Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Sep. 24, 2017 | Nov. 30, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Fat Brands, Inc | |
Entity Central Index Key | 1,705,012 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 24, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-21 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 10,000,000 | |
Trading Symbol | FAT | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) $ in Thousands | Sep. 24, 2017USD ($) |
ASSETS | |
Deferred offering costs (Note 2) | $ 224 |
Trade name | 8 |
Total assets | 232 |
Current liabilities | |
Accounts payable | 31 |
Total current liabilities | 31 |
Due to parent | 201 |
Total liabilities | 232 |
Commitments and contingencies (Note 4) | |
Stockholder's equity | |
Common stock, $.0001 par value, 100 shares authorized, issued and outstanding | |
Additional paid-in capital | |
Retained earnings | |
Total stockholder's equity | |
Total liabilities and stockholder's equity | $ 232 |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parenthetical) | Sep. 24, 2017$ / sharesshares |
Statement of Financial Position [Abstract] | |
Common stock, par value | $ / shares | $ .0001 |
Common stock, shares authorized | 100,000 |
Common stock, shares issued | 100,000 |
Common stock, shares outstanding | 100,000 |
Statement of Operations (Unaudi
Statement of Operations (Unaudited) | 6 Months Ended |
Sep. 24, 2017USD ($) | |
Income Statement [Abstract] | |
Revenues | |
Expenses | |
Income before income tax expense | |
Income tax expense | |
Net income |
Statement of Stockholder's Equi
Statement of Stockholder's Equity (Unaudited) - 6 months ended Sep. 24, 2017 - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Total |
Balance, Beginning at Mar. 20, 2017 | ||||
Balance, Beginning, shares at Mar. 20, 2017 | 100,000 | |||
Net income | ||||
Balance, Ending at Sep. 24, 2017 | ||||
Balance, Ending, shares at Sep. 24, 2017 | 100,000 |
Statement of Cash Flows (Unaudi
Statement of Cash Flows (Unaudited) $ in Thousands | 6 Months Ended |
Sep. 24, 2017USD ($) | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
Net income | |
Changes in current operating assets and liabilities: | |
Accounts payable | 31 |
Total adjustments | 31 |
Net cash flows provided by operating activities | 31 |
CASH FLOWS FROM INVESTING ACTIVITIES | |
Payments for deferred offering costs and trade name | (232) |
Cash flows used in investing activities | (232) |
CASH FLOWS FROM FINANCING ACTIVITIES | |
Advances from parent | 201 |
Cash flows provided by financing activities | 201 |
Net increase in cash | |
Cash, beginning of period | |
Cash, end of period |
Basis of Presentation and Accou
Basis of Presentation and Accounting Policies | 6 Months Ended |
Sep. 24, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Accounting Policies | NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES FAT Brands Inc. (the “ Company FCCG The accompanying interim financial statements of the Company are unaudited and have been prepared in conformity with the requirements of Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), particularly Rule 10-01 thereof, which governs the presentation of interim financial statements. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying interim financial statements should be read in conjunction with the disclosures contained in the Company’s Offering Circular filed with the Securities and Exchange Commission on October 23, 2017 (the “ Offering Circular In the Company’s opinion, all adjustments, comprised of normal recurring accruals necessary for the fair presentation of the interim financial statements, have been included in the accompanying financial statements. Operating results for the period from the Company’s inception through September 24, 2017 are not indicative of the results that may be expected for the remainder of the period ending December 31, 2017. The preparation of 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 reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. At September 24, 2017, certain Company officers and directors had indirect majority voting control of the Company. |
Deferred Offering Costs
Deferred Offering Costs | 6 Months Ended |
Sep. 24, 2017 | |
Deferred Offering Costs | |
Deferred Offering Costs | NOTE 2 - DEFERRED OFFERING COSTS During the period from inception through September 24, 2017, the Company incurred costs in connection with its organization and initial public offering in the amount of $232,000. Of this amount, $8,000 was payment for internet rights to the trade name. The funds for these expenditures were provided by an advance from FCCG of $201,000 and accounts payable in the amount of $31,000. The deferred offering costs will be netted against the proceeds of the initial public offering and the intercompany advance will be repaid at that time. