Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2018 | Mar. 25, 2019 | Jul. 01, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Fat Brands, Inc | ||
Entity Central Index Key | 0001705012 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 30, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 14,564 | ||
Entity Common Stock, Shares Outstanding | 11,807,349 | ||
Trading Symbol | FAT | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash | $ 653 | $ 32 |
Accounts receivable, net of allowance for doubtful accounts of $595 and $679, respectively | 1,779 | 918 |
Trade notes receivable, net of allowance for doubtful accounts of $37 and $17, respectively | 65 | 77 |
Other current assets | 1,042 | 153 |
Total current assets | 3,539 | 1,180 |
Notes receivable - noncurrent, net of allowance for doubtful accounts of $112 and $17, respectively | 212 | 346 |
Due from affiliates | 15,514 | 7,963 |
Deferred income taxes | 2,236 | 937 |
Goodwill | 10,391 | 7,356 |
Other intangible assets, net | 23,289 | 11,011 |
Other assets | 2,779 | 7 |
Buffalo's creative and advertising fund | 436 | |
Total assets | 57,960 | 29,236 |
Liabilities | ||
Accounts payable | 4,415 | 2,439 |
Deferred income | 1,076 | 1,772 |
Accrued expenses | 3,705 | 1,761 |
Accrued advertising | 369 | 348 |
Accrued interest payable | 2,250 | 405 |
Dividend payable on mandatorily redeemable preferred shares | 391 | |
Term loan | 15,400 | |
Total current liabilities | 27,606 | 6,725 |
Deferred income - noncurrent | 6,621 | 1,941 |
Acquisition purchase price payable | 3,497 | |
Mandatorily redeemable preferred shares, net | 14,191 | |
Deferred dividend payable on mandatorily redeemable preferred shares | 228 | |
Notes payable to FCCG | 18,125 | |
Other liabilities | 78 | |
Buffalo's creative and advertising fund-contra | 436 | |
Total liabilities | 52,221 | 27,227 |
Commitments and contingencies (Note 17) | ||
Stockholders' equity | ||
Common stock, $.0001 par value; 25,000,000 shares authorized; 11,546,589 and 10,000,000 shares issued and outstanding at December 30, 2018 and December 31, 2017, respectively | 10,757 | 2,622 |
Accumulated deficit | (5,018) | (613) |
Total stockholders' equity | 5,739 | 2,009 |
Total liabilities and stockholders' equity | $ 57,960 | $ 29,236 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance for doubtful accounts | $ 595 | $ 679 |
Trade notes receivable, net of allowance for doubtful accounts | 37 | 17 |
Notes receivable - noncurrent, net of allowance for doubtful accounts | $ 112 | $ 17 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 11,546,589 | 10,000,000 |
Common stock, shares outstanding | 11,546,589 | 10,000,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 30, 2018 | |
Revenue | ||
Royalties | $ 2,023 | $ 12,097 |
Franchise fees | 140 | 2,136 |
Store opening fees | 352 | |
Advertising fees | 3,182 | |
Other income | 10 | 600 |
Total revenue | 2,173 | 18,367 |
General and administrative expenses | ||
Compensation expense | 1,337 | 5,884 |
Professional fees expense | 117 | 1,529 |
Public company expense | 273 | 1,108 |
Advertising expense | 3,182 | |
Other | 396 | 2,428 |
Total general and administrative expenses | 2,123 | 14,131 |
Income from operations | 50 | 4,236 |
Other income (expense) | ||
Interest expense, net | (205) | (3,816) |
Interest expense related to mandatorily redeemable preferred shares | (954) | |
Depreciation and amortization | (23) | (358) |
Other expense, net | (28) | (1,181) |
Total other expense, net | (256) | (6,309) |
Loss before income tax (benefit) expense | (206) | (2,073) |
Income tax (benefit) expense | 407 | (275) |
Net loss | $ (613) | $ (1,798) |
Basic and diluted loss per common share | $ (0.07) | $ (0.16) |
Basic and diluted weighted average shares outstanding | 8,686,008 | 10,970,814 |
Cash dividends declared per common share | $ 0.36 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Par Value [Member] | Additional Paid-in capital [Member] | Accumulated Deficit [Member] | Total |
Balance, Beginning at Mar. 20, 2017 | |||||
Balance, Beginning, shares at Mar. 20, 2017 | 100 | ||||
Forward split of common stock, shares | 7,999,900 | ||||
Issuance of shares | $ 20,930 | 1 | 20,929 | 20,930 | |
Issuance of shares, shares | 2,000,000 | ||||
Distribution to FCCG in excess of historical cost basis of assets received | $ (18,397) | (18,397) | (18,397) | ||
Net loss | (613) | (613) | |||
Share-based compensation | 89 | 89 | 89 | ||
Balance, Ending at Dec. 31, 2017 | $ 2,622 | 1 | 2,621 | (613) | 2,009 |
Balance, Ending, shares at Dec. 31, 2017 | 10,000,000 | ||||
Cumulative-effect adjustment from adoption of ASU 2014-09, Revenue from Contracts with Customers | (2,607) | (2,607) | |||
Dividends on common stock | (3,914) | (3,914) | (3,914) | ||
Issuance of common stock in lieu of director fees payable | $ 510 | 510 | 510 | ||
Issuance of common stock in lieu of director fees payable, shares | 68,952 | ||||
Issuance of common stock in payment of related party note | $ 7,272 | 7,272 | 7,272 | ||
Issuance of common stock in payment of related party note, shares | 989,395 | ||||
Issuance of common stock in lieu of dividend payable to FCCG | $ 3,036 | 3,036 | 3,036 | ||
Issuance of common stock in lieu of dividend payable to FCCG, shares | 488,242 | ||||
Issuance of warrants to purchase common stock | $ 774 | 774 | 774 | ||
Stock offering costs | (150) | (150) | (150) | ||
Issuance of warrants to placement agents | 78 | 78 | 78 | ||
Value of common stock beneficial conversion feature of Series A-1 Preferred Stock | 90 | 90 | 90 | ||
Net loss | (1,798) | (1,798) | |||
Share-based compensation | 439 | 439 | 439 | ||
Balance, Ending at Dec. 30, 2018 | $ 10,757 | $ 1 | $ 10,756 | $ (5,018) | $ 5,739 |
Balance, Ending, shares at Dec. 30, 2018 | 11,546,589 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 30, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (613) | $ (1,798) |
Adjustments to reconcile net loss to net cash provided by operations: | ||
Deferred income taxes | 232 | (504) |
Depreciation and amortization | 23 | 358 |
Share-based compensation | 89 | 439 |
Accretion of term loan | 583 | |
Accretion of mandatorily redeemable preferred shares | 34 | |
Accretion of purchase price liability | 7 | |
Provision for bad debts | 124 | 76 |
Change in: | ||
Accounts receivable | (221) | (301) |
Trade notes receivable | 8 | 58 |
Prepaid expenses | (145) | (242) |
Other | (20) | |
Accounts payables and accrued expense | 1,604 | 2,226 |
Accrued advertising | 43 | (271) |
Accrued interest payable | 405 | 2,232 |
Dividend payable on mandatorily redeemable preferred shares | 619 | |
Deferred income | (50) | (1,659) |
Total adjustments | 2,112 | 3,635 |
Net cash provided by operating activities | 1,499 | 1,837 |
Cash flows from investing activities | ||
Payments made in connection with acquisitions, net | (10,515) | (7,595) |
Additions to property and equipment | (148) | |
Other | (7) | |
Net cash used in investing activities | (10,522) | (7,743) |
Cash flows from financing activities | ||
Proceeds from borrowings and associated warrants, net of issuance costs | 17,066 | |
Proceeds from issuance of common stock from initial public offering, net of issuance costs | 20,930 | |
Issuance of mandatorily redeemable preferred shares and associated warrants, net | 7,984 | |
Repayments of borrowings | (11,875) | (10,853) |
Change in due from affiliates | (6,742) | |
Dividends paid in cash | (878) | |
Other | (50) | |
Net cash provided by financing activities | 9,055 | 6,527 |
Net increase in cash | 32 | 621 |
Cash at beginning of period | 32 | |
Cash at end of period | 32 | 653 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 2,495 | |
Cash paid for income taxes | 17 | 220 |
Supplemental disclosure of non-cash financing and investing activities: | ||
Dividends reinvested in common stock | 3,036 | |
Note payable issued in exchange for contributed subsidiaries | 30,000 | |
Net non-cash assets received from FCCG | 11,568 | |
Note payable to FCCG converted to common and preferred stock | 9,272 | |
Director fees converted to common stock | 510 | |
Income taxes payable offset against amounts due from affiliates | $ 134 | $ 195 |
Organization and Relationships
Organization and Relationships | 12 Months Ended |
