Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 27, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | ARC Group, Inc. | ||
Entity Central Index Key | 0001452872 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 8,122,261 | ||
Entity Common Stock, Shares Outstanding | 7,080,771 | ||
Trading Symbol | ARCK | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 345,228 | $ 145,346 |
Accounts receivable, net | 127,930 | 166,987 |
Accounts receivable, net - related party | 1,505 | |
Ad funds receivable, net | 10,500 | 36,837 |
Ad funds receivable, net - related party | 2,280 | |
Other receivables | 556,986 | |
Prepaid expenses | 34,582 | |
Inventory | 211,025 | 45,417 |
Notes receivable, net | 2,967 | 28,522 |
Other current assets | 8,078 | 5,923 |
Total current assets | 1,297,296 | 432,817 |
Deposits | 49,421 | 21,189 |
Notes receivable, net of current portion | 2,553 | 5,106 |
Intangible assets, net | 786,565 | |
Property and equipment, net | 12,537,502 | 99,114 |
Total assets | 14,673,337 | 558,226 |
Liabilities and stockholders' deficit | ||
Accounts payable and accrued expenses | 1,478,745 | 467,264 |
Accounts payable and accrued expenses - related party | 231,187 | 94,150 |
Other payables | 544,098 | |
Accrued interest | 29,105 | 13,472 |
Settlement agreements payable | 276,269 | 264,997 |
Accrued legal contingency | 163,764 | 155,935 |
Contingent consideration | 55,356 | 199,682 |
Deferred franchise fees | 13,718 | |
Capital lease obligation | 175,764 | |
Seller payable | 312,000 | |
Notes payable - related party, net | 720,178 | 30,503 |
Gift card liabilities | 81,956 | 9,147 |
Total current liabilities | 4,082,140 | 1,235,150 |
Deferred franchise fees, net of current portion | 51,516 | |
Capital lease obligation, net of current portion | 11,210,146 | |
Total liabilities | 15,343,802 | 1,235,150 |
Stockholders' deficit: | ||
Class A common stock - $0.01 par value: 100,000,000 shares authorized, 6,680,065 and 6,950,869 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively | 66,801 | 69,509 |
Series A convertible preferred stock - $0.01 par value: 1,000,000 shares authorized, 449,581 and -0- outstanding at December 31, 2018 and December 31, 2017, respectively | 4,496 | |
Additional paid-in capital | 4,490,338 | 3,995,306 |
Stock subscriptions payable | 15,453 | 26,853 |
Accumulated deficit | (5,247,553) | (4,768,592) |
Total stockholders' deficit | (670,465) | (676,924) |
Total liabilities and stockholders' deficit | $ 14,673,337 | $ 558,226 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Class A common stock, par value | $ 0.01 | $ 0.01 |
Class A common stock, shares authorized | 100,000,000 | 100,000,000 |
Class A common stock, shares issued | 6,680,065 | 6,950,869 |
Class A common stock, shares outstanding | 6,680,065 | 6,950,869 |
Series A convertible preferred stock, par value | $ 0.01 | $ 0.01 |
Series A convertible preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Series A convertible preferred stock, shares outstanding | 449,581 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue: | ||
Total net revenue | $ 9,500,537 | $ 4,257,577 |
Restaurant operating costs: | ||
Labor | 2,801,867 | 1,159,026 |
Other operating expenses | 1,840,661 | 591,558 |
Professional fees | 796,473 | 407,512 |
Employee compensation expense | 564,521 | 388,944 |
General and administrative expenses | 718,563 | 354,950 |
Total operating expenses | 10,279,181 | 4,342,191 |
Loss from operations | (778,644) | (84,614) |
Other income: | ||
Interest expense | (230,256) | (29,980) |
Interest income | 716 | 2,340 |
Gain on write-off of accounts payable | 251,238 | |
Gain on sale of investment in Paradise on Wings - related party | 24,000 | |
Gain on write-off of notes payable | 7,000 | |
Gain on write-off of stock subscriptions payable | 150,000 | |
Gain on bargain purchase | 624,952 | |
Other income and expense | 100,749 | 24,756 |
Total other income | 496,161 | 429,354 |
Net (loss) / income | $ (282,483) | $ 344,740 |
Net (loss) / income per share - basic and fully diluted | $ (0.04) | $ 0.05 |
Weighted average number of shares outstanding - basic | 6,777,903 | 6,817,310 |
Weighted average number of shares outstanding - fully diluted | 6,963,762 | 6,817,310 |
Cost of Sales [Member] | ||
Restaurant operating costs: | ||
Restaurant operating cost of sales and Occupancy | $ 3,248,801 | $ 1,201,825 |
Restaurant Sales [Member] | ||
Revenue: | ||
Total net revenue | 8,374,022 | 3,424,865 |
Franchise and Other Revenue [Member] | ||
Revenue: | ||
Total net revenue | 922,124 | 676,007 |
Franchise and Other Revenue Related Party [Member] | ||
Revenue: | ||
Total net revenue | 204,391 | 156,705 |
Occupancy [Member] | ||
Restaurant operating costs: | ||
Restaurant operating cost of sales and Occupancy | $ 308,295 | $ 238,376 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Deficit - USD ($) | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-in Capital [Member] | Stock Subscriptions Payable [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 66,475 | $ 3,747,953 | $ 150,000 | $ (5,113,332) | $ (1,148,904) | |
Balance, shares at Dec. 31, 2016 | 6,647,464 | |||||
Common stock issued for services | $ 2,681 | 217,706 | 26,853 | 247,240 | ||
Common stock issued for services, shares | 268,110 | |||||
Common stock issued for payment of consulting fees due | $ 353 | 29,647 | 30,000 | |||
Common stock issued for payment of consulting fees due, shares | 35,295 | |||||
Write-off of stock subscriptions payable | (150,000) | (150,000) | ||||
Net income/(loss) | 344,740 | 344,740 | ||||
Balance at Dec. 31, 2017 | $ 69,509 | 3,995,306 | 26,853 | (4,768,592) | (676,924) | |
Balance, shares at Dec. 31, 2017 | 6,950,869 | |||||
Common stock issued for services | $ 1,788 | 329,298 | (11,400) | 319,686 | ||
Common stock issued for services, shares | 178,777 | |||||
Write-off of stock subscriptions payable | ||||||
Stock option issued for services | 10,002 | 10,002 | ||||
Deferred franchise fees | (196,478) | (196,478) | ||||
Beneficial conversion feature | 155,732 | 155,732 | ||||
Common stock exchanged for preferred stock | $ (4,496) | $ 4,496 | ||||
Common stock exchanged for preferred stock, shares | (449,581) | 449,581 | ||||
Net income/(loss) | (282,483) | (282,483) | ||||
Balance at Dec. 31, 2018 | $ 66,801 | $ 4,496 | $ 4,490,338 | $ 15,453 | $ (5,247,553) | $ (670,465) |
Balance, shares at Dec. 31, 2018 | 6,680,065 | 449,581 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | ||
Net (loss) / income | $ (282,483) | $ 344,740 |
Adjustments to reconcile net (loss) / income to net cash provided by operating activities: | ||
Depreciation expense | 252,914 | 17,180 |
Amortization of intangible assets | 2,275 | |
Amortization of debt discount | 9,548 | |
Stock-based compensation expense | 329,688 | 247,240 |
Stock-based payment for consulting fees due | 30,000 | |
Change in fair value of contingent consideration | 178,785 | |
Gain on sale of investment in Paradise on Wings - related party | (24,000) | |
Gain on write-off of accounts payable | (251,238) | |
Gain on write-off of notes payable | (7,000) | |
Gain on write-off of stock subscriptions payable | (150,000) | |
Gain on bargain purchase | (624,952) | |
Changes in operating activities, net of acquisition of Fat Patty's concept: | ||
Accounts receivable | 39,057 | (99,592) |
Accounts receivable - related party | 1,505 | 13,063 |
Ad fund receivable | 26,337 | (36,837) |
Ad fund receivable - related party | 2,280 | (2,280) |
Other receivables | (556,986) | |
Prepaid expenses | (34,582) | (3,194) |
Inventory | (74,184) | (167) |
Deposits | (19,383) | |
Other current assets | (30,387) | (1,891) |
Accounts payable and accrued liabilities | 1,345,212 | (5,951) |
Accounts payable and accrued liabilities - related party | 137,037 | (4,284) |
Settlement agreements payable | 11,272 | 11,273 |
Accrued legal settlement | 7,829 | 7,830 |
Deferred franchise fees | (131,244) | |
Gift card liabilities | 48,102 | 4,051 |
Net cash provided by operating activities | 478,238 | 248,345 |
Cash flows from investing activities | ||
Issuance of notes receivable | (7,659) | |
Repayments of notes receivable | 28,108 | 67,152 |
Contingent consideration | (144,326) | |
Sale of investment in Paradise on Wings - related party | 24,000 | |
Cash acquired in acquisition of Fat Patty's | 7,100 | |
Purchases of fixed assets | (351,007) | (35,346) |
Net cash (used) / provided by investing activities | (460,125) | 48,147 |
Cash flows from financing activities | ||
Proceeds from issuance of notes payable - related party | 367,736 | 433,771 |
Payments on capital lease obligation | (114,090) | |
Repayments of notes payable - related party | (71,877) | (635,840) |
Net cash provided / (used) by financing activities | 181,769 | (202,069) |
Net increase in cash and cash equivalents | 199,882 | 94,423 |
Cash and cash equivalents, beginning of period | 145,346 | 50,923 |
Cash and cash equivalents, end of period | 345,228 | 145,346 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 178,201 | |
Cash paid for income taxes | ||
Schedule of non-cash financing activities | ||
Adjustment to deferred franchise fees related to prior period | 196,478 | |
Preferred stock issued in exchange for common stock | 4,496 | |
Property and equipment acquired through accounts payable | 226,000 | |
Acquisition of Fat Patty's franchise with note payable and deferred compensation liability | 852,000 | |
Property and equipment acquired with capital lease | $ 11,500,000 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Note 1. Description of Business ARC Group, Inc., a Nevada corporation (the “Company”), was incorporated in April 2000. The Company’s business is focused primarily on the development of the Dick’s Wings & Grill ® Fat Patty’s ® On August 30, 2018, the Company closed upon an asset purchase agreement for Fat Patty’s. Fat Patty’s is comprised of four company-owned restaurants located at 1442 Winchester Avenue, Ashland, Kentucky 41101, 5156 WV 34, Hurricane, West Virginia 25526, 3401 Rt. 60 East, Barboursville, West Virginia 25504, and 1935 Third Avenue, Huntington, West Virginia 25702 (collectively, the “Fat Patty’s Restaurants”). A description of the Company’s acquisition of Fat Patty’s is set forth herein under Note 5. – Acquisition of Fat Patty’s. On October 30, 2018, the Company entered into an agreement to acquire the Tilted Kilt Eatery and Pub ® Note 6. Agreement to Acquire Tilted Kilt On November 7, 2018, the Company became a franchisee of a Tilted Kilt restaurant located in Gonzales, Louisiana. At December 31, 2018, the Company had 21 Dick’s Wings restaurants and three Dick’s Wings concession stands. Of the 21 restaurants, 16 were located in Florida and five were located in Georgia. The Company’s concession stands were also located in Florida. Four of the Company’s restaurants were owned by the Company, and the remaining 17 restaurants were owned and operated by franchisees. The Company’s concession stands were also owned by the Company. In addition, the Company had four Fat Patty’s restaurants at December 31, 2018. Of the four restaurants, three were located in West Virginia and one was located in Kentucky. All four of the restaurants were owned by the Company. The Company also had its Tilted Kilt restaurant in Louisiana for which it serves as a franchisee. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies This summary of significant accounting policies is provided to assist the reader in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes thereto are representations of the Company’s management. The Company’s management is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the consolidated financial statements. Restatement The Company has restated its previously issued consolidated statement of operations for the year ended December 31, 2017. The impact of the restatement is more specifically described herein under Note 20. Restatement of Previously Issued Consolidated Financial Statements Basis of Presentation The Company’s consolidated financial statements have been prepared using GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. All intercompany accounts and transactions were eliminated in consolidation. Going Concern The company concluded that facts existed that created an uncertainty about the Company’s ability to continue as a going concern as of December 31, 2016. Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications Certain amounts in the Company’s consolidated financial statements for the 2017 fiscal year have been reclassified to conform to the 2018 fiscal year presentation. These reclassifications did not result in any change to the previously reported total assets, net income or stockholders’ deficit. Segment Disclosure The Company has both Company-owned restaurants and franchised restaurants Segment Reporting Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less on the date of purchase to be cash equivalents in accordance with ASC Topic 305, Cash and Cash Equivalents Accounts Receivable Accounts receivable are recorded in accordance with ASC Topic 310, Receivables primarily of Accounts receivable, net of the allowance for doubtful accounts, represents the estimated net realizable value of the Company’s accounts receivable. Provisions for doubtful accounts are recorded based on historical collection experience, the age of the receivables and current economic conditions. The accounts receivable balances at December 31, 2018 and 2017 were comprised primarily of credit card sales by Company-owned restaurants, royalties due from the Company’s franchisees, and sales proceeds due from the concessionaire of the Company’s concessions stands, all of which the Company collected in full in January 2019 and 2018, respectively. Accordingly, the allowance for doubtful accounts was zero at December 31, 2018 and 2017. Other Receivables Other receivables was comprised primarily of receipts from credit card sales by Company-owned Fat Patty’s restaurants that occurred after the Company completed the acquisition of Fat Patty’s that were held by the former owner of Fat Patty’s, all of which are expected to be collected in full by the Company during the next 12 months. Inventory Inventory consists primarily of food and beverage products and is accounted for at the lower of cost or net realizable value using the first in, first out method of inventory valuation in accordance with ASC Topic 330, Inventory Intangible Assets, Net The Company acquired various intangible assets in connection with the acquisition of Fat Patty’s. The intangible assets were comprised of a tradename and a non-compete agreement. The Company amortizes the non-compete agreement on a straight-line basis over the expected period of benefit, which is five years. The tradename has an indefinite life and is not subject to amortization but tested for impairment on an annual basis. The Company recognized $2,275 of amortization expense for the non-compete agreement during the year ended December 31, 2018. Property and Equipment, Net Property and equipment is recorded at cost, less accumulated depreciation, in accordance with ASC Topic 360, Property, Plant and Equipment Long-Lived Assets The Company reviews long-lived assets for impairment at least quarterly or whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable in accordance with ASC 360. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the individual restaurant level. The Company evaluates the recoverability of a restaurant’s long-lived assets, including buildings, intangibles, leasehold improvements, furniture, fixtures, and equipment over the remaining life of the primary asset in the asset group, after considering the potential impact of planned operational improvements, marketing programs, and anticipated changes in the trade area. In determining future cash flows, significant estimates are made by management with respect to future operating results for each restaurant over the remaining life of the primary asset in the asset group. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset carrying amount exceeds its fair value based on the Company’s estimate of discounted future cash flows. The Company accounts for exit or disposal activities, including restaurant closures, in accordance with ASC Topic 420, Exit or Disposal Cost Obligations Financial Instruments The Company accounts for its financial instruments in accordance with ASC Topic 825, Financial Instruments Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in the Company’s principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In accordance with ASC Topic 820, Fair Value Measurements and Disclosures The levels of fair value hierarchy are: Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date; Level 2: Observable inputs other than quoted prices included in Level 1, such as: (i) quoted prices for similar assets and liabilities in active markets, (ii) quoted prices for identical or similar assets and liabilities in markets that are not active, and (iii) other inputs that are observable or can be corroborated by observable market data; and Level 3: Unobservable inputs for which there is little or no market data available. A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. In contrast, the Company considers unobservable data to be data that reflects the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. General Advertising Fund The Company has established a general advertising fund that it uses to pay for advertising costs, sales promotions, market research and other support functions intended to maximize general public recognition and acceptance of the Dick’s Wings franchise. Company-owned and franchised restaurants are required to contribute at least 1%, but not more than 2%, of their gross revenue to the Company’s general advertising fund. Prior to January 1, 2018, contributions made by franchisees to the general advertising fund and marketing and advertising expenses paid by the general advertising fund were not recognized as revenue and expenses. They instead constituted agency transactions. These contributions were recorded as a liability against which specific costs were charged during the year ended December 31, 2017. The Company accounts for cash and cash equivalents held by the general advertising fund as restricted cash on its consolidated balance sheets. The restricted cash of this fund is classified as current if it is expected to be utilized to fund short-term obligations of the general advertising fund. The Company did not have any restricted cash at December 31, 2018 or 2017. Contributions made by franchisees to the general advertising fund and marketing and advertising expenses paid by the general advertising fund were recognized as revenue and expenses during the year ended December 31, 2018. Other Payables Other payables was comprised primarily of accounts payable owed to the former owner of Fat Patty’s for alcohol and other items purchased by him in connection with the operation of the concept. Revenue Recognition On January 1, 2018, the Company adopted the provisions of ASC Topic 606, Revenue From Contracts With Customers The Company adopted this new guidance effective the first day of fiscal year 2018, using the modified retrospective method of adoption. Under this method, the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative period has not been adjusted and continues to be reported under the previous revenue recognition guidance. The details of the significant changes and quantitative impact of the changes are discussed below. Franchise Fees ASC 606 impacted the timing of recognition of franchise fees. Under previous guidance, these fees were typically recognized upon the opening of restaurants. Under ASC 606, the fees are deferred and recognized as revenue over the term of the individual franchise agreements. The effect of the required deferral of fees received in a given year will be mitigated by the recognition of revenue from fees retrospectively deferred from prior years. As a result of the adoption of ASC 606, the Company recognized deferred franchise fees in the amount of $196,478 on its consolidated balance sheet as of January 1, 2018 and an increase in its accumulated deficit by the same amount on that date. The Company recognized a total of $131,244 of deferred franchise fees as income during the year ended December 31, 2018. Accordingly, the carrying value of the Company’s deferred franchised fees was $65,234 at December 31, 2018. Advertising Funds ASC 606 also impacted the accounting for transactions related to the Company’s general advertising fund. Under previous guidance, franchisee contributions to and expenditures by the fund were not included in the Company’s consolidated financial statements. Under ASC 606, the Company records contributions to and expenditures by the fund as revenue and expenses within the Company’s consolidated financial statements. The Company recognized contributions to and expenditures by the fund of $189,362 during the year ended December 31, 2018. Gift Card Funds Additionally, ASC 606 impacted the accounting for transactions related to the Company’s gift card program. Under previous guidance, estimated breakage income on gift cards was deferred until it was deemed remote that the unused gift card balance would be redeemed. Under ASC 606, breakage income on gift cards is recognized as gift cards are utilized. The effect of this change on the Company’s consolidated financial statements was negligible. Impact on Financial Statements The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated financial statements as of and for the year ended December 31, 2018: Adjustments As Reported Franchise Fees Advertising Funds Balances Without Adoption Consolidated Balance Sheet Deferred franchise fees $ 13,718 $ (13,718 ) $ — $ — Total current liabilities 4,082,140 (13,718 ) — 4,068,422 Deferred franchise fees, net of current portion 51,516 (51,516 ) — — Total liabilities 15,343,802 (51,516 ) — 15,292,286 Accumulated deficit (5,247,553 ) 65,234 — (5,182,319 ) Total stockholders’ deficit (670,465 ) 65,234 — (605,231 ) Consolidated Statement of Operations Franchise and other revenue $ 922,124 $ (84,454 ) $ (156,796 ) $ 680,874 Franchise and other revenue – related party 204,391 (46,790 ) (32,566 ) 125,035 Total revenue 9,500,537 (131,244 ) (189,362 ) 9,179,931 General and administrative expenses 718,563 — (189,362 ) 529,201 Total operating expenses 10,279,181 — (189,362 ) 10,089,819 Loss from operations (778,644 ) (131,244 ) — (909,888 ) Net loss (282,483 ) (131,244 ) — (413,727 ) Consolidated Statement of Cash Flows Cash flows from operating activities: Net loss $ (282,483 ) $ (131,244 ) $ — $ (413,727 ) Changes in operating assets and liabilities: Deferred franchise fees (131,244 ) 131,244 — — Disaggregation of Revenue The following table disaggregate revenue by primary geographical market and source: Year Ended December 31, 2018 Year Ended December 31, 2017 Primary Geographic Markets Florida $ 5,011,328 $ 4,057,755 Georgia 504,983 199,822 Kentucky 856,981 — Louisiana 185,742 — West Virginia 2,941,503 — Total revenue $ 9,500,537 $ 4,257,577 Sources of Revenue Restaurant sales $ 8,374,022 $ 3,424,865 Royalties 787,189 829,069 Franchise fees 131,244 — Advertising fund fees 189,362 — Other revenue 18,720 3,643 Total revenue $ 9,500,537 $ 4,257,577 Contract Balances The following table presents changes in deferred franchise fees as of and for the year ended December 31, 2018: Total Liabilities Deferred franchise fees at January 1, 2018 $ 196,478 Revenue recognized during the period (131,244 ) New deferrals due to cash received — Deferred franchise fees at December 31, 2018 $ 65,234 Anticipated Future Recognition of Deferred Franchise Fees The following table presents the estimated franchise fees to be recognized in the future related to performance obligations that were unsatisfied at December 31, 2018: Year Franchise Fees Recognized 2019 $ 13,718 2020 12,000 2021 10,926 2022 9,000 2023 6,637 Thereafter 12,953 Total $ 65,234 Payments Received From Vendors Vendor allowances include allowances and other funds that the Company receives from vendors. Certain of these funds are determined based on various quantitative contract terms. The Company also receives vendor allowances from certain manufacturers and distributors calculated based upon purchases made by franchisees. Vendor allowances are not recognized as revenue. Instead, they are recognized as a reduction in costs. The Company generally receives payment from vendors approximately 30 days from the end of a month for that month’s purchases. Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the fair value recognition provisions of ASC Topic 718, Compensation – Stock Compensation The Company accounts for non-employee stock-based compensation in accordance with ASC 718 and ASC Topic 505, Equity The Company uses the Black-Scholes pricing model to determine the fair value of the stock-based compensation that it grants to employees and non-employees. The Black-Scholes pricing model takes into consideration such factors as the estimated term of the securities, the conversion or exercise price of the securities, the volatility of the price of the Company’s common stock, interest rates, and the probability that the securities will be converted or exercised to determine the fair value of the securities. The selection of these criteria requires management’s judgment and may impact the Company’s net income or loss. The computation of volatility is intended to produce a volatility value that is representative of the Company’s expectations about the future volatility of the price of its common stock over an expected term. The Company used its share price history to determine volatility and cannot predict what the price of its shares of common stock will be in the future. As a result, the volatility value that the Company calculated may differ from the actual volatility of the price of its shares of common stock in the future. Operating Leases Rent expense for leases that contain scheduled rent increases is recognized on a straight-line basis over the lease term, including cancelable option periods where failure to exercise such options would result in an economic penalty such that the renewal appears reasonably assured. The straight-line rent calculation and rent expense includes the rent holiday period, which is the period of time between taking control of a leased site and the rent commencement date. The amount by which straight-line rent exceeds actual lease payment requirements in the early years of the lease is accrued as deferred rent liability and reduced in later years when the actual cash payment requirements exceed the straight-line expense. Contingent rents are generally amounts due as a result of sales in excess of amounts stipulated in certain restaurant leases and are included in rent expense as they are incurred. Landlord contributions are recorded when received as a deferred rent liability and amortized as a reduction of rent expense on a straight-line basis over the lease term. Marketing and Advertising Contributions to the national advertising fund related to Company-owned restaurants are expensed as contributed and local advertising costs for Company-owned restaurants are expensed as incurred. All other marketing and advertising costs are expensed as incurred. The Company incurred $423,911 and $90,120 for marketing and advertising costs during the years ended December 31, 2018 and 2017, respectively. Start-Up Costs Start-up costs consists of costs associated with the opening of new Company-owned restaurants and varies based on the number of new locations opening and under construction. These costs are expensed as incurred in accordance with ASC Topic 720, Other Expenses Sales Taxes Sales taxes collected from customers are excluded from revenue. Sales taxes payable are included in accrued expenses until the taxes are remitted to the appropriate taxing authorities in accordance with ASC Topic 450, Contingencies Income Taxes The Company uses the liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes Net deferred tax assets were comprised of the following at December 31, 2018 and 2017, respectively: December 31, 2018 December 31, 2017 Deferred tax assets: Net operating loss carryforwards $ 644,568 $ 527,100 Accruals 93,247 65,260 Deferred tax liabilities: Gain on bargain purchase (156,624 ) — Valuation allowance (581,191 ) (592,360 ) Net deferred tax assets $ — $ — The Company had net operating loss carry-forwards of approximately $2,568,000 and $2,100,000 at December 31, 2018 and 2017, respectively, that may be offset against future taxable income. No tax benefit has been reported in the consolidated financial statements for the Company’s 2018 and 2017 fiscal years because the potential tax benefit is offset by a valuation allowance of the same amount. The Company had no uncertain tax positions at December 31, 2018 and 2017. Effective January 1, 2018, the federal corporate income tax rate was decreased from 34% to 21%. The effect of this change on deferred taxes and the valuation allowance at December 31, 2017 was $244,147. In connection with the completion and filing of its income tax return with the Internal Revenue Service, the Company’s net operating loss carry-forward changed, resulting in an increase to deferred taxes and the valuation allowance of $77,097, bringing the total effect of the change on deferred taxes and the valuation allowance to 321,244 at December 31, 2017. The valuation allowance as of December 31, 2018 and 2017 includes $82,753 and $105,629, respectively, of net operating loss carry forwards that relate to stock compensation expense for income tax reporting purposes that upon realization, would be recorded as additional paid-in capital. The valuation allowance reduces deferred tax assets to an amount that management believes will more likely than not be realized. A reconciliation of the difference between the provision for income taxes and income taxes at the statutory U.S. federal income tax rate for the years ended December 31, 2018 and 2017 is as follows: December 31, 2018 December 31, 2017 Income tax provision at statutory rate $ (59,321 ) $ 123,612 State income taxes (11,582 ) 14,906 Stock compensation expense 82,753 105,629 Effect of change in federal tax rate — 244,147 Other — 11,904 Return to provision net operating loss adjustment — 77,097 Change in valuation allowance (11,850 ) (577,295 ) Net tax provision $ — $ — Utilization of net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations contained in the Internal Revenue Code of 1986, as amended, as well as similar state and foreign provisions. These ownership changes may limit the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income and tax, respectively. On July 31, 2017, Seenu G. Kasturi, who on December 31, 2018 served as the Company’s President, Chief Financial Officer and Chairman of its board of directors, purchased 2,647,144 shares of the Company’s common stock, which represented approximately 38.4% of the outstanding shares of the Company’s common stock on that date, from William D. Leopold. This transaction has been deemed to have resulted in a change in ownership of the Company pursuant to Internal Revenue Code Section 382. As a result, the Company can utilize up to $120,000 of pre-ownership change net operating loss carryforwards each year. Subsequent ownership changes could further affect the limitation in future years. These annual limitation provisions may result in the expiration of certain net operating losses and credits before utilization. Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases Leases In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) The Company reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to the Company’s operations or that no material effect is expected on the Company’s consolidated financial statements as a result of future adoption. |
Net Income _ (Loss) Per Share
Net Income / (Loss) Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Income / (Loss) Per Share | Note 3. Net Income / (Loss) Per Share The Company calculates basic and diluted net income / (loss) per share in accordance with ASC Topic 260, Earnings per Share All of the shares of common stock underlying exercisable or convertible securities that were outstanding at December 31, 2018 were excluded from the computation of diluted net loss per share for the year ended December 31, 2018 because they were anti-dilutive. As a result, basic net loss per share was equal to diluted net loss per share for the year ended December 31, 2018. The Company did not have any securities outstanding at December 31, 2017 that were exercisable or convertible into shares of the Company’s common stock. As a result, basic net income per share was equal to diluted net income per share for the year ended December 31, 2017 . |
Acquisition of Seediv
Acquisition of Seediv | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisition of Seediv | Note 4. Acquisition of Seediv On December 19, 2016, the Company acquired all of the issued and outstanding membership interests of Seediv, LLC, a Louisiana limited liability company (“Seediv”), for $600,000 and an earn-out payment. Seediv is the owner and operator of the Dick’s Wings & Grill restaurant located at 100 Marketside Avenue, Suite 301, in the Nocatee development in Ponte Vedra, Florida (the “Nocatee Restaurant”) and the Dick’s Wings & Grill restaurant located at 6055 Youngerman Circle in Argyle Village in Jacksonville, Florida (the “Youngerman Circle Restaurant”; together with the Nocatee Restaurant, the “Nocatee and Youngerman Circle Restaurants”). The closing of the acquisition occurred simultaneously with the execution of the membership interest purchase agreement by the Company and Mr. Kasturi on December 19, 2016. In connection with the acquisition of Seediv, the Company agreed to make an earnout payment to Mr. Kasturi and recorded $20,897 of contingent consideration as the estimated initial fair value of the earnout payment. A description of the manner by which the earnout payment was valued is set forth herein under Note 10. Fair Value Measurements |
Acquisition of Fat Patty's
Acquisition of Fat Patty's | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisition of Fat Patty's | Note 5. Acquisition of Fat Patty’s On August 3, 2018, the Company entered into an asset purchase agreement with CSA, Inc., a West Virginia corporation (“CSA”), CSA Investments, LLC, a West Virginia limited liability company (“CSA Investments”), CSA of Teays Valley, Inc., a West Virginia corporation (“CSA Teays Valley”), CSA, Inc. of Ashland, a Kentucky corporation (“CSA Ashland”), Fat Patty’s, LLC, a West Virginia limited liability company (“FPLLC”), and Clint Artrip, an individual (“Artrip”; together with CSA, CSA Investments, CSA Teays Valley, and CSA Ashland, FPLLC, the “Sellers”), pursuant to which the Company agreed to acquire all of the assets associated with Fat Patty’s (the “Fat Patty’s Acquisition”). The Company agreed to pay the Sellers $12,352,000 for the assets, of which $12,000,000 was to be paid to the Sellers at closing, $40,000 was to be paid to the Sellers within 10 days after the closing and the remaining $312,000 will be paid to the Sellers on the first anniversary of the closing. The closing of the Fat Patty’s Acquisition occurred on August 30, 2018, however, as discussed below, the Company entered into a separate related agreement with a third party that resulted in a direct transfer of the Properties (as defined below) from the Sellers to the third party. Accordingly, in substance, the Company only acquired the net assets detailed below for a purchase price of $852,000. In connection with the Fat Patty’s Acquisition, the Company entered into a secured convertible promissory note with Seenu G. Kasturi on August 30, 2018 pursuant to which the Company borrowed $622,929 from Mr. Kasturi to help finance the Fat Patty’s Acquisition. All principal and accrued but unpaid interest is due and payable by the Company in full on the earlier of (i) the fifth (5 th Also on August 3, 2018, In connection with the Property Acquisition, the Company entered into a master lease agreement (the “Master Lease”) with Store Capital on August 30, 2018 pursuant to which the Company leased each of the Properties from Store Capital. The initial term of the lease expires on August 31, 2038. The Company has the option to extend the term of the lease for four additional successive periods of five years each. The aggregate base annual rent is $876,875 and is subject to annual increases commencing September 1, 2019 in an amount equal to the lesser of: (i) 1.75%, or (ii) 1.25 times the change in the Consumer Price Index. The Company is responsible for all costs and obligations relating to the Properties. The acquisition of Fat Patty’s was accounted for as a business combination using the acquisition method of accounting in accordance with Accounting Standard Codification (“ASC”) Topic 805, Business Combinations For purposes of measuring the estimated fair value, where applicable, of the assets acquired and the liabilities assumed as reflected in the Company’s consolidated financial statements, the guidance in ASC Topic 820, Fair Value Measurements and Disclosures The assets acquired and liabilities assumed were comprised of the following: Cash $ 7,100 Inventory 91,424 Intangible assets 788,840 Equipment 614,295 Total assets acquired 1,501,659 Gift card liabilities (24,707 ) Total liabilities assumed (24,707 ) Gain on bargain purchase (624,952 ) Net assets acquired with note payable and deferred compensation liability $ 852,000 The estimates of fair values recorded are Level 3 inputs that have been determined by management based upon various market and income analyses and recent asset appraisals. The Company made certain adjustments to the amounts initially allocated to intangible assets and gift card liabilities after evaluating additional information that was present on the date the acquisition was completed. The fair value of the identifiable assets acquired and liabilities assumed of $1,476,952 exceeded the purchase price of Fat Patty’s by $624,952. Consequently, the Company reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed and concluded that the valuation procedures and resulting measures were appropriate. As a result, the Company recognized a gain of $624,952 during the year ended December 31, 2018 in connection with the acquisition. The Sellers of Fat Patty’s received cash without any earnouts or indemnification holdbacks, which was the primary motivation for the sale of Fat Patty’s. This was the primary reason the acquisition resulted in a bargain purchase. The gain was recorded in the other income in the Company’s consolidated statements of operations. The following table summarizes certain financial information for the years ended December 31, 2018 and 2017 contained in the Company’s Year Ended December 31, 2018 (Unaudited) Year Ended December 31, 2017 (Unaudited) Revenue $ 17,352,358 $ 15,927,114 Income from continuing operations 1,024,359 661,150 Net income 1,520,520 1,090,504 Net income per share – basic $ 0.23 $ 0.16 Net income per share – fully diluted $ 0.22 $ 0.16 The results of operations for Fat Patty’s were included in the Company’s results of operations beginning August 30, 2018. The actual amounts of revenue and net income for Fat Patty’s that are included in the Company’s consolidated statements of operations for the year ended December 31, 2018 were $3,798,484 and $164,182, respectively. The unaudited pro forma financial information has been presented for informational purposes only and is not necessarily indicative of the actual results that would have occurred had the acquisition been consummated on January 1, 2017 or of the future results of the combined entities |
Agreement to Acquire Tilted Kil
Agreement to Acquire Tilted Kilt | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Agreement to Acquire Tilted Kilt | Note 6. Agreement to Acquire Tilted Kilt On October 30, 2018, the Company entered into a Membership Interest Purchase Agreement with SDA Holdings, LLC, a Louisiana limited liability company (“SDA Holdings”), and Fred D. Alexander pursuant to which the Company agreed to acquire all of the issued and outstanding membership interests in SDA Holdings for $10. SDA Holdings is the owner of the Tilted Kilt Pub & Eatery ® The closing of the transaction is conditioned upon SDA Holdings, Trustee Services Group (the “Custodian”), Seenu G. Kasturi, who served as the Company’s President and Chief Financial Officer and the Chairman of its board of directors as of December 31, 2018, Let’s Eat Incorporated (“Let’s Eat”), the Reilly Group, LLC (the “Reilly Group”) and John Reynauld entering into an amendment to that certain Custodian Agreement, dated June 7, 2018, by an among the parties to add SDA Holdings as a party to the agreement and remove Mr. Kasturi as a party to the agreement, in which event SDA Holdings will be required to deliver to the Custodian a certificate evidencing 718,563 shares of the Company’s common stock. The closing of the transaction is also conditioned upon the Company raising gross proceeds of at least $2,000,000 through the sale of debt or equity securities, as well as other customary closing conditions. Upon closing of this acquisition, the Company will issue 666,667 shares of common stock to Mr. Kasturi, place 718,563 shares of common stock into escrow to replace a like number of shares placed in escrow by Mr. Kasturi, and through a wholly-owned subsidiary, be the obligor under a demand promissory note in favor of Mr. Kasturi in the principal amount of up to $2,500,000. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 7. Inventory Inventory was comprised of the following at December 31, 2018 and 2017, respectively: December 31, 2018 December 31, 2017 Food $ 120,426 $ 23,987 Beverages 90,599 21,430 Total $ 211,025 $ 45,417 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Note 8. Property and Equipment, Net Property and equipment, including capital lease assets, was comprised of the following at December 31, 2018 and 2017, respectively: December 31, 2018 December 31, 2017 Land, buildings and improvements $ 11,500,000 $ — Leasehold improvements 323,500 69,472 Furniture, fixtures and equipment 1,021,735 78,621 Subtotal 12,845,235 148,093 Less: accumulated depreciation (307,733 ) (48,979 ) Total $ 12,537,502 $ 99,114 The land, buildings and improvements of $11,500,000 at December 31, 2018 consisted of gross assets acquired on the capital lease with related depreciation expense and accumulated depreciation of $98,324. Depreciation expense was $252,914 and $17,180 during the years ended December 31, 2018 and 2017, respectively |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Intangible Assets | Note 9. Intangible Assets The Company acquired various intangible assets in connection with the acquisition of Fat Patty’s. Intangible assets include a tradename valued at $770,000 and a non-compete agreement valued at $18,840 for a total of $788,840 on August 30, 2018, which is the date the acquisition of Fat Patty’s was completed. The Company amortizes the non-compete agreement on a straight-line basis over the expected period of benefit, which is five years. The tradename has an indefinite life and is not subject to amortization but tested for impairment on an annual basis. The amount of amortization recognized for the non-compete agreement was $2,275 during the year ended December 31, 2018. Accordingly, the Company had total intangible assets of $786,565 at December 31, 2018. The Company did not have any intangible assets at December 31, 2017. The following table presents the future amortization expense to be recognized from the Company’s intangible assets at December 31, 2018: Year Amortization Expense to be 2019 $ 3,768 2020 3,768 2021 3,768 2022 3,768 2023 1,493 Thereafter — Total $ 16,565 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 10. Fair Value Measurements On January 20, 2014, the Company purchased a 50% ownership interest in Paradise on Wings Franchise Group, LLC, a Utah limited liability company that is the franchisor of the Wing Nutz ® Note 4. Acquisition of Seediv The Company performed a review of its investment in Paradise on Wings at the end of its 2016 fiscal year and determined that an “other-than-temporary” decline in the value of the investment had occurred and that a loss on impairment equal to its then carrying amount should be recognized. In addition, because Paradise on Wings incurred a loss of $440,561 during the period beginning January 1, 2017 and ending September 30, 2017, the carrying amount of the Company’s investment in Paradise on Wings remained unchanged at September 30, 2017. Accordingly, the carrying amount of the Company’s investment in Paradise on Wings was zero at September 30, 2017. On September 30, 2017, the Company sold its 50% ownership interest in Paradise on Wings to Seenu G. Kasturi for $24,000. Paradise on Wings incurred a loss of $440,561 during the period beginning January 1, 2017 and ending September 30, 2017. As a result, the carrying amount of the Company’s investment in Paradise on Wings was zero at September 30, 2017. In connection with the acquisition of Seediv, the Company agreed to pay contingent consideration in the form of an earn-out payment. The Company determined that the fair value of the liability for the contingent consideration was estimated to be $20,897 at the acquisition date. The Company determined the fair value of the contingent consideration based on a probability-weighted approach derived from earn-out criteria estimates and a probability assessment with respect to the likelihood of achieving the earn-out criteria. The measurement was based upon significant inputs not observable in the market, including internal projections and an analysis of the target markets. The resultant probability-weighted contingent consideration was discounted using a discount rate based upon the weighted-average cost of capital. At each reporting date, the Company revalues the contingent consideration to the reporting date fair value and records increases and decreases in the fair value as income or expense under general and administrative expenses in the Company’s consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration may result from, among other things, changes in discount periods and rates, changes in the timing and amount of earn-out criteria, and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria. As of December 31, 2017, the Company calculated the earnout payment in accordance with the provisions of the membership interest purchase agreement and determined that the earnout payment was $199,682. The Company recognized additional Seediv compensation expense in the amount of $178,785 during the year ended December 31, 2017 in connection with the earnout payment and the liability for the contingent consideration was increased by $178,785 to $199,682 at December 31, 2017. The Company made payments in the amount of $144,326 to Mr. Kasturi with respect to the earnout payment during the year ended December 31, 2018. Accordingly, the outstanding balance of contingent consideration was $55,356 and $199,682 at December 31, 2018 and 2017, respectively. The following table presents the contingent consideration recorded by the Company in connection with the acquisition of Seediv within the fair value hierarchy utilized to measure fair value on a recurring basis at December 31, 2018 and 2017, respectively: Level 1 Level 2 Level 3 December 31, 2018 $ — $ 55,356 $ — December 31, 2017 $ — $ 199,682 $ — The earnout payment was to be calculated based on the earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the Nocatee and Youngerman Circle Restaurants during the year ended December 31, 2017. As of December 31, 2017, the EBITDA for the Nocatee and Youngerman Circle Restaurants was utilized to compute the ending contingent consideration liability. As a result, the fair value measurement of the contingent consideration represented a Level 2 fair value measurement at December 31, 2018 and 2017 because it was based on other significant observable inputs. The Company’s other financial instruments consist of cash and cash equivalents, accounts and ad fund receivables, notes receivable, capital lease assets and liabilities, accounts payable, accrued expenses and notes payable. The estimated fair values of the cash and cash equivalents, accounts and ad fund receivables, notes receivable, accounts payable, accrued expenses and notes payable (and the related beneficial conversion feature associated with the notes payable) approximate their respective carrying amounts due to the short-term maturities of these instruments. The estimated fair value of the capital lease obligation approximated its carrying amount as the interest rate is implicit in the underlying lease. |
