restaurant as of February 21, 2013. The Company began accounting for such revenue activities pursuant to Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition, and applicable related guidance. Revenue is derived from the sale of prepared food and beverage and select retail items. Revenue is recognized at the time of sale and is to be reported on the Company's consolidated statements of operations net of sales taxes collected. The amount of sales tax collected is included in accrued expenses until the taxes are remitted to the appropriate taxing authorities.

Table of Contents

Stock-Based Compensation

Recently issued and adopted accounting pronouncements

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”), as of March 31, 2015, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that because of the material weaknesses in our internal control over financial reporting, as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, that our disclosure controls and procedures were not effective as of December 31, 2014. A material weakness is a deficiency or a combination of deficiencies in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the 1934 Act is accumulated and communicated to management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Table of Contents

Internal Control Over Financial Reporting.

During the most recent fiscal quarter covered by this Quarterly Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the 1934 Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. RISK FACTORS

There have been no material changes to the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

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

Option Grants

Warrant and Share Issuances

The Company sold $80,000 of the 2014 Notes in the first quarter ended March 31, 2015. By their original terms, the 2014 Notes and accrued interest become convertible, at the option of the holder, after two years from the issue date. The conversion price is the lower of 80% of the 20-day average closing sales price on the date conversion is elected or $0.25 per share. These securities were issued in reliance on the exemptions from registration under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated under the Securities Act.

Table of Contents

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

None.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

Exhibit Number	Description

3.1	Articles of Incorporation, as amended through March 9, 2015. Filed herewith.
3.2	Bylaws, as amended through January 6, 2015. (1)
10.1	Sixth Amendment to the Franchise Agreement dated February 13, 2015. (1)
10.2	Master License Agreement by and between SH Franchising & Licensing LLC and Bourbon Brothers Holding Corporation dated February 8, 2015. Filed herewith.
31.1	Rule 13a-14(a)/15d-14(a) - Certification of Principal Executive Officer. Filed herewith.
31.2	Rule 13a-14(a)/15d-14(a) - Certification of Principal Financial Officer. Filed herewith.
32.1	Section 1350 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the SARBANES-OXLEY ACT of 2002. Filed herewith.
32.2	Section 1350 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the SARBANES-OXLEY ACT of 2002. Filed herewith.
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

(1) Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and filed on March 6, 2015.

In accordance with the requirements of Section 13 or 15(d) Securities Exchange Act of 1934, we have duly caused this report to be signed on our behalf by the undersigned, thereunto duly authorized.

	SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

Date: May 15, 2015	By:	/s/ Mitchell Roth
		Mitchell Roth, President

Date: May 15, 2015	By:	/s/ Heather Atkinson
		Heather Atkinson, CFO

Exhibit 3.1

Document must be filed electronically. Paper documents are not accepted. Fees & forms are subject to change. For more information or print copies of filed documents, visit www.sos.state.co.us	E-Filed	Colorado Secretary of State Date and Time: 03/09/2015 01:05 PM ID Number: 20081058152 Document number: 201511169812 Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Amendment

filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)

ID number:

20081058152

1. Enity name:	Bourbon Brothers Holding Corporation
	(If changing the name of the corporation, indicate name BEFORE the name change)

2. New Entity name:	Southern Concepts Restaurant Group, Inc.
(if aplicable)

3. Use of Restricted Words (if any of these
terms are contained in an entity name, true name of an entity, trade name or trademark stated in this document, mark the applicable box):	o "bank" or "trust" or any derivative thereof o "credit union" o "savings and loan" o "insurance", casualty", "mutual", or "surety"

4.	Other amendments, if any, are attached.

5.	If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment states the provisions for implementing the amendment.

6. If the corporation's period of duration as amended is less than perpetual, state the date on which the period of duration expires:
	(mm/dd/yyyy)

If the corporation's period of duration as amended is perpetual, mark this box: þ

7. (Optional) Delayed effective date:
	(mm/dd/yyyy)

Notice:

Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the individual's act and deed, or that the individual in good faith believes the document is the act and deed of the person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic statutes, and that the individual in good faith believes the facts stated in the document are true and the document complies with the requirements of that Part, the constituent documents, and the organic statutes.

This perjury notice applies to each individual who causes this document to be delivered to the secretary of state, whether or not such individual is named in the document as one who has caused it to be delivered.

8. Name(s) and address(es) of the individual(s) causing the document to be delivered for filing:
	Filam Amy
	(Last) (First) (Middle) (Suffix)
	6400 South Fiddlers Green Circle
	(Street name and number or Post Office information)
	Suite 1000
	Greenwood Village CO 80111
	(City) (State) (Postal/Zip Code)
	United States
	(Province - if applicable) (Country - if not US)

(The document need not state the true name and address of more than one individual. However, if you wish to state the name and addressof any additional individuals causing the document to be delivered for filing, mark this box[ ] and include an attachment stating the name and address of such individuals.)

Disclaimer:

This form, and any related instructions, are not intended to provide legal, business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time, remains the responsibility of the user of this form. Questions should be addressed to the user's attorney.

Document must be filed electronically. Paper documents are not accepted. Fees & forms are subject to change. For more information or print copies of filed documents, visit www.sos.state.co.us	E-Filed	Colorado Secretary of State Date and Time: 03/09/2015 02:43 PM ID Number: 20081058152 Document number: 20151170188 Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Amendment

filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)

ID number:

20081058152

1. Enity name:	Southern Concepts Restaurant Group, Inc.
	(If changing the name of the corporation, indicate name BEFORE the name change)

2. New Entity name:
(if aplicable)

3. Use of Restricted Words (if any of these
terms are contained in an entity name, true name of an entity, trade name or trademark stated in this document, mark the applicable box):	o "bank" or "trust" or any derivative thereof o "credit union" o "savings and loan" o "insurance", casualty", "mutual", or "surety"

4.	Other amendments, if any, are attached.

5.	If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment states the provisions for implementing the amendment.

6. If the corporation's period of duration as amended is less than perpetual, state the date on which the period of duration expires:
	(mm/dd/yyyy)

If the corporation's period of duration as amended is perpetual, mark this box: þ

7. (Optional) Delayed effective date:
	(mm/dd/yyyy)

Notice:

8. Name(s) and address(es) of the individual(s) causing the document to be delivered for filing:
	Filam Amy
	(Last) (First) (Middle) (Suffix)
	6400 South Fiddlers Green Circle
	(Street name and number or Post Office information)
	Suite 1000
	Greenwood Village CO 80111
	(City) (State) (Postal/Zip Code)
	United States
	(Province - if applicable) (Country - if not US)

Disclaimer:

ARTICLES OF AMENDMENT

TO THE

AMENDED AND RESTATED ARTICLES OF INCORPORATION

SOUTHERN CONCEPTS RESTAURANT GROUP, INC.

These Articles of Amendment to the Articles of Incorporation were approved by the directors following the approval of certain amendments by the shareholders of Southern Concepts Restaurant Group, Inc. (the "Corporation"). This attachment is incorporated into the foregoing Articles of Amendment.

Article II, Section 1 of the Amended and Restated Certificate of Incorporation of the Corporation is hereby deleted and replaced in its entirety by the following:

"ARTICLE II

Authorized Shares

Section 1: Number. The aggregate number of shares which the Corporation shall have authority to issue is One Hundred Twenty-Four Million Eight Hundred Eighty-Four Thousand Eight Hundred Fifty-Nine (124,884,859), of which One Hundred Twenty Million (120,000,000) shall be designated as shares of Common Stock of one class with unlimited voting rights with no par value, and Four Million Eight Hundred Eighty-Four Thousand Eight Hundred Fifty-Nine (4,884,859) shall be designated as shares of Preferred Stock, to have such par value, classes and preferences as the Board of Directors may determine from time to time."

Exhibit 10.2

ACKNOWLEDGEMENT OF FORM MASTER LICENSE AGREEMENT

On this 8^th day of February, 2015, SH FRANCHISING & LICENSING, LLC, a New York limited liability company, and Southern Hospitality Licensee, LLC a Colorado limited liability company, acknowledge and agree that the following form Master License Agreement, which is attached hereto as Attachment 1, is the approved form of the parties. The parties further agree that they will not alter such form Master License Agreement without the prior written consent of the other party.

COMPANY:

SH FRANCHISING & LICENSING, LLC

By: /s/ Nelson Braff

Name: Nelson Braff

Title: Member

LICENSEE:

Southern Hospitality Licensee, LLC

By: /s/ Mitchell Roth

Name: Mitchell Roth

Title: President

ATTACHMENT 1

MASTER LICENSE AGREEMENT

SOUTHERN HOSPITALITY BBQ MASTER LICENSE AGREEMENT

(LIMITED SERVICE MODEL)

Address: N/A

Site#: N/A

SOUTHERN HOSPITALITY BBQ MASTER LICENSE AGREEMENT

TABLE OF CONTENTS

Section		Page

1.	GRANT OF LICENSE	2
2.	TERM AND RENEWAL	3
3.	LICENSE FEE AND ROYALTIES	4
4.	SITE ACCEPTANCE	5
5.	CONSTRUCTION OF RESTAURANT	5
6.	TIMING OF OPENING	6
7.	TRAINING	6
8.	BRANDING AND PUBLIC RELATIONS ASSISTANCE	6
9.	OPERATIONS AND MAINTENANCE OF RESTAURANT	7
10.	COMPUTER AND POINT OF SALE SYSTEMS	7
11.	ING27REDIENTS, MATERIALS, SUPPLIES AND SUPPLIERS	7
12.	ADVERTISING	10
13.	ACCOUNTING AND RECORDS SYSTEMS	10
14.	PERSONNEL OF THE LICENSED RESTAURANT	11
15.	COMPLIANCE WITH LAWS AND HEALTH STANDARDS	11
16.	INSPECTIONS OF THE RESTAURANT	12
17.	OWNERSHIP AND USE OF MARKS	12
18.	CASUALTY LOSSES	14
19.	INSURANCE	14
20.	CONFIDENTIAL INFORMATION	15
21.	TRANSFER OF INTEREST	15
22.	COMPANY’S RIGHT OF FIRST REFUSAL	18
23.	DEFAULT AND TERMINATION	19
24.	OBLIGATIONS UPON TERMINATION OR EXPIRATION	21
25.	COVENANTS AND RESTRICTIONS ON OTHER BUSINESS INTERESTS	23
26.	INDEPENDENT CONTRACTOR AND INDEMNIFICATION	23
27.	MISCELLANEOUS PROVISIONS	24
28.	ACKNOWLEDGMENTS	29