Dec. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Relationships | NOTE 1. ORGANIZATION AND RELATIONSHIPS FAT Brands Inc. (the “Company”) was formed on March 21, 2017 as a wholly-owned subsidiary of Fog Cutter Capital Group Inc. (“FCCG”). On October 20, 2017, the Company completed an initial public offering and issued additional shares of common stock representing 20 percent of its ownership (the “Offering”). The net proceeds of the Offering were approximately $20,930,000 after deducting the selling agent fees and offering expenses. The Company’s common stock trades on the Nasdaq Capital Market under the symbol “FAT.” Concurrent with the Offering, two subsidiaries of FCCG, Fatburger North America, Inc. (“Fatburger”) and Buffalo’s Franchise Concepts, Inc. (“Buffalo’s”) were contributed to the Company by FCCG in exchange for a $30,000,000 note payable (the “Related Party Debt”). FCCG also contributed the newly acquired operating subsidiaries of Homestyle Dining LLC: Ponderosa Franchising Company, Bonanza Restaurant Company, Ponderosa International Development, Inc. and Puerto Rico Ponderosa, Inc. (collectively, “Ponderosa”). These subsidiaries conduct the worldwide franchising of the Ponderosa Steakhouse Restaurants and the Bonanza Steakhouse Restaurants. The Company provided $10,550,000 of the net proceeds from the Offering to FCCG to consummate the acquisition of Homestyle Dining LLC. On July 3, 2018, the Company completed the acquisition of Hurricane AMT, LLC, a Florida limited liability company (“Hurricane”), for a purchase price of $12,500,000. Hurricane is the franchisor of Hurricane Grill & Wings and Hurricane BTW Restaurants. On December 3, 2018, the Company acquired the intellectual property and restaurant operations of Yalla Mediterranean, LLC (the “Yalla Business”). Yalla Mediterranean, LLC has developed, designed, created and operates a fast-casual restaurant business under the brand name “Yalla Mediterranean” specializing in fresh and healthy Mediterranean menu items, with seven upscale fast food restaurants located in Northern and Southern California. The purchase price for the Yalla Business was valued at $3,490,000. The Company did not begin operations until October 20, 2017. Consequently, the partial year results presented for 2017 in the accompanying consolidated statements of operations and statements of cash flows are for informational purposes and not intended to be comparative of the full-year consolidated results presented for fiscal 2018. At December 30, 2018, FCCG controlled a significant voting majority of the Company. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of operations The Company operates on a 52-week calendar and its fiscal year ends on the last Sunday of the calendar year. Consistent with the industry practice, the Company measures its stores’ performance based upon 7-day work weeks. Using the 52-week cycle ensures consistent weekly reporting for operations and ensures that each week has the same days, since certain days are more profitable than others. The use of this fiscal year means a 53 rd Principles of consolidation Use of estimates in the preparation of the consolidated financial statements Financial statement reclassification Accounts receivable Trade notes receivable – Goodwill and other intangible assets Income taxes The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. A two-step approach is utilized to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon the ultimate settlement. Franchise fees and royalty revenue Store opening fees – Advertising – Share-based compensation Earnings per share Subsequent to December 30, 2018, the Company declared a stock dividend on February 7, 2019 and issued 245,376 shares of common stock in satisfaction of the dividend (See Note 20). Earnings per share for 2018 and 2017 have been adjusted retrospectively to reflect the impact of the stock dividend. Recently Adopted Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts With Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods and services to customers. The updated standard replaces most existing revenue recognition guidance in U.S. GAAP. These standards became effective for the Company on January 1, 2018. These standards require that the transaction price received from customers be allocated to each separate and distinct performance obligation. The transaction price attributable to each separate and distinct performance obligation is then recognized as the performance obligations are satisfied as specified in the contract. The services we provide related to store openings contain separate and distinct performance obligations from the franchise right and thus those store opening fees will be recognized as revenue upon store opening. The balance of any upfront fees collected from franchisee not related to the store opening are amortized over the term of each respective franchise agreement. Previously, we recognized upfront franchise fees such as initial and renewal fees when the related services have been provided, which is when a store opened for initial fees and when renewal options became effective for renewal fees. These standards require any unamortized portion of fees received prior to adoption be presented in the consolidated balance sheet as a contract liability. The new standards also had an impact on transactions previously not included in the Company’s revenues and expenses such as franchisee contributions to and subsequent expenditures from advertising arrangements with franchisees. The Company did not previously include these contributions and expenditures in its consolidated statements of operations or cash flows. Under the new standards, the Company will recognize advertising fees and the related expense in its consolidated statements of operations or cash flows. The Company will also consolidate the assets and liabilities related to advertising funds on its balance sheet. These standards will not impact the recognition of our sales-based royalties from franchisees, which is generally our largest source of revenue. We have implemented internal controls related to the recognition and presentation of the Company’s revenues under these new standards. The Company adopted ASU 2014-09 on January 1, 2018 using the modified retrospective method, in which the cumulative effect of applying the standard would be recognized at the date of initial application. An adjustment to increase deferred revenue in the amount of $3,400,000 was established on the date of adoption relating to fees received through December 31, 2017 that would have been deferred and recognized over the term of each respective franchise store agreement if the new guidance had been applied in the past. A deferred tax asset of $793,000 related to this contract liability was also established on the date of adoption. These adjustments had the net effect of increasing beginning accumulated deficit by approximately $2,607,000. Adopting the new accounting standards for revenue affected several financial statement line items for the fiscal year ended December 30, 2018. The following tables provide the affected amounts as reported in these Unaudited Consolidated Financial Statements compared with what they would have been if the previous accounting guidance had remained in effect. As of December 30, 2018 (in thousands) Amounts As Reported Amounts Under Previous Accounting Guidance Unaudited Consolidated Balance Sheet: Cash $ 653 $ 501 Accounts receivable $ 1,779 $ 1,406 Other current assets $ 1,042 $ 1,038 Due from affiliates $ 15,514 $ 15,144 Deferred income taxes $ 2,236 $ 1,440 Buffalo’s Creative and Advertising Fund $ - $ 428 Buffalo’s Creative and Advertising Fund - Contra $ - $ (428 ) Accounts payable $ 4,415 $ 3,984 Deferred income $ 7,697 $ 4,644 Accrued expenses $ 3,705 $ 3,487 Accrued advertising $ 369 $ 463 Accumulated deficit $ (5,018 ) $ (3,092 ) For the fiscal year ended December 30, 2018 (in thousands except per share data) Amounts As Reported Amounts Under Previous Accounting Guidance Unaudited Consolidated Statement of Operations: Franchise fees and store opening fees $ 2,488 $ 1,809 Advertising fees $ 3,182 $ - Advertising expense $ (3,182 ) $ - Net loss $ (1,798 ) $ (2,478 ) Earnings per common share - basic $ (0.16 ) $ (0.23 ) Earnings per common share - diluted $ (0.16 ) $ (0.23 ) For the fiscal year ended December 30, 2018 (in thousands) Amounts As Reported Amounts Under Previous Accounting Guidance Unaudited Consolidated Statement of Cash Flows: Net loss $ (1,798 ) $ (2,478 ) Adjustments to reconcile net income to net cash provided by operating activities: Accounts receivable $ (301 ) $ (488 ) Deferred income $ (1,659 ) $ 931 Accounts payable and accrued expenses $ 2,226 $ 3,258 Accrued advertising $ (271 ) $ 115 Change in due from affiliates $ (6,742 ) $ (7,181 ) In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to reduce diversity in practice in how transactions are classified in the statement of cash flows. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), requiring a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. This ASU is effective for interim and annual period beginning after December 15, 2018 and requires a modified retrospective approach to adoption for lessees related to capital and operating leases existing at, or entered into after, the earliest comparative period presented in the financial statements, with certain practical expedients available. The adoption of this standard will result in the Company recording Right of Use Assets and Lease Liabilities on its consolidated financial statements. The dollar amount of the Right of Use Assets is projected to be approximately equal to the amount of the Lease Liabilities. The adoption of this standard is not expected to have a significant effect on the amount of lease expense recognized by the Company. In June 2018, the FASB issued ASU No.2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Prior to this update, Topic 718 applied only to share-based transactions to employees. Consistent with the accounting requirements for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. The amendments in the update are effective for public business entities form fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The adoption of this accounting standard is not expected to have a material effect on the Company’s consolidated financial statements. In July 2018, the FASB issued ASU 2018-09, Codification Improvements. This ASU makes amendments to multiple codification Topics. The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments in this ASU do not require transition guidance and will be effective upon issuance of this ASU. However, many of the amendments in this ASU do have transition guidance with effective dates for annual periods beginning after December 15, 2018. The Company is currently assessing the effect that this ASU will have on its financial position, results of operations, and disclosures. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, “Fair Value Measurement.” This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. The Company is currently assessing the effect that this ASU will have on its financial position, results of operations, and disclosures. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 3. ACQUISITIONS Hurricane AMT, LLC On July 3, 2018, the Company completed the acquisition of Hurricane AMT, LLC, a Florida limited liability company (“Hurricane”), for a purchase price of $12,500,000. Hurricane is the franchisor of Hurricane Grill & Wings and Hurricane BTW Restaurants. The purchase price of $12,500,000 was delivered through the payment of $8,000,000 in cash and the issuance to the Sellers of $4,500,000 of equity units of the Company valued at $10,000 per unit, or a total of 450 units. Each unit consists of (i) 100 shares of the Company’s newly designated Series A-1 Fixed Rate Cumulative Preferred Stock (the “Series A-1 Preferred Stock”) and (ii) a warrant to purchase 125 shares of the Company’s Common Stock at $8.00 per share (the “Hurricane Warrants”). Holders of Series A-1 Preferred Stock will be entitled to receive cumulative dividends on the $100.00 per share stated liquidation preference of the Series A-1 Preferred Stock, in the amount of cash dividends at a rate of 6.0% per year. Upon (i) the five-year anniversary of the initial issuance date (July 3, 2023), or (ii) the earlier liquidation, dissolution or winding-up of the Company (the “Series A-1 Mandatory Redemption Date”), the holders of Series A-1 Preferred Stock will be entitled to cash redemption of their shares in an amount equal to $100.00 per share plus any accrued and unpaid dividends. In addition, prior to the Series A-1 Mandatory Redemption Date, the Company may optionally redeem the Series A-1 Preferred Stock, in whole or in part, at par plus any accrued and unpaid dividends. Holders of Series A-1 Preferred Stock may also optionally cause the Company to redeem all or any portion of their shares of Series A-1 Preferred Stock beginning any time after the two-year anniversary of the initial issuance date for an amount equal to $100.00 per share plus any accrued and unpaid dividends, which amount may be settled in cash or Common Stock of the Company, at the option of the holder. If a holder elects to receive Common Stock, shares will be issued as payment for redemption at the rate of $12.00 per share of Common Stock. Fees and expenses related to the Hurricane acquisition totaled approximately $206,000 consisting primarily of professional fees, all of which are classified as other expenses in the accompanying consolidated statement of operations. These fees and expenses were funded through cash on hand and proceeds from borrowings. The allocation of consideration to the net tangible and intangible assets acquired is presented in the table below (in thousands): Cash $ 358 Accounts receivable 352 Other assets 883 Intangible assets 11,020 Goodwill 2,772 Accounts payable and accrued expenses (643 ) Deferred franchise fees (1,885 ) Other liabilities (357 ) Total net identifiable assets $ 12,500 The following table provides information regarding the revenue and earnings of Hurricane included in the accompanying consolidated financial statements since July 3, 2018 (in thousands): Hurricane Revenues Royalties $ 1,589 Franchise fees 22 Advertising fees 868 Other income 7 Total revenues 2,486 Expenses General and administrative 2,164 Income from operations 322 Other expense (217 ) Income before income tax expense 105 Income tax benefit (1 ) Net income $ 106 The following unaudited pro forma information presents the revenue and earnings of Hurricane as if it had been acquired on January 1, 2018 (the beginning of the Company’s fiscal year) through December 30, 2018 (in thousands): Pro Forma Hurricane Revenues Royalties $ 3,282 Franchise fees 54 Advertising fees 1,751 Other income 7 Total revenues 5,094 Expenses General and administrative 5,282 Loss from operations (188 ) Other expense (347 ) Loss before income tax benefit (535 ) Income tax benefit (150 ) Net loss $ (385 ) The unaudited pro forma income statement reflects actual results of Hurricane for the fiscal year ended December 30, 2018 with the following adjustments: Revenue – The unaudited pro forma income statement presents franchise fee revenue and advertising revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers Selling, general and administrative expenses – Prior to the acquisition, Hurricane incurred costs associated with a closed, company owned restaurant. These expenses have been eliminated in the pro forma adjustments since the acquisition did not include the company owned restaurant. The pro forma adjustments also include advertising expenses in accordance with ASU 2014-09. Interest expense, net – The pro forma interest expense has been adjusted to exclude actual Hurricane interest expense incurred prior to the acquisition. All interest-bearing liabilities were paid off at the Acquisition date. Depreciation and amortization – The pro forma adjustments include the amortization of the intangible asset relating to acquired franchise agreements over their average remaining term of 13 years. Income tax benefit – The tax benefit of the pro forma net loss is calculated using an effective tax rate of 28%. Upon acquisition, Hurricane became subject to the Tax Sharing Agreement with FCCG. Had the Company owned Hurricane as of January 1, 2018, the unaudited pro forma consolidated net loss of the Company would have been a loss of approximately $2,983,000 instead of a loss of $1,798,000. This pro forma loss includes the additional financing carrying costs (net of tax benefits) in the amount of 694,000 that would have been incurred by FAT Brands had the