Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 14, 2018 | |
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 | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 168,124,080 | |
Trading Symbol | GIGL | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 103,267 | $ 131,336 |
Inventory | 23,607 | 24,710 |
Prepaid expenses, other | 24,783 | 21,196 |
Total current assets | 151,657 | 177,242 |
Fixed assets: | ||
Total fixed assets, net | 563,828 | 740,189 |
Other assets | 2,620 | 2,620 |
Total assets | 718,105 | 920,051 |
Current liabilities: | ||
Accounts payable | 568,623 | 677,692 |
Incentive from lessor - current portion | 113,605 | 102,168 |
Note payable from lessor, in default | 420,881 | 422,361 |
Accrued expenses | 124,998 | 250,876 |
Accrued officers salary | 414,086 | 375,900 |
Deferred revenue | 21,305 | 6,530 |
Convertible note payable | 50,000 | 50,000 |
Total current liabilities | 1,713,498 | 1,885,527 |
Long-term liabilities: | ||
Incentive from lessor - long-term | 463,771 | 550,839 |
Deferred gain | 349,674 | 401,262 |
Total long-term liabilities | 813,445 | 952,101 |
Total liabilities | 2,526,943 | 2,837,628 |
Stockholders' deficit: | ||
Common stock, $0.001 par value, 1,125,000,000 shares authorized, 168,124,080 and 145,602,251 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 168,124 | 145,602 |
Common stock issuable (1,397,619 shares as of September 30, 2018 and December 31, 2017, respectively) | 293,535 | 293,535 |
Additional paid-in capital | 10,508,194 | 9,874,936 |
Accumulated deficit | (12,778,691) | (12,231,650) |
Total stockholders' deficit | (1,808,838) | (1,917,577) |
Total liabilities and stockholders' deficit | $ 718,105 | $ 920,051 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,125,000,000 | 1,125,000,000 |
Common stock, shares issued | 168,124,080 | 145,602,251 |
Common stock, shares outstanding | 168,124,080 | 145,602,251 |
Common stock issuable, shares | 1,397,619 | 1,397,619 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Revenue | ||||
Net sales | $ 677,838 | $ 652,977 | $ 1,871,138 | $ 1,890,505 |
Costs and operating expenses | ||||
Cost of operations | 476,888 | 485,308 | 1,443,351 | 1,418,263 |
General and administrative expenses | 178,340 | 277,841 | 760,081 | 1,463,397 |
Depreciation and amortization | 56,211 | 64,205 | 176,361 | 192,342 |
Total operating expenses | 711,439 | 827,354 | 2,379,793 | 3,074,002 |
Loss from Operations | (33,601) | (174,377) | (508,655) | (1,183,497) |
Other expenses: | ||||
Finance and interest expense | (10,850) | (12,876) | (36,986) | (76,919) |
Change in fair value of derivatives | (50,629) | |||
(Loss) gain on extinguishment of derivatives | 185,604 | |||
Loss on extinguishment of debt | (186,818) | |||
Loss on settlement | (400) | (1,400) | ||
Loss before provision for income taxes | (44,851) | (187,253) | (547,041) | (1,312,259) |
Provision for/benefit from income taxes | (2,650) | |||
Net loss | $ (44,851) | $ (187,253) | $ (547,041) | $ (1,314,909) |
Net loss per share - basic and diluted | $ 0 | $ 0 | $ 0 | $ (0.01) |
Weighted average number of common shares outstanding - basic and diluted | 165,867,413 | 144,102,251 | 160,599,026 | 125,101,775 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($) | Common Stock [Member] | Additional Paid in Capital [Member] | Stock Issuable [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 145,602 | $ 9,874,936 | $ 293,535 | $ (12,231,650) | $ (1,917,577) |
Balance, shares at Dec. 31, 2017 | 145,602,251 | ||||
Shares issued for cash | $ 19,792 | 573,963 | 593,755 | ||
Shares issued for cash, shares | 19,791,829 | ||||
Fair value of shares issued for employees compensation | $ 200 | 4,400 | 4,600 | ||
Fair value of shares issued for employees compensation, shares | 200,000 | ||||
Fair value of shares issued to settle accounts payable | $ 1,500 | 39,150 | 40,650 | ||
Fair value of shares issued to settle accounts payable, shares | 1,500,000 | ||||
Fair value of shares issued for professional services | $ 1,030 | 15,745 | $ 16,775 | ||
Fair value of shares issued for professional services, shares | 1,030,000 | 1,030,000 | |||
Net loss | (547,041) | $ (547,041) | |||
Balance at Sep. 30, 2018 | $ 168,124 | $ 10,508,194 | $ 293,535 | $ (12,778,691) | $ (1,808,838) |
Balance, shares at Sep. 30, 2018 | 168,124,080 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (547,041) | $ (1,314,909) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 176,361 | 192,342 |
Stock-based compensation | 4,600 | 28,470 |
Loss on stock issuance for payable settlement | 1,400 | 109,096 |
Warrants vested for services | 531,000 | |
Interest and fees included in note payable | 3,520 | 15,318 |
Shares issued for services | 16,775 | 45,144 |
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 | (3,587) | (5,400) |
Decrease (increase) in inventory | 1,103 | (4,953) |
