##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K/A
 (Amendment No. 1)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 26, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 for the transition period from  to
 Commission File No. 000-53577
 DIVERSIFIED RESTAURANT HOLDINGS, INC.
  Nevada
    
    03-0606420(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification
Number)
 27680 Franklin Rd., Southfield, MI 48034
 (248) 223-9160
   Common Stock, $.0001 par value per share
 o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




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TABLE OF CONTENTS  PART IIITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2    Table of Contents  EXPLANATORY NOTE
  December 26, 2010
    
    
    December 27, 2009Diluted earnings per share, as reported
    
    $
    0.19
    
    
    $
    0.40Diluted earnings per share, as restated
    
    $
    0.02
    
    
    $
    0.04
   
 PART II.
 
 ITEM 8.
    
    CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
   1




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##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  
    
    Report of Independent Registered Public Accounting Firm dated
March 28, 2011 and April 11, 2011 
Silberstein Ungar, PLLC
 
    
    Consolidated Balance Sheets  December 26, 2010 and December 27, 2009
 
    
    Consolidated Statements of Operations
 
    
    Consolidated Statement of Stockholders Equity
 
    
    Consolidated Statements of Cash Flows
 
    
    Notes to Consolidated Financial Statements
     EXHIBIT NO.
    
    EXHIBIT DESCRIPTION2.1
    
    
    Affiliates Acquisition Purchase Agreement dated February 1, 2010
(incorporated by reference to exhibit 2.1 of our Form 8-K filed
February 5, 2010)2.2
    
    
    Brandon Property Purchase and Sale Agreement dated March 25, 2010
between our subsidiary, MCA Enterprises, Brandon, Inc. and Florida
Wings Group, LLC (incorporated by reference to exhibit 10 of our
Form 8-K filed June 30, 2010).3.1
    
    
    Articles of Incorporation (incorporated by reference to our
registration statement on Form SB-2 (SEC File Number 333-145316),
as filed with the Securities and Exchange Commission on August 10,
2007)3.2
    
    
    Amended and Restated Certificate of Incorporation (incorporated by
reference to our registration statement on Form SB-2 (SEC File
Number 333-145316), as filed with the Securities and Exchange
Commission on August 10, 2007)3.3
    
    
    By-laws (incorporated by reference to our registration statement
on Form SB-2 (SEC File Number 333-145316), as filed with the
Securities and Exchange Commission on August 10, 2007)4.0
    
    
    Specimen Stock Certificate (incorporated by reference to our
registration statement on Form SB-2 (SEC File Number 333-145316),
as filed with the Securities and Exchange Commission on August 10,
2007)10.1
    
    
    Buffalo Wild Wings Franchise Agreement dated July 29, 2010 by and
between Buffalo Wild Wings International, Inc. and Anker, Inc., a
wholly-owned subsidiary of the Company (incorporated by reference
to exhibit 10.1 of our Form 10-Q filed November 12, 2010)10.2
    
    
    Renewal Addendum to Buffalo Wild Wings Franchise Agreement dated
July 29, 2010, by and between Buffalo Wild Wings International,
Inc. and Anker, Inc., a wholly-owned subsidiary of the Company
(incorporated by reference to exhibit 10.2 of our Form 10-Q filed
November 12, 2010)10.3
    
    
    Buffalo Wild Wings Area Development Agreement dated July 18, 2003,
by and between Buffalo Wild Wings International, Inc. and MCA
Enterprises, Inc. (subsequently assigned to AMC Wings, Inc., a
wholly-owned subsidiary of the Company) (incorporated by reference
to exhibit 10.3 of our Form 10-Q filed November 12, 2010)
  2




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##### Table of Contents



EXHIBIT NO.
    