acquisition been consummated as of January 1, 2018. Yalla Mediterranean On December 3, 2018, the Company entered into an Intellectual Property Purchase Agreement and License (the “IP Agreement”), and Master Transaction Agreement (the “Master Agreement”) with Yalla Mediterranean, LLC (“Yalla Med”), under which the Company agreed to acquire the intellectual property of the restaurant business of Yalla Mediterranean, LLC (the “Yalla Business”) and to acquire in the future seven restaurants currently owned by Yalla Med. Yalla Med owns and operates a fast-casual restaurant business under the brand name “Yalla Mediterranean,” specializing in fresh and healthy Mediterranean menu items, with seven upscale fast casual restaurants located in Northern and Southern California. The Company, through a subsidiary, acquired the intellectual property used in connection with the Yalla Business pursuant to the IP Agreement. Under the terms of the IP Agreement, the purchase price for the intellectual property will be paid in the form of an earn-out, calculated as the greater of $1,500,000 or 400% of Yalla Income, all as described in the IP Agreement. The seller can require the Company to pay the purchase price in up to two installments during the ten-year period following the acquisition. At the time of the acquisition, the purchase price recorded for the intellectual property was $1,790,000. Additionally, pursuant to the Master Agreement, the Company agreed to acquire the assets, agreements and other properties of each of the seven existing Yalla Mediterranean restaurants during a marketing period specified in the Master Agreement (the “Marketing Period”). The purchase price will be the greater of $1,000,000 or the sum of (i) the first $1,750,000 of gross sale proceeds received from the sale of the Yalla Mediterranean restaurants to franchisee/purchasers, plus (ii) the amount, if any, by which fifty percent (50%) of the net proceeds (after taking into consideration operating income or loss and transaction costs and expenses) from the sale of the Yalla Mediterranean restaurants exceeds $1,750,000. At the time of the acquisition, the purchase price recorded for the net tangible assets relating to the seven existing Yalla Mediterranean restaurants was $1,700,000. The Company also entered into a Management Agreement under which its subsidiary will manage the operations of the seven Yalla Mediterranean restaurants and market them for sale to franchisees during the Marketing Period. Once a franchisee/purchaser has been identified, Yalla Med will transfer legal ownership of the specific restaurant to the Company’s subsidiary, which will then transfer the restaurant to the ultimate franchisee/purchaser who will own and operate the location. During the term of the Management Agreement, the Company’s subsidiary is responsible for operating expenses and has the right to receive operating income from the restaurants. Based on the structure of the transactions outlined in the Master Agreement, the IP Agreement, and the Management Agreement, the Company has accounted for the transactions as a business combination under ASC 805. The allocation of the total consideration recognized of $3,490,000 to the net tangible and intangible assets acquired in the Yalla Business is presented in the table below (in thousands): Cash $ 82 Accounts receivable 77 Inventory 95 Other assets 90 Property and equipment 2,521 Intangible assets 1,530 Goodwill 262 Accounts payable and accrued expenses (1,167 ) Total net identifiable assets $ 3,490 |
Trade Notes Receivable
Trade Notes Receivable | 12 Months Ended |
Dec. 30, 2018 | |
Receivables [Abstract] | |
Trade Notes Receivable | Note 4. Trade NOTES RECEIVABLE Trade notes receivable are created when the settlement of a delinquent franchisee receivable account is reached, and the entire balance is not immediately paid. Trade notes receivable generally include personal guarantees from the franchisee. The notes are made for the shortest time frame negotiable and will generally carry an interest rate of 6% to 7.5%. Reserve amounts, on the notes, are established based on the likelihood of collection. As of December 30, 2018, these trade notes receivable totaled $277,000, which was net of reserves of $149,000. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Note 5. GOODWILL Goodwill consists of the following (in thousands): December 30, 2018 December 31, 2017 Goodwill: Fatburger $ 529 $ 529 Buffalo’s 5,365 5,365 Hurricane 2,772 - Ponderosa 1,462 1,462 Yalla 263 - Total goodwill $ 10,391 $ 7,356 |
Other Intangible Assets
Other Intangible Assets | 12 Months Ended |
Dec. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Note 6. OTHER INTANGIBLE ASSETS Intangible assets consist of the following (in thousands): December 30, 2018 December 31, 2017 Trademarks: Fatburger $ 2,135 $ 2,135 Buffalo’s 27 27 Hurricane 6,840 - Ponderosa 7,230 7,230 Yalla 1,530 - Total trademarks 17,762 9,392 Franchise agreements: Hurricane – cost 4,180 - Hurricane – accumulated amortization (161 ) - Ponderosa – cost 1,640 1,640 Ponderosa – accumulated amortization (132 ) (21 ) Total franchise agreements 5,527 1,619 Total $ 23,289 $ 11,011 The expected future amortization of the Company’s capitalized franchise agreements is as follows (in thousands): Fiscal year: 2019 $ 432 2020 432 2021 432 2022 432 2023 432 Thereafter 3,367 Total $ 5,527 |
Deferred Income
Deferred Income | 12 Months Ended |
Dec. 30, 2018 | |
Contract with Customer, Liability [Abstract] | |
Deferred Income | Note 7. DEFERRED INCOME Deferred income is as follows (in thousands): December 30, 2018 December 31, 2017 Deferred franchise fees $ 6,711 $ 2,781 Deferred royalties 653 932 Deferred advertising revenue 333 - Total $ 7,697 $ 3,713 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8. Income Taxes 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 current 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 having an interest 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. An inter-company receivable of approximately $15,514,000 due from FCCG and its affiliates will be applied first to reduce excess income tax payment obligations to FCCG under the Tax Sharing Agreement. As of December 30, 2018, FCCG had a federal net operating loss carryforward (the “NOL”) of approximately $88,913,000, which may be used to offset future consolidated taxable income. The NOL expires if not used within twenty years of origination. The following schedule reflects the timing and amount of the NOL that is subject to potential expiration if unused by the end of the indicated fiscal year (in thousands): Fiscal year: 2019 $ 12,654 2020 25,045 2021 2,844 2022 46 2023 76 Thereafter 48,248 Total $ 88,913 For financial reporting purposes, the Company has recorded a tax provision calculated as if the Company files its tax returns on a stand-alone basis. The amount payable to FCCG determined by this calculation of $195,000 was offset against amounts due from FCCG as of December 30, 2018 (See Note 12). Deferred taxes reflect the net effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for calculating taxes payable on a stand-alone basis. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): December 30, 2018 December 31, 2017 Deferred tax assets (liabilities) Deferred income $ 1,779 $ 882 Reserves and accruals 346 451 Intangibles (532 ) (372 ) Deferred state income tax (72 ) (25 ) Tax credits 126 - Share-based compensation 131 - Interest expense 439 - Other 19 1 Total $ 2,236 $ 937 Components of the income tax (benefit) expense are as follows (in thousands): Fiscal Year Ended December 30, 2018 Fiscal Year Ended December 31, 2017 Current Federal $ (79 ) $ 134 State 88 24 Foreign 220 17 229 175 Deferred Federal (381 ) 320 State (123 ) (88 ) (504 ) 232 Total income tax (benefit) expense $ (275 ) $ 407 On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJ Act”) was enacted into law. One major provision of the TCJ Act was the reduction of the corporate tax rate from 34% to 21%, effective January 1, 2018. Income tax provision related to continuing operations differ from the amounts computed by applying the statutory income tax rate to pretax income as follows (in thousands): Fiscal Year Ended Fiscal Year Ended December 30, 2018 December 31, 2017 Tax benefit at statutory rate $ (435 ) $ (70 ) State and local income taxes (27 ) (41 ) Foreign taxes 216 - Tax credits (203 ) - Dividends on mandatorily redeemable preferred stock 200 - Tax law changes - 505 Other (26 ) 13 Total income tax (benefit) expense $ (275 ) $ 407 As of December 30, 2018, the Company’s subsidiaries’ annual tax filings for the prior three years are open for audit by Federal and for the prior four years for state tax agencies. The Company is the beneficiary of indemnification agreements from the prior owners of the subsidiaries for tax liabilities related to periods prior to its ownership of the subsidiaries. Management evaluated the Company’s overall tax positions and has determined that no provision for uncertain income tax positions is necessary as of December 30, 2018. |