(Decrease) increase in accounts payable | (69,819) | 133,857 |
Decrease in lease incentive liability | (75,631) | (64,602) |
(Decrease) increase in accrued expenses | (87,692) | 89,648 |
Increase (decrease) in deferred revenue | 14,775 | (10,084) |
Decrease amortization of deferred gain | (51,588) | (10,657) |
Net cash used in operating activities | (616,824) | (213,887) |
Cash flows from financing activities | ||
Payment on note payable-lessor | (5,000) | |
Payments on promissory note payable | (11,498) | |
Proceeds from common stock issuable | 75,000 | |
Proceeds received from sale of stock upon note settlement | 110,000 | |
Proceeds from sale of common shares | 593,755 | |
Net cash provided by financing activities | 588,755 | 173,502 |
NET INCREASE (DECREASE) IN CASH | (28,069) | (40,385) |
CASH AT BEGINNING OF PERIOD | 131,336 | 144,520 |
CASH AT END OF PERIOD | 103,267 | 104,135 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Shares issued to settle convertible notes payable | 835,847 | |
Reclass of notes payable to accrued interest | 3,125 | |
Shares issued to settle payable | $ 39,250 | $ 136,904 |
History and Organization
History and Organization | 9 Months Ended |
Sep. 30, 2018 | |
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 | 9 Months Ended |
Sep. 30, 2018 | |
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 December 31, 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 December 31, 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 | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Going concern The accompanying condensed 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 condensed consolidated financial statements, during the thirty-nine weeks ended September 30, 2018, the Company incurred a net loss of $547,041, used cash in operations of $616,824, and had a stockholders’ deficit of $1,808,838 as of that date. In addition, the note payable to the Company’s landlord was in default. 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 December 31, 2017 financial statements has raised substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the financial statements are issued. 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 $103,267 as of September 30, 2018. Management estimates that the current funds on hand will be sufficient to continue operations through December 2018. 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 can 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 condensed 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 liabilities and equity securities issued for services and realization of deferred tax assets. Actual results could differ from those estimates. Revenue In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. The Company adopted the guidance of ASC 606 on January 1, 2018. The implementation of ASC 606 had no impact on the condensed consolidated financial statements and no cumulative effect adjustment was recognized. 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 September 30, 2018, the assumed conversion of convertible notes payable and the exercise of 19,967,917 stock warrants, and 115,000 options to acquire shares of common stock are anti-dilutive due to the Company’s net losses and are excluded in determining diluted loss per share. Stock-based compensation The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board (FASB) whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested, and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Company’s stock option and warrant grants is estimated using the Black-Scholes Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes Option Pricing model could materially affect compensation expense recorded in future periods. The Company also issues restricted shares of its common stock for share-based compensation programs to employees and non-employees. The Company measures the compensation cost with respect to restricted shares to employees based upon the estimated fair value at the date of the grant, and is recognized as expense over the period, which an employee is required to provide services in exchange for the award. For non-employees, the Company measures the compensation cost with respect to restricted shares based upon the estimated fair value at the measurement date which is either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Recent Accounting Standards 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, and believes the adoption of the pronouncement will result in the recording of lease assets and lease liabilities of approximately $1,500,000 to our balance sheet upon adoption. 