Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 02, 2017 | Aug. 21, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Giggles N' Hugs, Inc. | |
Entity Central Index Key | 1,381,435 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 2, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-02 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 135,667,251 | |
Trading Symbol | GIGL | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jul. 02, 2017 | Jan. 01, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 154,288 | $ 144,520 |
Inventory | 25,617 | 20,331 |
Prepaid expenses, other | 16,517 | 13,806 |
Total current assets | 196,422 | 178,657 |
Fixed assets: | ||
Total fixed assets, net | 865,991 | 994,128 |
Other assets | 2,620 | 2,620 |
Total assets | 1,065,033 | 1,175,405 |
Current liabilities: | ||
Accounts payable | 543,610 | 610,925 |
Incentive from lessor - current portion | 94,756 | 87,420 |
Note payable from lessor, current portion net of discount of $283,377 and $35,094, respectively | 21,734 | 21,544 |
Accrued expenses | 501,836 | 328,952 |
Deferred revenue | 11,630 | 24,159 |
Promissory note payable and accrued interest | 193,340 | |
Convertible note payable and accrued interest, | 50,000 | 151,383 |
Derivative liability | 357,411 | |
Total current liabilities | 1,223,566 | 1,775,134 |
Long-term liabilities: | ||
Incentive from lessor - long-term | 603,129 | 653,008 |
Note payable - lessor | 406,758 | 411,173 |
Deferred gain | 435,654 | 429,115 |
Total long-term liabilities | 1,445,541 | 1,493,296 |
Total liabilities | 2,669,107 | 3,268,430 |
Stockholders' deficit: | ||
Common stock, $0.001 par value, 1,125,000,000 shares authorized, 134,922,251 and 67,934,205 shares issued and outstanding as of July 2, 2017 and January 1, 2017, respectively | 134,922 | 67,933 |
Common stock issuable (9,297,619 and 405,556 shares as of July 2, 2017 and January 1, 2017, respectively) | 846,535 | 218,535 |
Additional paid-in capital | 9,151,365 | 8,229,747 |
Accumulated deficit | (11,736,896) | (10,609,240) |
Total stockholders' deficit | (1,604,074) | (2,093,025) |
Total liabilities and stockholders' deficit | $ 1,065,033 | $ 1,175,405 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jul. 02, 2017 | Jan. 01, 2017 |
Statement of Financial Position [Abstract] | ||
Note payable, discount current | $ 283,377 | $ 35,094 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,125,000,000 | 1,125,000,000 |
Common stock, shares issued | 134,922,251 | 67,934,205 |
Common stock, shares outstanding | 134,922,251 | 67,934,205 |
Common stock issuable, shares | 9,297,619 | 405,556 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2017 | Jun. 26, 2016 | Jul. 02, 2017 | Jun. 26, 2016 | |
Revenue | ||||
Net sales | $ 575,824 | $ 831,464 | $ 1,237,527 | $ 1,710,398 |
Costs and operating expenses | ||||
Cost of operations | 429,164 | 734,151 | 932,955 | 1,504,669 |
General and administrative expenses | 249,822 | 319,926 | 1,185,556 | 644,118 |
Depreciation and amortization | 64,068 | 88,741 | 128,137 | 177,882 |
Total operating expenses | 743,054 | 1,142,818 | 2,246,648 | 2,326,669 |
Loss from Operations | (167,230) | (311,354) | (1,009,121) | (616,271) |
Other income (expenses): | ||||
Finance and interest expense | (14,772) | (84,378) | (64,042) | (173,331) |
Change in fair value of derivatives liability | (50,629) | |||
Gain on extinguishment of derivative liability | 185,604 | |||
Loss on extinguishment of debt | (186,818) | |||
Gain on sale of asset | 5,971 | 5,971 | ||
Gain on lease termination | 214,111 | 214,111 | ||
Loss before provision for income taxes | (368,820) | (175,650) | (1,125,006) | (569,520) |
Provision for/benefit from income taxes | (2,650) | 616 | (2,650) | (184) |
Net loss | $ (371,470) | $ (175,034) | $ (1,127,656) | $ (569,704) |
Net loss per share - basic and diluted | $ (0.01) | $ (0.01) | ||
Weighted average number of common shares outstanding - basic and diluted | 134,355,584 | 42,806,033 | 120,473,746 | 42,367,492 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - 6 months ended Jul. 02, 2017 - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Stock Issuable [Member] | Accumulated Deficit [Member] | Total |
Balance at Jan. 01, 2017 | $ 67,933 | $ 8,229,747 | $ 218,535 | $ (10,609,240) | $ (2,093,025) |
Balance, shares at Jan. 01, 2017 | 67,934,205 | ||||
Shares issued for employees compensation | $ 10,170 | 18,300 | 28,470 | ||
Shares issued for employees compensation, shares | 10,170,000 | ||||
Shares issued to settle accounts payable | $ 2,100 | 243,900 | 246,000 | ||
Shares issued to settle accounts payable, shares | 2,100,000 | ||||
Shares issued for convertible notes | $ 54,119 | 218,728 | 272,847 | ||
Shares issued for convertible notes, shares | 54,118,046 | ||||
Cash received for stock issuable | 75,000 | 75,000 | |||
Shares issued for professional services | $ 600 | 9,690 | 10,290 | ||
Shares issued for professional services, shares | 600,000 | ||||
Fair value of warrants granted for services | 531,000 | 531,000 | |||
Stock issuable to settle the convertible notes | (100,000) | 553,000 | 453,000 | ||
Net loss | (1,127,656) | (1,127,656) | |||
Balance at Jul. 02, 2017 | $ 134,922 | $ 9,151,365 | $ 846,535 | $ (11,736,896) | $ (1,604,074) |
Balance, shares at Jul. 02, 2017 | 134,922,251 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jul. 02, 2017 | Jun. 26, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (1,127,656) | $ (569,704) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 128,137 | 177,882 |
Amortization of debt discount | 154,658 | |
Gain on sales of fixed assets | (5,971) | |
Gain on lease termination | (214,111) | |
Stock-based compensation | 28,470 | |
Loss on stock issuance for payable settlement | 109,096 | |
Warrants vested for services | 531,000 | 31,000 |
Interest and fees included in note payable | 21,449 | |
Shares issued for services | 10,290 | 30,170 |
Gain on extinguishment of derivative liability | (185,604) | |
Change in fair value of derivative liability | 50,629 | |
Promissory note settlement | 186,818 | |
Changes in operating assets and liabilities: | ||
Increase in prepaid expenses and deposits | (2,711) | (3,890) |
(Increase) decrease in inventory | (5,286) | 10,553 |
Increase in accounts payable | 69,589 | 179,976 |
Decrease in lease incentive liability | (42,543) | (61,653) |
Increase (decrease) increase in accrued expenses | 180,623 | (320,676) |
(Decrease) increase in deferred revenue | (12,529) | 10,380 |
Amortization of deferred gain | 6,539 | |
Net cash used in operating activities | (53,689) | (581,386) |
Cash flows from investing activities | ||
Provided from lease termination | 350,000 | |