Debt
Debt | 12 Months Ended |
Dec. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Note 9. DEBT Senior Secured Redeemable Debentures On April 27, 2018, the Company established a credit facility with TCA Global Credit Master Fund, LP (“TCA”). The Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with TCA, pursuant to which TCA agreed to lend the Company up to $5,000,000 through the purchase of Senior Secured Redeemable Debentures issued by the Company (the “Debentures”). A total of $2,000,000 was funded by TCA in connection with the initial closing on April 27, 2018, and the Company issued to TCA an initial Debenture with a face amount of $2,000,000, maturing on October 27, 2019 and bearing interest at the rate of 15% per annum. The Company had the right to prepay the Debentures, in whole or in part, at any time prior to maturity without penalty. The Debentures required interest only payments during the first four months, followed by fully amortizing payments for the balance of the term. The Company paid a commitment fee of 2% of issued Debentures for the facility and agreed to pay an investment banking fee of $170,000 upon maturity of the Debentures. The Company used the net proceeds for working capital purposes and repayment of other indebtedness. The amounts borrowed under the Purchase Agreement were guaranteed by the Company’s operating subsidiaries and by FCCG, pursuant to a Guaranty Agreement in favor of TCA. The Company’s obligations under the Debentures were also secured by a Security Agreement, granting TCA a security interest in substantially all of its assets. In addition, FCCG’s obligations under the Guaranty Agreement were secured by a pledge in favor of TCA of certain shares of common stock that Fog Cutter holds in the Company. During the term of the Purchase Agreement, the Company was prohibited from incurring additional indebtedness, with customary exceptions for ordinary course financing arrangements and subordinated indebtedness. The entire balance of the Debenture was paid in full on July 3, 2018, and the credit facility was terminated. The Company recognized interest expense of $62,000 for the fiscal year ended December 30, 2018. Additionally, the Company recognized debt offering costs of $143,000 and the investment banking fee of $170,000. Term Loan On July 3, 2018, the Company as borrower, and certain of the Company’s direct and indirect subsidiaries and affiliates as guarantors, entered into a new Loan and Security Agreement (the “Loan Agreement”) with FB Lending, LLC (the “Lender”). Pursuant to the Loan Agreement, the Company borrowed $16.0 million in a term loan (“Term Loan”) from the Lender. The Company used a portion of the loan proceeds to fund (i) the cash payment of $8.0 million to the members of Hurricane and closing costs in connection with the acquisition of Hurricane, and (ii) to repay borrowings of $2.0 million plus interest and fees owing under the Company’s existing loan facility with TCA Global Credit Master Fund, LP. The Company used the remaining proceeds for general working capital purposes. The term loan under the Loan Agreement matures on June 30, 2020. Interest on the term loan accrues at an annual fixed rate of 15.0%. The Company may prepay all or a portion of the outstanding principal and accrued unpaid interest under the Loan Agreement at any time upon prior notice to the Lender, subject to a prepayment penalty of 10% in the first year and 5% in the second year of the term loan. The Company is required to prepay all or a portion of the outstanding principal and accrued unpaid interest under the Loan Agreement in connection with certain dispositions of assets, extraordinary receipts, issuances of additional debt or equity, or a change of control of the Company. In connection with the Loan Agreement, the Company also issued warrants to purchase up to 499,000 shares of the Company’s Common Stock at $7.35 per share to the Lender (the “Lender Warrant”). Warrants were also issued to certain loan placement agents to purchase 65,306 shares of the Company’s common stock at $7.35 per share (the “Placement Agent Warrants”). (See Note 15) As security for its obligations under the Loan Agreement, the Company granted a lien on substantially all of its assets to the Lender. In addition, certain of the Company’s direct and indirect subsidiaries and affiliates entered into a Guaranty (the “Guaranty”) in favor of the Lender, pursuant to which they guaranteed the obligations of the Company under the Loan Agreement and granted as security for their guaranty obligations a lien on substantially all of their assets. The Loan Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company’s ability to, among other things, incur other indebtedness, grant liens, merge or consolidate, dispose of assets, pay dividends or make distributions, in each case subject to customary exceptions. The Loan Agreement also includes customary events of default that include, among other things, non-payment, inaccuracy of representations and warranties, covenant breaches, events that result in a material adverse effect (as defined in the Loan Agreement), cross default to other material indebtedness, bankruptcy, insolvency and material judgments. The occurrence and continuance of an event of default could result in the acceleration of the Company’s obligations under the Loan Agreement and an increase in the interest rate by 5.0% per annum. On the issuance date, the Company allocated the proceeds between Term Loan and the Lender Warrant based on the relative fair values of each. The aggregate values assigned upon issuance of each component were as follows (in thousands): Warrants (equity component) Term Loan (debt component) Total Gross proceeds $ 571 $ 15,429 $ 16,000 Issuance costs - 868 868 Net proceeds $ 571 $ 14,561 $ 15,132 Balance sheet impact at issuance: Long-term debt, net of discount and offering costs $ - $ 14,561 $ 14,561 Additional paid-in capital $ 571 $ 78 $ 649 As of December 30, 2018, the total principal amount due under the Term Loan was $16,400,000. As of the same date, the net carrying value of the Term Loan $15,400,000, which includes an unaccreted debt discount of $349,000 associated with the warrants and unamortized debt offering costs of $651,000. The Term Loan was repaid in full on January 29, 2019 and is categorized as “Term loan” in the accompanying financial statements. The Company recognized interest expense on the Term Loan of $3,301,000 for the fiscal year ended December 30, 2018, which includes $400,000 of additional principal and $1,360,000 of prepayment penalties, $222,000 in accretion expense and $217,000 for amortization of debt offering costs. |
Note Payable to FCCG
Note Payable to FCCG | 12 Months Ended |
Dec. 30, 2018 | |
Debt Disclosure [Abstract] | |
Note Payable to FCCG | Note 10. NOTE PAYABLE To FCCG Effective October 20, 2017, FCCG contributed two of its operating subsidiaries, Fatburger and 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 $19,778,000 of the note payable to FCCG was subsequently repaid, reducing the balance to $10,222,000 at June 26, 2018. On June 27, 2018, the Company entered into the Note Exchange Agreement, as amended, under which it agreed with FCCG to exchange $9,272,053 of the remaining balance of the Company’s outstanding Related Party Debt for shares of capital stock of the Company in the following amounts: ● $2,000,000 of the Related Party Debt balance was exchanged for 20,000 shares of Series A Fixed Rate Cumulative Preferred Stock of the Company at $100 per share and warrants to purchase 25,000 of the Company’s common stock with an exercise price of $8.00 per share; and ● A portion of the remaining Related Party Debt balance of $7,272,053 was exchanged for 989,395 shares of Common Stock of the Company, representing an exchange price of $7.35 per share, which was the closing trading price of the Common Stock on June 26, 2018. Following the exchange, the remaining balance of the Related Party Debt was $950,000. As of December 30, 2018, the Related Party Debt had been repaid in full. The transactions described above were exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws. The Company recognized interest expense on the note payable to FCCG of $888,000 for the fiscal year ended December 30, 2018 and $405,000 for the fiscal year ended December 31, 2017, respectively. |