    EXHIBIT DESCRIPTION10.4
    
    
    Transfer Agreement dated March 20, 2007, by MCA Enterprises
Brandon, Inc. (formerly MCA Enterprises, Inc.), T. Michael Ansley,
Mark C. Ansley, Thomas D. Ansley, Steven Menker, Jason Curtis and
AMC Wings, Inc. and Buffalo Wild Wings International, Inc.
(incorporated by reference to exhibit 10.4 of our Form 10-Q filed
November 12, 2010)10.5
    
    
    Amendment to Buffalo Wild Wings Area Development Agreement dated
March 20, 2007 (incorporated by reference to exhibit 10.5 of our
Form 10-Q filed November 12, 2010)10.6
    
    
    Amendment to Buffalo Wild Wings Area Development Agreement dated
November 5, 2007 (incorporated by reference to exhibit 10.5 of our
Form 10-Q filed November 12, 2010)10.7
    
    
    Buffalo Wild Wings Franchise Agreement dated September 7, 2010, by
and between Buffalo Wild Wings International, Inc. and AMC
Traverse City, Inc., a wholly-owned subsidiary of the Company
(incorporated by reference to exhibit 10.1 to our Form 8-K filed
September 10, 2010)10.8
    
    
    Buffalo Wild Wings Franchise Agreement dated September 7, 2010, by
and between Buffalo Wild Wings International, Inc. and AMC
Lakeland, Inc., a wholly-owned subsidiary of the Company
(incorporated by reference to exhibit 10.2 to our Form 8-K filed
September 10, 2010)10.9
    
    
    Form of Stock Option Agreement (incorporated by reference to
exhibit 10.1 to our Form 8-K filed August 5, 2010)10.10
    
    
    Amendment to Buffalo Wild Wings Area Development Agreement dated
December 27, 2003 (incorporated by reference to exhibit 10.12 of
our Form 10-Q filed November 12, 2010)10.11
    
    
    Real Estate Loan Agreement dated June 23, 2010 between our
subsidiary, MCA Enterprises Brandon, Inc., and Bank of America
N.A. (incorporated by reference to exhibit 10.1 to our Form 10-Q
filed August 10, 2010)10.12
    
    
    Bridge Loan Agreement dated June 23, 2010 between our subsidiary,
MCA Enterprises Brandon, Inc., and Bank of America N.A.
(incorporated by reference to exhibit 10.2 to our Form 10-Q filed
August 10, 2010).10.13
    
    
    Buffalo Wild Wings Franchise Agreement dated June 3, 2010 between
our subsidiary, AMC Ft. Myers, Inc., and Buffalo Wild Wings
International, Inc. (incorporated by reference to exhibit 10.4 to
our Form 10-Q filed August 10, 2010).10.14
    
    
    RBS Credit Agreement dated May 5, 2010 between DRH and RBS (filed
with the Securities and Exchange Commission as an exhibit to the
Companys Form 8-K on May 10, 2010)10.15
    
    
    Buffalo Wild Wings Retail Center Lease dated December 7, 2009
between our subsidiary, AMC Marquette, Inc., and Centrup
Hospitality, LLC (incorporated by reference to exhibit 10 of our
Form 8-K filed December 11, 2009)10.16
    
    
    Buffalo Wild Wings Retail Center Lease dated December 2, 2009
between our subsidiary, AMC Chesterfield, Inc., and Chesterfield
Development Company, LLC (incorporated by reference to exhibit 10
for our Form 8-K filed December 7, 2009)10.17
    
    
    Buffalo Wild Wings Franchise Agreement dated October 20, 2009
between our subsidiary, AMC Marquette, Inc., and Buffalo Wild
Wings International, Inc. (incorporated by reference to exhibit
10.1 of our Form 8-K filed October 26, 2009)10.18
    
    
    Buffalo Wild Wings Franchise Agreement dated October 20, 2009
between our subsidiary, AMC Chesterfield, Inc., and Buffalo Wild
Wings International, Inc. (incorporated by reference to exhibit
10.2 of our Form 8-K filed October 26, 2009)10.19
    
    
    Master Lease Agreement dated September 9, 2009 between our
subsidiary, Troy Burgers, Inc., and Novi Town Center Investors,
LLC (incorporated by reference to exhibit 10 of our Form 8-K filed
September 10, 2009)
  3




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##### Table of Contents



EXHIBIT NO.
    