Notes Receivable
Notes Receivable | 12 Months Ended |
Dec. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |
Notes Receivable | Note 11. Notes Receivable In September 2014, the Company made a loan to one of its franchisees in the aggregate original principal amount of $6,329. The loan was for a term of three years, was payable in monthly installments, and did not require the payment of any interest. A total of $25 of principal was outstanding under the loan at December 31, 2017. The loan was paid off in full during the year ended December 31, 2018. In June 2016, the Company made a loan to one of its franchisees under a promissory note in the aggregate original principal amount of $25,000. In July 2016, the Company made an additional loan to the same franchisee under a line of credit agreement for an aggregate original principal amount of up to $28,136. In September 2016, the Company made an additional loan to the same franchisee under a second line of credit agreement for an aggregate original principal amount of up to $25,000. The loan under the promissory note is for a term of two years, is payable in monthly installments beginning January 1, 2017, and accrues interest at a rate of 5% per annum beginning September 1, 2016. The loan under the $28,136 line of credit agreement was for a term of two years, was payable in monthly installments beginning January 1, 2017, and did not require the payment of any interest. The loan was repaid in full during the year ended December 31, 2017. The loan under the $25,000 line of credit agreement is for a term of two years, is payable in monthly installments beginning January 1, 2017 and accrues interest at a rate of 5% per annum beginning October 1, 2016. A total of $414 and $25,944 of principal was outstanding under the loans at December 31, 2018 and 2017, respectively. Interest in the aggregate amount of $715 accrued and was paid in full under the loans during the year ended December 31, 2018. Interest in the aggregate amount of $1,925 accrued under the loans during the year ended December 31, 2017, and payments of interest in the aggregate amount of $2,763 were made under the loans during the year ended December 31, 2017. No accrued interest was outstanding under the loans at December 31, 2018 and 2017. In September 2016, the Company made a loan to one of its franchisees in the aggregate original principal amount of $13,869. The loan was due and payable in full on November 15, 2018, was payable in monthly installments beginning December 15, 2016, and accrued interest at a rate of 5% per annum beginning October 1, 2016. A total of $13,318 of principal was outstanding under the loan at December 31, 2016. Interest in the aggregate amount of $415 accrued and was paid in full under the loan during the year ended December 31, 2017. The loan was repaid in full during the year ended December 31, 2017. In October 2017, the Company made a loan to one of its franchisees in the aggregate original principal amount of $7,659. The loan is due and payable in full on December 1, 2020, is payable in monthly installments beginning January 1, 2018, and does not require the payment of any interest. A total of $5,106 of principal was outstanding under the loan at December 31, 2018. The full amount of the loan was outstanding at December 31, 2017. The carrying value of the Company’s outstanding notes receivable was $5,520 and $33,628 at December 31, 2018 and 2017, respectively, all of which was due from unrelated third parties. Of these amounts, $2,967 and $2,553 were classified as short-term and long-term notes receivable, respectively, at December 31, 2018, and $28,522 and $5,106 were classified as short-term and long-term notes receivable, respectively, at December 31, 2017. The Company generated interest income of $715 and $2,340 during the years ended December 31, 2018 and 2017, respectively. The Company did not have any interest receivable outstanding at December 31, 2018 and 2017. |
Debt Obligations
Debt Obligations | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Note 12. Debt Obligations In September 2013, the Company entered into a loan agreement with Blue Victory Holdings, Inc., a Nevada corporation (“Blue Victory”), As of December 31, 2016, the Company had principal in the amount of $16,103 outstanding under its credit facility with Blue Victory. During the year ended December 31, 2017, the Company borrowed $61,721 under the credit facility and repaid $77,824 to Blue Victory under the credit facility. Accordingly, there was no principal outstanding under the credit facility at December 31, 2017. The Company did not borrow any funds under the credit facility during the year ended December 31, 2018. Accordingly, there was no principal outstanding under the credit facility at December 31, 2018. On December 19, 2016, the Company acquired Seediv. In connection therewith, the Company assumed debt owed by Seediv to Blue Victory pursuant to the terms of a promissory note issued by Seediv in favor of Blue Victory in the amount of $216,469. The promissory note Accordingly, there was no principal outstanding under the credit facility at December 31, 2017. The Company borrowed $372,049 from Blue Victory and repaid $341,546 to Blue Victory under a separate unsecured loan that it had entered into with Blue Victory during the year ended December 31, 2017. The loan accrues interest at a rate of 6% per annum and is payable on demand On August 30, 2018, the Company entered into a secured convertible promissory note with Seenu G. Kasturi pursuant to which the Company borrowed $622,929 to help finance the Fat Patty’s Acquisition. A description of the note is set forth herein under Note 5. Acquisition of Fat Patty’s. The carrying value of the Company’s outstanding promissory notes, net of unamortized discount of $145,290 and excluding capital lease obligations, was $720,178 and $30,503 at December 31, 2018 and 2017, respectively. |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | Note 13. Capital Stock The Company’s authorized capital consisted of 100,000,000 shares of Class A common stock, par value $0.01 per share, at December 31, 2018 and 2017, respectively, of which 6,680,065 and 6,950,869 shares of common stock were outstanding at December 31, 2018 and 2017, respectively, and consisted of 1,000,000 and -0- shares of Series A convertible preferred stock, par value $0.01 per share, at December 31, 2018 and 2017, respectively, of which 449,581 and -0- shares were outstanding at December 31, 2018 and 2017, respectively. On September 27, 2011, the Company entered into an agreement with a consultant pursuant to which the Company agreed to issue 142,857 shares of its common stock to the consultant as payment for consulting services to be performed by the consultant during a term commencing on the date of the agreement and ending June 30, 2012. The shares were valued at the closing price of the Company’s common stock on the date of grant for total consideration of $150,000. The Company recognized $150,000 of stock compensation in connection therewith and credited stock subscription payable. The Company had not issued any of the shares to the consultant as of December 31, 2017. Accordingly, the Company had an outstanding balance of $150,000 in stock subscriptions payable at December 31, 2017. As of December 31, 2017, in accordance with ASC 450, the Company determined that the probability that the Company would have to issue any shares of common stock to the consultant, or pay any other form of consideration to the consultant, was remote. Accordingly, the Company concluded that the $150,000 of stock subscription payable should be written off as of December 31, 2017. The Company recorded the write-off within other income in its consolidated statements of operations. In May 2017, the Company entered into an agreement with Maxim Group LLC (“Maxim”) to provide general financial advisory and investment banking services to the Company for a term of one year. Under the terms of the agreement, the Company agreed to pay Maxim $5,000 per month during the term of the agreement and issue 225,000 shares of common stock to Maxim upon the execution of the agreement. The Company recognized $180,000 of stock compensation expense ended December 31, 2017. In August 2017, the Company approved the issuance of a total of 2,750 shares of its common stock to certain of its non-executive employees as incentive compensation. . In August 2017, the Company approved the issuance of a total of 13,000 shares of its common stock to certain of its franchisees as incentive compensation. . In August 2017, the Company issued 35,295 shares of its common stock to a consultant as payment for $30,000 of consulting fees then due and payable by the Company. The Company recognized $40,500 of stock compensation expense during the year ended December 31, 2017 in connection with the vesting of the shares of common stock earned by Mr. Kasturi on April 1, July 1 and October 1, 2017 under the employment agreement that he was then a party to with the Company. The Company also recognized $13,353 of stock compensation expense during the year ended December 31, 2017 in connection with the vesting of the shares of common stock to be earned by Mr. Kasturi on January 1, 2018 under the employment agreement that he was then a party to with the Company. This amount was credited to stock subscriptions payable at December 31, 2017. In January 2018, the Company issued a total of 5,625 shares of its common stock to certain of its franchisees as incentive compensation. . In June 2018, the Company’s board of directors created Series A convertible preferred stock and authorized 1,000,000 shares of Series A convertible preferred stock, par value $0.01 per share, for issuance. Each share of Series A convertible preferred stock is entitled to 100 votes per share and is convertible into one share of the Company’s common stock at a conversion price of $0.75 per share of common stock. The conversion price may be paid in cash, through a reduction in the number of shares of common stock received, or by other methods approved by the board of directors. In the event any shares of the Series A convertible preferred stock are transferred by the holder thereof, such shares immediately and automatically convert into shares of common stock with the conversion price being paid by the recipient through a reduction in the number of shares of common stock received. The Series A convertible preferred stock is treated pari passu In May 2018, the Company issued a stock option to an employee that is exercisable into 30,000 shares of common stock. The shares were valued on the date of grant by using the Black-Scholes pricing model. The Company recognized $10,002 of stock compensation expense during the year ended December 31, 2018 in connection with the vesting of the option. In May 2018, the Company provided an employee with the right to receive $33,000 in cash or 20,000 shares of shares of the Company’s common stock on May 15, 2021. The shares were valued at a price per share equal to the closing price of the Company’s common stock on the OTCQB on the date of grant and remeasured as of December 31, 2018. In accordance with ASC 718, as the employee is able to settle the right in either cash or common stock, the Company recognized $6,254 of stock compensation expense in connection therewith during the year ended December 31, 2018 and recorded a corresponding liability which has been recorded in accounts payable and accrued expenses within the Company’s consolidated balance sheets . In June 2018, the Company entered into a securities purchase agreement with Seenu G. Kasturi pursuant to which the Company issued Mr. Kasturi 449,581 shares of Series A convertible preferred stock in exchange for 449,581 shares of common stock held by Mr. Kasturi. Upon receipt of the shares of common stock from Mr. Kasturi, the shares were retired and restored to the status of authorized and unissued shares of common stock. Accordingly, the number of shares of common stock outstanding immediately after the transaction was completed decreased from 6,974,008 shares to 6,524,427 shares. No expense was recognized by the Company during the year ended December 31, 2018 in connection with the transaction. In August 2018, the Company entered into an agreement with a firm to provide investor relations services to the Company. Under the terms of the agreement, the Company agreed to pay the firm $12,250 and issue 3,500 shares of common stock to the firm upon the execution of the agreement as compensation for services to be performed during the months of August and September 2018. The Company agreed to pay the firm $7,000 and issue 1,500 shares of common stock each month thereafter during the remainder of the term of the agreement. The Company recognized $11,685 of stock compensation expense under the agreement during . In September 2018, the Company entered into an agreement with Maxim to provide investment banking and mergers and acquisition services to the Company for a term of one year. Under the terms of the agreement, the Company agreed to pay Maxim $7,500 per month during the term of the agreement and issue 125,000 shares of common stock to Maxim upon the execution of the agreement. The Company recognized $245,000 of stock compensation expense under the agreement during the . The Company recognized $40,647 of stock compensation expense during the year ended December 31, 2018 in connection with the vesting of the shares of common stock earned by Mr. Kasturi on January 1, April 1, July 1 and October 1, 2018 under the employment agreement that he was then a party to with the Company. The Company also recognized $13,353 of stock compensation expense during the year ended December 31, 2018 in connection with the vesting of the shares of common stock to be earned by Mr. Kasturi on January 1, 2019 under the employment agreement that he was then a party to with the Company. This amount was credited to stock subscriptions payable at December 31, 2018. The Company recognized a total of $329,688 and $247,240 for stock compensation expense during the years ended December 31, 2018 and 2017, respectively. The Company had a total of $15,453 and $26,853 of stock subscription payable outstanding at December 31, 2018 and 2017, respectively. |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Stock Options and Warrants [Abstract] | |
Stock Options and Warrants | Note 14. Stock Options and Warrants The Company issued one stock option during the year ended December 31, 2018. The stock option is exercisable into 30,000 shares of common stock at an exercise price of $1.49 and vests in three equal annual installments commencing on the first anniversary of the date of issuance. The shares were valued on the date of grant by using the Black-Scholes pricing model in accordance with the provisions of ASC Topic 718. This stock option was the only stock option outstanding during the year ended December 31, 2018. The Company did not issue any stock options during the year ended December 31, 2017, and there were no stock options outstanding during the year ended December 31, 2017. The Company did not issue any warrants exercisable into shares of the Company’s common stock during the years ended December 31, 2018 and 2017, there were no warrants outstanding during the years ended December 31, 2018 and 2017. |
Stock Compensation Plans
Stock Compensation Plans | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Compensation Plans | Note 15. Stock Compensation Plans American Restaurant Concepts, Inc. 2011 Stock Incentive Plan In August 2011, the Company adopted the American Restaurant Concepts, Inc. 2011 Stock Incentive Plan. Under the plan, 1,214,286 shares of common stock may be granted to employees, officers and directors of, and consultants and advisors to, the Company under awards that may be made in the form of stock options, warrants, stock appreciation rights, restricted stock, restricted units, unrestricted stock and other equity-based or equity-related awards. As of December 31, 2018, 142,858 shares of the Company’s common stock remained available for issuance under the plan. The plan terminates in August 2021. On August 18, 2011, the Company filed a registration statement on Form S-8, File No. 333- 176383 ARC Group, Inc. 2014 Stock Incentive Plan In June 2014, the Company adopted the ARC Group, Inc. 2014 Stock Incentive Plan. Under the plan, 1,000,000 shares of common stock may be granted to employees, officers and directors of, and consultants and advisors to, the Company under awards that may be made in the form of stock options, warrants, stock appreciation rights, restricted stock, restricted units, unrestricted stock and other equity-based or equity-related awards. As of December 31, 2018, all 1,000,000 shares of the Company’s common stock remained available for issuance under the plan. The plan terminates in June 2024. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 16. Commitments and Contingencies Employment Agreements and Arrangements Richard W. Akam On January 22, 2013, the Company appointed Richard W. Akam to serve as its Chief Operating Officer. In connection therewith, the Company entered into an employment agreement with Mr. Akam pursuant to which it agreed to pay him an annual base salary of $150,000, subject to annual adjustment and discretionary bonuses, plus certain standard and customary fringe benefits. The initial term of the employment agreement is for one year and automatically renews for additional one-year terms until terminated by Mr. Akam or the Company. The employment agreement provided that, on July 22, 2013, the Company would grant Mr. Akam shares of its common stock equal in value to $50,000 if Mr. Akam was continuously employed by the Company through that date. The number of shares of common stock that the Company would issue to Mr. Akam would be calculated based on the last sales price of the Company’s common stock as reported on the OTCQB on July 22, 2013. The employment agreement also provided that the Company would grant Mr. Akam additional shares of its common stock equal in value to $50,000 on January 1st of each year thereafter if Mr. Akam was continuously employed by the Company through January 1st of the applicable year. The number of shares of common stock that the Company would issue to Mr. Akam for each applicable year would be calculated based on the average of the last sales price of shares of the Company’s common stock as reported on the OTCQB for the month of January of the applicable year. Notwithstanding the above, and in connection therewith, Mr. Akam agreed that the number of shares that may be earned by him under his employment agreement in connection with any particular grant would be equal to the lesser of: (i) 71,429 shares of common stock, or (ii) the number of shares of common stock calculated by dividing $50,000 by the closing price of the Company’s common stock on the day immediately preceding the date the Company’s obligation to issue the shares to him fully accrues. Mr. Akam also agreed that in the event the Company was unable to fulfill its obligation to issue all of the shares earned by him with respect to any particular grant because it did not have enough shares of common stock authorized and available for issuance, (i) Mr. Akam would not require the Company to issue more shares of common stock than are then authorized and available for issuance by the Company, and (i) the Company would be permitted to settle any liability to Mr. Akam created as a result thereof in cash. In the event the Company terminates Mr. Akam’s employment without “cause” (as such term is defined in the employment agreement), Mr. Akam will be entitled to receive the following severance compensation from the Company: (i) if the Company terminates Mr. Akam’s employment during the first year of his employment with the Company, that amount of compensation equal to the salary payable to Mr. Akam during that year, (ii) if the Company terminates Mr. Akam’s employment during the second year of his employment with the Company, that amount of compensation equal to nine months of the salary payable to Mr. Akam during that year, (iii) if the Company terminates Mr. Akam’s employment during the third year of his employment with the Company, that amount of compensation equal to six months of the salary payable to Mr. Akam during that year, and (iv) if the Company terminates Mr. Akam’s employment after the third year of his employment with the Company, that amount of compensation equal to three months of the salary payable to Mr. Akam during the year that such termination occurs. Mr. Akam will not be entitled to receive any severance compensation from the Company if the Company terminates his employment for “cause” or as a result of his disability, or if Mr. Akam resigns from his employment with the Company. The employment agreement also contains customary provisions that provide that, during the term of Mr. Akam’s employment with the Company and for a period of one year thereafter, Mr. Akam is prohibited from disclosing confidential information of the Company, soliciting Company employees and certain other persons, and competing with the Company. On July 31, 2013, the Company appointed Richard Akam as its Chief Executive Officer, Chief Financial Officer and Secretary. The Company and Mr. Akam did not amend the employment agreement in connection with the above appointments, and Mr. Akam did not receive any additional compensation in connection with the above appointments. On August 19, 2013, the Company appointed Daniel Slone as the Company’s Chief Financial Officer. In connection therewith, Richard Akam resigned as the Company’s Chief Financial Officer on August 19, 2013. Mr. Akam retained his positions as the Company’s Chief Executive Officer, Chief Operating Officer and Secretary. On January 31, 2017, the Company and Richard W. Akam entered into an amendment to the employment agreement. Under the terms of the amendment, the parties confirmed the appointment of Mr. Akam as the Company’s Chief Operating Officer on January 22, 2013 and as the Company’s Chief Executive Officer on July 31, 2013, clarified that Mr. Akam’s monthly base salary after the initial term of the employment agreement may be adjusted from time to time by the Company with Mr. Akam’s consent, removed the provision relating to the grant of shares of the Company’s common stock to Mr. Akam on January 1 st st Daniel Slone On August 19, 2013, the Company appointed Daniel Slone as the Company’s Chief Financial Officer. The Company agreed to pay Mr. Slone an annual base salary of $1.00 in connection with his appointment. The Company did not enter into an employment agreement with Mr. Slone. On January 17, 2017, Daniel Slone resigned as the Company’s Chief Financial Officer. Seenu G. Kasturi On January 18, 2017, the Company appointed Seenu G. Kasturi as its President, Chief Financial Officer and Chairman of the board of directors. In connection therewith, on January 18, 2017, the Company entered into an employment agreement with Mr. Kasturi to serve as the President and Chief Financial Officer of the Company. The employment agreement is for an initial term of three years with automatic one-year renewals thereafter unless earlier terminated or not renewed as provided therein. Under the terms of the employment agreement, Mr. Kasturi will be paid annual compensation in the amount of $80,000 per year, consisting of: (i) an initial annual base salary of $26,000, and (ii) equity awards equal in value to $54,000 per year. Mr. Kasturi will be eligible to receive increases in salary on January 1 st Operating Leases Company Headquarters In January 2015, the Company entered into a lease with Crescent Hill Office Park for its corporate headquarters located at 6327-4 Argyle Forest Boulevard, Jacksonville, Florida In January 2018, the Company entered into a new, month-to-month lease with Crescent Hill Office Park for its corporate headquarters located at 6327-4 Argyle Forest Boulevard, Jacksonville, Florida On November 15, 2018, the Company entered into a triple net lease with the Kasturi Children’s Trust (the “Trust”) for its new corporate headquarters located at 1409 Kingsley Ave., Ste. 2, Orange Park, Florida. The lease is for a term of 60 months and provides for rent payments in the amount of $4,000 per month. The Trust is an irrevocable trust for which the children of Seenu G. Kasturi are the beneficiaries. The trustee of the Trust is an unrelated third party. Nocatee Restaurant In October 2013, On April 1, 2017, DWG Acquisitions, Seediv and NTC-REG entered into an assignment and assumption & first modification to lease agreement for the Nocatee Restaurant. Under the agreement, DWG Acquisitions assigned all of its right, title, interest and claim in and to the Nocatee lease, and Seediv assumed the payment and performance of all obligations, liabilities and covenants of DWG Acquisitions under the lease for the Nocatee Restaurant. In addition, the parties amended certain terms of the lease to state that the lease covers approximately 3,400 square feet of space, to extend the term of the lease for a 60-month period commencing on April 1, 2018 and expiring March 31, 2023, and to change the rent payments to an initial monthly rent payment of $7,035 without an additional annual rent payment. Youngerman Circle Restaurant In May 2014, On December 20, 2016, Seediv entered into a new triple net lease with Raceland QSR for the Youngerman Circle Restaurant. The lease provides for rent payments to be made by the Company for each of 13 rent periods per year, with each rent period comprised of four weeks. The lease provides for an initial base rent payment equal to the greater of: (i) $10,000 per rent period, or (ii) 7.5% of the Youngerman Circle Restaurant’s net sales for the applicable rent period. Commencing on the fifth (5 th Valdosta Dick’s Wings Restaurant On December 31, 2017, DWAG Valdosta, LLC, a Georgia limited liability company that is a wholly-owned subsidiary of the Company (“DWAG Valdosta”), entered into a triple net lease with PLD, L.L.L.P., a Georgia limited liability company, for the Dick’s Wings and Grill restaurant located at 153 Baytree Road, Valdosta, Georgia. The lease provides for monthly rent payments of $3,333 for the first two years and $5,000 for the following three years, plus an additional annual rent payment equal to the amount by which 6% of the restaurant’s annual gross sales exceeds $1,000,000. The lease has an initial term of five years and provides the Company with an option to extend the lease for two additional five-year periods. Panama City Beach Dick’s Wings Restaurant On July 1, 2015, DWG Acquisitions entered into a lease Arquette Development Corporation, a Florida corporation (“Arquette Development”), for the Dick’s Wings and Grill restaurant located at 1136 Thomas Drive, Panama City Beach, Florida (the “Panama City Lease”). The lease provided for rent payments of $5,000 plus an additional annual rent payment equal to the amount by which 6% of the restaurant’s annual gross sales exceeds $1,200,000. The lease had an initial term of three years and provided DWG Acquisitions with an option to extend the lease for three additional three-year periods. The lease expired on June 30, 2018 and was not renewed by DWG Acquisitions. Upon the expiration of the lease, DWG Acquisitions entered into a month-to-month tenancy with Arquette Development pursuant to which DWAG PCB, LLC, a Florida limited liability company that is a wholly-owned subsidiary of the Company (“DWAG PCB”), makes monthly rent payments of $3,000 to Arquette Development on behalf of DWG Acquisitions. Tallahassee Dick’s Wings Restaurant On May 1, 2018, DWAG Tallahassee, LLC, a Florida limited liability company that is a wholly-owned subsidiary of the Company (“DWAG Tallahassee”), entered into a triple net lease with Bannerman Crossings III, LLC, a Florida limited liability company, for a Dick’s Wings and Grill restaurant to be located at 3427 Bannerman Rd., Suite 104, Tallahassee, Florida. The lease provides for no rent during the first year of the lease, followed by monthly rent payments equal to 6% of the restaurant’s monthly gross sales for each month remaining under the lease. The lease has an initial term of 10 years and provides the Company with an option to extend the lease for two additional five-year periods. Bannerman Crossings agreed to loan DWAG Tallahassee $250,000 to be used for tenant improvements to the property. DWAG has the right to terminate the lease at the end of the 42 nd th th Gonzalez Tilted Kilt Restaurant On September 25, 2018, TK Gonzales LA, LLC, a Louisiana limited liability company that is a wholly-owned subsidiary of the Company (“TK Gonzales”), entered into a triple net lease with Acadiana Development of Gonzales, LLC, a Louisiana limited liability company, for the Tilted Kilt restaurant located at 2838 Outfitter’s Drive, Gonzales, Louisiana. The lease provides for initial monthly rent payments of $12,000 that increase to $17,600 during the term of the lease. The lease has an initial term of 10 years and provides the Company with an option to extend the lease for two additional five-year periods. Rent expense under the operating leases was $341,124 and $262,350 during the years ended December 31, 2018 and 2017, respectively, and was comprised of the following: December 31, 2018 December 31, 2017 Straight-lined minimum rent $ 340,657 $ 194,770 Contingent rent 467 67,580 Total $ 341,124 $ 262,350 The following table presents future minimum annual lease payments under the operating leases as of December 31, 2018: Year Future Minimum Lease Payments 2019 $ 466,314 2020 495,892 2021 521,565 2022 534,192 2023 417,344 Thereafter 2,976,232 Total $ 5,411,539 Capital Leases On August 30, 2018, the Company entered into the Master Lease. The initial term of the lease expires on August 31, 2038. The Company has the option to extend the term of the lease for four additional successive periods of five years each. The aggregate base annual rent is $876,875 and is subject to annual increases commencing September 1, 2019 in an amount equal to the lesser of: (i) 1.75%, or (ii) 1.25 times the change in the Consumer Price Index. The Company is responsible for all costs and obligations relating to the Properties. The Company determined that the Master Lease is a capital lease. The Company recorded a capital lease asset and capital lease obligation of $11,500,000 in its consolidated balance sheets that was equal to the present value of the Company’s future minimum leaseback payments. The outstanding balance of the capital lease obligation was . The following table presents the future annual minimum lease payments to be recognized under the capital lease as of December 31, 2018: Year Future Minimum Lease Payments 2019 $ 881,990 2020 897,425 2021 913,130 2022 929,110 2023 945,369 Thereafter 15,924,033 Total 20,491,057 Less: portion representing interest (9,105,147 ) Present value of lease payments $ 11,385,910 The following table presents the future obligations under the capital lease at December 31, 2018: Year Future Lease Obligations Recognized 2019 $ 175,764 2020 202,944 2021 232,148 2022 263,512 2023 297,180 Thereafter 10,214,362 Total $ 11,385,910 The land, buildings and improvements of $11,500,000 included within property and equipment in Note 8. Property and Equipment, Net Depreciation expense and accumulated depreciation were approximately $98,324 during the year ended December 31, 2018. Interest expense was $178,201 during the year ended December 31, 2018. Sponsorship Agreements In July 2013, the Company entered into a three-year sponsorship agreement with the Jacksonville Jaguars, LLC (the “Jacksonville Jaguars”) and, in connection therewith, in August 2013, entered into a subcontractor concession agreement with Levy Premium Foodservice Limited Partnership (“Levy”) for a concession stand to be located at TIAA Bank Field in Jacksonville, Florida. The Company concurrently assigned all of its rights and obligations under the concession agreement to DWG Acquisitions in return for a fee of $2,000 per month for each full or partial month during which the concession agreement is in effect. In July 2015, the Company extended its sponsorship agreement with the Jaguars by an additional two years and entered into a subcontractor concession agreement with Ovations Food Services, L.P. (“Ovations”) for a second concession stand at TIAA Bank Field. The Company concurrently assigned all of its rights and obligations under the second concession agreement to DWG Acquisitions in return for an additional fee of $3,000 per month for each full or partial month during which the concession agreement is in effect. In September 2016, the Company terminated its subcontractor concession agreements with Levy and Ovations and the related assignment agreements with DWG Acquisitions, and entered into a sub-concession agreement with Jacksonville Sportservice, Inc. (“Jacksonville Sportservice”) and DWG Acquisitions with respect to the two concession stands previously covered by the Levy and Ovations subcontractor concession agreements. The Company concurrently assigned all of its rights and obligations under the sub-concession agreement to DWG Acquisitions in return for a fee equal to the income generated by the concession stands less all expenses incurred by the concession stands for each full or partial month during which the concession agreement is in effect. In October 2017, the Company entered into a termination agreement with DWG Acquisitions whereby the Company terminated the assignment to DWG Acquisitions. In November 2017, the Company entered into a new five-year sponsorship agreement with the Jacksonville Jaguars. Under the terms of the sponsorship agreement, during each preseason and regular season football game played by the Jacksonville Jaguars and at certain other events held at the football-based stadium in Jacksonville, Florida currently named “Everbank Field”: (i) the Company has the right to display its branding on one fixed concession stand in the Bud Light Party Zone at Everbank Field and a second concession stand located on the concourse at Everbank Field, (ii) the Company has the right to have its food products sold or otherwise distributed from the stands and/or certain general concession areas at Everbank Field, and (iii) the Company has the right to receive a variety of stadium signage at Everbank Field, radio broadcasting on the Jacksonville Jaguars’ radio programming, and digital advertising on the Jacksonville Jaguars’ website and certain of its social media sites. The term of the sponsorship agreement commences on April 1, 2018 and expires on the later of: (i) the conclusion of the 2022/23 NFL season, and (ii) February 28, 2023. The Company is required to pay the Jacksonville Jaguars annual fees in the amount of $200,000 during the first year of the agreement increasing to $216,490 during the last year of the agreement. In addition, the Company is required to provide the Jacksonville Jaguars with food, beverages and serving products equal in value to $35,000 during the first year of the agreement increasing to $37,890 during the last year of the agreement. In the event the Jacksonville Jaguars play in any post-season playoff games, the Company will pay the Jacksonville Jaguars an additional amount per playoff game equal to a pro-rated portion of the annual fee applicable during the then-current year of the agreement. The following table presents the future minimum annual payments under the sponsorship agreement as of December 31, 2018: Year Minimum Annual Payments 2019 $ 204,000 2020 208,080 2021 212,240 2022 216,490 2023 — Thereafter — Total $ 840,810 Accounts Payable As of December 31, 2017, the Company had accounts payable outstanding in the amount of $709,621. Of this amount, $251,238 of the accounts payable had been outstanding for more than five years. The statute of limitations applicable to these payables expired during the year ended December 31, 2017 and the Company had not received any communications from any of the applicable vendors during the past five years. In accordance with ASC 450, the Company determined that the possibility that any vendor would contact the Company seeking payment for any of such accounts payable and recover a judgment for such payment was remote. Accordingly, the Company concluded that the $251,238 of accounts payable should be written off as of December 31, 2017. The Company recorded the write-off within other income / (expense) in its consolidated statements of operations. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Note 17. Related-Party Transactions Except as otherwise set forth below, all of the following transactions are with Seenu G. Kasturi or an entity affiliated with Mr. Kasturi. On January 18, 2017, Mr. Kasturi was appointed as the Company’s President, Chief Financial Officer and Chairman of the Company’s board of directors. As of December 31, 2018, Mr. Kasturi was the beneficial owner of 26.6% of the Company’s common stock and 100% of the Company’s Series A convertible preferred stock, collectively representing 89.3% of the voting power of the Company’s capital stock. Seenu G. Kasturi has served as Vice President and Controller of TKFO since June 2018. He has owned all of the outstanding membership interests in DWG Acquisitions and Raceland QSR and has served as the President, Treasurer and Secretary of DWG Acquisitions and Raceland QSR, since their formation in 2013 and 2012, respectively. Mr. Kasturi has owned 90% of the equity interests in Blue Victory and has served as its President, Treasurer, Secretary and sole member of its board of directors since its formation in 2009. He also owned all of the outstanding membership interests in Seediv, and served as its President, Treasurer and Secretary, from its formation in July 2016 to December 19, 2016, the date the Company acquired Seediv. Employment Agreements In January 2013, the Company entered into an employment agreement with Richard W. Akam in connection with his appointment as the Company’s Chief Operating Officer. As of December 31, 2018, Mr. Akam served as the Company’s Chief Executive Officer, Chief Operating Officer and Secretary. A description of the employment agreement is set forth herein under Note 16. Commitments and Contingencies – Employment Agreements Note 21. Subsequent Events In January 2017, the Company appointed Seenu G. Kasturi as its President, Chief Financial Officer and Chairman of the board of directors and, in connection therewith, entered into an employment agreement with Mr. Kasturi. A description of the employment agreement is set forth herein under Note 16. Commitments and Contingencies – Employment Agreements Note 21. Subsequent Events Sponsorship Agreements In September 2016, the Company terminated its subcontractor concession agreements with Levy and Ovations and the related assignment agreements with DWG Acquisitions, and entered into a sub-concession agreement with Jacksonville Sportservice and DWG Acquisitions with respect to the two concession stands previously covered by the Levy and Ovations subcontractor concession agreements. The Company concurrently assigned all of its rights and obligations under the sub-concession agreement to DWG Acquisitions in return for a fee equal to the income generated by the concession stands less all expenses incurred by the concession stands for each full or partial month during which the concession agreement is in effect. In October 2017, the Company entered into a termination agreement with DWG Acquisitions whereby the Company terminated the assignment to DWG Acquisitions. DWG Acquisitions incurred net expenses of $2,680 under the assignment agreement during the year ended December 31, 2017. Financing Transactions The Company is a party to a credit facility with Blue Victory. Note 12. Debt Obligations The Company borrowed funds from, and repaid funds to, Blue Victory under a separate loan that it had entered into with Blue Victory during the year ended December 31, 2017. Note 12. Debt Obligations Leases In October 2013, DWG Acquisitions entered into a triple net shopping center lease with NTC-REG, LLC (“NTC-REG) for the Nocatee Restaurant. A description of the lease is set forth herein under Note 16. Commitments and Contingencies – Operating Leases. Note 16. Commitments and Contingencies – Operating Leases. In May 2014, DWG Acquisitions entered into a triple net lease with Raceland QSR for the Youngerman Circle Restaurant. A description of the lease is set forth herein under Note 16. Commitments and Contingencies – Operating Leases. Note 16. Commitments and Contingencies – Operating Leases. On November 15, 2018, the Company entered into a triple net lease with the Kasturi Children’s Trust (the “Trust”) for its new corporate headquarters. A description of the lease is set forth herein under Note 16. Commitments and Contingencies – Operating Leases. Upon the expiration of the Panama City Lease on June 30, 2018, DWG Acquisitions entered into a month-to-month tenancy with Arquette Development pursuant to which DWAG PCB makes monthly rent payments of $3,000 to Arquette Development on behalf of DWG Acquisitions. A description of the Panama City Lease and DWG Acquisitions’ month-to-month tenancy with Arquette Development is set forth herein under Note 16. Commitments and Contingencies – Operating Leases Franchise Agreements The Company has been a party to several franchise agreements with DWG Acquisitions pursuant to which DWG Acquisitions owned and operated Dick’s Wings restaurants. The terms of these franchise agreements were identical to the terms of the franchise agreements that the Company enters into with unrelated franchisees, except that the Company did not require DWG Acquisitions to pay a franchise fee to the Company under the franchise agreements for the Nocatee and Youngerman Circle Restaurants. The Company generated a total of $204,391 and $156,705 in royalties and franchise fees through its franchise agreements with DWG Acquisitions during the years ended December 31, 2018 and 2017, respectively. The Company had a total of $1,505 of accounts receivable outstanding from DWG Acquisitions at December 31, 2017, and had a total of $2,280 of ad funds receivable outstanding from DWG Acquisitions at December 31, 2017. The Company did not have any accounts receivable or ad funds receivable outstanding from DWG Acquisitions at December 31, 2018. The Company had a total of $41,512 and $65,349 for accounts payable and accrued expenses outstanding from DWG Acquisitions at December 31, 2018 and 2017, respectively. The Company is no longer a party to any franchise agreements with DWG Acquisitions. In September 2018, the Company became a franchisee of a Tilted Kilt restaurant located in Gonzales, Louisiana. Richard W. Akam, who serves as the Company’s Chief Operating Officer and Secretary, has served as President of TKFO since June 2018, and Ketan Pandya, who serves as a member of the Company’s board of directors, has served as Vice President of Franchise Relations of TKFO since June 2018. Fred D. Alexander, who serves as a member of the Company’s board of directors, is the owner of SDA Holdings. The Company paid ad fund fees of $2,416 to Tilted Kilt during the year ended December 31, 2018. The Company is not required to pay any royalties or franchise fees to Tilted Kilt under its franchise agreement with Tilted Kilt. Series A Convertible Preferred Stock In June 2018, the Company entered into a securities purchase agreement with Seenu G. Kasturi pursuant to which the Company issued Mr. Kasturi 449,581 shares of Series A convertible preferred stock in exchange for 449,581 shares of common stock then held by Mr. Kasturi. A description of this transaction is set forth herein under Note 13. Capital Stock. Acquisitions and Dispositions On December 19, 2016, the Company acquired all of the outstanding membership interests of Seediv from Seenu G. Kasturi for a purchase price of $600,000 and an earnout payment. The earn-out payment was determined to be $199,682, of which $144,326 had been paid as of December 31, 2018. As part of the transaction, the Company assumed debt owed by Seediv to Blue Victory in the amount of $216,469 which the Company repaid in full during the year ended December 31, 2017. A description of the debt is set forth herein under Note 12. Debt Obligations On September 30, 2017, the Company sold its 50% ownership interest in Paradise on Wings to Seenu G. Kasturi for $24,000. On October 4, 2017, Seediv entered into an agreement for purchase and sale of real estate with Raceland QSR pursuant to which Seediv agreed to purchase the real property located at 6055 Youngerman Circle in Argyle Circle, Jacksonville, Florida from Raceland QSR. The purchase price for the property was to be the lesser of: (i) $2,000,000, or (ii) the appraised value of the property determined by the appraisal completed by the financing source proposed to be utilized by Seediv to finance the acquisition of the property. The agreement provided for the payment by Seediv of a deposit of $10,000 within 10 days of the date of the agreement to an escrow agent to be selected by the parties with the remainder of the purchase price to be paid by Seediv at closing. Seediv had the right to terminate the transaction in the event that certain feasibility studies, the title commitment or the appraisal was unsatisfactory to Seediv, or if Raceland QSR breached any of its representations, warranties, covenants, agreements or obligations under the agreement, in which case the deposit would be returned to Seediv. The closing of the transaction was to occur on December 3, 2017. On November 30, 2017, Seediv On August 30, 2018, the Company closed upon the asset purchase agreement for Fat Patty’s. In connection therewith, the Company issued a secured convertible promissory note to Seenu G. Kasturi pursuant to which the Company borrowed $622,929 to help finance this acquisition. A description of the promissory note is set forth herein under Note 12. Debt Obligations On October 30, 2018, the Company entered into a membership interest purchase agreement with SDA Holdings and Fred D. Alexander pursuant to which the Company agreed to acquire all of the issued and outstanding membership interests in SDA Holdings. A description of this transaction is set forth herein under Note 6. Agreement to Acquire Tilted Kilt. Other Related-Party Arrangements. Certain part-time employees of the Company are also employed on a part-time basis by various entities affiliated with Seenu G. Kasturi. In addition, excluding the $41,512 of accounts payable and accrued expenses owed to DWG Acquisitions discussed above under – Franchise Agreement |