Mandatorily Redeemable Preferre
Mandatorily Redeemable Preferred Stock | 12 Months Ended |
Dec. 30, 2018 | |
Mandatorily Redeemable Preferred Stock | |
Mandatorily Redeemable Preferred Stock | Note 11. MANDaTORilY REDEEMABLE PREFERRED STOCK Series A Fixed Rate Cumulative Preferred Stock On June 8, 2018, the Company filed a Certificate of Designation of Rights and Preferences of Series A Fixed Rate Cumulative Preferred Stock (“Series A Preferred Stock”) with the Secretary of State of the State of Delaware (the “Certificate of Designation”), designating a total of 100,000 shares of Series A Preferred Stock. The Certificate of Designation contains the following terms pertaining to the Series A Preferred Stock: Dividends Voting Rights Liquidation and Redemption In addition, prior to the Series A Mandatory Redemption Date, the Company may optionally redeem the Series A Preferred Stock, in whole or in part, at the following redemption prices per share, plus any accrued and unpaid dividends: (i) On or prior to June 30, 2021: $115.00 per share. (ii) After June 30, 2021 and on or prior to June 30, 2022: $110.00 per share. (iii) After June 30, 2022: $100.00 per share. Holders of Series A Preferred Stock may also optionally cause the Company to redeem all or any portion of their shares of Series A Preferred Stock beginning any time after the two-year anniversary of the initial issuance date for an amount equal to $100.00 per share plus any accrued and unpaid dividends, which amount may be settled in cash or Common Stock of the Company, at the option of the holder. If a holder elects to receive Common Stock, the shares will be issued based on the 20-day volume weighted average price of the Common Stock immediately preceding the date of the holder’s redemption notice. As of December 30, 2018, there were 100,000 shares of Series A Preferred stock outstanding, issued in the following two transactions: (i) On June 7, 2018, the Company entered into a Subscription Agreement for the issuance and sale (the “Offering”) of 800 units (the “Units”), with each Unit consisting of (i) 100 shares of the Company’s newly designated Series A Fixed Rate Cumulative Preferred Stock (the “Series A Preferred Stock”) and (ii) warrants (the “Series A Warrants”) to purchase 125 shares of the Company’s Common Stock at $8.00 per share. The sales price of each Unit was $10,000, resulting in gross proceeds to the Company from the initial closing of $8,000,000 and the issuance of 80,000 shares of Series A Preferred Stock and Series A Warrants to purchase 100,000 shares of common stock (the “Subscription Warrants”). (ii) On June 27, 2018, the Company entered into a Note Exchange Agreement, as amended, under which it agreed with FCCG to exchange all but $950,000 of the remaining balance of the Company’s outstanding Promissory Note issued to the FCCG on October 20, 2017, in the original principal amount of $30,000,000 (the “Note”). At the time, the Note had an estimated outstanding balance of principal plus accrued interest of $10,222,000 (the “Note Balance”). On June 27, 2018, $9,272,053 of the Note Balance was exchanged for shares of capital stock of the Company and warrants in the following amounts (the “Exchange Shares”): ● $2,000,000 of the Note Balance was exchanged for 200 Units consisting of 20,000 shares of Series A Fixed Rate Cumulative Preferred Stock of the Company at $100 per share and Series A Warrants to purchase 25,000 of the Company’s common stock at an exercise price of $8.00 per share (the “Exchange Warrants”); and ● $7,272,053 of the Note Balance was exchanged for 989,395 shares of Common Stock of the Company, representing an exchange price of $7.35 per share, which was the closing trading price of the Common Stock on June 26, 2018. The Company classified the Series A Preferred Stock as long-term debt because it contains an unconditional obligation requiring the Company to redeem the instruments at $100.00 per share on the Mandatory Redemption Date. The Series A Warrants have been recorded as additional paid-in capital. On the issuance date, the Company allocated the proceeds between the Series A Preferred Stock and the Series A Warrants based on the relative fair values of each. The aggregate values assigned upon issuance of each component were as follows (amounts in thousands, except price per unit): Series A Warrants (equity component) Mandatorily Redeemable Series A Preferred Stock (debt component) Total Subscription Agreement: Gross proceeds $ 87 $ 7,913 $ 8,000 Issuance costs - 15 15 Net proceeds 87 7,898 7,985 Exchange Shares: 25 1,975 2,000 Total proceeds $ 112 $ 9,873 $ 9,985 Subscription price per unit $ 108.75 $ 9,891.25 $ 10,000 Balance sheet impact at issuance: Long-term debt, net of debt discount and offering costs $ - $ 9,873 $ 9,873 Additional paid-in capital $ 112 $ - $ 112 As of December 30, 2018, the net Series A Preferred Stock balance was $9,888,000 including an unaccreted debt discount of $99,000 associated with the warrants and unamortized debt offering costs of $14,000. The Company recognized interest expense on the Series A Preferred Stock of $785,000 for the fiscal year ended December 30, 2018. Also, the Company recognized accretion expense on the Series A Preferred Stock of $13,000 for the fiscal year ended December 30, 2018, as well as $2,000 for the amortization of debt offering costs. Each of these stock issuances was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws. Each of the investors in the Offering represented that it is an accredited investor within the meaning of Rule 501(a) of Regulation D and was acquiring the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any general solicitation by the Company or its representatives. Series A-1 Fixed Rate Cumulative Preferred Stock On July 3, 2018, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation of Rights and Preferences of Series A-1 Fixed Rate Cumulative Preferred Stock (the “Series A-1 Certificate of Designation”), designating a total of 200,000 shares of Series A-1 Fixed Rate Cumulative Preferred Stock (the “Series A-1 Preferred Stock”). As of December 30, 2018, there were 45,000 shares of Series A-1 Preferred Stock issued and outstanding. The Series A-1 Certificate of Designation contains the following terms pertaining to the Series A-1 Preferred Stock: Dividends Voting Rights Liquidation and Redemption. Holders of Series A-1 Preferred Stock may also optionally cause the Company to redeem all or any portion of their shares of Series A-1 Preferred Stock beginning any time after the two-year anniversary of the initial issuance date for an amount equal to $100.00 per share plus any accrued and unpaid dividends, which amount may be settled in cash or Common Stock of the Company, at the option of the holder. If a holder elects to receive Common Stock, shares will be issued as payment for redemption at the rate of $12.00 per share of Common Stock. As of December 30, 2018, there were 45,000 shares of Series A-1 Preferred Stock outstanding, issued in connection with the acquisition of Hurricane. On July 3, 2018, in connection with the acquisition of Hurricane, the Company agreed to issue $4,500,000 of equity units of the Company valued at $10,000 per unit, or a total of 450 units. Each unit consists of (i) 100 shares of the Company’s newly designated Series A-1 Preferred Stock and (ii) a warrant to purchase 125 shares of the Company’s Common Stock at $8.00 per share (the “Hurricane Warrants”). The Company also entered into a Registration Rights Agreement with the Sellers under which