EXHIBITS:

	Exhibit A	Location
	Exhibit B	Currently Authorized Trademarks and Service Marks
	Exhibit C	Company’s Proprietary Products
	Exhibit D	Licensee’s Acknowledgment
	Exhibit E	Mutual Confidentiality Agreement

SOUTHERN HOSPITALITY BBQ

MASTER LICENSE AGREEMENT

(Limited Service Model)

THIS SOUTHERN HOSPITALITY BBQ MASTER LICENSE AGREEMENT (“Agreement”) is made between SH FRANCHISING & LICENSING, LLC, a New York limited liability company (hereinafter, “Company”), and Southern Hospitality Licensee, LLC, a Colorado limited liability company (hereinafter, “Licensee”). The Agreement is dated February 8, 2015 (the “Effective Date”).

RECITALS:

WHEREAS, Company and Licensee have and/or intend to expend significant time, effort and money to develop a distinctive system relating to the establishment and operation of a limited service restaurant model, featuring a specialized menu of barbecued meats, sandwiches, sides, salads and desserts, as well as other food and beverage items (hereinafter referred to as “System”); and

WHEREAS, the System expressly includes recipes and menu items, operations manuals, design plans, business plans, customer and supplier lists, equipment specifications, and cooking methods; and

WHEREAS, Company owns or has the right to use or sublicense or promote certain trade names, service marks, trademarks, domain names, celebrity affiliations, logos, emblems, and indicia of origin, including but not limited to, the mark “SOUTHERN HOSPITALITY” and such other trade names, service marks, trademarks, logos and indicia of origin that may be designated by Company in the future (hereinafter referred to as “Marks”); and

WHEREAS, the definition of “System” expressly excludes any right, title or interest in the Marks except for the limited license granted pursuant to this Agreement; and

WHEREAS, Company continues to develop, use and control the use of such Marks in order to identify for the public the source of services and products marketed under the Marks; and

WHEREAS, Licensee desires to enter into the business of operating up to five (5) restaurants (each a “Restaurant”) under the System and to obtain a license from Company to use the Marks in connection therewith; and

WHEREAS, Licensee understands and acknowledges the importance of maintaining Company’s high standards of quality, cleanliness, appearance and service and the necessity of operating the business licensed under this Agreement in conformity with Company’s standards and specifications and protecting any proprietary information provided to Licensee under this Agreement; and

WHEREAS, Licensee acknowledges that Licensee has conducted an independent investigation of the business contemplated by this Agreement and understands and acknowledges that the nature of the business conducted by Company may evolve and change over time, that an investment in a Restaurant involves business risks and that the success of the business is largely dependent upon the business abilities and efforts of Licensee; and

WHEREAS, Licensee acknowledges that Licensee has not received or relied upon any representation, warranty, or guaranty, express or implied, as to the income, sales volume, earnings, expenses, revenues, profits or success of Southern Hospitality restaurants or the business contemplated by this Agreement;

NOW, THEREFORE, the parties, in consideration of the undertakings and commitments set forth in this Agreement, agree as follows:

1. GRANT OF LICENSE

1.1 Company grants to Licensee, upon the terms and conditions contained in this Agreement, the right to use and do business under the System and the Marks at locations (each a “Location”) mutually agreed to between Company and Licensee in the metropolitan areas of Denver, Colorado and Colorado Springs, Colorado (the “Territory”). This Agreement shall be executed for each Restaurant that Licensee develops in the Territory. The license permits Licensee to operate a Restaurant solely at the Location approved in advance in writing by Company, and to use the Marks solely in connection with that Restaurant.

1.2 This Agreement confers no sublicensing rights upon Licensee or the right to develop or operate a Restaurant under the Marks anywhere in the world except within the Territory.

1.3 This Agreement requires licensees to open a minimum of three (3) Restaurants under the Marks in the Territory, but in a number not to exceed five (5) Restaurants in the Territory on or before eighteen (18) months from the Effective Date. Company is not obligated to grant Licensee the right to open any Restaurants under the Marks in the Territory or elsewhere beyond the five (5) Restaurants specified in this paragraph. Provided, however, if Company refuses to permit Licensee to open more than five (5) Restaurants under the Marks after written request from Licensee, and Company utilizes the System, which is co‑owned by Company and Licensee as further set forth in Section 1.4 below, Company will pay Licensee a fee of $2,500 for each restaurant where the System is used up to a maximum of $250,000 (after which no additional compensation will be due to Licensee).

1.4 Co-Ownership of the System. The System shall be considered jointly-owned and developed by Company and Licensee, and each of Company and Licensee shall both have the right, without compensation to or approval from the other (except as provided in Section 1.3 above), to independently use, license, sublicense and convey each party’s ownership interest in the System.

1.5 Licensee acknowledges that this license is non‑exclusive, as described below:

1.5.1 At any time, Company may operate, or license others to operate, Restaurants under the Marks outside of the Territory.

1.5.2 After this Agreement expires or is terminated, Company may operate, or license others to operate, Restaurants under the Marks within the Territory.

1.6 Licensee acknowledges and agrees that Company may modify and update the Marks, in its sole discretion. Licensee acknowledges and agrees that Company may enter into co-branding relationships, marketing agreements, and other strategic alliances with other companies or entities, all of which may result in changes to the Marks. As the Marks change, Licensee may be required to purchase new equipment and/or signage, and make other investments in the Licensed Business. Licensee understands and agrees that it must develop and operate the Restaurant in accordance with the System and Marks, as they are modified, updated, improved and changed from time to time.

1.7 Termination or expiration of this Agreement at a particular Location constitutes a termination or expiration of the license and any and all licenses granted under this Agreement at such Location.

2. TERM AND RENEWAL

2.1 Except as otherwise provided herein, the Term of the License or the Marks for each Restaurant expires at the earlier of fifteen (15) years from the effective date for each Restaurant as shown in Exhibit A, or upon expiration or termination of Licensee’s right to remain in possession of, or operate, a Restaurant at the Location (“Initial Term”).

2.2 Company grants to Licensee an option to enter into a new license agreement for the Marks to each Restaurant for one (1) additional consecutive term of five (5) years or a shorter term that is coterminous with the term of the lease for the Location, subject to the following conditions:

2.2.1 Not less than twelve (12) months or more than eighteen (18) months before the end of the Initial Term, Licensee must have given Company written notice of Licensee’s election to exercise the option. If Licensee does not provide timely written notice of its election to exercise the option, Licensee will be deemed to have waived the option.

2.2.2 Licensee must sign Company’s then‑current form of license agreement, which will supersede this Agreement in all respects. The terms of that license agreement may differ from the terms of this Agreement. Excluded from differences shall be remuneration due to Company by Licensee, which is to be limited to two and one half percent of gross sales, subject to Section 3.2. Further fees such as, but not limited to, marketing, advertising or module fees shall be excluded from future agreements.

2.2.3 Licensee must confirm to Company that Licensee has the right to remain in possession of the Location for the entire additional term of the license.

2.2.4 Licensee must complete such renovation, modernization and improvement of the Restaurant premises and fixtures, furniture and equipment as Company may reasonably require. Such work may include, without limitation, replacement or addition of signs, equipment, furnishings, fixtures, finishes and décor items, and redesign of the layout of the Restaurant, to reflect the then‑current standards and image of the Southern Hospitality fast casual concept. The work must be substantially completed before the new license agreement is signed.

2.2.5 Licensee must not be in default beyond the cure period under any provision of this Agreement, any amendment or successor to this Agreement, or any other agreement between Licensee and Company.

2.2.6 Licensee must have timely met all monetary obligations to Company and its Affiliates. The term “Affiliate” means any entity that owns, is owned by, or is under common ownership with, the entity being referenced.

2.2.7 Licensee must not have received a notice of default more than three (3) times during the Initial Term; however, regardless of the number of prior notices of default, Company will not be obligated to grant a new license if, in its opinion, Licensee has not substantially complied with all of the terms and conditions of this Agreement or any other agreement between Licensee and Company.

2.2.8 The parties agree that the renewal of this Agreement indicates that that each party has substantially fulfilled their respective obligations during the Initial Term.

2.3 If Company chooses not to renew the license, Company will provide Licensee written notice stating the reasons for such refusal, no later than ninety (90) days before the expiration of the Initial Term of the license.

3. LICENSE FEE AND ROYALTIES

3.1 Licensee shall pay Company an initial license fee of $0 for each of the first five (5) Restaurants opened pursuant to this Agreement.

3.2 During the term of this Agreement, Licensee will owe to Company a continuing monthly royalty fee equal to $2,500 or two and one half percent (2.5%) of Gross Sales from a Restaurant, whichever is greater (the “Royalty”). The Royalty will be payable to Company no later than the tenth (10^th) day of a month based on Gross Sales from the prior month. Licensee will pay the Royalty in the form and manner directed by Company from time to time. The base minimum monthly royalty shall be subject to an upward adjust of 3% during each year of the Term or Renewal Term, as the case may be.