    EXHIBIT DESCRIPTION10.20
    
    
    Master Lease Agreement dated February 12, 2009 between our
subsidiary, AMC Flint, Inc., and CoActiv Capital Partners, Inc.
(incorporated by reference to exhibit 10 of our Form 8-K filed
February 17, 2009)10.21
    
    
    Buffalo Wild Wings Amendment to Area Development Agreement dated
December 10, 2008 between our subsidiary, AMC Wings, Inc., and
Buffalo Wild Wings International, Inc. (incorporated by reference
to exhibit 10.1 of our Form 8-K filed December 15, 2008)10.22
    
    
    Buffalo Wild Wings Franchise Agreement dated July 1, 2008 between
our subsidiary, AMC Port Huron, Inc., and Buffalo Wild Wings
International, Inc. (incorporated by reference to exhibit 10 of
our form 8-K filed July 8, 2008)10.23
    
    
    Buffalo Wild Wings Franchise Agreement dated July 1, 2008 between
our subsidiary, AMC Flint, Inc., and Buffalo Wild Wings
International, Inc. (incorporated by reference to exhibit 10 of
our form 8-K filed July 8, 2008)10.24
    
    
    Retail Center Lease dated June 30, 2008 between our subsidiary,
AMC Port Huron, Inc., and Port Builders, Inc., Walter Sparling and
Mary L. Sparling (incorporated by reference to exhibit 10 of our
form 8-K filed July 7, 2008)10.25
    
    
    Retail Center Lease dated June 30, 2008 between our subsidiary,
AMC Flint, Inc., and Ramco-Gershenson Properties, L.P.
(incorporated by reference to exhibit 10 of our form 8-K filed
July 7, 2008)10.26
    
    
    Form of Stock Option Agreement, dated July 30, 2007, entered into
by and between the Company and Directors Gregory Stevens, T.
Michael Ansley, Jay Alan Dusenberry, Jason T. Curtis and David
Ligotti (incorporated by reference to exhibit 10.24 of our Form 10-K filed March 26, 2010)14
    
    
    Code of Ethics (incorporated by reference to our Form 10-K for the
fiscal year ended December 31, 2008, as filed with the Securities
and Exchange Commission on March 31, 2009)31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)32.1
    
    
    Certification of Chief Executive Officer pursuant to Section 906
of Sarbanes Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer pursuant to Section 906
of Sarbanes Oxley Act of 2002
  4




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SIGNATURES
   DIVERSIFIED RESTAURANT HOLDINGS, INC.By:
    /s/ T. Michael AnsleyT. Michael AnsleyPresident, Chief Executive Officer, Director, Chairman of the Board, and Principal Executive OfficerBy:
    /s/ David G. BurkeDavid G. BurkeTreasurer, Chief Financial Officer, Director,
Principal Financial Officer, and
Principal Accounting Officer  5




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DIVERSIFIED RESTAURANT HOLDINGS, INC.
 Index to Consolidated Financial Statements
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-1REPORT BY DIVERSIFIED RESTAURANT HOLDINGS, INC.S MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
    
    
    F-2CONSOLIDATED FINANCIAL STATEMENTS:CONSOLIDATED BALANCE SHEETS
    
    
    F-3CONSOLIDATED STATEMENTS OF OPERATIONS
    
    
    F-4CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
    
    
    F-5CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY(DEFICIT)
    
    
    F-6CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
    F-7NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    F-8
  6




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Silberstein Ungar, PLLC
 CPAs and Business Advisors
 phone (248) 203-0080
fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025
 www.sucpas.com
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    /s/ Silberstein Ungar, PLLC
 
 
  F-1




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REPORT BY DIVERSIFIED RESTAURANT HOLDINGS, INC.S MANAGEMENT
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Internal Control  Integrated Framework
  Diversified Restaurant Holdings, Inc./s/ T. Michael AnsleyT. Michael AnsleyChairman of the Board, President, Chief Executive Officer,and Principal Executive Officer/s/ David G. BurkeDavid G. BurkeChief Financial Officer, Treasurer, Principal Financial Officer,and Principal Accounting Officer
  F-2