the Company agreed to prepare and file a registration statement with the Securities and Exchange Commission to register for resale the Series A-1 Preferred Stock and shares of Common Stock issuable upon exercise of the Hurricane Warrants and upon conversion of the Series A-1 Preferred Stock. The Company classified the Series A-1 Preferred Stock as long-term debt because it contains an unconditional obligation requiring the Company to redeem the instruments at $100.00 per share on the Series A-1 Mandatory Redemption Date. The associated Hurricane Warrants have been recorded as additional paid-in capital. On the issuance date, the Company allocated the proceeds between the Series A-1 Preferred Stock and the Hurricane Warrants based on the relative fair values of each. In addition, because the effective conversion price of the Series A-1 Preferred Stock is lower than the contractual conversion price, the Company also recorded a beneficial conversion feature to additional paid in capital. The aggregate values assigned upon issuance of each component were as follows (amounts in thousands, except price per unit): Conversion Feature (equity component) Hurricane Warrants (equity component) Mandatorily Redeemable Series A-1 Preferred Stock (debt component) Total Hurricane Acquisition: Gross proceeds $ 90 $ 91 $ 4,319 $ 4,500 Issuance costs - - 35 35 Net proceeds $ 90 $ 91 $ 4,284 $ 4,465 Subscription price per unit $ 201.07 $ 201.07 $ 9,597.86 $ 10,000.00 Balance sheet impact at issuance: Long-term debt, net of debt discount and offering costs $ - $ - $ 4,284 $ 4,284 Additional paid-in capital $ 90 $ 91 $ - $ 181 As of December 30, 2018, the net Series A-1 Preferred Stock balance was $4,303,000 including an unaccreted debt discount of $166,000 associated with the warrants and beneficial conversion feature and unamortized debt offering costs of $31,000. The Company recognized interest expense on the Series A-1 Preferred Stock of $135,000 for the fiscal year ended December 30, 2018. Also, the Company recognized accretion expense on the Series A-1 Preferred Stock of $15,000, as well as $4,000 for the amortization of debt offering costs. Each of these stock issuances was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws. Each of the investors in the Offering represented that it is an accredited investor within the meaning of Rule 501(a) of Regulation D and was acquiring the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any general solicitation by the Company or its representatives. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 12. Related Party Transactions The Company had open accounts with affiliated entities under the common control of FCCG resulting in net amounts due to the Company of $15,514,000 as of December 30, 2018. Beginning October 20, 2017, the receivable from FCCG bears interest at a rate of 10% per annum. During the fiscal year ended December 30, 2018, $1,125,000 of accrued interest income was added to the balance of the receivable from FCCG. The balance of Due From Affiliates includes a preferred capital investment in Homestyle Dining LLC, a Delaware limited liability corporation (“HSD”) in the amount of $4.0 million made effective July 5, 2018 (the “Preferred Interest”). FCCG owns all of the common interests in HSD. The holder of the Preferred Interest is entitled to a 15% priority return on the outstanding balance of the investment (the “Preferred Return”). Any available cash flows from HSD on a quarterly basis are to be distributed to pay the accrued Preferred Return and repay the Preferred Interest until fully retired. On or before the five-year anniversary of the investment, the Preferred Interest is to be fully repaid, together with all previously accrued but unpaid Preferred Return. FCCG has unconditionally guaranteed repayment of the Preferred Interest in the event HSD fails to do so. Prior to the Offering, the Company’s operations were insignificant other than structuring the Offering. During this time, FCCG provided executive administration and accounting services for the Company. The Company reimbursed FCCG for out-of-pocket costs associated with these services, but there was no allocation of FCCG’s overhead costs. Effective with the Offering, the Company assumed all direct and indirect administrative functions relating to its business. During the fiscal year ended December 30, 2018, the Company recognized payables to FCCG in the amount of $195,000 for use of FCCG’s net operating losses for tax purposes (See Note 8). |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 30, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | Note 13. SHAREHOLDERS’ EQUITY As of December 30, 2018 and December 31, 2017, the total number of authorized shares of common stock was 25,000,000, and there were 11,546,589 and 10,000,000 shares of common stock outstanding, respectively. Below are the changes to the Company’s common stock during the fiscal year ended December 30, 2018: ● On April 16, 2018, the Company issued 153,600 shares of common stock at a value of $6.25 per share to FCCG in lieu of cash for payment of common stock dividends (See Note 16). ● On June 15, 2018, the Company issued a total of 41,772 shares of common stock at a value of $7.90 per share to the non-employee members of the board of directors as consideration for accrued directors’ fees. ● One June 27, 2018, the Company and FCCG agreed to exchange $7,272,053 of an outstanding promissory note due to FCCG from the Company for 989,395 shares of Common Stock at a value of $7.35 per share. (See Note 10). ● On July 16, 2018, the Company issued 157,765, shares of common stock at a value of $6.085 per share to FCCG in lieu of cash for payment of common stock dividends (See Note 16). ● On September 20, 2018, the Company issued a total of 10,482 shares of common stock at a value of $8.59 per share to the non-employee members of the board of directors as consideration for accrued directors’ fees. ● On October 31, 2018, the Company issued 176,877, shares of common stock at a value of $6.31 per share to FCCG in lieu of cash for payment of common stock dividends (See Note 16). ● On December 10, 2018, the Company issued a total of 16,698 shares of common stock at a value of $5.39 per share to the non-employee members of the board of directors as consideration for accrued directors’ fees. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 30, 2018 | |
Equity [Abstract] | |
Share-Based Compensation | Note 14. SHARE-BASED COMPENSATION Effective September 30, 2017, the Company adopted the 2017 Omnibus Equity Incentive Plan (the “Plan”). The Plan is a comprehensive incentive compensation plan under which the Company can grant equity-based and other incentive awards to officers, employees and directors of, and consultants and advisers to, FAT Brands Inc. and its subsidiaries. The Plan provides a maximum of 1,000,000 shares available for grant. All of the stock options issued by the Company to date have included a vesting period of three years, with one-third of each grant vesting annually. The Company’s stock option activity for the fiscal year ended December 30, 2018 can be summarized as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Stock options outstanding at December 31, 2017 362,500 $ 12.00 8.8 Grants 335,000 $ 6.08 9.9 Forfeited (30,000 ) $ 12.00 9.1 Expired - $ - - Stock options outstanding at December 30, 2018 667,500 $ 9.03 9.3 Stock options exercisable at December 30, 2018 119,173 $ 12.00 8.8 The assumptions used in the Black-Scholes valuation model to record the stock-based compensation are as follows: Including Non-Employee Options Expected dividend yield 4.00% - 8.91 % Expected volatility 30.23% - 31.73 % Risk-free interest rate 1.60% - 2.85 % Expected term (in years) 5.50 – 5.75 The Company recognized share-based compensation expense in the amount of $439,000 during the fiscal year ended December 30, 2018. There remains $433,000 of related share-based compensation expense relating to these non-vested grants, which will be recognized over the remaining vesting period, subject to future forfeitures. |
Warrants
Warrants | 12 Months Ended |