3.3 Any payment not actually received by Company on or before its due date will be deemed overdue. If any payment is overdue, Licensee must pay Company, in addition to the overdue amount, interest on such amount from the date it was due until paid, at the rate of eighteen percent (18%) per annum, or the maximum rate permitted by law, whichever is less. Company will be entitled to such interest in addition to any other remedies it may have.

3.4 “Gross Sales” includes all revenue from the sale of all food, beverage and products, and all other income of every kind and nature related to the Restaurant, including proceeds from business interruption insurance, and revenue from off-site events, whether for cash or credit and, in the case of credit, regardless of collection. “Gross Sales” does not include any sales taxes or other taxes collected from customers by Licensee for transmittal to the appropriate taxing authority or customer refunds.

4. SITE ACCEPTANCE

Any proposed site in the Territory is subject to the mutual agreement of Company and Licensee. If a site for the Restaurant has not been agreed upon by the parties by the time this Agreement is signed, a site must be selected in accordance with the following provisions. Upon acceptance by Company, the site will be described in Exhibit A to this Agreement, and become the Location.

4.1 Before signing a lease for the Restaurant, Licensee must obtain Company’s acceptance of the site. No site will be deemed accepted unless it has been expressly accepted in writing by Company. The acceptance or disapproval of any site submitted by Licensee will be at the sole discretion of Company.

4.2 Neither Company’s examination or acceptance of a site, nor any information communicated to Licensee regarding the site, constitute a representation, guaranty or warranty, express or implied, of the successful operation of any restaurant at such location.

5. CONSTRUCTION OF RESTAURANT

5.1 In the course of designing the Restaurant, Licensee must comply with all of the following requirements:

5.1.1 Licensee must employ a qualified, licensed architect and/or engineer.

5.1.2 Because the design of the Restaurant is crucial to the success of the Restaurant, Licensee must adhere to all design standards for the Restaurant as they change from time to time. Licensee shall only use trade dress, furniture, fixtures and equipment as preapproved by Company and specified in writing. Company recommends, but does not require Licensee to engage the services of Roy Nachum for design. If Licensee elects not to engage Roy Nachum for design services, Licensee and Company, collectively, shall pay the sum of $4,500 for each Restaurant in which he is not engaged for services with each party contributing 50% of the fee.

5.1.3 Licensee must obtain or prepare a schematic layout of the Restaurant site, which is subject to approval by Company. Licensee, at Licensee’s own expense, shall hire an architect or other independent contractor to prepare one. Licensee understands and agrees that Licensee bears sole responsibility for verifying the critical dimensions. Company has no liability for any consequences that may arise from any inaccuracy in the dimensions provided by Licensee or Licensee’s architect.

5.1.4 Licensee must provide to Company a schedule setting forth in detail the expected date on which Licensee will: (a) deliver the final construction plans for the Restaurant; (b) receive all necessary building permits; and (c) complete construction of the Restaurant.

5.1.5 Licensee’s architect and engineer must prepare construction plans for the site improvements based upon the schematic layout.

5.1.6 Licensee must submit the construction plans, including all engineering plans, to Company for written approval. Company may withhold approval of any construction plans in its sole discretion. Once approved by Company, such final plans must not thereafter be changed or modified without the prior written permission of Company. Company’s examination and approval of plans, or any information communicated to Licensee regarding the plans, does not constitute a representation, guaranty or warranty, express or implied, of the successful construction, operation or profitability of any restaurant. Such examination, approval and information indicate only that Company believes that the plans meet Company’s minimum criteria as they existed at the time of the evaluation.

5.1.7 Licensee must obtain all zoning classifications and clearances that may be required by state or local laws, ordinances or regulations, or that may be necessary or advisable due to any restrictive covenants relating to Licensee’s location.

5.2 Before beginning any construction of the Restaurant, Licensee must comply with all of the following requirements:

5.2.1 Licensee must engage a qualified, licensed general contractor to construct the Restaurant and to complete all site improvements.

5.2.2 Licensee must obtain the insurance required under Section 19 of the License Agreement, and maintain that insurance during the entire period of construction.

5.2.3 Licensee must obtain all permits and certifications required for the lawful construction of the Restaurant and, upon the request of Company, must certify in writing that all such permits and certifications have been obtained, or submit copies of such permits and certificates to Company.

5.3 At the time construction is completed, Licensee must comply with the following requirements:

5.3.1 Licensee must obtain all customary contractors’ sworn statements and partial and final waivers of lien for construction, remodeling, decorating and installation services.

5.3.2 Licensee must obtain all permits and certifications required for the lawful operation of the Restaurant, including but not limited to, a certificate of occupancy and health permits and, to the extent applicable, licenses to sell alcoholic beverages. Licensee must certify in writing, upon the request of Company, that all such permits and certifications have been obtained, or submit copies of such permits and certificates to Company.

5.3.3 Licensee must notify Company of the date of completion of construction. Licensee understands and acknowledges that Licensee may not open the Restaurant for business unless it receives the authorization of Company. Licensee further understands and agrees that Company’s authorization to open will be conditioned upon Licensee’s strict compliance with the specifications of the approved final plans and with the standards of the System. Company may not unreasonably prevent Licensee from opening for business, and may only do so on the grounds that the licensed business would have a material negative impact on Company or other licensed businesses. An example of the type of action this section is meant to prevent would be Licensee selling pizza.

6. TIMING OF OPENING

Licensee must open the Restaurant within the following time lines. The parties agree that time is of the essence in the opening of the Restaurant.

6.1 Licensee must open the Restaurant for business within fifteen (15) days after the date of the approval of Company described in Subsection 5.3.3.

6.2 Licensee must open the Restaurant in compliance with all standards and specifications of Company within six (6) months after the execution of this Agreement, or as otherwise specified in writing.

7. TRAINING

Company is not obligated to provide training of any kind to Licensee of its management or employees before or after the Restaurant opens for business to the public. Company may provide training and such other refresher courses, seminars and training programs as it, in its sole discretion, deems necessary or desirable, at the expense of Company..

8. BRANDING AND PUBLIC RELATIONS ASSISTANCE

Company will provide to Licensee, from time to time, branding and public relations assistance and, as Company deems advisable, advice and written materials concerning techniques of managing and operating the Licensed Business, including new developments and improvements in restaurant equipment, food products, packaging and preparation.

9. OPERATIONS AND MAINTENANCE OF RESTAURANT

9.1 Licensee understands and agrees that every detail of the Licensed Business is important to Licensee, Company, and other licensees in the effort to develop and maintain high operating standards, to increase the demand for the services and products sold under the Marks, and to protect the reputation and goodwill of Company. To ensure that the highest degree of quality and service is maintained, Licensee must operate the Restaurant in conformity with such methods, standards and specifications as Company may from time to time prescribe, including the following:

9.1.1 Licensee must use the Restaurant premises solely for the operation of the Licensed Business, and must not use, or permit the use of, the premises for any other purpose or activity at any time.

9.1.2 Licensee will obtain a liquor license to sell beer, wine and spirits at the Restaurant.

9.1.3 Licensee may accept such credit card, debit card, gift card/loyalty card (if possible and at a reasonable cost to Licensee); check verification, and electronic fund transfer as payment. Licensee may accept such methods of payment that Company authorizes or approves, which authorization or approval will not be unreasonably withheld, delayed, or conditioned.

9.1.4 Licensee must keep the business open and in normal operation for such hours and days as agreed upon between Licensee and Company.

9.2 After this Agreement has been in effect for five (5) years, Company may require Licensee to complete such renovation, modernization and improvement of the Restaurant premises and fixtures, furniture and equipment as Company may reasonably require. Such work may include, without limitation, replacement or addition of signs, equipment, furnishings, fixtures, finishes and décor items, both interior and exterior, and redesign of the layout of the Restaurant, to reflect the then-current standards and image of the then current Southern Hospitality fast casual concept.

10. COMPUTER AND POINT OF SALE SYSTEMS

Company acknowledges and agrees that Licensee may use a point of sale system of its choosing, but must allow for electronic polling of such system by Company.

11. INGREDIENTS, MATERIALS, SUPPLIES AND SUPPLIERS

11.1 Licensee must offer and sell in the Restaurant all proprietary food items, ingredients, supplies, materials and other products (collectively “Proprietary Products”) that Company from time to time requires or authorizes, and Licensee may not offer or sell any other products or services without Company’s written approval. Such Proprietary Products are provided on Exhibit C. Company may make reasonable modifications to Exhibit C to reflect current specifications and/or standards from time to time. Any food items, ingredients, supplies, materials and other products that are not included on Exhibit C shall be deemed as “Generic Products.” For the avoidance of doubt, Generic Products shall include those food items, ingredients, supplies, materials and other products that Licensee must offer and sell in the Restaurant that must meet Company’s specifications for the same. Company agrees that Licensee may purchase Generic Products from its own local or regional suppliers, manufacturers, and/or distributors so long as such Generic Products meet the applicable standard and specifications prescribed by Company from time to time, if any, provided that Company is satisfied that they meet Company’s food safety standards. Company agrees that Licensee shall have the right to receive and keep rebates or discounts on the purchase of such Generic Products from Licensee’s suppliers, manufacturers, and/or distributors.

11.2 Licensee must purchase all Proprietary Products used or offered for sale at the Restaurant solely from suppliers, distributors and other vendors (collectively, “Suppliers”) that have been approved in writing by Company, and have not thereafter been disapproved. From time to time or at Licensee’s request, Company will provide Licensee with a list of suppliers approved to supply Proprietary Products.

11.3 Licensee must use in the development and operation of the Restaurant only those brands, types and models of equipment, signs, fixtures and furnishings (collectively, “Equipment”) that meet Company’s standards and specifications. Licensee may purchase approved brands, types and models of Equipment that meet Company’s specifications only from Suppliers that have been approved by Company in writing, and have not thereafter been disapproved. From time to time or at Licensee’s request, Company will provide Licensee with a list of suppliers approved to supply Equipment.