Provided from sales or purchase of fixed assets | 10,500 | |
Net cash provided by investing activities | 360,500 | |
Cash flows from financing activities | ||
Payments on promissory note payable | (11,543) | |
Proceeds from common stock issuable | 75,000 | |
Net cash provided by financing activities | 63,457 | |
NET INCREASE (DECREASE) IN CASH | 9,768 | (220,886) |
CASH AT BEGINNING OF PERIOD | 144,520 | 334,191 |
CASH AT END OF PERIOD | 154,288 | 113,305 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Interest paid | 26,834 | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Shares issued to settle convertible notes payable | 272,847 | |
Reclass of notes payable to accrued interest | 3,125 | |
Shares issued to settle payable | $ 136,904 | $ 31,500 |
History and Organization
History and Organization | 6 Months Ended |
Jul. 02, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
History and Organization | NOTE 1 – HISTORY AND ORGANIZATION Giggles N’ Hugs, Inc. (“GIGL Inc.” or the “Company”) was originally organized on September 17, 2004 under the laws of the State of Nevada, as Teacher’s Pet, Inc. GIGL Inc. was organized to sell teaching supplies and learning tools. On August 20, 2010, GIGL Inc. filed an amendment to its articles of incorporation to change its name to Giggles N’ Hugs, Inc. On December 30, 2011, GIGL Inc. completed the acquisition of all the issued and outstanding shares of GNH, Inc. (“GNH”), a Nevada corporation, pursuant to a Stock Exchange Agreement. For accounting purposes, the acquisition of GNH by GIGL Inc. has been recorded as a reverse merger. Giggles N Hugs restaurant concept brings together high-end, organic food with the play elements and entertainment for children. Giggles N Hugs offers an upscale, family-friendly atmosphere with a play area dedicated to children ages 10 and younger with nightly entertainment, such as magic shows, concerts, puppet shows, as well as activities and games which include face painting, dance parties, karaoke, and arts and crafts. The Company adopted a 52/53 week fiscal year ending on the Sunday closest to December 31 st |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jul. 02, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | NOTE 2 – BASIS OF PRESENTATION The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US Dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended January 1, 2017 and notes thereto included in the Company’s annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports. The condensed consolidated balance sheet as of January 1, 2017 included herein was derived from the audited consolidated financial statements as of that date, but does not included all disclosures, including notes, required by GAAP. Results of operations for the interim periods may not be indicative of annual results. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 02, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Going concern 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. As reflected in the accompanying consolidated financial statements, during the twenty-six weeks ended July 2, 2017, the Company incurred a net loss of $1,127,656, used cash in operations of $53,689, and had a stockholders’ deficit of $1,604,074 as of that date. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. In addition, the Company’s independent registered public accounting firm in its report on the January 1, 2017 financial statements has raised substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company had cash on hand in the amount of $154,288 as of July 2, 2017. Management estimates that the current funds on hand will be sufficient to continue operations through September 2017. Management is currently seeking additional funds, primarily through the issuance of debt and equity securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case or equity financing. Principles of consolidation The consolidated financial statements include the accounts of Giggles N Hugs, Inc., GNH, Inc., GNH CC, Inc. for restaurant operations in Westfield Mall in Century City, California (which was closed June 30, 2016 due to a complete remodel of the Mall), GNH Topanga, Inc. for restaurant operations in Westfield Topanga Shopping Center in Woodland Hills, California, and Glendale Giggles N Hugs, Inc. for restaurant operations in Glendale Galleria in Glendale, California. Intercompany balances and transactions have been eliminated. Giggles N Hugs, Inc., GNH, Inc., GNH CC, Inc., GNH Topanga, Inc., and Glendale Giggles N Hugs, Inc. will be collectively referred herein to as the “Company”. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions used by management including assumptions made in impairment analysis of fixed assets, accruals of potential liabilities, valuation of derivative liability and equity securities issued for services and realization of deferred tax assets. Actual results could differ from those estimates. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company uses Level 2 inputs for its valuation methodology for the warrant derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. Loss per common share Net loss per share is provided in accordance with ASC Subtopic 260-10. We present basic loss per share (“EPS”) and diluted EPS on the face of statements of operations. Basic EPS is computed by dividing reported losses by the weighted average shares outstanding. Except where the result would be anti-dilutive to income from continuing operations, diluted earnings per share has been computed assuming the conversion of the convertible long-term debt and the elimination of the related interest expense, and the exercise of stock options and warrants. Loss per common share has been computed using the weighted average number of common shares outstanding during the year. For the period ended July 2, 2017 and June 26, 2016, the assumed conversion of convertible notes payable and the exercise of stock warrants are anti-dilutive due to the Company’s net losses and are excluded in determining diluted loss per share. Recent Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures. The Company anticipates that this will add significant liabilities to the balance sheet. In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not expected to have any impact on the Company’s financial statement presentation or disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jul. 02, 2017 | |
Fixed assets: | |