Judgments in Legal Proceedings
Judgments in Legal Proceedings | 12 Months Ended |
Dec. 31, 2018 | |
Judgment In Legal Proceedings [Abstract] | |
Judgments in Legal Proceedings | Note 18. Judgments in Legal Proceedings On February 25, 2011, a legal proceeding entitled Duval Station Investment, LLC vs. Hot Wing Concepts, Inc. d/b/a Dick’s Wings and Grill, and American Restaurant Concepts, Inc. In January 2015, Santander Bank filed a complaint against the Company in the Circuit Court, Fourth Judicial Circuit in and for Duval County, Florida, seeking damages of $194,181 plus interest, costs and attorney’s fees for breach of a guaranty of certain obligations of Ritz Aviation, LLC (“Ritz Aviation”) under a promissory note executed by Ritz Aviation in July 2005. During the Company’s fourth fiscal quarter of 2016, Santander Bank informed the Company that certain assets of Ritz Aviation had been sold for $82,642 and that the proceeds from the sale were applied towards the balance of the damages being sought, resulting in an outstanding balance of damages sought of $111,539. The outstanding balance of damages sought was reflected in accrued legal contingency at December 31, 2018 and 2017. Interest expense in the amount of $7,829 accrued on the outstanding balance of the accrued legal contingency during the years ended December 31, 2018 and 2017. The interest expense was credited to accrued legal contingency. A total of $41,638 and $33,809 of accrued interest, and $10,586 of other expenses (excluding legal fees), were outstanding at December 31, 2018 and 2017, respectively, resulting in an aggregate potential loss of $163,764 and $155,935 at December 31, 2018 and 2017, respectively. The potential losses of $163,764 and $155,935 were reflected in accrued legal contingency at December 31, 2018 and 2017, respectively. This case is currently pending. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 19. Segment Reporting The Company has two reportable segments, which are Company-owned restaurants and franchise operations. Company-Owned Restaurants Company-owned restaurants consist of several brands that are aggregated into one reportable segment because of the nature of the products and services, the production processes, the customers, the methods used to distribute the products and services, the nature of the regulatory environment, and store level profit margin for each of the brands are similar. The brands are Dick’s Wings and Grill, Fat Patty’s and Tilted Kilt Eatery and Pub. All Company-owned restaurants are casual dining restaurants. There were a total of nine and two company-owned restaurants at December 31, 2018 and 2017, respectively. Franchise Operations The Company only offers franchises for the Dick’s Wings brand. All franchised restaurants are casual dining restaurants. Franchises are sold in markets where expansion is deemed advantageous to the development of the Dick’s Wings brand and system of restaurants. The Company enters into franchise agreements with franchisees to build and operate restaurants using the Dicks Wings brand within a defined geographic area. The agreements have a 10-year term and can be renewed for one additional 10-year term. In exchange for royalty payments, advertising funds, franchise fees and area development fees, the Company provides the franchisees with the use of its Dick’s Wings trademarks and Dick’s Wings system, which includes uniform operating procedures, standards for consistency and quality of products, technical knowledge, and procedures for accounting, inventory control and management. The Company also provides franchisees with assistance with site selection, prototypical architectural plans, interior and exterior design and layout, training, marketing and sales techniques, and restaurant openings. Franchisees generally remit royalty payments weekly for the prior week’s sales. Franchise fees and area development fees are paid upon the signing of the related franchise agreements. Franchisees are required to operate their restaurants in compliance with their franchise agreements, which includes adherence to operating and quality control standards, procedures and specifications established by the Company. Franchisees are evaluated regularly by the Company for compliance with their franchise agreements through the use of periodic, unannounced, on-site inspections and standard evaluation reports. The Company is not required to provide loans, leases, or guarantees to franchisees or the franchisees’ employees and vendors. If a franchisee becomes financially distressed, the Company is not required to provide financial assistance. If financial distress leads to insolvency of the franchisee or the filing of a petition by or against the franchisee under bankruptcy laws, the Company has the right, but not the obligation, to acquire the franchise at fair value as determined by an independent appraiser selected by the Company. There were a total of 19 and 20 franchised restaurants at December 31, 2018 and 2017, respectively. Segment Financial Information Information on segments and a reconciliation of income from operations to net (loss) / income is as follows: Year Ended December 31, 2018 Year Ended December 31, 2017 Revenue Company-owned restaurants $ 8,374,022 $ 3,424,865 Franchise operations 1,126,515 832,712 Total revenue $ 9,500,537 $ 4,257,577 Net (Loss) / Income Company-owned restaurants $ 174,398 $ 234,080 Franchise operations 733,696 773,876 Total income from operations 908,094 1,007,956 Corporate and unallocated expenses (1,190,577 ) (663,216 ) Net (loss) / income $ (282,483 ) $ 344,740 Depreciation and Amortization Company-owned restaurants $ 251,633 $ 17,180 Franchise operations — — Corporate 1,281 — Total $ 252,914 $ 17,180 Capital Expenditures Company-owned restaurants $ 12,658,385 $ 35,196 Franchise operations — — Corporate 32,917 — Total $ 12,691,302 $ 35,196 |
Restatement of Previously Issue
Restatement of Previously Issued Consolidated Financial Statements | 12 Months Ended |
Dec. 31, 2018 | |
Previously Restated Financial Information [Abstract] | |
Restatement of Previously Issued Consolidated Financial Statements | Note 20. Restatement of Previously Issued Consolidated Financial Statements The Company is restating its audited consolidated financial statements for the year ended December 31, 2017 to correct an error related to the manner by which it recorded $188,086 of food discounts provided to customers and complimentary meals provided to employees. The Company recorded each of these items as an increase to restaurant operating costs – other operating expenses rather than as a reduction to restaurant sales on its consolidated statements of operations. As a result, restaurant sales and restaurant operating costs – other operating expenses were each overstated by $188,086 during the year ended December 31, 2017. The Company has restated its audited consolidated financial statements for the year ended December 31, 2017 for the sole purpose of reducing restaurant sales and restaurant operating costs – other operating expenses by $188,086. The impact of the restatement on the Company’s consolidated statement of operations for the year ended December 31, 2017 is presented below. The restatement did not have any impact on the Company’s consolidated balance sheet and statement of cash flows as of and for the year ended December 31, 2017. For the Year Ended December 31, 2017 Consolidated Statement of Operations: As Previously Reported Adjustments As Restated Restaurant sales $ 3,612,951 $ (188,086 ) $ 3,424,865 Revenue 4,445,663 (188,086 ) 4,257,577 Restaurant operating costs – other operating expenses (779,644 ) 188,086 (591,558 ) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 21. Subsequent Events On January 1, 2019, Seenu G. Kasturi earned 10,706 shares of the Company’s common stock pursuant to the terms of his employment agreement with the Company. On January 2, 2019, the Company appointed Seenu G. Kasturi as its Chief Executive Officer. As a result of the appointment, Mr. Kasturi now serves as the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the Company’s board of directors. In connection therewith, on January 2, 2019, Mr. Kasturi resigned as the Company’s President and Richard W. Akam resigned as the Company’s Chief Executive Officer. Mr. Akam will continue to serve as the Company’s Chief Operating Officer and Secretary. On January 2, 2019, the Company entered into an amended and restated employment agreement with Mr. Kasturi to serve as the Chief Executive Officer and Chief Financial Officer of the Company. The agreement is for an initial term of three years with automatic one-year renewals thereafter unless earlier terminated or not renewed as provided therein. Under the terms of the agreement, Mr. Kasturi will be paid an initial annual base salary in the amount of $350,000. Mr. Kasturi will be eligible to receive increases in salary on January 1 st Pursuant to the terms of the new employment agreement, the Company entered into a restricted stock award agreement with Mr. Kasturi pursuant to which the Company granted 390,000 shares of the Company’s common stock to Mr. Kasturi. The shares vest in accordance with the following schedule: (i) 130,000 shares on March 31, 2019; (ii) 130,000 shares on March 31, 2020; and (iii) 130,000 shares on March 31, 2021. Also on January 2, 2019, the Company entered into a Second Amendment to Employment Agreement with Richard W. Akam pursuant to which Mr. Akam resigned as the Company Chief Executive Officer but retained his positions as the Company’s Chief Operating Officer and Secretary. On January 29, 2019, the Company commenced a private offering of up to 5,000,000 units, each unit comprised of one share of common stock and one warrant to purchase one share of common stock, at a purchase price of $1.40 per unit. Each warrant is exercisable for a term of five years at an exercise price of $1.55 per share, subject to adjustment. The units are being offered without registration under the Securities Act of 1933, as amended (“Securities Act”), solely to persons who qualify as accredited investors, as that term is defined in Rule 501 of Regulation D under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated thereunder. The Company retained Maxim Group, LLC to serve as its placement agent for the offering. The Company agreed to pay the placement agent a placement fee equal to 7% of the aggregate gross proceeds raised in the offering and warrants exercisable for a term of five years to purchase 4% of the number of shares of common stock included in the units sold in the offering at an exercise price of $1.55 per share. The offering may be increased by up to an additional $1,000,000 at the mutual discretion of the Company and the placement agent. The Offering will terminate on March 31, 2019, unless extended by the Company and the placement agent to a date not later than May 31, 2019. The initial closing of the offering is conditioned, among other things, on the Company’s acceptance of subscriptions for at least $500,000 of units and the closing of the Company’s agreement to purchase all of the membership interests in SDA Holdings. Net proceeds, if any, from the Offering will be used to fund the deferred portion of the purchase price for the Company’s acquisition of Fat Patty’s, future payments to the persons that owned Tilted Kilt prior to SDA Holdings, and the repayment of the loan made by Seenu G. Kasturi to help fund the acquisitions of Fat Patty’s and Tilted Kilt, and the balance for general corporate purposes. On March 25, 2019, the Company experienced a fire at its Fat Patty's restaurant located at 5156 State Route 34 in Hurricane, West Virginia. The Company has not yet determined the extent of the damage or when the restaurant will reopen. The Company maintains insurance on the restaurant, but does not yet know how much, if any, insurance proceeds it will receive in connection with the fire. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Restatement | Restatement The Company has restated its previously issued consolidated statement of operations for the year ended December 31, 2017. The impact of the restatement is more specifically described herein under Note 20. Restatement of Previously Issued Consolidated Financial Statements |
Basis of Presentation | Basis of Presentation The Company’s consolidated financial statements have been prepared using GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. All intercompany accounts and transactions were eliminated in consolidation. |
Going Concern | Going Concern The company concluded that facts existed that created an uncertainty about the Company’s ability to continue as a going concern as of December 31, 2016. |
Estimates | Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain amounts in the Company’s consolidated financial statements for the 2017 fiscal year have been reclassified to conform to the 2018 fiscal year presentation. These reclassifications did not result in any change to the previously reported total assets, net income or stockholders’ deficit. |
Segment Disclosure | Segment Disclosure The Company has both Company-owned restaurants and franchised restaurants Segment Reporting |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less on the date of purchase to be cash equivalents in accordance with ASC Topic 305, Cash and Cash Equivalents |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded in accordance with ASC Topic 310, Receivables primarily of Accounts receivable, net of the allowance for doubtful accounts, represents the estimated net realizable value of the Company’s accounts receivable. Provisions for doubtful accounts are recorded based on historical collection experience, the age of the receivables and current economic conditions. The accounts receivable balances at December 31, 2018 and 2017 were comprised primarily of credit card sales by Company-owned restaurants, royalties due from the Company’s franchisees, and sales proceeds due from the concessionaire of the Company’s concessions stands, all of which the Company collected in full in January 2019 and 2018, respectively. Accordingly, the allowance for doubtful accounts was zero at December 31, 2018 and 2017. |
Other Receivables | Other Receivables Other receivables was comprised primarily of receipts from credit card sales by Company-owned Fat Patty’s restaurants that occurred after the Company completed the acquisition of Fat Patty’s that were held by the former owner of Fat Patty’s, all of which are expected to be collected in full by the Company during the next 12 months. |
Inventory | Inventory Inventory consists primarily of food and beverage products and is accounted for at the lower of cost or net realizable value using the first in, first out method of inventory valuation in accordance with ASC Topic 330, Inventory |
Intangible Assets, Net | Intangible Assets, Net The Company acquired various intangible assets in connection with the acquisition of Fat Patty’s. The intangible assets were comprised of a tradename and a non-compete agreement. The Company amortizes the non-compete agreement on a straight-line basis over the expected period of benefit, which is five years. The tradename has an indefinite life and is not subject to amortization but tested for impairment on an annual basis. The Company recognized $2,275 of amortization expense for the non-compete agreement during the year ended December 31, 2018. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment is recorded at cost, less accumulated depreciation, in accordance with ASC Topic 360, Property, Plant and Equipment |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets for impairment at least quarterly or whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable in accordance with ASC 360. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the individual restaurant level. The Company evaluates the recoverability of a restaurant’s long-lived assets, including buildings, intangibles, leasehold improvements, furniture, fixtures, and equipment over the remaining life of the primary asset in the asset group, after considering the potential impact of planned operational improvements, marketing programs, and anticipated changes in the trade area. In determining future cash flows, significant estimates are made by management with respect to future operating results for each restaurant over the remaining life of the primary asset in the asset group. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset carrying amount exceeds its fair value based on the Company’s estimate of discounted future cash flows. The Company accounts for exit or disposal activities, including restaurant closures, in accordance with ASC Topic 420, Exit or Disposal Cost Obligations |
Financial Instruments | Financial Instruments The Company accounts for its financial instruments in accordance with ASC Topic 825, Financial Instruments |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in the Company’s principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In accordance with ASC Topic 820, Fair Value Measurements and Disclosures The levels of fair value hierarchy are: Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date; Level 2: Observable inputs other than quoted prices included in Level 1, such as: (i) quoted prices for similar assets and liabilities in active markets, (ii) quoted prices for identical or similar assets and liabilities in markets that are not active, and (iii) other inputs that are observable or can be corroborated by observable market data; and Level 3: Unobservable inputs for which there is little or no market data available. A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. In contrast, the Company considers unobservable data to be data that reflects the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. |
General Advertising Fund | General Advertising Fund The Company has established a general advertising fund that it uses to pay for advertising costs, sales promotions, market research and other support functions intended to maximize general public recognition and acceptance of the Dick’s Wings franchise. Company-owned and franchised restaurants are required to contribute at least 1%, but not more than 2%, of their gross revenue to the Company’s general advertising fund. Prior to January 1, 2018, contributions made by franchisees to the general advertising fund and marketing and advertising expenses paid by the general advertising fund were not recognized as revenue and expenses. They instead constituted agency transactions. These contributions were recorded as a liability against which specific costs were charged during the year ended December 31, 2017. The Company accounts for cash and cash equivalents held by the general advertising fund as restricted cash on its consolidated balance sheets. The restricted cash of this fund is classified as current if it is expected to be utilized to fund short-term obligations of the general advertising fund. The Company did not have any restricted cash at December 31, 2018 or 2017. Contributions made by franchisees to the general advertising fund and marketing and advertising expenses paid by the general advertising fund were recognized as revenue and expenses during the year ended December 31, 2018. |
Other Payables | Other Payables Other payables was comprised primarily of accounts payable owed to the former owner of Fat Patty’s for alcohol and other items purchased by him in connection with the operation of the concept. |
Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted the provisions of ASC Topic 606, Revenue From Contracts With Customers The Company adopted this new guidance effective the first day of fiscal year 2018, using the modified retrospective method of adoption. Under this method, the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative period has not been adjusted and continues to be reported under the previous revenue recognition guidance. The details of the significant changes and quantitative impact of the changes are discussed below. Franchise Fees ASC 606 impacted the timing of recognition of franchise fees. Under previous guidance, these fees were typically recognized upon the opening of restaurants. Under ASC 606, the fees are deferred and recognized as revenue over the term of the individual franchise agreements. The effect of the required deferral of fees received in a given year will be mitigated by the recognition of revenue from fees retrospectively deferred from prior years. As a result of the adoption of ASC 606, the Company recognized deferred franchise fees in the amount of $196,478 on its consolidated balance sheet as of January 1, 2018 and an increase in its accumulated deficit by the same amount on that date. The Company recognized a total of $131,244 of deferred franchise fees as income during the year ended December 31, 2018. Accordingly, the carrying value of the Company’s deferred franchised fees was $65,234 at December 31, 2018. Advertising Funds ASC 606 also impacted the accounting for transactions related to the Company’s general advertising fund. Under previous guidance, franchisee contributions to and expenditures by the fund were not included in the Company’s consolidated financial statements. Under ASC 606, the Company records contributions to and expenditures by the fund as revenue and expenses within the Company’s consolidated financial statements. The Company recognized contributions to and expenditures by the fund of $189,362 during the year ended December 31, 2018. Gift Card Funds Additionally, ASC 606 impacted the accounting for transactions related to the Company’s gift card program. Under previous guidance, estimated breakage income on gift cards was deferred until it was deemed remote that the unused gift card balance would be redeemed. Under ASC 606, breakage income on gift cards is recognized as gift cards are utilized. The effect of this change on the Company’s consolidated financial statements was negligible. Impact on Financial Statements The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated financial statements as of and for the year ended December 31, 2018: Adjustments As Reported Franchise Fees Advertising Funds Balances Without Adoption Consolidated Balance Sheet Deferred franchise fees $ 13,718 $ (13,718 ) $ — $ — Total current liabilities 4,082,140 (13,718 ) — 4,068,422 Deferred franchise fees, net of current portion 51,516 (51,516 ) — — Total liabilities 15,343,802 (51,516 ) — 15,292,286 Accumulated deficit (5,247,553 ) 65,234 — (5,182,319 ) Total stockholders’ deficit (670,465 ) 65,234 — (605,231 ) Consolidated Statement of Operations Franchise and other revenue $ 922,124 $ (84,454 ) $ (156,796 ) $ 680,874 Franchise and other revenue – related party 204,391 (46,790 ) (32,566 ) 125,035 Total revenue 9,500,537 (131,244 ) (189,362 ) 9,179,931 General and administrative expenses 718,563 — (189,362 ) 529,201 Total operating expenses 10,279,181 — (189,362 ) 10,089,819 Loss from operations (778,644 ) (131,244 ) — (909,888 ) Net loss (282,483 ) (131,244 ) — (413,727 ) Consolidated Statement of Cash Flows Cash flows from operating activities: Net loss $ (282,483 ) $ (131,244 ) $ — $ (413,727 ) Changes in operating assets and liabilities: Deferred franchise fees (131,244 ) 131,244 — — Disaggregation of Revenue The following table disaggregate revenue by primary geographical market and source: Year Ended December 31, 2018 Year Ended December 31, 2017 Primary Geographic Markets Florida $ 5,011,328 $ 4,057,755 Georgia 504,983 199,822 Kentucky 856,981 — Louisiana 185,742 — West Virginia 2,941,503 — Total revenue $ 9,500,537 $ 4,257,577 Sources of Revenue Restaurant sales $ 8,374,022 $ 3,424,865 Royalties 787,189 829,069 Franchise fees 131,244 — Advertising fund fees 189,362 — Other revenue 18,720 3,643 Total revenue $ 9,500,537 $ 4,257,577 Contract Balances The following table presents changes in deferred franchise fees as of and for the year ended December 31, 2018: Total Liabilities Deferred franchise fees at January 1, 2018 $ 196,478 Revenue recognized during the period (131,244 ) New deferrals due to cash received — Deferred franchise fees at December 31, 2018 $ 65,234 Anticipated Future Recognition of Deferred Franchise Fees The following table presents the estimated franchise fees to be recognized in the future related to performance obligations that were unsatisfied at December 31, 2018: Year Franchise Fees Recognized 2019 $ 13,718 2020 12,000 2021 10,926 2022 9,000 2023 6,637 Thereafter 12,953 Total $ 65,234 |
Payments Received from Vendors | Payments Received From Vendors Vendor allowances include allowances and other funds that the Company receives from vendors. Certain of these funds are determined based on various quantitative contract terms. The Company also receives vendor allowances from certain manufacturers and distributors calculated based upon purchases made by franchisees. Vendor allowances are not recognized as revenue. Instead, they are recognized as a reduction in costs. The Company generally receives payment from vendors approximately 30 days from the end of a month for that month’s purchases. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the fair value recognition provisions of ASC Topic 718, Compensation – Stock Compensation The Company accounts for non-employee stock-based compensation in accordance with ASC 718 and ASC Topic 505, Equity The Company uses the Black-Scholes pricing model to determine the fair value of the stock-based compensation that it grants to employees and non-employees. The Black-Scholes pricing model takes into consideration such factors as the estimated term of the securities, the conversion or exercise price of the securities, the volatility of the price of the Company’s common stock, interest rates, and the probability that the securities will be converted or exercised to determine the fair value of the securities. The selection of these criteria requires management’s judgment and may impact the Company’s net income or loss. The computation of volatility is intended to produce a volatility value that is representative of the Company’s expectations about the future volatility of the price of its common stock over an expected term. The Company used its share price history to determine volatility and cannot predict what the price of its shares of common stock will be in the future. As a result, the volatility value that the Company calculated may differ from the actual volatility of the price of its shares of common stock in the future. |
Operating Leases | Operating Leases Rent expense for leases that contain scheduled rent increases is recognized on a straight-line basis over the lease term, including cancelable option periods where failure to exercise such options would result in an economic penalty such that the renewal appears reasonably assured. The straight-line rent calculation and rent expense includes the rent holiday period, which is the period of time between taking control of a leased site and the rent commencement date. The amount by which straight-line rent exceeds actual lease payment requirements in the early years of the lease is accrued as deferred rent liability and reduced in later years when the actual cash payment requirements exceed the straight-line expense. Contingent rents are generally amounts due as a result of sales in excess of amounts stipulated in certain restaurant leases and are included in rent expense as they are incurred. Landlord contributions are recorded when received as a deferred rent liability and amortized as a reduction of rent expense on a straight-line basis over the lease term. |
Marketing and Advertising | Marketing and Advertising Contributions to the national advertising fund related to Company-owned restaurants are expensed as contributed and local advertising costs for Company-owned restaurants are expensed as incurred. All other marketing and advertising costs are expensed as incurred. The Company incurred $423,911 and $90,120 for marketing and advertising costs during the years ended December 31, 2018 and 2017, respectively. |
Start-Up Costs | Start-Up Costs Start-up costs consists of costs associated with the opening of new Company-owned restaurants and varies based on the number of new locations opening and under construction. These costs are expensed as incurred in accordance with ASC Topic 720, Other Expenses |
Sales Taxes | Sales Taxes Sales taxes collected from customers are excluded from revenue. Sales taxes payable are included in accrued expenses until the taxes are remitted to the appropriate taxing authorities in accordance with ASC Topic 450, Contingencies |
Income Taxes | Income Taxes The Company uses the liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes Net deferred tax assets were comprised of the following at December 31, 2018 and 2017, respectively: December 31, 2018 December 31, 2017 Deferred tax assets: Net operating loss carryforwards $ 644,568 $ 527,100 Accruals 93,247 65,260 Deferred tax liabilities: Gain on bargain purchase (156,624 ) — Valuation allowance (581,191 ) (592,360 ) Net deferred tax assets $ — $ — The Company had net operating loss carry-forwards of approximately $2,568,000 and $2,100,000 at December 31, 2018 and 2017, respectively, that may be offset against future taxable income. No tax benefit has been reported in the consolidated financial statements for the Company’s 2018 and 2017 fiscal years because the potential tax benefit is offset by a valuation allowance of the same amount. The Company had no uncertain tax positions at December 31, 2018 and 2017. Effective January 1, 2018, the federal corporate income tax rate was decreased from 34% to 21%. The effect of this change on deferred taxes and the valuation allowance at December 31, 2017 was $244,147. In connection with the completion and filing of its income tax return with the Internal Revenue Service, the Company’s net operating loss carry-forward changed, resulting in an increase to deferred taxes and the valuation allowance of $77,097, bringing the total effect of the change on deferred taxes and the valuation allowance to 321,244 at December 31, 2017. The valuation allowance as of December 31, 2018 and 2017 includes $82,753 and $105,629, respectively, of net operating loss carry forwards that relate to stock compensation expense for income tax reporting purposes that upon realization, would be recorded as additional paid-in capital. The valuation allowance reduces deferred tax assets to an amount that management believes will more likely than not be realized. A reconciliation of the difference between the provision for income taxes and income taxes at the statutory U.S. federal income tax rate for the years ended December 31, 2018 and 2017 is as follows: December 31, 2018 December 31, 2017 Income tax provision at statutory rate $ (59,321 ) $ 123,612 State income taxes (11,582 ) 14,906 Stock compensation expense 82,753 105,629 Effect of change in federal tax rate — 244,147 Other — 11,904 Return to provision net operating loss adjustment — 77,097 Change in valuation allowance (11,850 ) (577,295 ) Net tax provision $ — $ — Utilization of net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations contained in the Internal Revenue Code of 1986, as amended, as well as similar state and foreign provisions. These ownership changes may limit the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income and tax, respectively. On July 31, 2017, Seenu G. Kasturi, who on December 31, 2018 served as the Company’s President, Chief Financial Officer and Chairman of its board of directors, purchased 2,647,144 shares of the Company’s common stock, which represented approximately 38.4% of the outstanding shares of the Company’s common stock on that date, from William D. Leopold. This transaction has been deemed to have resulted in a change in ownership of the Company pursuant to Internal Revenue Code Section 382. As a result, the Company can utilize up to $120,000 of pre-ownership change net operating loss carryforwards each year. Subsequent ownership changes could further affect the limitation in future years. These annual limitation provisions may result in the expiration of certain net operating losses and credits before utilization. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases Leases In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) The Company reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to the Company’s operations or that no material effect is expected on the Company’s consolidated financial statements as a result of future adoption. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Consolidated Financial Statements | The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated financial statements as of and for the year ended December 31, 2018: Adjustments As Reported Franchise Fees Advertising Funds Balances Without Adoption Consolidated Balance Sheet Deferred franchise fees $ 13,718 $ (13,718 ) $ — $ — Total current liabilities 4,082,140 (13,718 ) — 4,068,422 Deferred franchise fees, net of current portion 51,516 (51,516 ) — — Total liabilities 15,343,802 (51,516 ) — 15,292,286 Accumulated deficit (5,247,553 ) 65,234 — (5,182,319 ) Total stockholders’ deficit (670,465 ) 65,234 — (605,231 ) Consolidated Statement of Operations Franchise and other revenue $ 922,124 $ (84,454 ) $ (156,796 ) $ 680,874 Franchise and other revenue – related party 204,391 (46,790 ) (32,566 ) 125,035 Total revenue 9,500,537 (131,244 ) (189,362 ) 9,179,931 General and administrative expenses 718,563 — (189,362 ) 529,201 Total operating expenses 10,279,181 — (189,362 ) 10,089,819 Loss from operations (778,644 ) (131,244 ) — (909,888 ) Net loss (282,483 ) (131,244 ) — (413,727 ) Consolidated Statement of Cash Flows Cash flows from operating activities: Net loss $ (282,483 ) $ (131,244 ) $ — $ (413,727 ) Changes in operating assets and liabilities: Deferred franchise fees (131,244 ) 131,244 — — |
Schedule of Disaggregation of Revenue | The following table disaggregate revenue by primary geographical market and source: Year Ended December 31, 2018 Year Ended December 31, 2017 Primary Geographic Markets Florida $ 5,011,328 $ 4,057,755 Georgia 504,983 199,822 Kentucky 856,981 — Louisiana 185,742 — West Virginia 2,941,503 — Total revenue $ 9,500,537 $ 4,257,577 Sources of Revenue Restaurant sales $ 8,374,022 $ 3,424,865 Royalties 787,189 829,069 Franchise fees 131,244 — Advertising fund fees 189,362 — Other revenue 18,720 3,643 Total revenue $ 9,500,537 $ 4,257,577 |
Schedule of Deferred Franchise Fees Under Contract Balances | The following table presents changes in deferred franchise fees as of and for the year ended December 31, 2018: Total Liabilities Deferred franchise fees at January 1, 2018 $ 196,478 Revenue recognized during the period (131,244 ) New deferrals due to cash received — Deferred franchise fees at December 31, 2018 $ 65,234 |
Schedule of Estimated Franchise Fees to be Recognized in the Future Related to Performance Obligations | The following table presents the estimated franchise fees to be recognized in the future related to performance obligations that were unsatisfied at December 31, 2018: Year Franchise Fees Recognized 2019 $ 13,718 2020 12,000 2021 10,926 2022 9,000 2023 6,637 Thereafter 12,953 Total $ 65,234 |
Schedule of Net Deferred Tax Assets | Net deferred tax assets were comprised of the following at December 31, 2018 and 2017, respectively: December 31, 2018 December 31, 2017 Deferred tax assets: Net operating loss carryforwards $ 644,568 $ 527,100 Accruals 93,247 65,260 Deferred tax liabilities: Gain on bargain purchase (156,624 ) — Valuation allowance (581,191 ) (592,360 ) Net deferred tax assets $ — $ — |
Schedule of Provision for Income Taxes Reconciliation | A reconciliation of the difference between the provision for income taxes and income taxes at the statutory U.S. federal income tax rate for the years ended December 31, 2018 and 2017 is as follows: December 31, 2018 December 31, 2017 Income tax provision at statutory rate $ (59,321 ) $ 123,612 State income taxes (11,582 ) 14,906 Stock compensation expense 82,753 105,629 Effect of change in federal tax rate — 244,147 Other — 11,904 Return to provision net operating loss adjustment — 77,097 Change in valuation allowance (11,850 ) (577,295 ) Net tax provision $ — $ — |
Acquisition of Fat Patty's (Tab
Acquisition of Fat Patty's (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | The assets acquired and liabilities assumed were comprised of the following: Cash $ 7,100 Inventory 91,424 Intangible assets 788,840 Equipment 614,295 Total assets acquired 1,501,659 Gift card liabilities (24,707 ) Total liabilities assumed (24,707 ) Gain on bargain purchase (624,952 ) Net assets acquired with note payable and deferred compensation liability $ 852,000 |
Schedule of Pro Forma Financial Information | The following table summarizes certain financial information for the years ended December 31, 2018 and 2017 contained in the Company’s Year Ended December 31, 2018 (Unaudited) Year Ended December 31, 2017 (Unaudited) Revenue $ 17,352,358 $ 15,927,114 Income from continuing operations 1,024,359 661,150 Net income 1,520,520 1,090,504 Net income per share – basic $ 0.23 $ 0.16 Net income per share – fully diluted $ 0.22 $ 0.16 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory was comprised of the following at December 31, 2018 and 2017, respectively: December 31, 2018 December 31, 2017 Food $ 120,426 $ 23,987 Beverages 90,599 21,430 Total $ 211,025 $ 45,417 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property and equipment, including capital lease assets, was comprised of the following at December 31, 2018 and 2017, respectively: December 31, 2018 December 31, 2017 Land, buildings and improvements $ 11,500,000 $ — Leasehold improvements 323,500 69,472 Furniture, fixtures and equipment 1,021,735 78,621 Subtotal 12,845,235 148,093 Less: accumulated depreciation (307,733 ) (48,979 ) Total $ 12,537,502 $ 99,114 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Schedule of Future Amortization Expense Recognized from Intangible Assets | The following table presents the future amortization expense to be recognized from the Company’s intangible assets at December 31, 2018: Year Amortization Expense to be 2019 $ 3,768 2020 3,768 2021 3,768 2022 3,768 2023 1,493 Thereafter — Total $ 16,565 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Equity Investment in Seediv Within the Fair Value Hierarchy Utilized to Measure Fair Value on a Recurring Basis | The following table presents the contingent consideration recorded by the Company in connection with the acquisition of Seediv within the fair value hierarchy utilized to measure fair value on a recurring basis at December 31, 2018 and 2017, respectively: Level 1 Level 2 Level 3 December 31, 2018 $ — $ 55,356 $ — December 31, 2017 $ — $ 199,682 $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Rent Expenses Under Operating Leases | Rent expense under the operating leases was $341,124 and $262,350 during the years ended December 31, 2018 and 2017, respectively, and was comprised of the following: December 31, 2018 December 31, 2017 Straight-lined minimum rent $ 340,657 $ 194,770 Contingent rent 467 67,580 Total $ 341,124 $ 262,350 |
Summary of Future Minimum Annual Payments Under Operating Lease | The following table presents future minimum annual lease payments under the operating leases as of December 31, 2018: Year Future Minimum Lease Payments 2019 $ 466,314 2020 495,892 2021 521,565 2022 534,192 2023 417,344 Thereafter 2,976,232 Total $ 5,411,539 |
Schedule of Future Annual Minimum Lease Payments Recognized Under Capital Lease | The following table presents the future annual minimum lease payments to be recognized under the capital lease as of December 31, 2018: Year Future Minimum Lease Payments 2019 $ 881,990 2020 897,425 2021 913,130 2022 929,110 2023 945,369 Thereafter 15,924,033 Total 20,491,057 Less: portion representing interest (9,105,147 ) Present value of lease payments $ 11,385,910 |
Schedule of Future Obligations Under the Capital Lease | The following table presents the future obligations under the capital lease at December 31, 2018: Year Future Lease Obligations Recognized 2019 $ 175,764 2020 202,944 2021 232,148 2022 263,512 2023 297,180 Thereafter 10,214,362 Total $ 11,385,910 |
Schedule of Future Minimum Annual Payments Under the Sponsorship Agreement | The following table presents the future minimum annual payments under the sponsorship agreement as of December 31, 2018: Year Minimum Annual Payments 2019 $ 204,000 2020 208,080 2021 212,240 2022 216,490 2023 — Thereafter — Total $ 840,810 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Financial Information | Information on segments and a reconciliation of income from operations to net (loss) / income is as follows: Year Ended December 31, 2018 Year Ended December 31, 2017 Revenue Company-owned restaurants $ 8,374,022 $ 3,424,865 Franchise operations 1,126,515 832,712 Total revenue $ 9,500,537 $ 4,257,577 Net (Loss) / Income Company-owned restaurants $ 174,398 $ 234,080 Franchise operations 733,696 773,876 Total income from operations 908,094 1,007,956 Corporate and unallocated expenses (1,190,577 ) (663,216 ) Net (loss) / income $ (282,483 ) $ 344,740 Depreciation and Amortization Company-owned restaurants $ 251,633 $ 17,180 Franchise operations — — Corporate 1,281 — Total $ 252,914 $ 17,180 Capital Expenditures Company-owned restaurants $ 12,658,385 $ 35,196 Franchise operations — — Corporate 32,917 — Total $ 12,691,302 $ 35,196 |
Restatement of Previously Iss_2
Restatement of Previously Issued Consolidated Financial Statements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Previously Restated Financial Information [Abstract] | |
Schedule of Consolidated Statement of Operation | The restatement did not have any impact on the Company’s consolidated balance sheet and statement of cash flows as of and for the year ended December 31, 2017. For the Year Ended December 31, 2017 Consolidated Statement of Operations: As Previously Reported Adjustments As Restated Restaurant sales $ 3,612,951 $ (188,086 ) $ 3,424,865 Revenue 4,445,663 (188,086 ) 4,257,577 Restaurant operating costs – other operating expenses (779,644 ) 188,086 (591,558 ) |
Description of Business (Detail
Description of Business (Details Narrative) - Restaurants | Dec. 31, 2018 | Dec. 31, 2017 |
Number of restaurants | 19 | 20 |
Franchisees [Member] | ||
Number of restaurants | 17 | |
Florida [Member] | ||
Number of restaurants | 16 | |
Georgia [Member] | ||
Number of restaurants | 5 | |
Tilted Kilt Eatery and Pub [Member] | ||
Number of restaurants | 29 | |
Dick's Wings [Member] | ||
Number of restaurants | 21 |
Significant Accounting Polici_4
Significant Accounting Policies (Details Narrative) | Jul. 31, 2017USD ($)shares | Dec. 31, 2018USD ($)Restaurants | Dec. 31, 2017USD ($) |