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DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 26
    
    
    December 272010
    
    
    2009ASSETSCurrent assetsCash and cash equivalents
    
    $
    1,305,031
    
    
    $
    1,594,362Accounts receivable  related party
    
    
    
    
    
    
    376,675Inventory
    
    
    339,059
    
    
    
    307,301Prepaid assets
    
    
    209,708
    
    
    
    152,702Other current assets
    
    
    43,348
    
    
    
    42,382Total current assets
    
    
    1,897,146
    
    
    
    2,473,422Property and equipment, net (Note 3)
    
    
    17,252,599
    
    
    
    11,655,513Intangible assets, net (Note 4)
    
    
    975,461
    
    
    
    789,279Other long-term assets
    
    
    63,539
    
    
    
    11,780Deferred income taxes (Note 8)
    
    
    607,744
    
    
    
    246,754Total assets
    
    $
    20,796,489
    
    
    $
    15,176,748LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilitiesCurrent portion of long-term debt (Note 6)
    
    $
    1,858,262
    
    
    $
    2,443,057Accounts payable
    
    
    1,388,397
    
    
    
    527,151Accrued liabilities
    
    
    1,089,112
    
    
    
    674,768Deferred rent
    
    
    127,075
    
    
    
    104,940Total current liabilities
    
    
    4,462,846
    
    
    
    3,749,916Accrued rent
    
    
    793,774
    
    
    
    846,014Deferred rent
    
    
    928,757
    
    
    
    638,024Related party payable
    
    
    
    
    
    
    430,351Other liabilities  interest rate swap
    
    
    367,181
    
    
    
    213,604Long-term debt, less current portion (Note 6)
    
    
    14,706,756
    
    
    
    6,517,041Total liabilities
    
    
    21,259,314
    
    
    
    12,394,950Commitments and contingencies (Notes 5, 6, 9, 10, and 11)Stockholders (deficit) equity (Note 7)Common stock  $0.0001 par value; 100,000,000 shares authorized, 18,876,000
and 18,626,000 shares, respectively, issued and outstanding
    
    
    1,888
    
    
    
    1,863Additional paid-in capital
    
    
    2,631,304
    
    
    
    2,356,155Retained earnings (accumulated deficit)
    
    
    (2,728,836
    )
    
    
    423,780Comprehensive (loss) income
    
    
    (367,181
    )
    
    
    Total
stockholders (deficit) equity
    
    
    (462,825
    )
    
    
    2,781,798Total
liabilities and stockholders (deficit) equity
    
    $
    20,796,489
    
    
    $
    15,176,748
   F-3




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DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 December 26
    
    
    December 272010
    
    
    2009RevenueFood and beverage sales
    
    $
    45,248,018
    
    
    $
    41,754,515Total revenue
    
    
    45,248,018
    
    
    
    41,754,515Operating expensesCompensation costs
    
    
    13,293,945
    
    
    
    11,470,244Food and beverage costs
    
    
    13,340,619
    
    
    
    13,029,103General and administrative
    
    
    10,738,464
    
    
    
    9,728,455Pre-opening
    
    
    654,764
    
    
    
    164,114Occupancy
    
    
    2,957,902
    
    
    
    2,935,363Depreciation and amortization
    
    
    2,679,133
    
    
    
    2,363,748Total operating expenses
    
    
    43,664,827
    
    
    
    39,691,027Operating profit
    
    
    1,583,191
    
    
    
    2,063,488Interest expense
    
    
    (1,202,299
    )
    
    
    (778,612
    )Other income, net
    
    
    28,317
    
    
    
    259,413Income before income taxes
    
    
    409,209
    
    
    
    1,544,289Income tax
benefit (provision)
    
    
    125,826
    
    
    
    (350,051
    )Net income
    
    $
    535,035
    
    
    $
    1,194,238Basic earnings per share  as reported
    
    $
    0.03
    
    
    $
    0.07Fully diluted earnings per share  as restated
    
    $
    0.02
    
    
    $
    0.04Weighted average number of common shares outstanding (Notes 1 and 7)Basic
    