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 | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: September 30, 2018 December 31, 2017 Leasehold improvements $ 1,889,027 $ 1,889,027 Fixtures and equipment 60,310 60,310 Computer software and equipment 267,372 267,372 Property and equipment, total 2,216,709 2,216,709 Less: accumulated depreciation (1,652,881 ) (1,476,520 ) Property and equipment, net $ 563,828 $ 740,189 Depreciation and amortization expense for the thirteen weeks and thirty-nine weeks ended September 30, 2018 were $56,211 and $176,361, respectively, and for the thirteen weeks and thirty-nine weeks ended October 1, 2017 were $64,205 and $192,342, respectively. Repair and maintenance expense for the thirteen weeks and thirty-nine weeks ended September 30, 2018 were $15,528.19 and $46,046, respectively, and for thirteen weeks and thirty-nine weeks ended October 1, 2017 were $15,071 and $48,851, respectively, Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the periods ended September 30, 2018 and December 31, 2017, there were no indications of further impairment based on management’s assessment of these assets. |
Note Payable From Lessor - In D
Note Payable From Lessor - In Default | 9 Months Ended |
Sep. 30, 2018 | |
Note Payable From Lessor - In Default | |
Note Payable From Lessor - In Default | NOTE 5 – NOTE PAYABLE FROM LESSOR – In Default 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. 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. As of December 31, 2017 and September 30, 2018 the balance of note payable net of unamortized note discount $422,361 and $420,881 respectively. 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 September 30, 2018, the Company was delinquent in its payments to GGP under the note, and as such, the Note has been reflected as currently due and disclosed as in default. |
Convertible Note Payable
Convertible Note Payable | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Note Payable | NOTE 6 – CONVERTIBLE NOTE PAYABLE On August 24, 2015, the Company entered into an unsecured Note Payable Agreement with an investor for which the Company issued a $50,000 Convertible Note Payable, which accrues interest at a rate of 5% per annum and matured on August 31, 2016. The Lender may also convert all or a portion of the Note Payable at any time into shares of common stock at a price of $0.10 per share. The balance of the Note was $50,000 as of September 30, 2018 and December 31, 2017 and was past due. |
Business Loan and Security Agre
Business Loan and Security Agreement | 9 Months Ended |
Sep. 30, 2018 | |
Business Loan And Security Agreement | |
Business Loan and Security Agreement | NOTE 7 – 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. The Company received the last loan from American Express Bank in May of 2018. As of September 30, 2018, there is no outstanding balance and the loan was terminated. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Common Stock | NOTE 8 – COMMON STOCK Issuance of Common Stock On April 19, 2018, Giggles N’ Hugs Inc. closed a public rights offering. The Company sold 19,791,829 units at a price of $.03 per unit. Each unit consists of one share of common stock and 0.70 of a warrant. Each whole warrant will be exercisable for one share of common stock at a price of $.06. per share. In the aggregate 19,791,829 shares of common stock and 13,854,274 warrants were issued for gross proceeds, before expenses and dealer-manager fees, of $593,755. During the thirty-nine weeks ended September 30, 2018, the Company granted and issued 200,000 shares of restricted common stock with a fair value of $4,600 for services. During the thirty-nine weeks ended September 30, 2018, the Company issued 1,500,000 shares of common stock in settlement of an accounts payable amounting to $39,250. The fair value of the shares issued was $40,650 based on the fair value of the shares on the date of settlement resulting in an additional cost to the Company of $1,400. During the thirty-nine weeks ended September 30, 2018, the Company issued 1,030,000 shares of common stock at fair value of $16,775 for services. Employee Stock Options The following table summarizes the changes in the options outstanding at September 30, 2018, 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. Options Exercise Price Outstanding, December 31, 2017 115,000 $ 4.50 Granted - - Exercised - - Outstanding, September 30, 2018 115,000 $ 4.50 Exercisable, September 30, 2018 115,000 $ 4.50 As of September 30, 2018, the stock options had no intrinsic value. There were no options granted during the fiscal quarter ended September 30, 2018, and there was no stock-based compensation expense in connection with options granted to employees. Warrants The following table summarizes the changes in the warrants outstanding at September 30, 2018, and the related prices. A summary of the Company’s warrants as of September 30, 2018 is presented below: Warrants Weighted Average Exercise Price Outstanding, December 31, 2017 6,113,643 $ 0.11 Granted 13,854,274 - Exercised - - Outstanding, September 30, 2018 19,967,917 $ 0.07 Exercisable, September 30, 2018 19,967,917 $ 0.07 Range of Exercise Prices Number Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life Number Exercisable Weighted Average Exercise Price $ 0.01 ~ $0.37 6,113,643 $ 0.07 2.31 6,113,643 $ 0.05 13,854,274 0.06 4.50 13,854,274 0.06 19,967,917 7.31 19,967,917 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Leases | NOTE 9 – 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 $88,468 and $84,773 for the thirteen weeks ended September 30, 2018 and October 1, 2017, respectively, and $263,774 and $255,738 for the thirty-nine weeks ended September 30, 2018 and October 1, 2017. 