Property and Equipment | NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: July 2, 2017 January 1, 2017 Leasehold improvements $ 1,889,027 $ 1,889,027 Fixtures and equipment 60,310 60,310 Computer software and equipment 264,890 264,890 Property and equipment, total 2,214,227 2,214,227 Less: accumulated depreciation (1,348,236 ) (1,220,099 ) Property and equipment, net $ 865,991 $ 994,128 Depreciation and amortization expenses for the thirteen weeks and twenty-six weeks ended July 2, 2017 were $64,069 and $128,137, respectively, and for the thirteen weeks and twenty-six weeks ended June 26, 2016 were $88,741 and $177,882, respectively. Repair and maintenance expense for the thirteen weeks and twenty-six weeks ended July 2, 2017 were $18,238 and $33,780, respectively, and for thirteen weeks and twenty-six weeks ended June 26, 2016 were $22,833 and $51,826, respectively. |
Note Payable Lessor
Note Payable Lessor | 6 Months Ended |
Jul. 02, 2017 | |
Note Payable Lessor | |
Note Payable Lessor | NOTE 5 – NOTE PAYABLE, LESSOR On February 12, 2013, the Company entered into a $700,000 Promissory Note Payable Agreement with GGP Limited Partnership (“Lender”) to be used by the Company for a portion of the construction work to be performed by the Company under the lease by and between the Company and Glendale II Mall Associates, LLC. The Note Payable accrued interest at a rate of 10% through October 15, 2015, 12% through October 31, 2017, and 15% through October 31, 2023 and matures on October 31, 2023. On March 1, 2015, the Company and the lender renegotiated the terms of the Promissory Note and agreed to a new note with a principal balance due of $683,316. As part of the new agreement, the Lender waived principal and interest payments for two years beginning March 1, 2015. On August 12, 2016 the Company entered into a third amendment on its lease at The Glendale Galleria. The amendment covered several areas, including adjustment to percentage rent payable, reduced the minimum rent payable, along with the payment and principal of Promissory Note. The Promissory Note was adjusted to a balance due of $763,261 from $683,316, with no interest, payable in equal monthly instalments of $5,300 through maturity of Note on May 31, 2028. The Company imputed interest using a discount rate of 10% to determine a fair value of the note of $443,521, resulting in a valuation discount of $319,740. As of July 2, 2017, the balance of note payable was $711,869, and unamortized note discount was $283,377, with a net balance due of $428,492. The exchange of the notes in fiscal 2016 was treated as a debt extinguishment as the change in terms constituted more than a 10% change in the fair value of the original note, and the difference between the fair value of the new note and the old note (including eliminating all remaining unamortized discount) of $220,668 was treated as a gain on debt extinguishment. The Company determined that since the GGP Promissory Note and the related revision of the lease were agreed to at the same time, that the change in the lease payment terms and the reduced rent, and the issuance of the new note are directly related. As such the gain on the termination of the note of $220,668 was deferred, and is being amortized over the remaining life of the lease as an adjustment to rent expense. The lender under the Note is GGP Limited Partnership (GGP). GGP is an affiliate of Glendale II Mall Associates, the lessor of the Company’s Glendale Mall restaurant location. In accordance with the note agreement, an event of default would occur if the Borrower defaults under the lease between the Company and Glendale II Mall Associates. Upon the occurrence of an event of default, the entire balance of the Note payable and accrued interest would become due and payable, and the balance due becomes subject to a default interest rate (which is 5% higher than the defined interest rate). As of July 2, 2016, the Company was delinquent in its payments to GGP under the note, but has subsequently brought the note current. |
Convertible Note Payable
Convertible Note Payable | 6 Months Ended |
Jul. 02, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Note Payable | NOTE 6 – CONVERTIBLE NOTE PAYABLE A summary of convertible debentures payable as of July 2, 2017 and January 1, 2017 is as follows: July 2, 2017 January 1, 2017 Iconic Holdings, LLC $ - $ 84,191 J&N Invest LLC 50,000 50,000 Accrued interest - 17,192 Total Convertible Notes 50,000 151,383 Net Convertible Notes $ 50,000 $ 151,383 Iconic Holdings, LLC On July 11, 2016, the Company modified the conversion feature of the Iconic note eliminating the conversion floor. The Company determined that since the conversion floor had been eliminated, that the Company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, the Company determined that the conversion feature created a derivative liability (see Note 9). During the twenty-six weeks ended July 2, 2017, the Company converted the remaining balance of the principal into 38,457,435 shares of common stock at average conversion price $0.00259 per share. Upon extinguishment of note, the derivative was eliminated. J&N Invest LLC |
Promissory Note
Promissory Note | 6 Months Ended |
Jul. 02, 2017 | |
Debt Disclosure [Abstract] | |
Promissory Note | NOTE 7 – PROMISSORY NOTE On December 18, 2015, the Company issued a six month unsecured promissory note in the principal sum of $265,000 in favor of St. George Investments, LLC, pursuant to the terms of a securities purchase agreement of the same date. The Note went into default when the Company failed to make payment on the due date. Consequently, on July 8, 2016, the Company entered into an Exchange Agreement with St. George Investments, LLC, to replace the original Promissory Note with a new Convertible Promissory Note (“Note”). The Note carries a Conversion clause that allows the Holder to have a cashless conversion into shares of Common Stock for all or part of the principal, at a price equal to the average market price for 20 days prior to the conversion. The company determined that since the conversion floor had no limit to the conversion price, that the company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, the Company determined that the conversion feature created a derivative at the date of the modification. During the period the Holder converted $48,914 of debt into 15,660,611 shares of Common Stock. In addition, the Company paid $7,517 of the principal balance. On March 23, 2017, St. George Investments, LLC (“St. George”) served an arbitration demand and summons claiming that the Company had breached its obligations under a convertible note by preventing St. George from converting the remaining balance of the note to common stock. The parties disagreed as to the conversion price set in the note agreement due to execution by the parties of different versions of the document. St. George claimed for additional damages. The Company believed these