    
    18,871,879
    
    
    
    18,070,000Diluted
    
    
    29,125,000
    
    
    
    29,020,000
   F-4




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DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 December 26
    
    
    December 272010
    
    
    2009Net income
    
    $
    535,035
    
    
    $
    1,194,238Comprehensive incomeUnrealized
changes in fair
value of cash
flow hedges
    
    
    (367,181
    )
    
    
    Comprehensive income
    
    $
    167,854
    
    
    $
    1,194,238
   F-5




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DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS (DEFICIT) EQUITY
 RetainedAdditional
    
    
    Earnings
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    (Loss) Income
    
    
    (Deficit) EquityBalances  December 31, 2008
    
    
    18,070,000
    
    
    $
    1,807
    
    
    $
    1,758,899
    
    
    $
    525,332
    
    
    $
    
    
    
    $
    2,286,038Share-based compensation (Note 7)
    
    
    
    
    
    
    
    
    
    
    32,312
    
    
    
    
    
    
    
    
    
    
    $
    32,312Exercise of employee stockoptions (Note 7)
    
    
    6,000
    
    
    
    1
    
    
    
    14,999
    
    
    
    
    
    
    
    
    
    
    $
    15,000Shares issued for warrants exercised at $1.00
per share (Note 7)
    
    
    550,000
    
    
    
    55
    
    
    
    549,945
    
    
    
    
    
    
    
    
    
    
    $
    550,000Dividends
paid prior to acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,295,790
    )
    
    
    
    
    
    $
    (1,295,790
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,194,238
    
    
    
    
    
    
    $
    1,194,238Balances  December 27, 2009
    
    
    18,626,000
    
    
    
    1,863
    
    
    
    2,356,155
    
    
    
    423,780
    
    
    
    0
    
    
    
    2,781,798Shares issued for warrants exercised at $1.00
per share (Note 7)
    
    
    250,000
    
    
    
    25
    
    
    
    249,975
    
    
    
    
    
    
    
    
    
    
    
    250,000Share-based compensation (Note 7)
    
    
    
    
    
    
    
    
    
    
    25,174
    
    
    
    
    
    
    
    
    
    
    
    25,174Acquisition of BWW restaurants (Note 2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,134,790
    )
    
    
    
    
    
    
    (3,134,790
    )Dividends
paid prior to acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (552,861
    )
    
    
    
    
    
    
    (552,861
    )Unrealized changes in fair value of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (367,181
    )
    
    
    (367,181
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    535,035
    
    
    
    
    
    
    
    535,035Balances  December 26, 2010
    
    
    18,876,000
    
    
    $
    1,888
    
    
    $
    2,631,304
    
    
    $
    (2,728,836
    )
    
    $
    (367,181
    )
    
    $
    (462,825
    )
   F-6




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DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 December 26
    
    
    December 272010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    535,035
    
    
    $
    1,194,238Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    2,679,133
    
    
    
    2,363,748Loss on disposal of property and equipment
    
    
    20,966
    
    
    
    310Share-based compensation
    
    
    25,174
    
    
    
    32,312Deferred income taxes
    
    
    (360,990
    )
    
    
    353,203Decrease
(increase) in operating assets:Accounts receivable  related party
    
    
    376,675
    
    
    
    165,134Inventory
    
    
    (31,758
    )
    
    
    35,508Prepaid assets
    
    
    (57,006
    )
    
    
    (41,718
    )Other current assets
    
    
    (966
    )
    
    
    4,115Intangible assets
    
    
    (82,666
    )
    
    
    (48,710
    )Other long-term assets
    
    
    (51,759
    )
    
    
    (11,780
    )Increase
(decrease) in operating liabilities:Accounts payable
    
    
    861,246
    
    
    
    (272,129
    )Accrued liabilities
    
    
    414,344
    
    
    
    75,498Accrued rent
    
    
    (52,240
    )
    
    
    200,357Deferred rent
    
    
    312,868
    
    
    
    (112,470
    )Net cash provided by (used in) operating activities
    
    
    4,588,056
    
    
    