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Sep. 24, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 3 - SUBSEQUENT EVENTS Issuance of Common Stock On October 19, 2017, the Company conducted a forward split of its common stock, par value $0.0001, which increased shares held by FCCG to 8,000,000 shares. On October 20, 2017, the Company completed its initial public offering and issued 2,000,000 additional shares of its common stock at an offering price of $12.00 per share, for an aggregate amount of $24,000,000 (the “ Offering The Reorganization Transactions In connection with the closing of the Offering, the Company completed the following transactions, which are referred to collectively as the “Reorganization Transactions”: Effective October 20, 2017, FCCG contributed two of its operating subsidiaries, Fatburger North America Inc. (“Fatburger”) and Buffalo’s Franchise Concepts Inc., (“Buffalo’s”) to the Company in exchange for an unsecured promissory note with a principal balance of $30,000,000, bearing interest at a rate of 10.0% per annum, and maturing in five years (the “Related Party Debt”). The contribution was consummated pursuant to a Contribution Agreement between the Company and FCCG. Approximately $9,500,000 of the net proceeds from the Offering was used to repay a portion of Related Party Debt owed to FCCG. FCCG agreed in March 2017 to acquire Homestyle Dining LLC from Metromedia Company and its affiliate (“Metromedia”) pursuant to a Membership Interest Purchase Agreement, as amended, which provided for a cash purchase price of $10,550,000 to be paid at closing. Effective October 20, 2017, the Company provided approximately $10,550,000 of the net proceeds from the Offering to FCCG to consummate the acquisition of Homestyle Dining LLC. In exchange, the Company received full ownership in the Homestyle Dining operating subsidiaries: Ponderosa Franchising Company, Bonanza Restaurant Company, Ponderosa International Development, Inc. and Puerto Rico Ponderosa, Inc. (collectively, “ Ponderosa Effective October 20, 2017, the Company entered into a Tax Sharing Agreement with FCCG that provides that FCCG will, to the extent permitted by applicable law, file consolidated federal, California and Oregon (and possibly other jurisdictions where revenue is generated, at FCCG’s election) income tax returns with the Company and its subsidiaries. The Company will pay FCCG the amount that its tax liability would have been had it filed a separate return. To the extent the Company’s required payment exceeds its share of the actual combined income tax liability (which may occur, for example, due to the application of FCCG’s net operating loss carryforwards), the Company will be permitted, in the discretion of a committee of its board of directors comprised solely of directors not affiliated with or interested in FCCG, to pay such excess to FCCG by issuing an equivalent amount of its common stock in lieu of cash, valued at the fair market value at the time of the payment. In addition, an inter-company receivable of approximately $13,175,000 due from FCCG to Fatburger and Buffalo’s will be applied first to reduce such excess income tax payment obligation to FCCG under the Tax Sharing Agreement. On October 20, 2017, the Company granted stock options to purchase 367,500 shares under the 2017 Omnibus Equity Incentive Plan to directors and employees, each with an exercise price equal to $12.00 per share and subject to a three-year vesting requirement. Agreement to Purchase Hurricane Grill & Wings On November 14, 2017, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) to purchase all of the right, title and interest in and to the membership interests of Hurricane AMT, LLC, a Florida limited liability corporation (“Hurricane”) for a purchase price of $12,500,000. Hurricane is the franchisor of Hurricane Grill & Wings and Hurricane BTW Restaurants. The original Hurricane Grill & Wings opened in Fort Pierce, Florida in 1995 and has expanded to over 60 restaurant locations in Alabama, Arizona, Colorado, Florida, Georgia, Kansas, New York, and Texas. |
Commitments, Contingencies & Of
Commitments, Contingencies & Off-Balance Sheet Risk | 6 Months Ended |
Sep. 24, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies & Off-Balance Sheet Risk | NOTE 4 – COMMITMENTS, CONTINGENCIES & OFF-BALANCE SHEET RISK Litigation As of September 24, 2017, the Company was not involved in any adversarial legal proceedings. The subsidiaries acquired on October 20, 2017 are involved in various legal proceedings occurring in the ordinary course of business which management believes will not have a material adverse effect on the financial condition or operations of the Company. Liquidity Following the completion of the Offering, franchising operations will become the major source of liquidity for the Company. Management expects these sources, including the sale of new franchises, to generate adequate cash flow to meet the Company’s liquidity needs for the 2017 fiscal year. As the Company contemplates significant acquisitions, other sources of liquidity will be considered, including borrowings or placements of securities. Fatburger Debt Covenant On June 1, 2010, Fatburger and certain of its affiliates became subject to a judgment payable to GE Capital Franchise Finance Corporation (GEFFC) for approximately $4,300,000. No proceeds from the original loan had been received by Fatburger, however it is jointly and severally liable as a co-borrower. On October 11, 2011, GEFFC agreed to accept payments in full satisfaction of the obligation totaling approximately $2,600,000 plus interest at 5%. Subsequently, FCCG made payments totaling approximately $2,000,000, plus interest to GEFFC. The borrowers have not made all of the payments required by the settlement agreement. On November 28, 2016, GEFFC sold the debt to an unrelated third party. On June 21, 2017, the debt was purchased by a limited partnership in which Andrew Wiederhorn, the CEO of the Company, is a general partner. Fog Cutter Capital Group Inc. has agreed to indemnify FAT Brands Inc. and Subsidiaries from costs and liabilities which may arise from this matter. Dividends The Company intends to declare quarterly dividends to holders of common stock. The declaration and