claims lacked merit and the Company retained counsel to vigorously defend this action. Effective May 3, 2017, the Company counter-sued for full damages for breaching the contract, claiming mistakes, rescission, breach of the covenant of good faith and fair dealing and unjust enrichment. On August 14, 2017, the Company and St. George entered into a settlement agreement whereby the Company agreed to deliver 7,900,000 unrestricted free-trading shares to SGI Immediately upon signing a final settlement agreement and St. George agreed to purchase an additional 1,100,000 shares for a purchase price of $110,000 at $0.10 per share. These shares shall be delivered pursuant to a conversion under the existing outstanding note. The shares had a fair value of $.07 per share as of the settlement date, or $553,000 in the aggregate. At the time of the settlement, the outstanding balance under the note was $132,928 and accrued interest of $10,818. The company considered the settlement as a debt extinguishment as the consideration to be issued was greater than 10% of the debt at the date of the modification. As such the Company recorded the fair value of the shares to be issued, and recognized a loss on the extinguishment of the aggregate face value of the note and accrued interest of $143,740, and the remaining value of the derivative liability of $222,436, resulting in a loss on extinguishment of $186,818. The Company determined that it was appropriate to record this loss as of July 2, 2017) as it related to outstanding claims that were due at that time, with the ultimate settlement becoming known prior to filing of the 10Q. |
Business Loan and Security Agre
Business Loan and Security Agreement | 6 Months Ended |
Jul. 02, 2017 | |
Business Loan And Security Agreement | |
Business Loan and Security Agreement | NOTE 8 – BUSINESS LOAN AND SECURITY AGREEMENT In August 2015, the Company entered into a Business Loan and Security Agreement with American Express Bank, which allows the Company to borrow up to $174,000. The loan originally matured in August 2016 but will remain in effect for successive one-year periods unless terminated by either party. The loan is secured by credit card collections from the Company’s store operations. The agreement provides that the Company will receive an advance of up to $180,000 at the beginning of each fiscal month, and requires the Company to repay the loan from the credit card deposits it receives from its customers. Assuming the balance has been paid off by the end of the month, the Company will receive another advance up to the face amount of the note at the beginning of the next fiscal month. The loan requires a loan fee of 0.5% of the outstanding balance as of each disbursement date. At July 2, 2017 and January 1, 2017, $149,917 and $136,629 was outstanding and is included in accrued expenses in the accompanying balance sheets. |
Derivative Liability
Derivative Liability | 6 Months Ended |
Jul. 02, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | NOTE 9 - DERIVATIVE LIABILITY Under authoritative guidance used by the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The Company has issued certain convertible notes whose conversion price is based on a future market price. However, since the number of shares to be issued is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to share settle the conversion option. The result is that the conversion option is classified as a liability and bifurcated from the debt host and accounted for as a derivative liability in accordance with ASC 815 and will be re-measured at the end of every reporting period with the change in value reported in the statement of operations. The fair value of the derivative liability related to the St. George note was determined to be $238,538 at January 1, 2017. During 2017, and through April 2, 2017, the Company settled principal balance amounting to $48,914. As a result, the Company extinguished the fair value of the corresponding Derivative Liability prior to conversion/payment and recorded a gain on settlement of $66,731. At April 2, 2017, the Company determined the FV of the remaining DL to be $222,346. As a result, the Company recorded a cost of $50,629 to account for the change in FV between the reporting periods. After the conversions through April 2, 2017, the Company and St. George had a dispute as to ultimate settlement of this obligation. On August 14, 2017, the Company and St. George agreed to settle the outstanding amount of convertible notes due for the issuance of 7,900,000 shares of common stock. The settlement was accounted for as a debt extinguishment. As such, given that the debt was extinguished, the remaining associated derivative liability of $222,346 was also extinguished was included in the calculation of loss on debt extinguishment. The fair value of the derivative liability related to the Iconic note was determined to be $118,873 at January 1, 2017. In January 2017, the lender converted all outstanding principal and interest due him in exchange for 38,457,435 shares of common stock. As a result, the Company extinguished the recorded derivative liability of $118,873 and recorded as a gain on extinguishment. |
Common Stock
Common Stock | 6 Months Ended |
Jul. 02, 2017 | |
Equity [Abstract] | |
Common Stock | NOTE 10 – COMMON STOCK Issuance of Common Stock During the twenty-six weeks ended July 2, 2017, the Company granted and issued to officers and employees 10,170,000 shares of restricted common stock with a fair value of $28,470, and a non-employee 600,000 shares with a fair value of $10,290 based on the fair value of the shares on the date of grant for services rendered. During the twenty-six weeks ended July 2, 2017, the Company issued 2,100,000 shares of common stock in settlement of an accounts payable amounting to $138,000. The fair value of the shares issued was $246,000 based on the fair value of the shares on the date of settlement resulting in an additional cost to the Company of $109,096. During the twenty-six weeks ended July 2, 2017, the Company received $75,000 from the sales of 992,602 shares of stock. Such shares have not yet been issued and warrants to acquire 357,142 shares of common stock at an excise price of $0.12 per share that expire in June 2020. During the twenty-six weeks ended July 2, 2017, the Company issued total of 54,118,046 shares of its common stock for conversion of convertible notes in the amount of $172,847 (see Note 6 and 7). Employee Stock Options The following table summarizes the changes in the options outstanding at April 2, 2017, and the related prices for the shares of the Company’s common stock issued to employees of the Company under a