    3,939,406Cash flows from investing activitiesPurchases of property and equipment
    
    
    (5,827,947
    )
    
    
    (718,070
    )Net cash provided by (used in) investing activities
    
    
    (5,827,947
    )
    
    
    (718,070
    )Cash flows from financing activitiesProceeds from issuance of long-term debt and notes payable
    
    
    3,450,746
    
    
    
    694,986Repayments of long-term debt and notes payable
    
    
    (2,197,325
    )
    
    
    (2,620,629
    )Proceeds from issuance of common stock
    
    
    250,000
    
    
    
    565,000Dividends
paid prior to acquisition
    
    
    (552,861
    )
    
    
    (1,295,790
    )Net cash provided by (used in) financing activities
    
    
    950,560
    
    
    
    (2,656,433
    )Net increase (decrease) in cash and cash equivalents
    
    
    (289,331
    )
    
    
    564,903Cash and cash equivalents, beginning of period
    
    
    1,594,362
    
    
    
    1,029,459Cash and cash equivalents, end of period
    
    $
    1,305,031
    
    
    $
    1,594,362
   F-7




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1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
 TM
  
    F-8




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Accounting for Leases,
 Principles of Consolidation
   Fiscal Year
  Segment Reporting
   F-9




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Cash and Cash Equivalents
  Revenue Recognition
  Accounts Receivable  Related Party
  Accounting for Gift Cards
    Lease Accounting
   F-10




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##### Table of Contents



Inventory
  Prepaid Expenses and Other Assets
  Franchise fees
    
    10 to 20 yearsTrademarks
    
    15 yearsLoan fees
    
    2 to 7 years (loan term)
  Property and Equipment
    Advertising
  Pre-opening Costs
   F-11




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Income Taxes
  Earnings Per Common Share
 Earnings per Share
 Concentration Risks
  Use of Estimates
  Financial Instrument
      F-12




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##### Table of Contents



Recent Accounting Pronouncements
 Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements. Fair Value Measurements and Disclosures
 Amendments to Certain Recognition and Disclosure
Requirements
  Reclassifications
  2. SIGNIFICANT BUSINESS TRANSACTIONS
 Acquisition of Nine Affiliated BWW Restaurants
  Business Combinations: Transactions Between Entities Under Common
Control i.e.
 Execution of $15 Million Comprehensive Debt Facility
   F-13




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Purchase of Building in Brandon, Florida
      F-14




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3. PROPERTY AND EQUIPMENT, NET
  December 26
    
    
    December 272010
    
    
    2009Land
    
    $
    385,959
    
    
    $
    Building
    
    
    2,255,246
    
    
    
    Equipment
    
    
    8,140,417
    
    
    
    6,710,092Furniture and fixtures
    
    
    2,216,347
    
    
    
    1,833,347Leasehold improvements
    
    
    13,925,216
    
    
    
    11,585,978Restaurant construction-in-progress
    
    
    1,247,265
    
    
    
    126,804Total
    
    
    28,170,450
    
    
    
    20,256,221Less accumulated depreciation
    
    
    (10,917,851
    )
    
    
    (8,600,708
    )Property and equipment, net
    
    $
    17,252,599
    
    
    $
    11,655,513
 4. INTANGIBLE ASSETS
  December 26
    
    
    December 272010
    
    
    2009Amortized intangiblesFranchise fees
    
    $
    373,750
    
    
    $
    358,750Trademark
    
    
    7,475
    
    
    
    2,500Loan fees
    
    
    155,100
    
    
    
    66,565Total
    
    
    536,325
    
    
    
    427,815Less accumulated amortization
    
    
    (115,246
    )
    
    
    (122,064
    )Amortized intangibles, net
    
    
    421,079
    
    
    
    305,751Unamortized intangiblesLiquor licenses
    
    
    554,382
    
    
    
    483,528Total intangibles
    
    $
    975,461
    
    
    $
    789,279
  5. RELATED PARTY TRANSACTIONS
    F-15




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Guarantees,
    6. LONG-TERM DEBT
  December 26
    
    
    December 272010
    
    
    2009Note payable to a bank secured by a
senior lien on all company assets.
Scheduled monthly principal and interest
payments are approximately $120,000
through maturity in May 2017. Interest is
charged based on a swap arrangement
designed to yield a fixed annual rate of
7.10%.
    