Net (loss) / income | $ (282,483) | $ 344,740 | |
Cash flows from operations | 478,238 | 248,345 | |
Working capital deficit | $ 2,784,844 | ||
Number of segment for reporting | Restaurants | 2 | ||
Allowance for doubtful accounts | $ 0 | 0 | |
Amortization of intangible assets | $ 2,275 | ||
Description for general adverting fund | Company-owned and franchised restaurants are required to contribute at least 1%, but not more than 2%, of their gross revenue to the Company's general advertising fund. | ||
Deferred franchise fees | $ 65,234 | 196,478 | |
Revenue | (131,244) | ||
Advertising fund fees | 189,362 | ||
Marketing and advertising costs | 423,911 | 90,120 | |
Deferred tax assets valuation allowance | 581,191 | 592,360 | |
Net operating loss carry-forwards | 2,568,000 | 2,100,000 | |
Income tax benefit | |||
Uncertain tax positions | |||
Income tax, description | Effective January 1, 2018, the federal corporate income tax rate was decreased from 34% to 21%. | ||
Federal corporate income tax rate | 21.00% | ||
Change in effect of valuation allowances | 244,147 | ||
Stock compensation expense for income tax reporting purposes | 82,753 | 105,629 | |
Seenu G Kasturi [Member] | |||
Stock compensation expense for income tax reporting purposes | $ 2,647,144 | ||
Common stock issued for settlement of litigation (in shares) | shares | 38.4 | ||
Seenu G Kasturi [Member] | Maximum [Member] | |||
Percentage of common stock outstanding shares | 12000000.00% | ||
Internal Revenue Service (IRS) [Member] | |||
Deferred tax assets valuation allowance | 77,097 | ||
Change in effect of valuation allowances | $ 321,244 | ||
Non-compete Agreement [Member] | |||
Amortization of intangible assets | $ 2,275 |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Consolidated Financial Statements (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred franchise fees | $ 13,718 | ||
Total current liabilities | 4,082,140 | 1,235,150 | |
Deferred franchise fees, net of current portion | 51,516 | ||
Total liabilities | 15,343,802 | 1,235,150 | |
Accumulated deficit | (5,247,553) | (4,768,592) | |
Total stockholders' deficit | (670,465) | (676,924) | $ (1,148,904) |
Total revenue | 9,500,537 | 4,257,577 | |
General and administrative expenses | 718,563 | 354,950 | |
Total operating expenses | 10,279,181 | 4,342,191 | |
Loss from operations | (778,644) | (84,614) | |
Net loss | (282,483) | 344,740 | |
Deferred franchise fees | (131,244) | ||
Franchise and Other Revenue [Member] | |||
Total revenue | 922,124 | ||
Franchise and Other Revenue Related Party [Member] | |||
Total revenue | 204,391 | ||
Adjustments Franchise Fees [Member] | |||
Deferred franchise fees | (13,718) | ||
Total current liabilities | (13,718) | ||
Deferred franchise fees, net of current portion | (51,516) | ||
Total liabilities | (51,516) | ||
Accumulated deficit | 65,234 | ||
Total stockholders' deficit | 65,234 | ||
Total revenue | (131,244) | ||
General and administrative expenses | |||
Total operating expenses | |||
Loss from operations | (131,244) | ||
Net loss | (131,244) | ||
Deferred franchise fees | 131,244 | ||
Adjustments Franchise Fees [Member] | Franchise and Other Revenue [Member] | |||
Total revenue | (84,454) | ||
Adjustments Franchise Fees [Member] | Franchise and Other Revenue Related Party [Member] | |||
Total revenue | (46,790) | ||
Adjustments Advertising Funds [Member] | |||
Deferred franchise fees | |||
Total current liabilities | |||
Deferred franchise fees, net of current portion | |||
Total liabilities | |||
Accumulated deficit | |||
Total stockholders' deficit | |||
Total revenue | (189,362) | ||
General and administrative expenses | (189,362) | ||
Total operating expenses | (189,362) | ||
Loss from operations | |||
Net loss | |||
Deferred franchise fees | |||
Adjustments Advertising Funds [Member] | Franchise and Other Revenue [Member] | |||
Total revenue | (156,796) | ||
Adjustments Advertising Funds [Member] | Franchise and Other Revenue Related Party [Member] | |||
Total revenue | (32,566) | ||
Balances Without Adoption [Member] | |||
Deferred franchise fees | |||
Total current liabilities | 4,068,422 | ||
Deferred franchise fees, net of current portion | |||
Total liabilities | 15,292,286 | ||
Accumulated deficit | (5,182,319) | ||
Total stockholders' deficit | (605,231) | ||
Total revenue | 9,179,931 | ||
General and administrative expenses | 529,201 | ||
Total operating expenses | 10,089,819 | ||
Loss from operations | (909,888) | ||
Net loss | (413,727) | ||
Deferred franchise fees | |||
Balances Without Adoption [Member] | Franchise and Other Revenue [Member] | |||
Total revenue | 680,874 | ||
Balances Without Adoption [Member] | Franchise and Other Revenue Related Party [Member] | |||
Total revenue | $ 125,035 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Total revenue | $ 9,500,537 | $ 4,257,577 |
Restaurant Sales [Member] | ||
Total revenue | 8,374,022 | 3,424,865 |
Royalties [Member] | ||
Total revenue | 787,189 | 829,069 |
Franchise Fees [Member] | ||
Total revenue | 131,244 | |
Advertising Fund Fees [Member] | ||
Total revenue | 189,362 | |
Other Revenue [Member] | ||
Total revenue | 18,720 | 3,643 |
Florida [Member] | ||
Total revenue | 5,011,328 | 4,057,755 |
Georgia [Member] | ||
Total revenue | 504,983 | 199,822 |
Kentucky [Member] | ||
Total revenue | 856,981 | |
Louisiana [Member] | ||
Total revenue | 185,742 | |
West Virginia [Member] | ||
Total revenue | $ 2,941,503 |
Significant Accounting Polici_7
Significant Accounting Policies - Schedule of Deferred Franchise Fees Under Contract Balances (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Accounting Policies [Abstract] | |
Deferred franchise fees at January 1, 2018 | $ 196,478 |
Revenue recognized during the period | (131,244) |
New deferrals due to cash received | |
Deferred franchise fees at December 31, 2018 | $ 65,234 |
Significant Accounting Polici_8
Significant Accounting Policies - Schedule of Estimated Franchise Fees to be Recognized in the Future Related to Performance Obligations (Details) | Dec. 31, 2018USD ($) |
Accounting Policies [Abstract] | |
2019 | $ 13,718 |
2020 | 12,000 |
2021 | 10,926 |
2022 | 9,000 |
2023 | 6,637 |
Thereafter | 12,953 |
Total | $ 65,234 |
Significant Accounting Polici_9
Significant Accounting Policies - Schedule of Net Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Deferred tax assets: Net operating loss carryforwards | $ 644,568 | $ 527,100 |
Deferred tax assets: Accruals | 93,247 | 65,260 |
Deferred tax liabilities: Gain on bargain purchase | (156,624) | |
Valuation allowance | (581,191) | (592,360) |
Net deferred tax assets |
Significant Accounting Polic_10
Significant Accounting Policies - Schedule of Provision for Income Taxes Reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Income tax provision at statutory rate | $ (59,321) | $ 123,612 |
State income taxes | (11,582) | 14,906 |
Stock compensation expense | 82,753 | 105,629 |
Effect of change in federal tax rate | 244,147 | |
Other | 11,904 | |
Return to provision net operating loss adjustment | 77,097 | |
Change in valuation allowance | (11,850) | (577,295) |
Net tax provision |
Acquisition of Seediv (Details
Acquisition of Seediv (Details Narrative) - USD ($) | Dec. 19, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||
Payment agreed for membership interests | $ 852,000 | ||
Contingent consideration | 55,356 | $ 199,682 | |
Seediv, LLC [Member] | |||
Business Acquisition [Line Items] | |||
Payment agreed for membership interests | $ 600,000 | ||
Contingent consideration | 55,356 | 199,682 | |
Seediv, LLC [Member] | Mr. Kasturi [Member] | |||
Business Acquisition [Line Items] | |||
Contingent consideration | $ 20,897 | $ 144,326 | $ 199,682 |
Acquisition of Fat Patty's (Det
Acquisition of Fat Patty's (Details Narrative) - USD ($) | Aug. 30, 2018 | Aug. 03, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||
Net assets acquired by entity | $ 852,000 | |||
Fair value of the identifiable assets acquired and liabilities assumed | (24,707) | |||
Gain on bargain purchase option | 624,952 | |||
Revenue | 9,500,537 | 4,257,577 | ||
Net (loss) / income | (282,483) | $ 344,740 | ||
Fat Patty [Member] | ||||
Business Acquisition [Line Items] | ||||
Payments to sellers for assets | $ 12,352,000 | |||
Amount paid to sellers at closing of acquisition | 12,000,000 | |||
Additional amount paid within 10 days after asset acquisition closing date to seller | 40,000 | |||
Remaining amount to be paid to seller on first anniversary of closing of acquisition | 312,000 | |||
Net assets acquired by entity | 852,000 | |||
Acquisition - related transaction costs | 82,929 | |||
Fair value of the identifiable assets acquired and liabilities assumed | 1,476,952 | |||
Increase in purchase price of business | 624,952 | |||
Gain on bargain purchase option | 624,952 | |||
Revenue | 3,798,484 | |||
Net (loss) / income | $ 164,182 | |||
Fat Patty [Member] | Seenu G Kasturi [Member] | ||||
Business Acquisition [Line Items] | ||||
Proceeds from related party debt | $ 622,929 | |||
Interest rate per annum | 6.00% | |||
Common stock at a conversion rate | $ 1.36 | |||
Store Capital Acquisitions, LLC [Member] | Purchase And Sale Agreement [Member] | ||||
Business Acquisition [Line Items] | ||||
Proceeds from sale of real properties upon which restaurants acquired | 11,500,000 | |||
Ultimate purchase price of assets and properties | $ 852,000 | |||
Store Capital Acquisitions, LLC [Member] | Master Lease Agreement [Member] | ||||
Business Acquisition [Line Items] | ||||
Lease expires date | Aug. 31, 2038 | |||
Additional successive term of lease | 5 years | |||
Aggregate base annual rent | $ 876,875 | |||
Percentage of increase in additional rent | 1.75% |
Acquisition of Fat Patty's - Sc
Acquisition of Fat Patty's - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Combinations [Abstract] | ||
Cash | $ 7,100 | |
Inventory | 91,424 | |
Intangible assets | 788,840 | |
Equipment | 614,295 | |
Total assets acquired | 1,501,659 | |
Gift card liabilities | (24,707) | |
Total liabilities assumed | (24,707) | |
Gain on bargain purchase | (624,952) | |
Net assets acquired with note payable and deferred compensation liability | $ 852,000 |
Acquisition of Fat Patty's - _2
Acquisition of Fat Patty's - Schedule of Pro Forma Financial Information (Details) - Fat Patty [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | ||
Revenue | $ 17,352,358 | $ 15,927,114 |
Income from continuing operations | 1,024,359 | 661,150 |
Net income | $ 1,520,520 | $ 1,090,504 |
Net income per share - basic | $ 0.23 | $ 0.16 |
Net income per share - fully diluted | $ 0.22 | $ 0.16 |
Agreement to Acquire Tilted K_2
Agreement to Acquire Tilted Kilt (Details Narrative) - Seenu G Kasturi [Member] - USD ($) | Jul. 31, 2017 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||
Stock issued during period, shares | 38.4 | |
Membership Interest Purchase Agreement [Member] | SDA Holdings, LLC [Member] | ||
Business Acquisition [Line Items] | ||
Number of common stock for transaction | 718,563 | |
Proceeds from sale of debt or equity securities | $ 2,000,000 | |
Stock issued during period, shares | 666,667 | |
Number of common stock replace | 718,563 | |
Debt instrument principal amount | $ 2,500,000 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | ||
Total | $ 211,025 | $ 45,417 |
Food [Member] | ||
Inventory [Line Items] | ||
Total | 120,426 | 23,987 |
Beverages [Member] | ||
Inventory [Line Items] | ||
Total | $ 90,599 | $ 21,430 |
Property and Equipment, Net (De
Property and Equipment, Net (Detail Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 12,845,235 | $ 148,093 |
Depreciation expense | 252,914 | 17,180 |
Land, Buildings and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 11,500,000 | |
Assets acquired on the capital lease with related depreciation expense and accumulated depreciation | $ 98,324 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 12,845,235 | $ 148,093 |
Less: accumulated depreciation | (307,733) | (48,979) |
Total | 12,537,502 | 99,114 |
Land, Buildings and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 11,500,000 | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 323,500 | 69,472 |
Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 1,021,735 | $ 78,621 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Aug. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amount of Intangible assets | $ 786,565 | ||
Assembled workforce and non-compete agreement, amortization method | straight-line basis | ||
Assembled workforce and non-compete agreement, expected period | 5 years | ||
Amortization recognized | $ 2,275 | ||
Non-compete Agreement [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization recognized | $ 2,275 | ||
Fat Patty [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amount of Intangible assets | $ 788,840 | ||
Fat Patty [Member] | Non-compete Agreement [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amount of Intangible assets | 18,840 | ||
Trade Names [Member] | Fat Patty [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amount of Intangible assets | $ 770,000 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Future Amortization Expense Recognized from Intangible Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Total | $ 786,565 | |
Intangible Assets [Member] | ||
2019 | 3,768 | |
2020 | 3,768 | |
2021 | 3,768 | |
2022 | 3,768 | |
2023 | 1,493 | |
Thereafter | ||
Total | $ 16,565 |
Fair Value Measurements (Detail
Fair Value Measurements (Detail Narrative) - USD ($) | Sep. 30, 2017 | Dec. 19, 2016 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 20, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Contingent consideration | $ 55,356 | $ 199,682 | ||||
Acquisition of Seediv [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Contingent consideration | $ 20,897 | |||||
Additional compensation expense | 178,785 | |||||
Increase in contingent consideration | $ 199,682 | |||||
Seenu G Kasturi [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Percentage of ownership interest | 50.00% | 50.00% | 89.30% | |||
Sale of investment | $ 24,000 | |||||
Seenu G Kasturi [Member] | Employment Agreement [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Earnout payment | $ 144,326 | |||||
Seenu G Kasturi [Member] | Acquisition of Seediv [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Earnout payment | $ 199,682 | $ 144,326 | ||||
Utah Limited Liability [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Percentage of ownership interest | 50.00% | |||||
Net loss | $ 440,561 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Equity Investment in Seediv Within the Fair Value Hierarchy Utilized to Measure Fair Value on a Recurring Basis (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 55,356 | $ 199,682 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | ||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | 55,356 | 199,682 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration |
Notes Receivable (Details Narra
Notes Receivable (Details Narratives) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Oct. 31, 2017 | Sep. 30, 2016 | Jul. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2014 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Principal outstanding under loan current | $ 25 | |||||||
Interest accrued | ||||||||
Short term notes receivable | 2,967 | 28,522 | ||||||
Long term notes receivable | 2,553 | 5,106 | ||||||
Interest income | 715 | 2,340 | ||||||
Interest receivable | ||||||||
Promissory Notes [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Principal outstanding under loan current | 414 | 25,944 | ||||||
Debt instrument term | 2 years | 2 years | 2 years | |||||
Debt instrument interest rate | 5.00% | 5.00% | ||||||
Interest accrued | 715 | 1,925 | ||||||
Payment of interest | 2,763 | |||||||
Franchisees [Member] | Line of Credit Agreement [Member] | Maximum [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Aggregate original principal amount | $ 28,136 | |||||||
Franchisees [Member] | Second Line of Credit Agreement [Member] | Maximum [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Aggregate original principal amount | $ 25,000 | |||||||
Franchisees [Member] | Promissory Notes [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Aggregate original principal amount | $ 25,000 | |||||||
Unrelated Third Parties [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Notes receivable | 5,520 | 33,628 | ||||||
Notes Receivable [Member] | Franchisees [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Aggregate original principal amount | $ 6,329 | |||||||
Principal outstanding under loan current | 25 | |||||||
Notes Receivable One [Member] | Franchisees [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Aggregate original principal amount | $ 13,869 | |||||||
Principal outstanding under loan current | $ 13,318 | |||||||
Debt instrument interest rate | 5.00% | |||||||
Interest accrued | $ 415 | |||||||
Debt instrument maturity date | Nov. 15, 2018 | |||||||
Notes Receivable Two [Member] | Franchisees [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Aggregate original principal amount | $ 7,659 | |||||||
Principal outstanding under loan current | $ 5,106 | |||||||
Debt instrument maturity date | Dec. 1, 2020 |
Debt Obligations (Details Narra
Debt Obligations (Details Narrative) - USD ($) | Aug. 30, 2018 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 19, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2013 |
Debt Instrument [Line Items] | |||||||||
Revolving line of credit | |||||||||
Amortization of of discount | 9,548 | ||||||||
Capital lease obligation | 720,178 | 30,503 | |||||||
Secured Convertible Promissory Note [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument discount | $ 155,732 | 145,290 | |||||||
Amortization of of discount | 10,442 | ||||||||
Secured Convertible Promissory Note [Member] | Seenu G Kasturi [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Proceeds from related party debt | $ 622,929 | ||||||||
Promissory Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument interest rate | 5.00% | 5.00% | |||||||
Blue Victory Holdings, Inc [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | 61,721 | ||||||||
Revolving line of credit | $ 16,103 | ||||||||
Repayments of line of credit | 77,824 | ||||||||
Debt instrument face amount | 236,333 | $ 30,503 | |||||||
Debt instrument interest rate | 6.00% | ||||||||
Proceeds from related party debt | 277,707 | $ 372,049 | |||||||
Repayments of debt from related party | $ 71,877 | $ 341,546 | |||||||
Seediv, LLC [Member] | Promissory Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument face amount | $ 216,469 | $ 216,469 | |||||||
Debt instrument interest rate | 6.00% | ||||||||
Loan Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit facility interest rate | 6.00% | ||||||||
Loan Agreement [Member] | Blue Victory Holdings, Inc [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,000,000 | ||||||||
Loan Agreement [Member] | Blue Victory Holdings, Inc [Member] | Minimum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,000,000 | ||||||||
Loan Agreement [Member] | Blue Victory Holdings, Inc [Member] | Maximum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 50,000 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | Jul. 31, 2017 | Sep. 27, 2011 | Sep. 30, 2018 | Aug. 31, 2018 | Jun. 30, 2018 | May 31, 2018 | Jan. 31, 2018 | Aug. 31, 2017 | May 31, 2017 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Capital Stock [Line Items] | ||||||||||||
Class A common stock, shares authorized | 100,000,000 | 100,000,000 | ||||||||||
Class A common stock, par value | $ 0.01 | $ 0.01 | ||||||||||
Class A common stock, shares outstanding | 6,680,065 | 6,950,869 | ||||||||||
Series A convertible preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | |||||||||
Series A convertible preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||
Series A convertible preferred stock, shares outstanding | 449,581 | 0 | ||||||||||
Number of shares issued for services, value | $ 319,686 | $ 247,240 | ||||||||||
Stock based compensation | 329,688 | 247,240 | ||||||||||
Stock subscriptions payable | 15,453 | 26,853 | ||||||||||
Write-off of stock subscriptions payable | 150,000 | |||||||||||
Consulting fees | $ 796,473 | $ 407,512 | ||||||||||
Preferred stock description | Each share of Series A convertible preferred stock is entitled to 100 votes per share and is convertible into one share of the Company's common stock at a conversion price of $0.75 per share of common stock. | |||||||||||
Conversion price of common stock | $ 0.75 | |||||||||||
Number of stock option exercisable | 30,000 | |||||||||||
Maximum [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Class A common stock, shares outstanding | 6,974,008 | |||||||||||
Minimum [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Class A common stock, shares outstanding | 6,524,427 | |||||||||||
Common Stock [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Number of shares issued for services | 178,777 | 268,110 | ||||||||||
Number of shares issued for services, value | $ 1,788 | $ 2,681 | ||||||||||
Write-off of stock subscriptions payable | ||||||||||||
Maxim Group, LLC [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | 245,000 | 180,000 | ||||||||||
Agreement term | 1 year | 1 year | ||||||||||
Repayment of debt per month | $ 5,000 | |||||||||||
Stock issued during period, shares | 125,000 | 225,000 | ||||||||||
Number of shares issued, values | $ 7,500 | |||||||||||
Firm [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Number of shares issued for services | 1,500 | 3,500 | ||||||||||
Number of shares issued for services, value | $ 7,000 | $ 12,250 | ||||||||||
Stock based compensation | 11,685 | |||||||||||
Consultant [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Number of shares issued for services | 142,857 | |||||||||||
Number of shares issued for services, value | $ 150,000 | |||||||||||
Stock based compensation | $ 150,000 | |||||||||||
Stock subscriptions payable | 150,000 | |||||||||||
Stock issued during period, shares | 35,295 | |||||||||||
Consulting fees | $ 30,000 | |||||||||||
Non-Executive Employees [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | 2,338 | |||||||||||
Stock issued during period, shares | 2,750 | |||||||||||
Franchisees [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | 9,000 | 11,050 | ||||||||||
Stock issued during period, shares | 5,625 | 13,000 | ||||||||||
Seenu G Kasturi [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | 40,500 | |||||||||||
Stock issued during period, shares | 38.4 | |||||||||||
Seenu G Kasturi [Member] | Series A Convertible Preferred Stock [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock issued during period, shares | 449,581 | |||||||||||
Seenu G Kasturi [Member] | Employment Agreement [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | 40,647 | $ 13,353 | ||||||||||
Seenu G Kasturi [Member] | Employment Agreement [Member] | Common Stock [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | 13,353 | |||||||||||