11.4 Company may, in its sole discretion, designate certain Proprietary Products to be produced and/or prepared at the Restaurant. Company may, at any time, modify the list of these items.

11.5 Licensee must pay all Suppliers (and all other providers of services or products) according to agreed-upon terms of payment, so as not to impair the reputation of Company, other licensees or otherwise impair the Marks.

11.6 All advertising and promotional materials, signs, decorations, paper goods (including disposable food containers, napkins, menus and all forms and stationery used in the Licensed Business), and other items that may be designated by Company to bear the Marks, must be used in the form, color, location and manner prescribed by Company. All such items must be submitted to Company for approval, and must meet Company’s specifications regarding design, materials and manufacture.

11.7 Company may offer Licensee the opportunity to participate in the testing and development of new menu items that may be developed or conceived by Company. If Licensee agrees to participate in such testing and development, Licensee understands and agrees that Licensee may be required to purchase new Products and/or Equipment.

12. ADVERTISING

The parties recognize the value of advertising and standardized advertising programs to the goodwill and public image of the Marks. Accordingly, the parties agree as follows:

12.1 LOCAL ADVERTISING AND PROMOTION

12.1.1 All local advertising and promotion by Licensee in any medium must be conducted in a dignified manner, and must conform to the standards and requirements of Company as set forth in writing by the Company. Licensee must not use any advertising and promotional plans and materials that have not been prepared, or previously approved in writing, by Company within the previous twelve (12) months. If Licensee wants to use any other plans or materials, Licensee must submit such plans and materials to Company and obtain written confirmation that the Company has received them. Company must approve or disapprove such plans and materials within fifteen (15) days after Company receives them. If the plans or materials are not disapproved within fifteen (15) days, they are deemed approved. Licensee must not use plans or materials unless and until Company approves them, and Licensee must promptly discontinue use of any advertising or promotional plans or materials upon notice from Company. Any and all costs associated with discontinuing the use of such plans and materials will be borne exclusively by Licensee.

12.1.2 Licensee agrees to spend a commercially reasonable amount of Gross Sales on local advertising.

12.2 MARKETING AND PROMOTION. Licensee will not be required to make a contribution to the Southern Hospitality BBQ Marketing Fund (“Marketing Fund”), however, if Licensee requests and receives any marketing-related services and/or materials from or through the Company, Licensee hereby agrees to reimburse the Company for the reasonable costs associated with providing those services and/or materials.

13. ACCOUNTING AND RECORDS SYSTEMS

13.1 With respect to the operation and financial condition of the Restaurant, Licensee must provide Company with daily sales reports and other reports requested from time to time. Licensee must also permit Company to remotely monitor Licensee’s point of sale system.

13.2 Licensee must prepare financial reporting materials in the form upon which the parties agree, and submit those materials to Company, as follows:

13.2.1 If requested by Company, Licensee shall provide Company with an annual statement of Gross Sales within ninety (90) days after the end of Licensee’s fiscal year. Licensee’s fiscal year ends on the last Friday in August. Licensee must submit by fax, mail or such other means as Company specifies a statement of Licensee’s Gross Sales for Licensee’s fiscal year.

13.3 Company or its designated agents may at any time enter and inspect Licensee’s place of business, and examine and copy, at Company’s expense Licensee’s official records related to Gross Sales. Company may also, at any time, have an audit made of Licensee’s Records of Gross Sales, and/or systems used to record those Gross Sales. If an inspection or audit reveals that any payments have been understated in any report to Company, then Licensee must pay to Company upon demand the amount understated, in addition to interest from the date such amount was due until paid, at the rate of eighteen percent (18%) per annum, or the maximum rate permitted by law, whichever is less. If an inspection or audit discloses an understatement in any report of two percent (2%) or more of Licensee’s Gross Sales for the audited period, Licensee must, in addition, reimburse Company for any and all costs and expenses connected with the inspection and audit, including, without limitation, travel, lodging and wage expenses, and reasonable accounting and reasonable legal costs. The foregoing remedies are in addition to any other remedies Company may have.

14. PERSONNEL OF THE LICENSED RESTAURANT

14.1 Licensee must employ at all times at least one (1) General Manager at the Restaurant. Such General Manager shall have previous restaurant experience and meet such other criteria as Company reasonably requires as set forth in writing from time to time. The General Manager must dedicate his/her full efforts toward running the Restaurant. Company shall have the right to request the resume of potential General Manager candidates and other applicable background information.

14.2 Licensee must employ at all times a competent, conscientious, trained staff. Licensee must take all necessary steps to ensure that all of its employees preserve good customer relations and comply with any dress code of the System, as agreed upon by Company and Licensee.

15. COMPLIANCE WITH LAWS AND HEALTH STANDARDS

15.1 Licensee must meet and maintain the highest health standards and ratings applicable to the operation of the Restaurant. Upon request and within ten (10) business days, Licensee must furnish to Company a copy of the most recent inspection report and/or warning, citation, certificate or rating applicable to the health or safety standards in the operation of the Restaurant.

15.2 Licensee must maintain the Restaurant in a high degree of sanitation, repair and condition. Subject to the reasonable requirements and timeframes of the Client, Licensee must make such additions, alterations, repairs and replacements at the Restaurant that Company deems necessary for that purpose. All such work must be completed within a reasonable time, as agreed upon by the parties. Such work may include, without limitation, periodic repainting, replacement of furnishings, equipment, décor, and obsolete signs, and repair of any damages to tables, countertops, floors, columns or other furnishings or fixtures visible to the customer.

15.3 Licensee must at all times, at its own expense, ensure the Restaurant conforms to and complies with all federal, state and local laws, ordinances and regulations, and payment card industry standards now in force or that are hereafter enacted affecting the operation of the Licensed Business. Company acknowledges that since the Client controls the Facility, Licensee cannot certify that the Facility or the Restaurant meet the requirements of the Americans with Disability Act (“ADA”) and any similar state law. If Company requests, Licensee shall use commercially reasonable efforts to acquire evidence of ADA compliance from its Client. It, however, shall not be a breach of this Agreement if Licensee is unable to acquire such evidence from the Client.

16. INSPECTIONS OF THE RESTAURANT

16.1 Licensee must permit Company or its agents, at any reasonable time, to remove samples of food or non‑food items from Licensee’s inventory, or from the Restaurant, without payment therefor, in amounts reasonably necessary for testing by Company to determine whether said samples meet Company’s then‑current standards and specifications.

16.2 Licensee must allow Company and its agents to enter upon the Restaurant premises at any time for the purpose of conducting inspections and audits. Licensee must cooperate with Company’s representatives in such inspections and audits by rendering such assistance as they may reasonably request. Upon notice from Company or its agents, and without limiting Company’s other rights under this Agreement, Licensee must take such steps as necessary to immediately correct any deficiencies detected during any such inspection. If Licensee fails to correct such deficiencies within a reasonable time, as determined by Company, Company may correct such deficiencies. Licensee must reimburse Company for its reasonable expenses for doing so, payable by Licensee immediately upon demand.

16.3 Licensee acknowledges and agrees that it must adhere to all mandatory specifications, standards and operating and inspection procedures prescribed from time to time by Company. Licensee’s failure to adhere to such mandatory specifications, standards, operating procedures and inspection procedures, or to pass Company’s quality control inspections, constitutes grounds for termination of this Agreement.

17. OWNERSHIP AND USE OF MARKS

17.1 Licensee understands and acknowledges that Company owns the Marks, that Licensee has no interest whatsoever in or to the Marks, and that Licensee’s right to use the Marks is derived solely from this Agreement, and is limited by the terms of this Agreement and all applicable specifications, standards and operating procedures prescribed by Company from time to time. Any unauthorized use of the Marks by Licensee will constitute an infringement of the rights of Company in and to the Marks.

17.2 Licensee agrees that any goodwill established by Licensee’s use of the Marks will inure to the exclusive benefit of Company, and Licensee acknowledges that this Agreement does not confer upon Licensee any goodwill or interests in the Marks.

17.3 Licensee must not, during the term of this Agreement or after its termination or expiration, contest the validity or ownership of any of the Marks or assist any other person in contesting the validity or ownership of any of the Marks.

17.4 All provisions of this Agreement applicable to the Marks will apply to any additional trademarks, service marks, logo forms and commercial symbols that Company hereafter authorizes Licensee to use in connection with the Licensed Business.

17.5 Licensee agrees to use the Marks as the sole identification of the Restaurant; however, Licensee must identify itself as the independent owner at the Restaurant in the manner prescribed by Company. Licensee agrees to display the Marks prominently and in the manner prescribed by Company on signs, menus and forms. Further, Licensee agrees to give such notices of trademark and service mark registrations and copyrights as Company specifies, and to obtain such fictitious or assumed name registrations as may be required under applicable law.

17.5.1 Licensee agrees to identify itself as the independent owner at the Restaurant during the course of business-to-business activities, though such identification is not intended to be made to consumers or the general public.

17.6 Licensee may not use any Mark as part of any corporate or trade name or with any prefix, suffix or other modifying words, terms, designs or symbols, or in any modified form. Licensee may not use any Marks in connection with any business or activity other than the Licensed Business or in any manner not explicitly authorized in writing by Company. Licensee may not establish a website or domain name that in any way uses or incorporates a Mark, or links to Company’s website, without the prior written consent of Company.

17.7 Failure to strictly comply with any and all provisions regarding use of the Marks in this Section 17 will be a breach of this Agreement and will be grounds for termination of this Agreement without the opportunity to cure, as more fully set forth in Section 23.

17.8 If Company determines, in its sole discretion, that it is advisable for Company and/or Licensee to modify or discontinue use of any Mark, or use one or more additional or substitute trademarks or service marks, Licensee agrees to comply with Company directives regarding the use of such Marks within a reasonable time as established by Company. The sole liability and obligation of Company in any such event will be to reimburse Licensee for the out‑of‑pocket costs of complying with this obligation.