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. The Promissory Note was adjusted to a balance due of $763,262 from $683,316, with zero percent interest, payable in equal monthly instalments of $5,300 through maturity of Note on May 31, 2028, creating a gain on extinguishment of the old note of $220,686. (see Note 5). The change in the payment terms of the lease caused a change in the previously calculated deferred rent of $69,614. For reporting purposes, 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. In addition, past due rent of $164,987 was forgiven. As such the gain on the termination of the note of $220,686, the adjustment to the deferred rent in the aggregate amount of $69,614, and the forgiveness of past due rent of $164,987, resulting in an aggregate gain of $455,287 had been deferred, and is being amortized on the straight-line basis over the remaining life of the lease as an adjustment to rent expense. The balance of the deferred gain was $401,260 as of, December 31, 2017. During the period ended September 30, 2018, $51,591 of deferred gain was amortized and offset to rent expense, resulting in a remaining deferred gain balance of $349,674 as of September 30, 2018 which will be amortized as an offset to rent expense over the remainder of the lease. The balance of the incentive from lessor as of September 30, 2018 and December 31, 2017, were $577,376 and $653,007, and included deferred rent of $134,573 and $132,818, respectively. As of September 30, 2018, $113,605 of the incentive from lessor was current and $463,771 was long term. Amortization of the incentive from lessor was $25,755 and $22,059 for the thirteen weeks ended September 30, 2018 and October 1, 2017, respectively, and $75,632 and $64,602 for thirty-nine weeks ended September 30, 2018 and October 1, 2017, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 10 – COMMITMENTS AND CONTINGENCIES Litigation As of September 30, 2018, there was no material outstanding litigation. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 11 – SUBSEQUENT EVENTS In September 2018, GNH Restaurant 3 LLC was formed in Delaware. This is a special purpose entity and is designed to open a new location if funding is achieved through crowd funding. As of November 14, 2018, they have not yet signed a lease. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Going Concern | Going concern The accompanying condensed 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 condensed consolidated financial statements, during the thirty-nine weeks ended September 30, 2018, the Company incurred a net loss of $547,041, used cash in operations of $616,824, and had a stockholders’ deficit of $1,808,838 as of that date. In addition, the note payable to the Company’s landlord was in default. 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 December 31, 2017 financial statements has raised substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the financial statements are issued. 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 $103,267 as of September 30, 2018. Management estimates that the current funds on hand will be sufficient to continue operations through December 2018. 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 can 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 condensed 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 liabilities and equity securities issued for services and realization of deferred tax assets. Actual results could differ from those estimates. |
Revenue | Revenue In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. The Company adopted the guidance of ASC 606 on January 1, 2018. The implementation of ASC 606 had no impact on the condensed consolidated financial statements and no cumulative effect adjustment was recognized. |
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 September 30, 2018, the assumed conversion of convertible notes payable and the exercise of 19,967,917 stock warrants, and 115,000 options to acquire shares of common stock are anti-dilutive due to the Company’s net losses and are excluded in determining diluted loss per share. |
