| Commitments and Contingencies | Note 16. Commitments and Contingencies Employment Agreements Seenu G. Kasturi On January 18, 2017, the
Company appointed Seenu G. Kasturi as its President, Chief Financial Officer and Chairman of its 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 was 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 was 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 was eligible
to receive increases in salary on January 1 st On January 2, 2019, the
Company appointed Seenu G. Kasturi as its Chief Executive Officer. As a result of the appointment, Mr. Kasturi then served as the
Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the its 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 continues 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. 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, Richard
Akam resigned as the Company’s Chief Financial Officer. 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 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. 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 the
Company with an option to extend the lease by three additional five-year periods. The lease 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. Financing 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. 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 March 31, 2019:
Year Minimum Annual Payments
2019 (remaining nine months) $ 153,000
2020 208,080
2021 212,240
2022 216,490
2023 —
Thereafter —
Total $ 789,810 Teay’s Valley Fire 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. As
a result, the restaurant has been closed for repair. The company has an insurance policy in place on the property and has been
receiving insurance proceeds under the policy for such items as lost income and damaged equipment. The restaurant is expected
to reopen in July 2019. |