    $
    8,399,538
    
    
    
    Note payable to a bank secured by a
senior mortgage on the Brandon Property,
corporate guaranties, and a personal
guaranty. Scheduled monthly principal and
interest payments are approximately
$8,000 for the period beginning July 2010
through maturity in June 2030, at which
point a balloon payment of $413,550 is
due. Interest is charged based on a fixed
rate of 6.72%, per annum, through June
2017, at which point the rate will adjust
to the U.S. Treasury Securities Rate plus
4% (and every seven years thereafter).
    
    
    1,141,188
    
    
    
    Note payable to a bank secured by a
junior mortgage on the Brandon Property.
Matures in 2030 and requires monthly
principal and interest installments of
approximately $6,100 until maturity.
Interest is charged at a rate of 3.58%
per annum.
    
    
    915,446
    
    
    
    DLOC to a bank, secured by a senior lien
on all company assets. Scheduled interest
payments are charged at a rate of 4% over
the 30-day LIBOR (the rate at December
26, 2010 was approximately 4.26%). In
November 2011, the DLOC will convert into
a term loan bearing interest at 4% over
the 30-day LIBOR and will mature in May
2017. The DLOC includes a carrying cost
of .25% per year of any available but
undrawn amounts.
    
    
    1,424,679
    
    
    
    
  F-16




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December 26
    
    
    December 272010
    
    
    2009Note payable to a bank secured by a
senior lien on all company assets.
Scheduled monthly principal and interest
payments are approximately $22,000
through maturity in May 2017. Interest is
charged based on a swap arrangement
designed to yield a fixed annual rate of
5.91%.
    
    
    1,379,098Unsecured note payable that matures in
August 2013 and requires monthly
principal and interest installments of
approximately $2,200, with the balance
due at maturity. Interest is 7% per
annum.
    
    
    241,832
    
    
    
    Note payable to a bank secured by the
property and equipment of Bearcat
Enterprises, Inc. as well as personal
guarantees of certain stockholders and
various related parties. Scheduled
monthly principal and interest payments
are approximately $4,600 including annual
interest charged at a variable rate of
3.70% above the 30-day LIBOR rate. The
rate at December 26, 2010 was
approximately 3.96%. The note was repaid
during 2010.
    
    
    
    
    
    
    72,975Note payable to Ford Credit secured by a
vehicle purchased by Flyer Enterprises,
Inc. to be used in the operation of the
business. This is an interest-free loan
under a promotional 0% rate. Scheduled
monthly principal payments are
approximately $430. The note matures in
April 2013.
    
    
    12,016
    
    
    
    17,167Various notes payable to a bank or
leasing company secured by property and
equipment as well as corporate and
personal guarantees of DRH; the Companys
subsidiaries; certain stockholders;
and/or various related parties. The
various agreements called for either
monthly interest only, principal, and/or
interest payments in the aggregate amount
of $117,169. Interest charges ranged from
LIBOR plus 2% to a fixed rate of 9.15%
per annum. The various notes were
scheduled to mature between February 2011
and December 2015. These various notes
were paid off upon the execution of the
May 5, 2010 Credit Facility.
    
    
    
    
    
    
    7,821,912Obligations under capital leases (Note 10)
    
    
    
    
    
    
    693,196Notes payable  related parties (Note 5)
    
    
    3,051,221
    
    
    
    354,848Total long-term debt
    
    
    16,565,018
    
    
    
    8,960,098Less current portion
    
    
    (1,858,262
    )
    