Seenu G Kasturi [Member] | Securities Purchase Agreement [Member] | Common Stock [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock issued during period, shares | 449,581 | |||||||||||
Seenu G Kasturi [Member] | Securities Purchase Agreement [Member] | Series A Convertible Preferred Stock [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock issued during period, shares | 449,581 | |||||||||||
Employee [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | $ 6,254 | $ 10,002 | ||||||||||
Number of stock option exercisable | 30,000 | |||||||||||
Employee [Member] | May 15, 2021 [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock issued during period, shares | 20,000 | |||||||||||
Number of shares issued, values | $ 33,000 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Options and Warrants [Abstract] | ||
Number of stock option shares issued | ||
Number of stock option exercisable | 30,000 | |
Stock option exercise price | $ 1.49 | |
Number of stock option oustanding | ||
Warrants exercisable | ||
Warrants outstanding |
Stock Compensation Plans (Detai
Stock Compensation Plans (Details Narrative) - shares | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2014 | Aug. 31, 2011 | Dec. 31, 2018 | Dec. 31, 2017 | Aug. 18, 2011 | |
Number of common stock granted to employees, officers and directors of, and consultants and advisors | |||||
Stock Incentive Plan 2011 [Member] | |||||
Number of common stock granted to employees, officers and directors of, and consultants and advisors | 1,214,286 | ||||
Number of common stock available for issuance | 142,858 | 1,214,286 | |||
Stock Incentive Plan 2014 [Member] | |||||
Number of common stock granted to employees, officers and directors of, and consultants and advisors | 1,000,000 | ||||
Number of common stock available for issuance | 1,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Nov. 15, 2018USD ($) | Sep. 25, 2018USD ($) | May 01, 2018USD ($) | Dec. 31, 2017USD ($) | Apr. 01, 2017USD ($)ft² | Jan. 18, 2017USD ($) | Dec. 20, 2016USD ($)RentPeriod | Jul. 01, 2015USD ($) | Jan. 22, 2013USD ($)shares | Jan. 22, 2013USD ($) | Aug. 30, 2018USD ($) | Jan. 31, 2018USD ($) | Nov. 30, 2017USD ($) | Jul. 31, 2015USD ($) | Jan. 31, 2015USD ($) | May 31, 2014 | Oct. 31, 2013USD ($) | Jul. 31, 2013USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Aug. 19, 2013$ / shares |
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Labor | $ 2,801,867 | $ 1,159,026 | |||||||||||||||||||
Fixed monthly rent payment | 341,124 | 262,350 | |||||||||||||||||||
Monthly rent payments for two year | 495,892 | ||||||||||||||||||||
Monthly rent payments for three year | 521,565 | ||||||||||||||||||||
Capital lease obligation | $ 30,503 | 720,178 | 30,503 | ||||||||||||||||||
Short-term portion of capital lease obligation | 175,764 | ||||||||||||||||||||
Long-term portion of capital lease obligation | 11,210,146 | ||||||||||||||||||||
Property and equipment | 148,093 | 12,845,235 | 148,093 | ||||||||||||||||||
Future payment of lease | 11,385,910 | ||||||||||||||||||||
Interest expense | 178,201 | ||||||||||||||||||||
Accounts payable outstanding | 709,621 | 709,621 | |||||||||||||||||||
Gain loss on write off of accounts payable | 251,238 | ||||||||||||||||||||
More Than Five Year [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Accounts payable outstanding | 251,238 | 251,238 | |||||||||||||||||||
Land, Buildings and Improvements [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Property and equipment | 11,500,000 | ||||||||||||||||||||
Future payment of lease | 20,491,057 | ||||||||||||||||||||
Interest on lease | 9,105,147 | ||||||||||||||||||||
Assets acquired on the capital lease with related depreciation expense and accumulated depreciation | 98,324 | ||||||||||||||||||||
Dwg Acquisitions LLC [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Fixed monthly rent payment | $ 1,100 | ||||||||||||||||||||
Percentage increase in additional annual rent payment | 6.00% | ||||||||||||||||||||
Initial term of lease | 53 months | ||||||||||||||||||||
Additional term of lease | 60 months | ||||||||||||||||||||
DWAG Valdosta, LLC [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Percentage increase in additional annual rent payment | 6.00% | ||||||||||||||||||||
Annual gross sales on restaurant | $ 1,000,000 | ||||||||||||||||||||
Panama City Beach Dick's Wings Restaurant [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Fixed monthly rent payment | $ 3,000 | ||||||||||||||||||||
Corporate Headquarters [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Fixed monthly rent payment | $ 2,063 | $ 1,806 | |||||||||||||||||||
Lease expire date | Dec. 31, 2018 | Dec. 31, 2017 | |||||||||||||||||||
New Corporate Headquarters [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Fixed monthly rent payment | $ 4,000 | ||||||||||||||||||||
Master Lease [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Fixed monthly rent payment | $ 876,875 | ||||||||||||||||||||
Lease expire date | Aug. 31, 2038 | ||||||||||||||||||||
Lease arrangement, description | (i) 1.75%, or (ii) 1.25 times the change in the Consumer Price Index. | ||||||||||||||||||||
Capital lease obligation | $ 11,500,000 | 11,385,910 | |||||||||||||||||||
Short-term portion of capital lease obligation | 171,411 | ||||||||||||||||||||
Long-term portion of capital lease obligation | 11,214,499 | ||||||||||||||||||||
Employment Agreement [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Amount of common stock connection with employee agreement | $ 50,000 | ||||||||||||||||||||
Employment Agreement [Member] | Richard W. Akam [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Annual compensation | $ 150,000 | ||||||||||||||||||||
Term of agreement | 1 year | ||||||||||||||||||||
Amount of common stock connection with employee agreement | $ 50,000 | ||||||||||||||||||||
Amount of additional shares of common stock to be issued | $ 50,000 | ||||||||||||||||||||
Number of common stock issued in connection with employment agreement | shares | 71,429 | ||||||||||||||||||||
Additional renewal term of agreement | 1 year | ||||||||||||||||||||
Employment Agreement [Member] | Daniel Slone [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Annual base salary per value | $ / shares | $ 1 | ||||||||||||||||||||
Employment Agreement [Member] | Seenu G Kasturi [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Annual compensation | $ 80,000 | ||||||||||||||||||||
Initial annual base salary | 26,000 | ||||||||||||||||||||
Labor | $ 54,000 | ||||||||||||||||||||
Lease Agreement [Member] | Dwg Acquisitions LLC [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Fixed monthly rent payment | $ 7,035 | ||||||||||||||||||||
Lease expire date | Mar. 31, 2023 | ||||||||||||||||||||
Additional term of lease | 60 months | ||||||||||||||||||||
Area of square feet | ft² | 3,400 | ||||||||||||||||||||
Lease Agreement [Member] | Youngerman Circle Restaurant [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Fixed monthly rent payment | $ 10,000 | ||||||||||||||||||||
Initial term of lease | 20 years | 10 years | |||||||||||||||||||
Additional term of lease | 5 years | 1 year | |||||||||||||||||||
Initial base rent payment percentage of net sales | 7.50% | 7.00% | |||||||||||||||||||
Number of rent period per year | RentPeriod | 13 | ||||||||||||||||||||
Lease arrangement, description | The lease provides for rent payments to be made by the Company for each of 13 rent periods per year, with each rent period comprised of four weeks. The lease provides for an initial base rent payment equal to the greater of: (i) $10,000 per rent period, or (ii) 7.5% of the Youngerman Circle Restaurant's net sales for the applicable rent period. Commencing on the fifth (5th) anniversary and continuing every five years thereafter, the base rent will be equal to the sum of: (i) the average base rent previously in effect for the preceding five-year period, and (ii) the product of such previous average base rent multiplied by 7.5%. The lease has an initial term of 20 years and provides the Company with an option to extend the lease for two additional five-year periods. | ||||||||||||||||||||
Lease Agreement [Member] | DWAG Valdosta, LLC [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Initial term of lease | 5 years | 5 years | |||||||||||||||||||
Additional term of lease | 5 years | 5 years | |||||||||||||||||||
Monthly rent payments for two year | $ 3,333 | $ 3,333 | |||||||||||||||||||
Monthly rent payments for three year | $ 5,000 | $ 5,000 | |||||||||||||||||||
Lease Agreement [Member] | Panama City Beach Dick's Wings Restaurant [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Fixed monthly rent payment | $ 5,000 | ||||||||||||||||||||
Lease expire date | Jun. 30, 2018 | ||||||||||||||||||||
Percentage increase in additional annual rent payment | 6.00% | ||||||||||||||||||||
Initial term of lease | 3 years | ||||||||||||||||||||
Additional term of lease | 3 years | ||||||||||||||||||||
Annual gross sales on restaurant | $ 1,200,000 | ||||||||||||||||||||
Lease Agreement [Member] | Tallahassee Dick's Wings Restaurant [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Percentage increase in additional annual rent payment | 6.00% | ||||||||||||||||||||
Initial term of lease | 10 years | ||||||||||||||||||||
Additional term of lease | 5 years | ||||||||||||||||||||
Lease arrangement, description | DWAG has the right to terminate the lease at the end of the 42nd month of the initial term in the event if gross sales during the period commencing on the first day of the 25th month of the initial term and ending on the last day of the 36th month of the initial term are less than $1,400,000 | ||||||||||||||||||||
Annual gross sales on restaurant | $ 1,400,000 | ||||||||||||||||||||
Monthly rent payments for one year | |||||||||||||||||||||
Tenant improvement | $ 250,000 | ||||||||||||||||||||
Lease Agreement [Member] | Gonzalez Tilted Kilt Restaurant [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Fixed monthly rent payment | $ 12,000 | ||||||||||||||||||||
Initial term of lease | 10 years | ||||||||||||||||||||
Additional term of lease | 5 years | ||||||||||||||||||||
Increase to term lease | $ 17,600 | ||||||||||||||||||||
Sponsorship Agreement [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Monthly rent payments for two year | 208,080 | ||||||||||||||||||||
Monthly rent payments for three year | $ 212,240 | ||||||||||||||||||||
Sponsorship Agreement [Member] | Jacksonville Jaguars, LLC [Member] | |||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||
Lease expire date | Feb. 28, 2023 | ||||||||||||||||||||
Initial term of lease | 5 years | 3 years | |||||||||||||||||||
Additional term of lease | 2 years | ||||||||||||||||||||
Annual fees | $ 3,000 | $ 2,000 | |||||||||||||||||||
Annual fees during first year agreement | $ 200,000 | ||||||||||||||||||||
Annual fees increases from first year to last year agreement | 216,490 | ||||||||||||||||||||
Services fees during first year agreement | 35,000 | ||||||||||||||||||||
Services fees increases from first year to last year agreement | $ 37,890 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Rent Expenses Under Operating Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Straight-lined minimum rent | $ 340,657 | $ 194,770 |
Contingent rent | 467 | 67,580 |
Total | $ 341,124 | $ 262,350 |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Future Minimum Annual Payments Under Operating Lease (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 466,314 |
2020 | 495,892 |
2021 | 521,565 |
2022 | 534,192 |
2023 | 417,344 |
Thereafter | 2,976,232 |
Total | $ 5,411,539 |
Commitments and Contingencies_4
Commitments and Contingencies - Schedule of Future Annual Minimum Lease Payments Recognized Under Capital Lease (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 881,990 |
2020 | 897,425 |
2021 | 913,130 |
2022 | 929,110 |
2023 | 945,369 |
Thereafter | 15,924,033 |
Total | 20,491,057 |
Less: portion representing interest | (9,105,147) |
Present value of lease payments | $ 11,385,910 |
Commitments and Contingencies_5
Commitments and Contingencies - Schedule of Future Obligations Under the Capital Lease (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 175,764 |
2020 | 202,944 |
2021 | 232,148 |
2022 | 263,512 |
2023 | 297,180 |
Thereafter | 10,214,362 |
Total | $ 11,385,910 |
Commitments and Contingencies_6
Commitments and Contingencies - Schedule of Future Minimum Annual Payments Under the Sponsorship Agreement (Details) | Dec. 31, 2018USD ($) |
Loss Contingencies [Line Items] | |
2019 | $ 466,314 |
2020 | 495,892 |
2021 | 521,565 |
2022 | 534,192 |
2023 | 417,344 |
Thereafter | 2,976,232 |
Total | 5,411,539 |
Sponsorship Agreement [Member] | |
Loss Contingencies [Line Items] | |
2019 | 204,000 |
2020 | 208,080 |
2021 | 212,240 |
2022 | 216,490 |
2023 | |
Thereafter | |
Total | $ 840,810 |
Related-Party Transactions (Det
Related-Party Transactions (Details Narrative) - USD ($) | Jun. 30, 2018 | Oct. 04, 2017 | Sep. 30, 2017 | Jul. 31, 2017 | Dec. 19, 2016 | Jun. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Aug. 30, 2018 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | |||||||||||
Revenue | $ 9,500,537 | $ 4,257,577 | |||||||||
Purchase price for the property | 614,295 | ||||||||||
Tilted Kilt [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Payment of fund fees | 2,416 | ||||||||||
Sponsorship Agreements [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Incurred net expenses | 2,680 | ||||||||||
Franchise Agreement [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Accounts payable and accrued expenses | 189,675 | ||||||||||
Blue Victory Holdings, Inc [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Aggregate original principal amount | 236,333 | 30,503 | |||||||||
Maximum borrowing capacity | 61,721 | ||||||||||
Dwg Acquisitions LLC [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Rent payments | $ 3,000 | ||||||||||
Accounts receivable | 1,505 | ||||||||||
Fund receivable from acquisitions | 2,280 | ||||||||||
Accounts payable and accrued expenses | 41,512 | 65,349 | |||||||||
Dwg Acquisitions LLC [Member] | Franchise Agreement [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Revenue | $ 204,391 | 156,705 | |||||||||
Seediv, LLC [Member] | Promissory Notes [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Aggregate original principal amount | $ 216,469 | $ 216,469 | |||||||||
Seediv, LLC [Member] | Blue Victory Holdings, Inc | Promissory Notes [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Aggregate original principal amount | $ 216,469 | ||||||||||
Seediv, LLC [Member] | Racing Qsr Llc [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Purchase price for the property | $ 2,000,000 | ||||||||||
Amount of deposit required with in ten days of agreement | $ 10,000 | ||||||||||
Seediv, LLC [Member] | Asset Purchase Agreement [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Maximum borrowing capacity | $ 622,929 | ||||||||||
Seenu G Kasturi [Member] | Limited Liability Company [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Ownership percentage in common stock of company | 50.00% | 50.00% | |||||||||
Seenu G Kasturi [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Equity interest rate | 50.00% | 50.00% | 89.30% | ||||||||
Stock issued during period, shares | 38.4 | ||||||||||
Acquired outstanding purchase price | 600,000 | ||||||||||
Purchase price | $ 24,000 | ||||||||||
Seenu G Kasturi [Member] | Acquisition of Seediv [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Earnout payment | $ 199,682 | $ 144,326 | |||||||||
Seenu G Kasturi [Member] | Blue Victory Holdings, Inc [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Equity interest rate | 90.00% | ||||||||||
Seenu G Kasturi [Member] | Limited Liability Company [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Purchase price | $ 24,000 | ||||||||||
Seenu G Kasturi [Member] | Series A Convertible Preferred Stock [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Equity interest rate | 100.00% | ||||||||||
Stock issued during period, shares | 449,581 | ||||||||||
Exchange shares of common stock | 449,581 | ||||||||||
Seenu G Kasturi [Member] | Common Stock [Member] | ARC Group, Inc | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Ownership percentage in common stock of company | 26.60% |
Judgments in Legal Proceedings
Judgments in Legal Proceedings (Details Narrative) - USD ($) | Nov. 11, 2011 | Oct. 04, 2011 | Jan. 31, 2015 | Dec. 25, 2011 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Loss Contingencies [Line Items] | |||||||
Interest expense | $ 7,829 | $ 7,829 | |||||
Accrued interest outstanding | |||||||
Legal fees | 194,747 | 194,747 | |||||
Gain on settlement of litigation | 276,269 | 264,997 | |||||
Accrued legal contingency | 163,764 | 155,935 | |||||
Pending Litigation [Member] | Breach of Guaranty of Certain Obligations of Ritz Aviation Llc [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Loss from legal proceedings | $ 82,642 | ||||||
Accrued interest outstanding | 41,638 | 33,809 | |||||
Loss contingency damages sought | $ 194,181 | 111,539 | |||||
Accrued legal contingency | 163,764 | 155,935 | |||||
Other expenses outstanding | $ 10,586 | $ 10,586 | |||||
Breach Of Guarantee [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Litigation settlement amount | $ 161,747 | ||||||
Litigation settlement expense | $ 33,000 | ||||||
Accrued interest of litigation settlement | $ 2,369 | ||||||
Loss from legal proceedings | $ 197,116 | ||||||
Interest expense | 11,272 | 11,272 | |||||
Accrued interest outstanding | $ 81,522 | $ 70,250 |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) | 12 Months Ended | |
Dec. 31, 2018RestaurantsSegment | Dec. 31, 2017Restaurants | |
Segment Reporting [Abstract] | ||
Number of reportable segments | Segment | 2 | |
Agreement term, description | The agreements have a 10-year term and can be renewed for one additional 10-year term. | |
Number of franchised restaurants | Restaurants | 19 | 20 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Financial Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | $ 9,500,537 | $ 4,257,577 |
Total income from operations | 908,094 | 1,007,956 |
Corporate and unallocated expenses | (1,190,577) | (663,216) |
Net (loss) / income | (282,483) | 344,740 |
Depreciation and amortization, total | 252,914 | 17,180 |
Capital expenditures, total | 12,691,302 | 35,196 |
Company-Owned Restaurants [Member] | ||
Revenue | 8,374,022 | 3,424,865 |
Total income from operations | 174,398 | 234,080 |
Depreciation and amortization, total | 251,633 | 17,180 |
Capital expenditures, total | 12,658,385 | 35,196 |
Franchise Operations [Member] | ||
Revenue | 1,126,515 | 832,712 |
Total income from operations | 733,696 | 773,876 |
Depreciation and amortization, total | ||
Capital expenditures, total | ||
Corporate [Member] | ||
Depreciation and amortization, total | 1,281 | |
Capital expenditures, total | $ 32,917 |
Restatement of Previously Iss_3
Restatement of Previously Issued Consolidated Financial Statements (Detail Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Previously Restated Financial Information [Line Items] | ||
Discount amount | $ 9,548 | |
Restaurant sales | 9,500,537 | 4,257,577 |
Restaurant operating costs - other operating expenses | $ 1,840,661 | 591,558 |
Restatement Adjustments [Member] | ||
Previously Restated Financial Information [Line Items] | ||
Discount amount | 188,086 | |
Restaurant sales | (188,086) | |
Restaurant operating costs - other operating expenses | 188,086 | |
Reducing restaurant sales and restaurant operating costs - other operating expenses | $ 188,086 |
Restatement of Previously Iss_4
Restatement of Previously Issued Consolidated Financial Statements - Schedule of Consolidated Statement of Operation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Previously Restated Financial Information [Line Items] | ||
Revenue | $ 9,500,537 | $ 4,257,577 |
Restaurant operating costs - other operating expenses | 1,840,661 | 591,558 |
Restaurant Sales [Member] | ||
Previously Restated Financial Information [Line Items] | ||
Revenue | $ 8,374,022 | 3,424,865 |
Previously Reported [Member] | ||
Previously Restated Financial Information [Line Items] | ||
Revenue | 4,445,663 | |
Restaurant operating costs - other operating expenses | (779,644) | |
Previously Reported [Member] | Restaurant Sales [Member] | ||
Previously Restated Financial Information [Line Items] | ||
Revenue | 3,612,951 | |
Restatement Adjustments [Member] | ||
Previously Restated Financial Information [Line Items] | ||
Revenue | (188,086) | |
Restaurant operating costs - other operating expenses | 188,086 | |
Restatement Adjustments [Member] | Restaurant Sales [Member] | ||
Previously Restated Financial Information [Line Items] | ||
Revenue | $ (188,086) |
Subsequent Events (Detail Narra
Subsequent Events (Detail Narrative) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2019 | Jan. 29, 2019 | Jan. 02, 2019 | Jan. 01, 2019 | Jul. 31, 2017 | Sep. 30, 2018 | May 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Subsequent Event [Line Items] | |||||||||||
Number of shares granted | |||||||||||
Subscripton amount | $ 15,453 | $ 26,853 | |||||||||
Maxim Group, LLC [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Stock issued during period of private offering | 125,000 | 225,000 | |||||||||
Seenu G Kasturi [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Stock issued during period of private offering | 38.4 | ||||||||||
Subsequent Event [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Stock purchase price per share unit | $ 1.40 | ||||||||||
Warrant exercisable term | 5 years | ||||||||||
Warrant exercise price per share | $ 1.55 | ||||||||||
Debt instrument, terminate date | Mar. 31, 2019 | ||||||||||
Debt instrumetn, extended date | May 31, 2019 | ||||||||||
Subscripton amount | $ 500,000 | ||||||||||
Subsequent Event [Member] | Maxim Group, LLC [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Warrant exercisable term | 5 years | ||||||||||
Warrant exercise price per share | $ 1.55 | ||||||||||
Percenatge of Placement fee | 7.00% | ||||||||||
Number of shares of common stock purchase percentage | 4.00% | ||||||||||
Subsequent Event [Member] | Maximum [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Stock issued during period of private offering | 5,000,000 | ||||||||||
Additional offering increased in value | $ 1,000,000 | ||||||||||
Subsequent Event [Member] | Seenu G Kasturi [Member] | Employment Agreements and Arrangement [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of common shares issued | 10,706 | ||||||||||
Subsequent Event [Member] | Seenu G Kasturi [Member] | Restated Employment Agreement [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Payment of annual base salary amount | $ 350,000 | ||||||||||
Subsequent Event [Member] | Seenu G Kasturi [Member] | Restricted Stock Award Agreement [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares granted | 390,000 | ||||||||||
Number of shares vested | 130,000 | 130,000 | 130,000 |