non-qualified employee stock option plan. Weighted Average Stock Exercise Options Price Outstanding, January 1, 2017 115,000 $ 4.50 Granted - - Exercised - - Outstanding, July 2, 2017 115,000 $ 4.50 Exercisable, July 2, 2017 115,000 $ 4.50 As of July 2, 2017, the stock options had no intrinsic value. There were no options granted during the fiscal quarter ended July 2, 2017, and there was no stock-based compensation expense in connection with options granted to employees recognized in the consolidated statement of operations for the twenty-six weeks ended July 2, 2017. Warrants The following table summarizes the changes in the warrants outstanding at July 2, 2017, and the related prices. A summary of the Company’s warrants as of July 2, 2017 is presented below: Weighted Average Exercise Warrants Price Outstanding, January 1, 2017 606,500 $ 0.13 Granted 5,507,143 0.10 Exercised - - Outstanding, July 2, 2017 6,113,643 $ 0.11 Exercisable, July 2, 2017 6,113,643 $ 0.11 Weighted Weighted Average Weighted Range of Average Remaining Average Exercise Number Exercise Contractual Number Exercise Prices Outstanding Price Life Exercisable Price $0.01 ~ $0.15 6,113,643 $ 0.11 4.55 6,113,643 $ 0.11 6,113,643 4.55 6,113,643 On May 17, 2016, GIGL entered into a Strategic Alliance Agreement with Kiddo, Inc., a Florida corporation (“consultant”) whereby consultant will provide marketing and branding services as well as introductions to potential strategic partners and investors. As consideration for consultant’s services pursuant to the Strategic Alliance Agreement, GIGL agreed to issue to consultant a warrant to purchase up to 4,400,000 shares of GIGL’s common stock at an exercise price of $0.075 per share, which warrant vests in increments based upon the achievement of certain milestones. As of January 1, 2017, 440,000 of these warrants with a fair value of $31,000 were deemed to have been achieved and are included in the table of outstanding warrants above. At July 2, 2017, the achievement of the corresponding milestones for the remaining warrants to acquire 3,960,000 has been determined to be remote or undeterminable, as such, the warrants have not been included as outstanding in the table above. During the twenty-six weeks ended July 2, 2017, the Company entered into agreements to issue warrants to acquire 5,150,000 shares of common stock for celebrity services to promote the Company’s business. The warrants were fully vested upon issuance, expire 5 years from the date of issuance, and 5,000,000 of the warrants are exercisable at $0.10 per share and 150,000 of the warrants are exercisable at $0.20 per share. The total fair value of these warrants at grant date was $531,000 using the Black-Scholes Option Pricing model with the following assumptions: life of 5 years; risk free interest rate of 1.73%; volatility of 350% and dividend yield of 0%. |
Leases
Leases | 6 Months Ended |
Jul. 02, 2017 | |
Leases [Abstract] | |
Leases | NOTE 11 – LEASES The Company currently leases its restaurant locations. The Company evaluates each lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes. Minimum base rent for the Company’s operating leases, which generally have escalating rentals over the term of the lease, is recorded on a straight-line basis over the lease term. The initial rent term includes the build-out, or rent holiday period, for the Company’s leases, where no rent payments are typically due under the terms of the lease. Deferred rent liabilities are recorded to the extent it exceeds minimum base rent per the lease agreement. Rent expense for the Company’s restaurant operating leases was $100,773 and $163,319 for the thirteen weeks ended July 2, 2017 and June 26, 2016, respectively, and $202,363 and $261,406 for the twenty-six weeks ended July 2, 2017 and July 26, 2016, respectively. The Company disburses cash for leasehold improvements and furniture, fixtures and equipment to build out and equip its leased premises. The Company also expends cash for structural additions that it makes to leased premises of which $506,271 and $475,000 were initially reimbursed Topanga and Glendale by its landlords, respectively, as construction contributions pursuant to agreed-upon terms in the lease agreements. Landlord construction contributions usually take the form of up-front cash. Depending on the specifics of the leased space and the lease agreement, amounts paid for structural components are recorded during the construction period as leasehold improvements or the landlord construction contributions are recorded as an incentive from lessor. On August 12, 2016, the Company entered into a third amendment on its lease at The Glendale Galleria. The amendment covered several areas, including adjustment to percentage rent payable, reduced the minimum rent payable and payment and principal of the Promissory Note payable to GGP which resulted in an aggregate gain of $455,287 which has been deferred, and will be amortized on the straight-line basis over the remaining life of the lease as an adjustment to rent expense. During the year ended January 1, 2017, $26,172 of the deferred gain was amortized and offset to rent expense, resulting in a remaining deferred gain balance of $429,115 as of January 1, 2017. During the twenty-six weeks ended July 2, 2017, an additional adjustment of outstanding rent of $37,937 was added to the deferred gain and will be amortized on the straight-line basis. During the twenty-six weeks ended July 2, 2017, $31,398 of the deferred gain was amortized and offset to rent expense, resulting in a remaining deferred gain balance of $435,654 as of July 2, 2017. The balance of the incentive from lessor as of July 2, 2017 and January 1, 2017, were $697,885 and $740,428, and included deferred rent of $126,104 and $117,056, respectively. As of July 2, 2017, $94,756 of the incentive from lessor was current and $603,129 was long term. Amortization of the incentive from lessor was $21,679 and $33,479 for the thirteen weeks ended July 2, 2017 and June 26, 2016, respectively, and $42,543 and $61,653 for twenty-six weeks ended July 2, 2017 and June 26, 2016, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 02, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 12 – COMMITMENTS AND CONTINGENCIES Litigation The Company entered into an agreement settling all claims with St. George on August 14, 2017 pursuant to a confidential settlement agreement. Subject to the execution of documents memorializing the settlement terms, the Company agreed to convert the outstanding balance of St. George’s note into 7,900,000 shares of common stock (see Note 7) and St. George agreed to purchase an additional 1,100,000 shares for a purchase price of $110,000 at $0.10 per share. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jul. 02, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 13 – SUBSEQUENT EVENTS On August 1, 2017, the Company issued to a consultant 745,000 unrestricted shares of common stock at fair value of $52,150 for services rendered. The Company entered into an agreement settling all claims with St. George on August 14, 2017 pursuant to a confidential settlement agreement. Subject to the execution of documents memorializing the settlement terms, the Company agreed to convert the outstanding balance of St. George’s note into 7,900,000 shares of common stock (see Note 7) and St. George agreed to purchase an additional 1,100,000 shares for a purchase price of $110,000 at $0.10 per share. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 02, 2017 | |