17.9 Licensee must immediately notify Company in writing if Licensee becomes aware of any apparent infringement or imitation of any Mark, any challenge to Licensee’s use of any Mark, any claim by any person of any rights in any Mark, or existence of any similar trade name, trademark or service mark. Licensee may not communicate with any person, other than Licensee’s counsel and Company and its counsel, in connection with any infringement, challenge or claim, except as otherwise required by law. Company has the exclusive right to control any litigation, U.S. Patent and Trademark Office proceeding or other legal or administrative proceeding relating to any Mark, and sole discretion to take such action as it deems appropriate.

17.10 Company agrees to indemnify Licensee against, and to reimburse Licensee for, all damages for which he is held liable in any proceeding in which Licensee’s use of any Mark pursuant to and in compliance with this Agreement is held to constitute trademark infringement, unfair competition or dilution, and for all costs reasonably incurred by Licensee in the defense of any such claim brought against it or in any such proceeding in which it is named as a party, provided that Licensee has timely notified Company of such claim or proceeding, has otherwise complied with this Agreement, and has tendered complete control of the defense of such to Company. If Company defends such claim, Company will have no obligation to indemnify or reimburse Licensee with respect to any fees or disbursements of any attorney retained by Licensee.

17.11 All promotional materials, advertising materials, discoveries, inventions, ideas, business methods or improvements (whether or not patentable or capable of being copyrighted) relating to the Marks, whether created by Licensee, Licensee’s owners (if Licensee is not an individual) or their agents and independent contractors, must be promptly disclosed by Licensee to Company, and will be Company’s sole and exclusive property and, if applicable, will be deemed to be works made-for-hire for Company. Licensee and its owners (if applicable) will sign, and cause their agents and independent contractors to sign, whatever assignment or other documents Company requests to evidence Company’s ownership and to assist Company in obtaining copyright registrations or patent rights. Licensee and its owners (if applicable) will use such items solely in connection with activities permitted under this Agreement, and will not use any substantially similar material for any purpose during or after the term of this Agreement.

18. CASUALTY LOSSES

If the Restaurant premises are damaged or destroyed by fire or other casualty, Licensee must repair or reconstruct the premises in accordance with Company’s then-current design standards. Such repair or reconstruction must be completed within a reasonable time in light of the circumstances. If the repairs or reconstruction cannot be completed within ninety (90) days after the casualty loss, then Licensee will have thirty (30) days after such event in which to apply for Company’s approval to relocate the Restaurant or for additional time to reconstruct the premises. Such approval will not be unreasonably withheld, but may be conditioned upon the payment of an agreed-upon minimum royalty while the restaurant is not in operation.

19. INSURANCE

During the term of this Agreement, each party must obtain and maintain in full force and effect, at his own expense, such insurance coverages as provided below. Within ten (10) days after the Effective Date of this Agreement, Licensee must furnish to Company Certificates of Insurance showing that Licensee’s insurance coverages are in effect. Renewal Certificates of Insurance must be delivered to Company within thirty (30) days of the expiration date of all policies. Requirements as of the Effective Date hereof are:

19.1 Commercial General Liability insurance, including Products Liability coverage, and Broad Form Contractual Liability coverage, including liquor liability coverage (if applicable), written on a “per occurrence” policy form in an amount of not less than Three Million Dollars ($3,000,000) combined single limit per occurrence and aggregate. Such insurance must contain contractual liability coverage for liabilities assumed by the insured under a written contract.

19.2 Business automobile liability insurance, including owned, leased, non-owned and hired automobile coverage with a limit of not less than One Million Dollars ($1,000,000) per accident.

19.3 Workers’ Compensation insurance as required by law and Employer’s Liability insurance with a limit of not less than One Million Dollars ($1,000,000).

19.4 “All Risk” property insurance covering: (a) the furniture, fixtures, equipment, inventory and other tangible property that Licensee owns in the Restaurant and (b) Business Interruption/ Business Income insurance (at least one (1) year of actual loss sustained), including Extra Expense insurance, so as to re-establish normal business operations.

19.5 All insurance policies required under this Agreement: (a) must be primary and non-contributory; (b) must be issued by an insurance company(ies) with a rating of not less than “A-VII” in the current Best Insurance Rating Guide or approved by the other party; and (c) must name the other party and its Affiliates as “additional insureds” (or its equivalent), except workers’ compensation insurance and employers’ liability.

20. CONFIDENTIAL INFORMATION

Unless otherwise mutually agreed between Company and Licensee, Company and Licensee each agree to preserve the confidentiality of any sensitive business information provided by the other and shall abide by the terms of the mutual confidentiality agreement attached hereto as Exhibit E and incorporated by reference herein.

21. TRANSFER OF INTEREST

21.1TRANSFER BY COMPANY. Company may transfer or assign this Agreement and all or any part of its rights or obligations herein to any person or legally formed entity. Any such assignment will inure to the benefit of any assignee or other legal successor to the interest of Company. Notwithstanding the foregoing, if Company transfers or assigns its rights or obligations under this Agreement, the assignee or transferee shall agree in writing that it will fulfill Company’s obligations to Licensee under this Agreement.

21.2 TRANSFER BY LICENSEE

21.2.1 Licensee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Licensee (or if Licensee is a legally formed entity, Licensee’s shareholders, partners or members), and that Company has granted this license in reliance on Licensee’s business skill, financial capacity and personal character. Accordingly, Licensee may not sell, assign, transfer, convey, give away, pledge, mortgage or otherwise encumber to a third party (hereinafter “Transfer”) any interest in Licensee, this Agreement or the Licensed Business, or permit such a Transfer, without the prior written consent of Company. Any purported Transfer, by operation of law or otherwise, not having the written consent of Company required by this Section 21 will be null and void, and will constitute a material breach of this Agreement. Furthermore, Licensee may not retain or otherwise contract with any entity that is not a party to this Agreement to provide management or administrative services for the Restaurant unless such entity is either an employee of Licensee or has been approved in writing by Company. Company may condition such approval on the receipt of a non-disclosure covenant from the third party.

21.2.2 Company may require any or all of the following as conditions of its approval of a transfer from Licensee to a third party:

21.2.2.1 All of the accrued monetary obligations and all other outstanding obligations of Licensee to Company and its Affiliates must have been satisfied.

21.2.2.2 Licensee must not be in material default of any provision of this Agreement, or any other agreement with Company or its Affiliates.

21.2.2.3 At the time of Transfer, the parties may sign a general release, in a form that is mutually satisfactory, releasing each other any and all claims against each other and their Affiliates, including officers, directors, shareholders and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances, and unknown claims.

21.2.2.4 The third-party transferee must enter into a written assumption agreement in a form satisfactory to Company, assuming and agreeing to discharge all of Licensee’s obligations under this Agreement and such ancillary agreements as Company may require. Alternately, and at Company’s option, the transferee must sign (and upon Company’s request, must cause all interested parties to sign) the standard form license agreement then in use for a term ending on the expiration date of this Agreement, and with such renewal term as may be provided by this Agreement, and such ancillary agreements as Company may require, including a Confidentiality Agreement. The terms of these agreements may not differ from the terms of this Agreement and will supersede this Agreement in all respects. The transferee will not be required to pay any initial license fee.

21.2.2.5 The third-party transferee and the proposed Principal Owners and their spouses, as applicable, must guarantee the performance of all obligations under this Agreement in writing, in a form satisfactory to Company.

21.2.2.6 The third-party transferee must demonstrate to Company’s satisfaction that it meets Company’s then-existing financial, educational, managerial and business standards. This includes possessing a good moral character, business reputation and credit rating, having the aptitude and ability to conduct the Licensed Business (as may be evidenced by prior related business experience or otherwise), and having adequate financial resources and capital to operate the business.

21.2.2.7 The third-party transferee or Licensee, at its expense, must upgrade the Restaurant to conform to the then-current standards and specifications of System restaurants, and must complete the upgrading and other requirements within the time specified by Company.

21.2.2.8 Licensee must remain liable for all of the obligations to Company in connection with the Licensed Business prior to the effective date of the transfer, and must sign any and all instruments reasonably requested by Company to evidence such liability.

21.2.2.9 At the transferee’s expense, the third-party transferee and (at Company’s request) third-party transferee’s personnel, must satisfactorily complete the training requirements set forth in Section 7, and must complete any training programs then in effect for licensees upon such terms and conditions as Company may reasonably require.

21.2.2.10 Except in the case of a Transfer to a corporation, limited liability company or partnership formed for the convenience of ownership, or Transfers among existing shareholders, Licensee (or third-party transferee) must pay a transfer fee equal to the lesser of five thousand dollars ($5,000.00) or Company’s actual out-of-pocket costs and expenses associated with reviewing the application to transfer, including, without limitation, legal and accounting fees.

21.2.2.11 Licensee and third-party transferee must agree that any note issued by the third-party transferee to Licensee in connection with the purchase of the Restaurant will be subordinate to third-party transferee’s obligations to pay royalties or any other amounts due Company or its Affiliates;

21.2.2.12 Licensee and third-party transferee must acknowledge in writing that Company’s approval of the proposed Transfer does not constitute a representation, guaranty or warranty, express or implied, of the suitability of the terms of the proposed Transfer or the successful operation of any Restaurant; however, Company may withhold consent to a transfer if it believes the terms and conditions of the proposed transfer would adversely affect the possibility of success of the business in light of the conditions under which it is to be purchased.

21.2.3 Licensee must not grant to a third party a security interest in the Licensed Business or in any of its assets unless the secured party agrees that if Licensee defaults under any documents related to the security interest, Company will have the right to prior notice and the option to be substituted as obligor to the secured party and to cure any default of third-party transferee.