Stock-Based Compensation | Stock-based compensation The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board (FASB) whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested, and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Company’s stock option and warrant grants is estimated using the Black-Scholes Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes Option Pricing model could materially affect compensation expense recorded in future periods. The Company also issues restricted shares of its common stock for share-based compensation programs to employees and non-employees. The Company measures the compensation cost with respect to restricted shares to employees based upon the estimated fair value at the date of the grant, and is recognized as expense over the period, which an employee is required to provide services in exchange for the award. For non-employees, the Company measures the compensation cost with respect to restricted shares based upon the estimated fair value at the measurement date which is either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. |
Recent Accounting Standards | Recent Accounting Standards 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, and believes the adoption of the pronouncement will result in the recording of lease assets and lease liabilities of approximately $1,500,000 to our balance sheet upon adoption. 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) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following at: September 30, 2018 December 31, 2017 Leasehold improvements $ 1,889,027 $ 1,889,027 Fixtures and equipment 60,310 60,310 Computer software and equipment 267,372 267,372 Property and equipment, total 2,216,709 2,216,709 Less: accumulated depreciation (1,652,881 ) (1,476,520 ) Property and equipment, net $ 563,828 $ 740,189 |
Common Stock (Tables)
Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Summary of Stock Awards for Options | Options Exercise Price Outstanding, December 31, 2017 115,000 $ 4.50 Granted - - Exercised - - Outstanding, September 30, 2018 115,000 $ 4.50 Exercisable, September 30, 2018 115,000 $ 4.50 |
Schedule of Stock Warrants Activity | A summary of the Company’s warrants as of September 30, 2018 is presented below: Warrants Weighted Average Exercise Price Outstanding, December 31, 2017 6,113,643 $ 0.11 Granted 13,854,274 - Exercised - - Outstanding, September 30, 2018 19,967,917 $ 0.07 Exercisable, September 30, 2018 19,967,917 $ 0.07 |
Schedule of Changes in Warrants Outstanding | Range of Exercise Prices Number Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life Number Exercisable Weighted Average Exercise Price $ 0.01 ~ $0.37 6,113,643 $ 0.07 2.31 6,113,643 $ 0.05 13,854,274 0.06 4.50 13,854,274 0.06 19,967,917 7.31 19,967,917 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Dec. 31, 2017 | Jan. 01, 2017 | |
Net loss | $ 44,851 | $ 187,253 | $ 547,041 | $ 1,314,909 | ||
Net cash used in operating activities | 616,824 | 213,887 | ||||
Stockholders' deficit | 1,808,838 | 1,808,838 | $ 1,917,577 | |||
Cash and equivalents | $ 103,267 | $ 104,135 | 103,267 | $ 104,135 | $ 131,336 | $ 144,520 |
ASU 2016-02 [Member] | ||||||
Lease assets and lease liabilities | $ 1,500,000 | |||||
Stock Warrants [Member] | ||||||
Anti-dilutive securities | 19,967,917 | |||||
Options to Acquire Shares of Common Stock [Member] | ||||||
Anti-dilutive securities | 115,000 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization | $ 56,211 | $ 64,205 | $ 176,361 | $ 192,342 |
Repair and maintenance expenses | $ 15,528 | $ 15,071 | $ 46,046 | $ 48,851 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 1,889,027 | $ 1,889,027 |
Fixtures and equipment | 60,310 | 60,310 |
Computer software and equipment | 267,372 | 267,372 |
Property and equipment, total | 2,216,709 | 2,216,709 |
Less: accumulated depreciation | (1,652,881) | (1,476,520) |
Property and equipment, net | $ 563,828 | $ 740,189 |
Note Payable From Lessor - In_2
Note Payable From Lessor - In Default (Details Narrative) - USD ($) | Aug. 12, 2016 | Sep. 30, 2018 | Dec. 31, 2017 | Mar. 01, 2015 | Feb. 12, 2013 |
Promissory notes payable face value | $ 683,316 | ||||
Promissory note principal balance | $ 420,881 | $ 422,361 | |||
Notes payable accrued interest rate | 0.00% | ||||
Debt maturity date | May 31, 2028 | ||||
Repayment of debt, periodic payment | $ 5,300 | ||||
Imputed interest discount rate | 10.00% | ||||
Fair value of note payable | $ 443,521 | ||||
Maximum percentage of defined interest rate | 5.00% | ||||
Adjusted Balance [Member] | |||||
Promissory notes payable face value | $ 763,262 | ||||
Promissory Note Payable Agreement [Member] | GGP Limited Partnership [Member] | |||||
Promissory notes payable face value | $ 700,000 | ||||
Promissory note principal balance | $ 683,316 |
Convertible Note Payable (Detai
Convertible Note Payable (Details Narrative) - USD ($) | Aug. 12, 2016 | Aug. 24, 2015 | Sep. 30, 2018 | Dec. 31, 2017 |
Convertible note payable face amount | $ 683,316 | |||