    
    (2,443,057
    )Long-term debt, net of current portion
    
    $
    14,706,756
    
    
    $
    6,517,041
  F-17




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Year
    
    Amount2011
    
    $
    1,858,2622012
    
    
    1,812,6242013
    
    
    2,134,7242014
    
    
    2,040,5482015
    
    
    2,175,219Thereafter
    
    
    6,543,641Total
    
    $
    16,565,018
   7. CAPITAL STOCK (INCLUDING PURCHASE WARRANTS AND OPTIONS)
   Compensation-Stock Compensation
  F-18




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Equity Based Payments
to Non-Employees
  8. INCOME TAXES
  December 26
    
    
    December 272010
    
    
    2009FederalCurrent
    
    $
    
    
    
    $
    Deferred
    
    
    259,350
    
    
    
    (194,480
    )StateCurrent
    
    
    (36,502
    )
    
    
    (17,427
    )Deferred
    
    
    (97,022
    )
    
    
    (40,157
    )Income Tax (Provision) Benefit
    
    $
    125,826
    
    
    $
    (252,064
    )
  December 26
    
    
    December 272010
    
    
    2009Income tax (provision) benefit at federal statutory rate
    
    $
    (87,855
    )
    
    $
    (207,455
    )State income tax (provision) benefit
    
    
    (133,524
    )
    
    
    (57,585
    )Permanent differences
    
    
    (81,799
    )
    
    
    (32,111
    )Tax credits
    
    
    347,989
    
    
    
    93,500Other
    
    
    81,015
    
    
    
    (48,413
    )Income tax (provision) benefit
    
    $
    125,826
    
    
    $
    (252,064
    )
  F-19




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December 26
    
    
    December 272010
    
    
    2009Deferred tax assets:Net operating loss carry forwards
    
    $
    1,252,609
    
    
    $
    954,370Deferred rent expense
    
    
    68,509
    
    
    
    78,998Start-up costs
    
    
    190,076
    
    
    
    104,327Tax credit carry-forwards
    
    
    540,533
    
    
    
    164,366Swap loss recognized for book
    
    

    
    
    
    56,970Other  including state deferred tax assets
    
    
    487,139
    
    
    
    193,781Total deferred assets
    
    
    2,538,866
    
    
    
    1,552,812Deferred tax liabilities:Other  including state deferred tax assets
    
    
    547,522
    
    
    
    146,325Tax depreciation in excess of book
    
    
    1,505,800
    
    
    
    1,159,733Total deferred tax liabilities:
    
    
    1,931,122
    
    
    
    1,306,058Net deferred income tax assets
    
    $
    607,744
    
    
    $
    246,754
 Income Taxes
        F-20




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9. OPERATING LEASES (INCLUDING RELATED PARTY)
    Year
    
    Amount2011
    
    $
    2,647,4192012
    
    
    2,735,5982013
    
    
    2,803,3442014
    
    
    2,676,7172015
    
    
    2,372,943
  F-21




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10. CAPITAL LEASES
  11. COMMITMENTS AND CONTINGENCIES
       F-22




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12. SUPPLEMENTAL CASH FLOWS INFORMATION
 Other Cash Flows Information
   Supplemental Schedule of Non-Cash Operating, Investing, and Financing Activities
    13.
FAIR VALUE OF FINANCIAL INSTRUMENTS
 Fair Value Measurements and
Disclosures
 
    
    Level 1  Quoted market prices in active markets for
identical assets and liabilities;
 
    
    Level 2  Inputs, other than level 1 inputs, either directly
or indirectly observable; and
 
    
    Level 3  Unobservable inputs developed using internal
estimates and assumptions (there is little or no market data) which reflect those that
market participants would use.
     F-23




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FAIR VALUE MEASUREMENTSAsset/(Liability)Description
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total
    
    
    TotalInterest Rate Swaps
    
    $
    
    
    
    
    (367,181
    )
    
    
    
    
    
    
    (367,181
    )
    
    
    (367,181
    )
  FAIR VALUE MEASUREMENTSAsset/(Liability)Description
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total
    
    
    TotalInterest Rate Swaps
    
    $
    
    
    
    
    (213,604
    )
    
    
    
    
    
    
    (213,604
    )
    
    
    (213,604
    )
  14. SUBSEQUENT EVENTS
 th st
   F-24