21.2.4 Licensee acknowledges and agrees that each of the foregoing conditions is necessary to assure third-party transferee’s full performance of the obligations under this Agreement.

21.2.5 Company’s consent to a transfer of any interest in Licensee, this Agreement or the Licensed Business will not constitute a waiver of any claims it may have against the Licensee or the third-party transferring party, nor will it be deemed a waiver of Company’s right to demand exact compliance with any of the terms of this Agreement by the third-party transferee.

21.2.6 Company’s agrees that, upon thirty (30) days written notice, Licensee shall be permitted to transfer or assign this Agreement or the Licensed Business and all of its obligations to its parents or Affiliates without (a) the approval of Licensor, (b) payment of any associated fees, (c) having to enter into another agreement, and (d) having undergo training, provided that the transferee or assignee employs Licensee’s Key Operator(s).

22. COMPANY’S RIGHT OF FIRST REFUSAL

22.1 Any party holding any interest in Licensee or in this license, and who desires to accept any bona fide offer from a third party to purchase all or part of such interest (hereinafter referred to as “Seller”), must notify Company in writing of each such offer forty-five (45) days before the proposed sale. Seller must provide such information and documentation relating to the proposed purchaser and the offer as Company may require. Company will have the right and option to purchase the Seller’s interest at Company’s sole discretion, at the price offered by the third party. Company will inform Seller of its intent to exercise the option within thirty (30) days after receipt of all of the information from Seller. If the proposed transaction includes assets of Licensee not related to the operation of the Licensed Business, Company may at its discretion exercise its option only with respect to the interest of the Licensed Business. In such event, an equitable purchase price will be allocated to each asset included in the proposed transaction. If Company elects to purchase the Seller’s interest, Company may require the purchase to close within thirty (30) days from the date of notice to the Seller of Company’s election to purchase.

22.2 Any material change in the terms of any offer prior to closing will constitute a new offer, and will be subject to Company’s right of first refusal as though it were an initial offer.

22.3 Failure of Company to exercise the option afforded by this Section 22 will not constitute a waiver of any other provision of this Agreement relating to proposed transfers, including any of the requirements of this Section 22.

22.4 If Company exercises its right of first refusal, the sale agreement must contain customary representations and warranties given by the Seller including, without limitation, representations and warranties as to ownership, condition of and title to stock and assets, liens and encumbrances relating to the stock and assets, validity of contracts and verification of financial statements.

23. DEFAULT AND TERMINATION

23.1 IMMEDIATE TERMINATION. Licensee will be deemed to be in default under this Agreement, and all rights granted herein will immediately terminate automatically with respect to the particular Licensed Business and without notice to Licensee if any of the following events occur:

23.1.1 Licensee fails to open a Restaurant within twelve (12) months of the date of this Agreement.

23.1.2 Licensee makes a general assignment for the benefit of creditors;

23.1.3 Licensee commences a voluntary petition under bankruptcy, insolvency or any similar law; or an involuntary case under bankruptcy or insolvency or similar law is filed against Licensee and is either unopposed by Licensee or is not dismissed within thirty (30) days of filing; or an order or decree for relief under bankruptcy, insolvency or similar laws is entered regarding Licensee. Licensee expressly waives all rights under the provisions of the bankruptcy or other applicable laws and rules, and consents to the immediate termination of this Agreement as provided herein. Licensee agrees not to seek an order from any court, tribunal or agency in any jurisdiction relating to bankruptcy, insolvency, reorganization or any similar proceedings that would have the effect of staying or enjoining this provision.

23.1.4 A bill in equity or other proceeding for the appointment of a receiver of Licensee or other custodian for Licensee’s business or assets or real or personal property is filed by, consented to, or not opposed by Licensee;

23.1.5 Licensee becomes insolvent in that Licensee generally fails, or is generally unable, to pay its obligations as they become due in the regular course of business;

23.1.6If Licensee is a corporation, partnership or other legal entity and Licensee is dissolved or its existence otherwise terminated;

23.1.7 Licensee at any time ceases to operate the Licensed Business for a period of ten (10) consecutive days, or otherwise abandons the Licensed Business; it shall not, however, be deemed a breach of this Agreement if the Licensed Business is closed due to an emergency or force majeure event.

23.2 TERMINATION UPON NOTICE. Licensee will be deemed to be in default, and Company may, at its option, terminate this Agreement and all rights granted under this Agreement at a particular Licensed Business upon any of the following grounds. Termination will become effective immediately upon notice to Licensee.

23.2.1 The Company reasonably determines that a threat or danger to public health or safety is likely to result from the construction, maintenance or operation of the Restaurant.

23.2.2 Licensee is convicted of, or pleads no contest to, a felony, a crime involving moral turpitude, or any other crime or offense that Company reasonably believes likely to have an adverse effect on the Marks, the goodwill associated therewith, or Company’s interest therein.

23.2.3 Licensee discloses, makes any unauthorized duplicates of, or otherwise improperly divulges or uses the confidential information provided to Licensee by Company pursuant to this Agreement.

23.2.4 Licensee maintains false books or records, or submits any reports or information to Company that contains any materially inaccurate, incomplete or misleading statements, or omits any fact necessary in order to make the statements made not misleading.

23.2.5 Licensee makes any unauthorized use of the Marks as provided in this Agreement.

23.3 TERMINATION AFTER OPPORTUNITY TO CURE. Licensee will be deemed to be in default, and Company may, at its option, terminate this Agreement and all rights granted under this Agreement upon any of the following grounds. If the condition is susceptible of being cured, Licensee must correct the condition within the period specified below, or termination will be effective at the conclusion of the cure period.

23.3.1 Licensee fails to maintain and/or operate the Licensed Business in accordance with the standards and specifications, including, but not limited to, selling any product that Licensee knows or should know does not conform to Company’s specifications, or selling any product that is not approved by Company. Licensee will have five (5) days after receiving written notice to correct such condition.

23.3.2 Licensee loses the right to possession of the premises, Licensee will have fifteen (15) business days after receiving written notice to correct such condition.

23.3.3 Licensee or any partner or shareholder in Licensee purports to transfer any rights or obligations under this Agreement or any interest in Licensee to any third party in violation of this Agreement. Licensee will have five (5) days after receiving written notice to correct such condition.

23.3.4 Licensee denies Company’s right to inspect, examine or audit the Licensed Restaurant or the Licensee’s books. Licensee will have five (5) business days after receiving written notice to cure such condition.

23.3.5 Licensee fails to submit any report of Gross Sales and of product mix when required, or his submission is incorrect or incomplete. Licensee will have ten (10) days after receiving written notice to correct such condition.

23.3.6 Licensee fails to keep the business open and in normal operation for such hours and days as Licensee and Company determine. Licensee will have five (5) business days after receiving written notice to correct such condition.

23.3.7 Licensee fails to make any payment required under this Agreement. Licensee will have ten (10) days after receiving written notice to correct such condition.

23.3.8 Licensee fails to comply with any provision of this Agreement not specified in this Section 23. Licensee will have thirty (30) days after receiving written notice to correct such condition. If Licensee diligently begins to correct such condition but such correction cannot be achieved within the thirty-(30)-day period, Company shall grant Licensee an additional thirty (30) days to correct the condition.

23.4 If any applicable law or rule requires greater prior notice of termination, the prior notice required by such law or rule will be substituted for the notice requirements specified above.

24. OBLIGATIONS UPON TERMINATION OR EXPIRATION

Upon termination or expiration of this Agreement, all rights granted under this Agreement to Licensee will immediately terminate, and Licensee has the following obligations:

24.1 Licensee must immediately cease to operate the Licensed Business and must not thereafter, directly or indirectly, represent itself to the public as a present licensee of Company.

24.2 Licensee must immediately and permanently cease to use, in any manner whatsoever, the Mark and all other Marks and distinctive forms, slogans, signs, symbols and devices associated with the Southern Hospitality Brand.

24.3 Licensee must take all necessary action to cancel any assumed name or equivalent registration that contains any service mark or trademark of Company, and Licensee must furnish Company with evidence satisfactory to Company of compliance with this obligation within five (5) days after termination or expiration of this Agreement.

24.4 Licensee must promptly upon termination or expiration of this Agreement, make such modifications or alterations to the premises as may be necessary to distinguish the appearance of said premises from that of other restaurants under the Marks, and Licensee must make such specific changes to the premises as Company may reasonably request for that purpose.

24.5 If Licensee continues to operate, or subsequently begins to operate, any other business, it must not use any reproduction, counterfeit, copy or colorable imitation of the Marks, either in connection with such other business or the promotion thereof, that is likely to cause confusion, mistake or deception, or that is likely to dilute Company’s rights in and to the Marks. Licensee further agrees not to use any designation of origin or description or representation that falsely suggests or represents an association or connection with Company.

24.6 Licensee must promptly pay all sums owing to Company and its Affiliates. In the event of termination for any default of Licensee, such sums will include all damages, costs and expenses, including reasonable attorneys’ fees, incurred by Company as a result of the default.

24.7Licensee must pay to Company all damages, costs and expenses, including reasonable attorneys’ fees, incurred by Company after the termination or expiration of this Agreement in obtaining i njunctive or other relief for the enforcement of any provisions of this Agreement, if applicable.

24.8 Licensee must promptly deliver to Company all records and documents containing confidential information relating to proprietary practices exclusive to operating a Southern Hospitality fast casual store or stores.

24.9 Company has the option, to be exercised within thirty (30) days after termination, to purchase from Licensee any or all of the furnishings, signs, fixtures, supplies or inventory that Licensee owns relating to the operation of the Licensed Business, at their fair market value. “Fair market value” will be determined by taking into account the termination or expiration of the license granted under this Agreement and will not include any factor or increment for any trademarks, service marks or other commercial symbols used in connection with the operation of the Restaurant or any goodwill or “going concern” value for the Restaurant. If the parties cannot agree on a fair market value within a reasonable time, the parties will designate an independent appraiser whose determination will be binding. If Company elects to exercise the option provided in this Section 24, it may set off all amounts due from Licensee, and the cost of the appraisal, if any, against any payment to be made by Company.