Accounting Policies [Abstract] | |
Going Concern | Going concern 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. As reflected in the accompanying consolidated financial statements, during the twenty-six weeks ended July 2, 2017, the Company incurred a net loss of $1,127,656, used cash in operations of $53,689, and had a stockholders’ deficit of $1,604,074 as of that date. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. In addition, the Company’s independent registered public accounting firm in its report on the January 1, 2017 financial statements has raised substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company had cash on hand in the amount of $154,288 as of July 2, 2017. Management estimates that the current funds on hand will be sufficient to continue operations through September 2017. Management is currently seeking additional funds, primarily through the issuance of debt and equity securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case or equity financing. |
Principles of Consolidation | Principles of consolidation The consolidated financial statements include the accounts of Giggles N Hugs, Inc., GNH, Inc., GNH CC, Inc. for restaurant operations in Westfield Mall in Century City, California (which was closed June 30, 2016 due to a complete remodel of the Mall), GNH Topanga, Inc. for restaurant operations in Westfield Topanga Shopping Center in Woodland Hills, California, and Glendale Giggles N Hugs, Inc. for restaurant operations in Glendale Galleria in Glendale, California. Intercompany balances and transactions have been eliminated. Giggles N Hugs, Inc., GNH, Inc., GNH CC, Inc., GNH Topanga, Inc., and Glendale Giggles N Hugs, Inc. will be collectively referred herein to as the “Company”. |
Use of Estimates | Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions used by management including assumptions made in impairment analysis of fixed assets, accruals of potential liabilities, valuation of derivative liability and equity securities issued for services and realization of deferred tax assets. Actual results could differ from those estimates. |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company uses Level 2 inputs for its valuation methodology for the warrant derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. |
Loss Per Common Share | Loss per common share Net loss per share is provided in accordance with ASC Subtopic 260-10. We present basic loss per share (“EPS”) and diluted EPS on the face of statements of operations. Basic EPS is computed by dividing reported losses by the weighted average shares outstanding. Except where the result would be anti-dilutive to income from continuing operations, diluted earnings per share has been computed assuming the conversion of the convertible long-term debt and the elimination of the related interest expense, and the exercise of stock options and warrants. Loss per common share has been computed using the weighted average number of common shares outstanding during the year. For the period ended July 2, 2017 and June 26, 2016, the assumed conversion of convertible notes payable and the exercise of stock warrants are anti-dilutive due to the Company’s net losses and are excluded in determining diluted loss per share. |
Recent Accounting Standards | Recent Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures. The Company anticipates that this will add significant liabilities to the balance sheet. In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not expected to have any impact on the Company’s financial statement presentation or disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jul. 02, 2017 | |
Fixed assets: | |
Schedule of Property and Equipment | Property and equipment consisted of the following at: July 2, 2017 January 1, 2017 Leasehold improvements $ 1,889,027 $ 1,889,027 Fixtures and equipment 60,310 60,310 Computer software and equipment 264,890 264,890 Property and equipment, total 2,214,227 2,214,227 Less: accumulated depreciation (1,348,236 ) (1,220,099 ) Property and equipment, net $ 865,991 $ 994,128 |
Convertible Note Payable (Table
Convertible Note Payable (Tables) | 6 Months Ended |
Jul. 02, 2017 | |
Debt Disclosure [Abstract] | |
Summary of Convertible Debentures Payable | A summary of convertible debentures payable as of July 2, 2017 and January 1, 2017 is as follows: July 2, 2017 January 1, 2017 Iconic Holdings, LLC $ - $ 84,191 J&N Invest LLC 50,000 50,000 Accrued interest - 17,192 Total Convertible Notes 50,000 151,383 Net Convertible Notes $ 50,000 $ 151,383 |
Common Stock (Tables)
Common Stock (Tables) | 6 Months Ended |
Jul. 02, 2017 | |
Equity [Abstract] | |
Summary of Stock Awards for Options | The following table summarizes the changes in the options outstanding at April 2, 2017, and the related prices for the shares of the Company’s common stock issued to employees of the Company under a non-qualified employee stock option plan. Weighted Average Stock Exercise Options Price Outstanding, January 1, 2017 115,000 $ 4.50 Granted - - Exercised - - Outstanding, July 2, 2017 115,000 $ 4.50 Exercisable, July 2, 2017 115,000 $ 4.50 |
Schedule of Stock Warrants Activity | A summary of the Company’s warrants as of July 2, 2017 is presented below: Weighted Average Exercise Warrants Price Outstanding, January 1, 2017 606,500 $ 0.13 Granted 5,507,143 0.10 Exercised - - Outstanding, July 2, 2017 6,113,643 $ 0.11 Exercisable, July 2, 2017 6,113,643 $ 0.11 |
Schedule of Changes in Warrants Outstanding | Weighted Weighted Average Weighted Range of Average Remaining Average Exercise Number Exercise Contractual Number Exercise Prices Outstanding Price Life Exercisable Price $0.01 ~ $0.15 6,113,643 $ 0.11 4.55 6,113,643 $ 0.11 6,113,643 4.55 6,113,643 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2017 | Jun. 26, 2016 | Jul. 02, 2017 | Jun. 26, 2016 | Jan. 01, 2017 | Dec. 27, 2015 | |