Convertible note payable interest rate | 0.00% | |||
Debt maturity date | May 31, 2028 | |||
Convertible note payable | $ 50,000 | $ 50,000 | ||
Unsecured Note Payable Agreement [Member] | ||||
Convertible note payable face amount | $ 50,000 | |||
Convertible note payable interest rate | 5.00% | |||
Convertible note payable conversion price per share | $ 0.10 | |||
Debt maturity date | Aug. 31, 2016 |
Business Loan and Security Ag_2
Business Loan and Security Agreement (Details Narrative) - USD ($) | 1 Months Ended | |
Aug. 31, 2015 | Sep. 30, 2018 | |
Loan Payable | ||
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% |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Equity [Abstract] | ||
Number of common stock shares sold | 19,791,829 | |
Sale of common stock price per share | $ .03 | |
Number of units consists of share of common stock | 1 | |
Warrants price per share | $ 0.70 | |
Warrant exercisable price per share | $ 0.06 | |
Warrants issued during the period | 13,854,274 | |
Proceeds from issuance of common stock | $ 593,755 | |
Shares issued during period restricted shares | 200,000 | |
Shares issued during period restricted shares, value | $ 4,600 | |
Number of shares issued for settlement accounts payable, shares | 1,500,000 | |
Number of shares issued for settlement accounts payable | $ 39,250 | |
Fair value of shares issued | 40,650 | |
Fair value of additional cost | $ 1,400 | |
Issuance of common stock for service, shares | 1,030,000 | |
Shares issued for services | $ 16,775 | |
Stock based compensation of intrinsic value |
Common Stock - Summary of Stock
Common Stock - Summary of Stock Awards for Options (Details) | 9 Months Ended |
Sep. 30, 2018$ / 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) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Equity [Abstract] | |
Warrants, Outstanding, Beginning balance | shares | 6,113,643 |
Warrants, Granted | shares | 13,854,274 |
Warrants, Exercised | shares | |
Warrants, Outstanding, Ending balance | shares | 19,967,917 |
Warrants, Exercisable | shares | 19,967,917 |
Weighted Average Exercise Price, Outstanding, Beginning | $ / shares | $ 0.11 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Outstanding, Ending | $ / shares | 0.07 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.07 |
Common Stock - Schedule of Chan
Common Stock - Schedule of Changes in Warrants Outstanding (Details) - $ / shares | 9 Months Ended | |
Oct. 01, 2018 | Sep. 30, 2018 | |
Number of Options, Outstanding | 19,967,917 | |
Weighted Average Remaining Contractual Life | 7 years 3 months 22 days | |
Number of Options, Exercisable | 19,967,917 | |
Range 1 [Member] | ||
Range of Exercise Prices, Lower Range Limit | $ 0.01 | |
Range of Exercise Prices, Upper Range Limit | $ 0.37 | |
Number of Options, Outstanding | 6,113,643 | |
Weighted Average Exercise Price | $ 0.07 | |
Weighted Average Remaining Contractual Life | 2 years 3 months 22 days | |
Number of Options, Exercisable | 6,113,643 | |
Weighted Average Exercise Price, Exercisable | $ 0.05 | |
Range 2 [Member] | ||
Number of Options, Outstanding | 13,854,274 | |
Weighted Average Exercise Price | $ 0.06 | |
Weighted Average Remaining Contractual Life | 4 years 6 months | |
Number of Options, Exercisable | 13,854,274 | |
Weighted Average Exercise Price, Exercisable | $ 0.06 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | Aug. 12, 2016 | Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Oct. 01, 2018 | Dec. 31, 2017 |
Operating lease rent expenses | $ 88,468 | $ 84,773 | $ 263,774 | $ 255,738 | |||
Incentive from lessor amount | 463,771 | 463,771 | $ 550,839 | ||||
Promissory notes payable face value | $ 683,316 | ||||||
Notes payable accrued interest rate | 0.00% | ||||||
Debt periodic payment | $ 5,300 | ||||||
Debt maturity date | May 31, 2028 | ||||||
Gain on debt extinguishment | $ 220,686 | (186,818) | |||||
Deferred rent | 69,614 | 134,573 | 134,573 | 132,818 | |||
Amount of due rent forgiven | 164,987 | ||||||
Gain on termination of note | 220,686 | ||||||
Deferred revenue | 455,287 | 455,287 | 401,260 | ||||
Deferred gain amortized and offset rent expense | 51,591 | 51,591 | |||||
Gain on deferred rent remaining balance | 349,674 | ||||||
Incentive from lessor remaining balance amount | 577,376 | 577,376 | 653,007 | ||||
Incentive from lessor amount current | 113,605 | 113,605 | |||||
Incentive from lessor - long-term | 463,771 | 463,771 | 550,839 | ||||
Amortization of incentives from lessors | $ 25,755 | $ 22,059 | $ 75,632 | $ 64,602 | |||
Adjusted Balance [Member] | |||||||
Promissory notes payable face value | $ 763,262 | ||||||
Topanga [Member] | |||||||
Incentive from lessor amount | $ 506,271 | ||||||
Incentive from lessor - long-term | $ 506,271 | ||||||
Glendale II Mall Associates, LLC [Member] | |||||||
Incentive from lessor amount | 475,000 | ||||||
Incentive from lessor - long-term | $ 475,000 |