24.10 All obligations of Company and Licensee that expressly or by their nature survive or are intended to survive the expiration, termination or assignment of this Agreement, including but not limited to provisions in Section 21 will continue in full force and effect after and notwithstanding its expiration or termination or assignment, until those obligations are satisfied in full or by their nature expire.

25. COVENANTS AND RESTRICTIONS ON OTHER BUSINESS INTERESTS

Company and Licensee agree that if, after the initial five stores agreed to in this agreement, Company restricts Licensee from further developing additional units of Southern Hospitality fast casual restaurants, Licensee may develop a competitive, fast casual BBQ concept, however such new concept may not operate within 10,000 feet of a Southern Hospitality branded fast casual concept. Furthermore, should Company change the remuneration structure of additional Southern Hospitality fast casual stores granted to Licensee, Licensee may opt out of future development and pursue a competitive, fast casual BBQ concept. Such competitive concept must be aesthetically differentiated from Southern Hospitality, meaning the combination of distressed barn wood, brick, rusted neon signs and Marks to be present in Southern Hospitality fast casual stores.

26. INDEPENDENT CONTRACTOR AND INDEMNIFICATION

26.1 It is understood and agreed by the parties that this Agreement does not create a fiduciary relationship between them, and that Company and Licensee are independent contractors. Nothing in this Agreement is intended to make either party an agent, legal representative, subsidiary, joint venturer, partner, employee or servant of the other for any purpose whatsoever.

26.2 During the term of this Agreement, Licensee must hold itself out in business-to-business dealings as an independent contractor operating the business pursuant to a license from Company. Licensee agrees to take such actions as may be necessary to do so. This section is not intended to create a distinction between Company owned stores and Licensee owned stores to the general public.

26.3 Nothing in this Agreement authorizes either party to make any contract, agreement, warranty or representation on the other’s behalf, or to incur any debt or other obligation in the other party’s name.

26.4 Licensee shall defend, indemnify and hold harmless Company and its Affiliates and their agents from all third party claims, demands, losses, obligations, costs, attorneys’ fees, expenses, liabilities, debts or damages (“Claims”) resulting from its negligent acts or willful misconduct in performance under this Agreement. If such Claims are asserted against Company or its Affiliates or their agents, Company will notify Licensee, and Licensee will assume the defense of such claims pursuant to its indemnification obligations set forth in this Section. If Licensee fails to assume the defense, then Company may defend in such manner as it deems appropriate. If there is a finding of fault on behalf of Licensee, Licensee must reimburse Company for all costs, including reasonable attorneys’ fees, and the reasonable value of time spent by corporate counsel, incurred by Company or its Affiliates in effecting such defense, in addition to any sum that Company or its Affiliates may incur by reason of any settlement or judgment.

27. MISCELLANEOUS PROVISIONS

27.1 APPROVALS AND WAIVERS

27.1.1 Whenever this Agreement requires the prior approval or consent of Company, Licensee must make a timely written request to Company for such approval or consent. All such approvals or consents must be obtained in writing.

27.1.2 Company makes no warranties or guarantees upon which Licensee may rely in connection with this Agreement.

27.1.3 No delay, omission or forbearance on the part of Company to exercise any right, option, duty or power constitutes a waiver by Company to enforce any such right, option, duty or power as against Licensee; nor does any such delay, omission, or forbearance constitute a waiver of any subsequent breach or default by Licensee. Company’s acceptance of any payments due to it under this Agreement will not be deemed to be a waiver by Company of any preceding breach by Licensee of any terms, provisions, covenants or conditions of this Agreement.

27.2 FORCE MAJEURE

Neither Company nor Licensee will be deemed to be in breach of this Agreement, or be liable for loss or damage if it fails to perform its obligations due to: (1) compliance with any law, ruling, order, regulation, requirement, or instruction of any federal, state, or municipal government or any department or agency thereof; (2) acts of God; (3) acts or omissions of the other party; (4) fires, strikes, embargoes, war, terrorism or riot; or (5) any other similar event or cause which are force majeure in nature. Any delay resulting from any of said causes will extend performance accordingly or excuse performance, in whole or in part, as may be reasonable.

27.3 APPLICATION OF PAYMENTS

Notwithstanding any designation by the Licensee, Company may in its discretion apply any payments made by Licensee to any of Licensee’s past indebtedness relating to royalties, the advertising fund, purchases, loans, interest or any other indebtedness to Company.

27.4 NOTICES

Any and all notices required or permitted under this Agreement must be made in writing, and must be personally delivered or mailed by certified or registered mail, return receipt requested, to the respective parties at the following addresses unless and until a different address has been designated by written notice to the other party:

	Notices to Company:	Southern Hospitality BBQ


		Attention:

	With a copy to:	Davis Wright Tremaine LLP
		1300 SW Fifth Avenue, Suite 2400 Portland, OR 97201 Attention: J. Riley Lagesen

	Notices to Licensee:	Bourbon Brothers Holding Corp.


		Attention:

	With a copy to:	Burns, Figa and Will, P.C.


		Attention:

Any notice by certified or registered mail will be deemed to have been given at the earlier of the (i) date and time of receipt, or (ii) first refusal.

27.5 ENTIRE AGREEMENT

The Recitals and Exhibits attached to this Agreement are hereby incorporated into and made part of this Agreement. This Agreement constitutes the entire, full and complete agreement between Company and Licensee concerning the license identified on Exhibit A, and supersedes any prior negotiations, understandings, representations or agreements relating to that License.

27.6 MODIFICATION

No amendment, change or variance from this Agreement will be binding on either party unless mutually agreed to by the parties, and signed by their authorized officers or agents in writing.

27.7 SEVERABILITY AND CONSTRUCTION

27.7.1 Except as expressly provided to the contrary in this Agreement, each portion, section, part, term and/or provision of this Agreement is severable. If, for any reason a court or agency having valid jurisdiction, determines any section, part, term or provision of this Agreement is invalid and contrary to, or in conflict with, any existing or future law or regulation, that decision will not impair the operation of, or have any other effect upon, such other portions, sections, parts, terms or provisions of this Agreement that remain intelligible. The latter will continue to be given full force and effect and bind the parties, and the invalid portions, sections, parts, terms or provisions will be deemed not to be a part of this Agreement.

27.7.2 Except as expressly provided to the contrary in this Agreement, nothing in this Agreement is intended, nor will be deemed, to confer upon any person or legal entity other than Licensee, Company, Company’s officers, directors and employees, and such successors and assigns as may be contemplated by this Agreement any rights or remedies under or by reason of this Agreement.

27.7.3 All captions in this Agreement are intended solely for the convenience of the parties, and none will be deemed to affect the meaning or construction of any provision hereof.

27.7.4 All references herein to the masculine, neuter or singular will be construed to include the masculine, feminine, neuter or plural, where applicable; and all acknowledgments, promises, covenants, agreements and obligations herein made or undertaken by Licensee will be deemed jointly and severally undertaken by all those executing this Agreement on behalf of Licensee.

27.8 DISPUTE RESOLUTION

27.8.1 AGREEMENT TO MEDIATE DISPUTES. Except as otherwise provided in this Agreement, neither party to this Agreement shall bring an action or proceeding to enforce or interpret any provision of this Agreement, or seeking any legal remedy based upon the relationship created by this Agreement or an alleged breach of this Agreement, until the dispute has been submitted to mediation conducted in accordance with the procedures stated in this Agreement.

27.8.1.1 The mediation shall be conducted pursuant to the rules of the National Franchise Mediation Program, a dispute resolution program for franchising administered under the auspices of the CPR Institute for Dispute Resolution (the “Mediation Service”). Either party may initiate the mediation (the “Initiating Party”) by notifying the Mediation Service in writing, with a copy to the other party (the “Responding Party”). The notice shall describe with specificity the nature of the dispute and the Initiating Party’s claim for relief. Thereupon, both parties will be obligated to engage in the mediation, which shall be conducted in accordance with the Mediation Service’s then-current rules, except to the extent the rules conflict with this Agreement, in which case this Agreement shall control.

27.8.1.2 The mediator must be either a practicing attorney with experience in business format franchising or a retired judge.

27.8.1.3 Except as otherwise provided in this Agreement: (i) the fees and expenses of the Mediation Service, including (without limitation) the mediator’s fee and expenses, shall be shared equally by the parties, and (ii) each party shall bear its own attorney’s fees and other costs incurred in connection with the mediation irrespective of the outcome of the mediation or the mediator’s evaluation of each party’s case.

27.8.1.4 The mediation conference shall begin as soon as possible with the goal of beginning the mediation within thirty (30) days after selection of the mediator. Regardless of whether Company or Licensee is the Initiating Party, the mediation shall be conducted at Company’s home office, unless the parties agree upon a mutually acceptable alternative location.

27.8.1.5 The parties shall participate in good faith in the entire mediation, including the mediation conference, with the intention of resolving the dispute, if at all possible. The parties shall each send at least one representative to the mediation conference who has authority to enter into a binding contract on that party’s behalf and on behalf of all principals of that party who are required by the terms of the parties’ settlement to be personally bound by it. The parties recognize and agree, however, that the mediator’s recommendations and decision shall not be binding on the parties.