payment of future dividends, if any, will be at the sole discretion of the board of directors and may be discontinued at any time. In determining the amount of any future dividends, the board of directors will take into account: (i) the Company’s consolidated financial results, available cash, future cash requirements and capital requirements, (ii) contractual, legal, tax and regulatory restrictions on, and implications of, the payment of dividends to stockholders, (iii) general economic and business conditions, and (iv) any other factors that the board of directors may deem relevant. The ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of the Company or its subsidiaries. No dividends have been declared or paid as of September 24, 2017. Franchising operations The Company is pursuing a growth strategy through developing additional franchising opportunities. Franchise development involves substantial risks that the Company intends to manage; however, it cannot be assured that present or future development will perform in accordance with the Company’s expectations or that any franchising activities will generate the Company’s expected returns on investment. The Company’s inability to expand franchises in accordance with planned expansion or to manage that growth could have a material adverse effect on the Company’s operations and financial condition. In addition, if its franchisees are unsuccessful in obtaining capital sufficient to fund this expansion, the timing of restaurant openings may be delayed and the Company’s operating results may be harmed. Other Following the Reorganization Transactions, the Company and its subsidiaries are parties to various operating leases for office space which expire through April 30, 2020. The leases provide for varying minimum annual rental payments including rent increases and free rent periods. The Company has future minimum rental payments under non-cancelable operating leases with initial or remaining terms of one year or more of approximately $796,000 as of September 24, 2017. There were no other off balance sheet arrangements in effect during the period from March 21, 2017, (inception) through September 24, 2017. |
Stock Options and Rights
Stock Options and Rights | 6 Months Ended |
Sep. 24, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options and Rights | NOTE 5 – STOCK OPTIONS AND RIGHTS On October 19, 2017 the Company adopted and approved the 2017 Omnibus Equity Incentive Plan (the “ Plan As of September 24, 2017, no awards had been granted under the Plan. (See Note 3 – Subsequent Events). |
Deferred Offering Costs (Detail
Deferred Offering Costs (Details Narrative) $ in Thousands | 6 Months Ended |
Sep. 24, 2017USD ($) | |
Deferred Offering Costs | |
Incurred cost and initial public offering amount | $ (232) |
Internet rights to trade name | 8 |
Advances from parent | 201 |
Accounts payable | $ 31 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Nov. 14, 2017 | Oct. 20, 2017 | Oct. 20, 2017 | Mar. 31, 2017 | Sep. 24, 2017 | Oct. 24, 2017 |
Common stock, par value | $ .0001 | |||||
Offering expenses | $ 224,000 | |||||
Due from related party | $ 201,000 | |||||
Subsequent Event [Member] | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||
Subsequent Event [Member] | Membership Interest Purchase Agreement [Member] | ||||||
Cash purchase price | $ 12,500,000 | |||||
Subsequent Event [Member] | 2017 Omnibus Equity Incentive Plan [Member] | Directors and Employees [Member] | ||||||
Granted stock options to purchase shares | 367,500 | |||||
Exercise price | $ 12 | $ 12 | ||||
Award vesting period | 3 years | |||||
Subsequent Event [Member] | Homestyle Dining LLC [Member] | ||||||
Cash purchase price | $ 10,550,000 | |||||
Proceeds from acquisition | $ 10,550,000 | |||||
Due from related party | 13,175,000 | |||||
Subsequent Event [Member] | Offering [Member] | ||||||
Common stock issued during period, shares | 2,000,000 | |||||
Common stock issued during period, value | $ 24,000,000 | |||||
Offering price per share | $ 12 | |||||
Net proceeds of the offering | 21,200,000 | |||||
Selling agent fees | $ 1,780,800 | |||||
Offering expenses | $ 1,019,200 | |||||
Outstanding common stock associated with offering percentage | 20.00% | |||||
Subsequent Event [Member] | Fog Cutter Capital Group Inc [Member] | ||||||
Number of shares increased after forward split | 8,000,000 | |||||
Subsequent Event [Member] | Fatburger and Buffalo's [Member] | ||||||
Net proceeds of the offering | $ 9,500,000 | |||||
Unsecured promissory note with principal balance | $ 30,000,000 | $ 30,000,000 | ||||
Debt interest rate | 10.00% | 10.00% | ||||
Debt maturity date, description | Maturing in five years |
Commitments, Contingencies & 14
Commitments, Contingencies & Off-Balance Sheet Risk (Details Narrative) - USD ($) $ in Thousands | Jun. 01, 2010 | Sep. 24, 2017 | Oct. 11, 2011 |
Operating lease expire date | Apr. 30, 2020 | ||
Operating lease term | 1 year | ||
Minimum annual rental payments | $ 796 | ||
GE Capital Franchise Finance Corporation [Member] | |||
Affiliates became subject to a judgment payable | $ 4,300 | ||
Payments in full satisfaction of obligation | $ 2,600 | ||
Interest rate | 5.00% | ||
Fog Cutter Capital Group Inc [Member] | |||
Payments in full satisfaction of obligation | $ 2,000 |
Stock Options and Rights (Detai
Stock Options and Rights (Details Narrative) | 6 Months Ended |
Sep. 24, 2017shares | |
October 19, 2017 [Member] | 2017 Omnibus Equity Incentive Plan [Member] | |
Maximum number of shares available for granted | 1,000,000 |