Accounting Policies [Abstract] | ||||||
Net loss | $ 371,470 | $ 175,034 | $ 1,127,656 | $ 569,704 | ||
Net cash used in operating activities | 53,689 | 581,386 | ||||
Stockholders' deficit | 1,604,074 | 1,604,074 | $ 2,093,025 | |||
Cash and equivalents | $ 154,288 | $ 113,305 | $ 154,288 | $ 113,305 | $ 144,520 | $ 334,191 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2017 | Jun. 26, 2016 | Jul. 02, 2017 | Jun. 26, 2016 | |
Fixed assets: | ||||
Depreciation and amortization | $ 64,068 | $ 88,741 | $ 128,137 | $ 177,882 |
Repair and maintenance expenses | $ 18,238 | $ 22,833 | $ 33,780 | $ 51,826 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Jul. 02, 2017 | Jan. 01, 2017 |
Fixed assets: | ||
Leasehold improvements | $ 1,889,027 | $ 1,889,027 |
Fixtures and equipment | 60,310 | 60,310 |
Computer software and equipment | 264,890 | 264,890 |
Property and equipment, total | 2,214,227 | 2,214,227 |
Less: accumulated depreciation | (1,348,236) | (1,220,099) |
Property and equipment, net | $ 865,991 | $ 994,128 |
Note Payable Lessor (Details Na
Note Payable Lessor (Details Narrative) - USD ($) | Aug. 12, 2016 | Feb. 12, 2013 | Jul. 02, 2017 | Jun. 26, 2016 | Mar. 01, 2015 |
Promissory notes payable face value | $ 683,316 | $ 700,000 | $ 100,000 | ||
Notes payable accrued interest rate | |||||
Debt maturity date | May 31, 2028 | Oct. 31, 2023 | |||
Promissory note principal balance | $ 443,521 | 711,869 | $ 683,316 | ||
Repayment of debt, periodic payment | $ 5,300 | ||||
Fair value of discount rate | 10.00% | ||||
Unamortization of debt discount | $ 319,740 | 283,377 | |||
Net balance due | 428,492 | ||||
Maximum percentage of defined interest rate | 10.00% | ||||
Gain on debt extinguishment | $ 220,668 | $ (186,818) | |||
Gain on termination of note | $ 220,668 | ||||
Minimum default interest rate | 5.00% | ||||
Adjusted Balance [Member] | |||||
Promissory notes payable face value | $ 763,261 | ||||
Through October 15, 2015 [Member] | |||||
Notes payable accrued interest rate | 10.00% | ||||
Through October 31, 2017 [Member] | |||||
Notes payable accrued interest rate | 12.00% | ||||
Through October 31, 2023 [Member] | |||||
Notes payable accrued interest rate | 15.00% |
Convertible Note Payable (Detai
Convertible Note Payable (Details Narrative) - USD ($) | Aug. 12, 2016 | Dec. 21, 2015 | Aug. 24, 2015 | Feb. 12, 2013 | Jul. 02, 2017 |
Convertible note payable interest rate | |||||
Convertible note payable face amount | $ 683,316 | $ 700,000 | $ 100,000 | ||
Discount on convertible note payable | $ 319,740 | $ 283,377 | |||
Debt maturity date | May 31, 2028 | Oct. 31, 2023 | |||
Debt conversion shares issued | 15,660,611 | ||||
Iconic Holdings LLC [Member] | |||||
Debt conversion shares issued | 38,457,435 | ||||
Trading price per share | $ 0.00259 | ||||
Unsecured Note Payable Agreement [Member] | Iconic Holdings LLC [Member] | |||||
Convertible note payable interest rate | 8.00% | ||||
Convertible note payable face amount | $ 161,250 | ||||
Discount on convertible note payable | 11,250 | ||||
Debt fee and costs | 11,250 | ||||
Net proceeds form debt issuance | $ 138,500 | ||||
Convertible note payable guaranteed interest rate | 10.00% | ||||
Debt maturity date | Dec. 21, 2016 | ||||
Convertible note payable redemption price percentage | 65.00% | ||||
Convertible note payable conversion price per share | $ 0.08 | ||||
Unsecured Note Payable Agreement [Member] | J&N Invest LLC [Member] | |||||
Convertible note payable interest rate | 5.00% | ||||
Convertible note payable face amount | $ 50,000 | ||||
Discount on convertible note payable | $ 50,000 | ||||
Debt maturity date | Aug. 31, 2016 | ||||
Convertible note payable conversion price per share | $ 0.10 | ||||
Trading price per share | $ 0.23 |
Convertible Note Payable - Summ
Convertible Note Payable - Summary of Convertible Debentures Payable (Details) - USD ($) | Jul. 02, 2017 | Jan. 01, 2017 |
Total Convertible Notes | $ 50,000 | $ 151,383 |
Accrued interest | 17,192 | |
Net Convertible Notes | 50,000 | 151,383 |
Iconic Holdings LLC [Member] | ||
Total Convertible Notes | 84,191 | |
J&N Invest LLC [Member] | ||
Total Convertible Notes | $ 50,000 | $ 50,000 |
Promissory Note (Details Narrat
Promissory Note (Details Narrative) - USD ($) | Aug. 12, 2016 | Jul. 02, 2017 | Jun. 26, 2016 | Jan. 01, 2017 | Dec. 18, 2015 | Mar. 01, 2015 |
Debt conversion, converted amount | $ 48,914 | |||||
Debt conversion shares issued | 15,660,611 | |||||
Debt instrument periodic payment, per month | $ 7,517 | |||||
Number of share purchase during period | 992,602 | |||||
Number of share purchase during period, value | $ 75,000 | |||||
Note oustanding balance | $ 443,521 | 711,869 | $ 683,316 | |||
Accrued interest | $ 17,192 | |||||
Gain loss on extinguishment of debt | $ 220,668 | $ (186,818) | ||||
August 14, 2017 [Member] | Derivative Liability [Member] | ||||||
Debt conversion shares issued | 7,900,000 | |||||
Settlement Agreement [Member] | August 14, 2017 [Member] | ||||||
Debt conversion, converted amount | $ 553,000 | |||||
Debt conversion shares issued | 7,900,000 | |||||
Number of unrestricted free trading shares agreed to deliver for settlement | $ .07 | |||||
Number of share purchase during period | 1,100,000 | |||||
Number of share purchase during period, value | $ 110,000 | |||||
Purchase price per share | $ 0.10 | |||||
Note oustanding balance | $ 132,928 | |||||
Accrued interest | 10,818 | |||||
Gain loss on extinguishment of debt | 143,740 | |||||
Derivative liability | 222,436 | |||||
Settlement Agreement [Member] | August 14, 2017 [Member] | Derivative Liability [Member] | ||||||
Gain loss on extinguishment of debt | $ 186,818 | |||||
Settlement Agreement [Member] | August 14, 2017 [Member] | Maximum [Member] | ||||||
Debt consideration percentage | 10.00% | |||||
St. George Investments, LLC [Member] | ||||||
Unsecured promissory note principal | $ 265,000 |
Business Loan and Security Ag31
Business Loan and Security Agreement (Details Narrative) - USD ($) | 1 Months Ended | ||
Aug. 31, 2015 | Jul. 02, 2017 | Jan. 01, 2017 | |
Accrued expenses | $ 149,917 | $ 136,629 | |
American Express Bank [Member] | |||
Line of credit facility maximum borrowing capacity | $ 174,000 | ||
Loan maturities date | August 2,016 | ||
Proceeds from advances | $ 180,000 | ||
Percentage of loan fee | 0.50% |
Derivative Liability (Details N
Derivative Liability (Details Narrative) - USD ($) | Jan. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 |
Derivative liability fair value | $ 238,538 | $ 222,346 | |
Gain on derivative | $ 185,604 | ||
Number of shares issued to settle notes | 15,660,611 | ||
Iconic Note [Member] | |||