27.8.1.6 If one party breaches this Agreement by refusing to participate in the mediation or not complying with the requirements for conducting the mediation, the non-breaching party may immediately file suit and take such other action to enforce its rights as permitted by law and the breaching party shall be obligated to pay: (i) the mediator’s fees and costs, (ii) the non-breaching party’s reasonable attorneys’ fees and costs incurred in connection with the mediation, and (iii) to the extent permitted by law, the non-breaching party’s reasonable attorneys’ fees and costs incurred in any suit arising out of the same dispute, regardless of whether the non-breaching party is the prevailing party. Additionally, in connection with (iii), the breaching party shall forfeit any right to recover its attorneys’ fees and costs should it prevail in the suit. The parties agree that the foregoing conditions are necessary in order to encourage meaningful mediation as a means for efficiently resolving any disputes that may arise.

27.8.2 EXCEPTIONS TO DUTY TO MEDIATE DISPUTE. The obligation to mediate shall not apply to any disputes, controversies or claims (i) where the monetary relief sought is under $10,000; (ii) in which a party seeks or applies for any kind of Provisional Remedies; or (iii) in which Company or the holder of rights under any lease or sublease seeks to enforce rights of unlawful detainer or similar remedies available to a landlord or for the enforcement of Company’s other rights under any Addendum to Lease with Debtor. The party that is awarded Provisional Remedies shall not be required to post bond or comparable security. Once Provisional Remedies are obtained, the parties agree to submit the dispute to, or continue, the mediation or action in accordance with this Agreement.

27.8.3 JUDICIAL RELIEF.

27.8.3.1 The parties agree that (i) all disputes arising out of or relating to this Agreement which are not resolved by negotiation or mediation, and (ii) all claims which this Agreement expressly excludes from mediation, shall be brought in the Supreme Court of New York located closest to Company’s home office, unless the subject matter of the dispute arises exclusively under federal law, in which event the dispute shall be submitted to the United States District Court located closest to Company’s home office. As of the date of this Agreement, the parties acknowledge that the Supreme Court of New York, and the United States District Court of the Southern District of New York are, respectively, the state and federal courts that are located closest to Company’s home office; however, the parties further acknowledge that Company may relocate its home office in its sole discretion at any time without notice to the undersigned party. The parties agree to submit to the jurisdiction of the courts mutually selected by them pursuant to this Section and mutually acknowledge that selecting a forum in which to resolve disputes arising between them is important to promote stability in their relationship.

27.8.3.2 To the fullest extent that it may effectively do so under Applicable Laws, Licensee waives the defense of an inconvenient forum to the maintenance of an action in the courts identified in this Section and agrees not to commence any action of any kind against Company, Company’s Affiliates and their respective officers, directors, shareholders, LLC managers and members, employees and agents or property arising out of or relating to this Agreement except in the courts identified in this Section.

27.8.4 WAIVER OF JURY TRIAL. COMPANY AND LICENSEE EACH HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT BY EITHER COMPANY OR LICENSEE ON ANY MATTER WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS AGREEMENT, THE RELATIONSHIP OF THE PARTIES, THE USE OF THE MARKS, OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN EFFECT, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW.

27.8.5 CHOICE OF LAW. Except as otherwise provided in this Agreement with respect to the possible application of Local Laws, the parties agree that New York law shall govern the construction, interpretation, validity and enforcement of this Agreement and shall be applied in any mediation or judicial proceeding to resolve all disputes between them, except to the extent the subject matter of the dispute arises exclusively under federal law, in which event the federal law shall govern.

27.8.6 LIMITATIONS PERIOD. To the extent permitted by Applicable Laws, any legal action of any kind arising out of or relating to this Agreement or its breach, including without limitation, any claim that this Agreement or any of its parts is invalid, illegal or otherwise voidable or void, must be commenced by no later than one year after the act, event, occurrence or transaction which constituted or gave rise to the alleged violation or liability; provided, however, the applicable limitations period shall be tolled during the course of any mediation which is initiated before the last day of the limitations period with the tolling beginning on the date that the Responding Party receives the Initiating Party’s demand for mediation and continuing until the date the mediation is concluded.

27.8.7 PUNITIVE OR EXEMPLARY DAMAGES. Company and Licensee, on behalf of themselves and their respective Affiliates, directors, officers, shareholders, members, managers, guarantors employees and agents, as applicable, each hereby waive to the fullest extent permitted by law, any right to, or claim for, punitive or exemplary damages against the other and agree that, in the event of a dispute between them, each is limited to recovering only the actual damages proven to have been sustained by it.

27.8.8 ATTORNEY’S FEES. Except as expressly provided in this Agreement, in any action or proceeding brought to enforce any provision of this Agreement or arising out of or in connection with the relationship of the parties hereunder, the prevailing party shall be entitled to recover against the other its reasonable attorneys’ fees and court costs in addition to any other relief awarded by the court. As used in this Agreement, the “prevailing party” is the party who recovers greater relief in the action.

27.8.9 WAIVER OF COLLATERAL ESTOPPEL. The parties agree they should each be able to settle, mediate, litigate or compromise disputes in which they may be, or become, involved with third parties without having the dispute affect their rights and obligations to each other under this Agreement. Company and Licensee therefore each agree that a decision of an arbitrator or judge in any proceeding or action in which either Company or Licensee, but not both of them, is a party shall not prevent the party to the proceeding or action from making the same or similar arguments, or taking the same or similar positions, in any proceeding or action between Company and Licensee. Company and Licensee therefore waive the right to assert that principles of collateral estoppel prevent either of them from raising any claim or defense in an action or proceeding between them even if they lost a similar claim or defense in another action or proceeding with a third party

27.8.10 PERSONAL GUARANTY. J.W Roth, Gary Tedder, and any individual who owns 25% or more of Licensee shall furnish any financial information reasonably required by Company and execute Company’s form of personal guaranty in the form attached to this Agreement as Exhibit E.

28. ACKNOWLEDGMENTS

28.1 Licensee’s initial investment, excluding any financing received from Company or an affiliate, and excluding the cost of unimproved land, totals at least One Million Dollars ($1,000,000).

28.2 Licensee is an existing Licensee of Company and Licensee and its principals are intimately acquainted with the business of Company.

28.3 Licensee acknowledges that it has conducted an independent investigation of the business licensed under this Agreement, and recognizes that the business venture contemplated by this Agreement involves business risks, and that its success will be largely dependent upon the ability of Licensee as an independent businessperson.

28.4 Licensee acknowledges that it has read and understood this Agreement, the attachment(s) hereto and agreements relating hereto, if any, and that Licensee has had ample time and opportunity to consult with advisors of Licensee’s own choosing about the potential benefits and risks of entering into this Agreement.

28.5 Licensee acknowledges that it has not received or relied upon, any representation, guaranty, or warranty express or implied, as to the sales volume, income, earnings, expenses, revenues, profits or success of Southern Hospitality BBQ Restaurants or the business venture contemplated by this Agreement.

28.6 Licensee acknowledges and agrees that Company’s officers, directors, employees and agents act only in a representative, and not in a personal, capacity in connection with any of their dealings with Licensee.

28.7 This License Agreement may be signed in one or more counterparts, all of which when taken together constitute one original document.

28.8 Neither party will use the other party’s (or Client’s) name, trademarks, or trade names whether registered or not, in any oral or written marketing-related communication to third parties, including publicity releases and advertising, or customer lists, without such party’s prior written consent.

[Signatures appear on following page]

IN WITNESS WHEREOF, the parties hereto have duly signed, sealed and delivered this Agreement on the day and year first above written.

COMPANY:

SH FRANCHISING & LICENSING, LLC

By: /s/ Nelson Braff

Name: Nelson Braff

Title: Member

LICENSEE:

Southern Hospitality Licensee, LLC

By: /s/ Mitchell Roth

Name: Mitchell Roth

Title: President

Exhibit A

LOCATION

The following is agreed upon as the Location in connection with the License Agreement for site #1 with an effective date of no later than 12/31/15.

Location address:

1000 South Colorado Blvd.

Glendale, CO 80246

The Protected Territory is the area within a 2 -mile radius of the Location.

COMPANY:

SH FRANCHISING & LICENSING, LLC

By: /s/ Nelson Braff

Name: Nelson Braff

Title: Member

LICENSEE:

Southern Hospitality Licensee, LLC

By: /s/ Mitchell Roth

Name: Mitchell Roth

Title: President

A-1

Exhibit B

CURRENTLY AUTHORIZED

TRADEMARKS

A-2

Exhibit C

COMPANY’S PROPRIETARY PRODUCTS

A-3

Exhibit D

LICENSEE’S ACKNOWLEDGMENT

The license sale is for more than One Million Dollars ($1,000,000), excluding the cost of unimproved land and any financing received from the Company or an affiliate, and thus is exempted from the Federal Trade Commission’s Franchise Rule disclosure requirements pursuant to 16 CFR 436.8(a)(5)(i).

Date: 2/8/15

LICENSEE:

Southern Hospitality Licensee, LLC

By: /s/ Mitchell Roth

Name: Mitchell Roth

Title: President

A-4

Exhibit E

MUTUAL CONFIDENTIALITY AGREEMENT

A-5

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Mitchell Roth, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Southern Concepts Restaurant Group, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 15, 2015

/s/ Mitchell Roth

Mitchell Roth

President, as person performing the duties of the Principal Executive Officer

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Heather Atkinson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Southern Concepts Restaurant Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent function):

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


May 15, 2015				/s/ Heather Atkinson Heather Atkinson Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF PRESIDENT OF SOUTHERN CONCEPTS RESTAURANT GROUP, INC.
PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350 and in connection with the accompanying report on Form 10-Q for the period ended March 31, 2015 that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officer of Southern Concepts Restaurant Group, Inc. (the "Company") hereby certifies that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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


May 15, 2015				/s/ Mitchell Roth Mitchell Roth President, as person performing the duties of Principal Executive Officer

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER OF BOURBON BROTHERS HOLDING CORPORATION
PURSUANT TO 18 U.S.C. SECTION 1350

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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


May 15, 2015				/s/ Heather Atkinson Heather Atkinson Chief Financial Officer

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

RIBS Southern Concepts Restaurant Group Inc (CE)