Derivative liability fair value | 118,873 | ||
Gain on derivative | $ 118,873 | ||
Number of shares issued to settle notes | 38,457,435 | ||
Derivative Liability [Member] | |||
Repayments of derivatives | $ 48,914 | ||
Gain on derivative | $ 66,731 | ||
Derivative Liability [Member] | August 14, 2017 [Member] | |||
Number of shares issued to settle notes | 7,900,000 | ||
Remaining Derivative Liability [Member] | August 14, 2017 [Member] | |||
Derivative liability fair value | $ 222,346 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jul. 02, 2017 | Jan. 01, 2017 | May 17, 2016 | |
Number of shares issued for settlement accounts payable, shares | 2,100,000 | ||
Number of shares issued for settlement accounts payable | $ 138,000 | ||
Fair value of shares issued | 246,000 | ||
Fair value of additional cost | 109,096 | ||
Sale of stock amount received | $ 75,000 | ||
Number of sale of stock shares received | 992,602 | ||
Number of common stock for conversion of convertible notes | $ 272,847 | ||
Warrant to purchase common stock | 5,150,000 | 440,000 | |
Warrant expire date | June 2,020 | ||
Fair value of warrants | $ 31,000 | ||
Remaining warrants to acquire | 3,960,000 | ||
Warrant term | 5 years | ||
Warrant exercisable | 5,000,000 | ||
Warrant exercisable, per share | $ .10 | ||
Fair value of options grant | $ 531,000 | ||
Strategic Alliance Agreement [Member] | |||
Warrant to purchase common stock | 4,400,000 | ||
Warrant exercise price | $ 0.075 | ||
Warrants [Member] | |||
Warrant to purchase common stock | 357,142 | ||
Warrant exercise price | $ 0.12 | ||
Warrant exercisable | 150,000 | ||
Warrant exercisable, per share | $ .20 | ||
Fair value of life | 5 years | ||
Risk free interest | 1.73% | ||
Volatility | 350.00% | ||
Dividend yield | 0.00% | ||
Convertible Notes [Member] | |||
Number of common stock for conversion of convertible notes, shares | 54,118,046 | ||
Number of common stock for conversion of convertible notes | $ 172,847 | ||
Officers And Employees [Member] | |||
Shares issued during period restricted shares | 10,170,000 | ||
Shares issued during period restricted shares, value | $ 28,470 | ||
Non Employees [Member] | |||
Shares issued during period restricted shares | 600,000 | ||
Shares issued during period restricted shares, value | $ 10,290 |
Common Stock - Summary of Stock
Common Stock - Summary of Stock Awards for Options (Details) | 6 Months Ended |
Jul. 02, 2017$ / sharesshares | |
Equity [Abstract] | |
Stock Options, Outstanding, Beginning balance | shares | 115,000 |
Stock Options, Granted | shares | |
Stock Options, Exercised | shares | |
Stock Options, Outstanding, Ending balance | shares | 115,000 |
Stock Options, Exercisable | shares | 115,000 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ / shares | $ 4.50 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares | 4.50 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 4.50 |
Common Stock - Schedule of Stoc
Common Stock - Schedule of Stock Warrants Activity (Details) - Warrant [Member] | 6 Months Ended |
Jul. 02, 2017$ / sharesshares | |
Warrants, Outstanding, Beginning balance | shares | 606,500 |
Warrants, Granted | shares | 5,507,143 |
Warrants, Exercised | shares | |
Warrants, Outstanding, Ending balance | shares | 6,113,643 |
Warrants, Exercisable | shares | 6,113,643 |
Weighted Average Exercise Price, Outstanding, Beginning | $ / shares | $ 0.13 |
Weighted Average Exercise Price, Granted | $ / shares | 0.1 |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Outstanding, Ending | $ / shares | 0.11 |
Warrants Exercisable, price | $ / shares | $ 0.11 |
Common Stock - Schedule of Chan
Common Stock - Schedule of Changes in Warrants Outstanding (Details) | 6 Months Ended |
Jul. 02, 2017$ / sharesshares | |
Number of Options, Outstanding | shares | 6,113,643 |
Weighted Average Remaining Contractual Life | 4 years 6 months 18 days |
Number of Options, Exercisable | shares | 6,113,643 |
Range 1 [Member] | |
Range of Exercise Prices, Lower Range Limit | $ / shares | $ 0.01 |
Range of Exercise Prices, Upper Range Limit | $ / shares | $ 0.15 |
Number of Options, Outstanding | shares | 6,113,643 |
Weighted Average Exercise Price | $ / shares | $ 0.11 |
Weighted Average Remaining Contractual Life | 4 years 6 months 18 days |
Number of Options, Exercisable | shares | 6,113,643 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.11 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jul. 02, 2017 | Jun. 26, 2016 | Jul. 02, 2017 | Jun. 26, 2016 | Jan. 01, 2017 | Aug. 12, 2016 | Jul. 26, 2016 | |
Operating lease rent expenses | $ 100,773 | $ 163,319 | $ 202,363 | $ 261,406 | |||
Incentive from lessor amount | 603,129 | 603,129 | $ 653,008 | ||||
Deferred revenue | 429,115 | $ 455,287 | |||||
Deferred gain amortized and offset rent expense | 31,398 | 31,398 | 26,172 | ||||
Remaining deferred gain amortized and offset rent expense | 435,654 | 435,654 | 429,115 | ||||
Additional deferred gain amortized and offset rent expense | 37,937 | 37,937 | |||||
Incentive from lessor remaining balance amount | 697,885 | 697,885 | 740,428 | ||||
Deferred rent | 126,104 | 126,104 | $ 117,056 | ||||
Incentive from lessor amount current | 94,756 | 94,756 | |||||
Amortization of incentives from lessors | 21,679 | $ 33,479 | 42,543 | $ 61,653 | |||
Topanga [Member] | |||||||
Incentive from lessor amount | $ 506,271 | $ 506,271 | |||||
Glendale II Mall Associates, LLC [Member] | |||||||
Incentive from lessor amount | $ 475,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 6 Months Ended |
Jul. 02, 2017USD ($)shares | |
Number of common shares for note settlement | shares | 15,660,611 |
Number of common shares for note settlement, value | $ | $ 48,914 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Aug. 14, 2017 | Aug. 14, 2017 | Aug. 02, 2017 | Jul. 02, 2017 | Jun. 26, 2016 |
Number of common stock shares issued | $ (10,290) | $ (30,170) | |||
Number of common shares for note settlement | 15,660,611 | ||||
Number of common shares for note settlement, value | $ 48,914 | ||||
Subsequent Event [Member] | Confidential Settlement Agreement [Member] | August 14, 2017 [Member] | |||||
Number of common shares for note settlement | 7,900,000 | ||||
Number of common shares for note settlement, value | $ 110,000 | ||||
Conversions price per share | $ 0.10 | $ 0.10 | |||
Subsequent Event [Member] | Consultants [Member] | |||||
Number of common stock shares issued | $ 745,000 | ||||
Number of common stock value issued, value | 52,150 | ||||
Subsequent Event [Member] | St. George [Member] | Confidential Settlement Agreement [Member] | August 14, 2017 [Member] | |||||
Number of common shares for note settlement | 1,100,000 |