Dec. 30, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Warrants | Note 15. WARRANTS From the Offering through December 30, 2018, the Company has issued the following outstanding warrants to purchase shares of its common stock: ● Warrants issued on October 20, 2017 to purchase 80,000 shares of the Company’s stock granted to the selling agent in the Company’s initial public offering (the “Common Stock Warrants”). The Common Stock Warrants are exercisable commencing April 20, 2018 through October 20, 2022. The exercise price for the Common Stock Warrants is $15 per share, and the Common Stock Warrants are valued at $124,000. The Common Stock Warrants provide that upon exercise, the Company may elect to redeem the Common Stock Warrants in cash by paying the difference between the applicable exercise price and the then-current fair market value of the common stock. ● Warrants issued on June 7, 2018 to purchase 100,000 shares of the Company’s common stock at $8.00 per share (the “Subscription Warrants”). The Subscription Warrants were issued as part of the Subscription Agreement (see Note 11). The Subscription Warrants are valued at $87,000. The Subscription Warrants may be exercised at any time or times beginning on the issue date and ending on the five-year anniversary of the issue date. ● Warrants issued on June 27, 2018 to purchase 25,000 shares of the Company’s common stock at $8.00 per share (the “Exchange Warrants”). The Exchange Warrants were issued as part of the Exchange (See Notes 10 and 11). The Exchange Warrants are valued at $25,000. The Exchange Warrants may be exercised at any time or times beginning on the issue date and ending on the five-year anniversary of the issue date. ● Warrants issued on July 3, 2018 to purchase 56,250 shares of the Company’s common stock at $8.00 per share (the “Hurricane Warrants”). The Hurricane Warrants were issued as part of the acquisition of Hurricane (See Notes 3 and 11). The Hurricane Warrants are valued at $58,000. The Hurricane Warrants may be exercised at any time or times beginning on the issue date and ending on the five-year anniversary of the issue date. ● Warrants issued on July 3, 2018 to purchase 499,000 shares of the Company’s common stock at $7.35 per share (the “Lender Warrant”). The Lender Warrant was issued as part of the $16 million credit facility with FB Lending, LLC (See Note 9). The Lender Warrant is valued at $592,000. The Lender Warrant may be exercised at any time or times beginning on the issue date and ending on the five-year anniversary of the issue date. ● Warrants issued on July 3, 2018 to purchase 65,306 shares of the Company’s common stock at $7.35 per share (the “Placement Agent Warrants”). The Placement Agent Warrants were issued to the placement agents of the $16 million credit facility with FB Lending, LLC (See Note 9). The Placement Agent Warrants are valued at $78,000. The Placement Agent Warrants may be exercised at any time or times beginning on the issue date and ending on the five-year anniversary of the issue date. The Company’s warrant activity for the fiscal year ended December 30, 2018 is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Warrants outstanding at December 31, 2017 80,000 $ 15.00 3.81 Grants 745,556 $ 7.51 4.50 Exercised - $ - - Forfeited - $ - - Expired - $ - - Warrants outstanding at December 30, 2018 825,556 $ 8.23 4.43 Warrants exercisable at December 30, 2018 825,556 $ 8.23 4.43 The weighted average fair value of the warrants granted from the Offering through December 30, 2018 and the assumptions used in the Black-Scholes valuation model are as follows: Warrants Expected dividend yield 4.00% - 6.63 % Expected volatility 31.73 % Risk-free interest rate 0.99% - 1.91 % Expected term (in years) 5.00 |
Dividends on Common Stock
Dividends on Common Stock | 12 Months Ended |
Dec. 30, 2018 | |
Equity [Abstract] | |
Dividends on Common Stock | Note 16. DIVIDENDS ON COMMON STOCK The Company’s Board of Directors has declared the following quarterly dividends on common stock during the fiscal year ended December 30, 2018: Declaration Date Record Date Payment Date Dividend per Share Amount of Dividend February 8, 2018 March 30, 2018 April 16, 2018 $ 0.12 $ 1,200,000 June 27, 2018 July 6, 2018 July 16, 2018 $ 0.12 1,351,517 October 8, 2018 October 18, 2018 October 31, 2018 $ 0.12 1,362,362 $ 3,913,879 Subsequent to fiscal 2018, the Company declared a stock dividend on February 7, 2019 equal to 2.13% on its common stock, representing the number of shares equal to $0.12 per share of common stock based on the closing price as of February 6, 2019. The stock dividend was paid on February 28, 2019 to stockholders of record as of the close of business on February 19, 2019. The Company issued 245,376 shares of common stock at a per share price of $5.64 in satisfaction of the dividend. No fractional shares were issued, instead the Company paid stockholders cash-in-lieu of shares. On each dividend payment date, FCCG elected to reinvest all, or a significant portion of, its dividend from its common shares of the Company at the closing market price of the shares on the payment date. As a result, on April 16, 2018, the Company issued 153,600 shares of common stock to FCCG at a price of $6.25 per share in satisfaction of $960,000 dividend payable. On July 16, 2018, the Company issued 157,765 shares of common stock to FCCG at a price of $6.085 per share in satisfaction of $960,000 dividend payable. On October 31, 2018, the Company issued 176,877 shares of common stock to FCCG at a price of $6.31 per share in satisfaction of the $1,116,091 dividend payable. The issuance of these shares to FCCG was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D under the Securities Act as transactions by an issuer not involving a public offering. FCCG acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 17. Commitments and Contingencies Litigation Eric Rojany, et al. v. FAT Brands Inc., et al. Daniel Alden, et al. v. FAT Brands Inc., et al. On June 7, 2018, plaintiff Eric Rojany, a putative investor in the Company, filed a putative class action lawsuit against the Company, Andrew Wiederhorn, Ron Roe, Fog Cutter Capital Group, Inc., Tripoint Global Equities, LLC and members of the Company’s board of directors, entitled Rojany v. FAT Brands Inc. Alden v. FAT Brands, Inc. Rojany Alden Rojany The Company and other defendants dispute the allegations of the lawsuit and intend to vigorously defend against the claims. Adam Vignola, et al. v. FAT Brands Inc., et al. On August 24, 2018, plaintiff Adam Vignola, a putative investor in the Company, filed a putative class action lawsuit against the Company, Andrew Wiederhorn, Ron Roe, Fog Cutter Capital Group, Inc., Tripoint Global Equities, LLC and members of the Company’s board of directors, entitled Vignola v. FAT Brands Inc. Vignola Rojany Rojany The Company and other defendants dispute the allegations of the lawsuit and intend to vigorously defend against the claims. The Company is obligated to indemnify its officers and directors to the extent permitted by applicable law in connection with the above actions, and has insurance for such individuals, to the extent of the limits of the applicable insurance policies and subject to potential reservations of rights. The Company is also obligated to indemnify Tripoint Global Equities, LLC under certain conditions relating to the Rojany Vignola The Company is involved in other claims and legal proceedings from time-to-time that arise in the ordinary course of business. The Company does not believe that the ultimate resolution of these actions will have a material adverse effect on its business, financial condition, results of operations, liquidity or capital resources. Operating Leases The Company leases corporate headquarters located in Beverly Hills, California comprising 5,478 square feet of space, pursuant to a lease that expires on April 30, 2020. The Company also leases 1,775 square feet of space in Plano, TX for our administrative and culinary operations for Bonanza and Ponderosa pursuant to a lease that expires on March 31, 2021. Our subsidiary, Yalla Acquisition, LLC, leases seven properties in California being operated as Yalla Mediterranean restaurants. It is our intention to identify franchisees who will operate these restaurants and assume the related lease liabilities. The Company believes that all existing facilities are in good operating condition and adequate to meet current and foreseeable needs. |
Geographic Information and Majo
Geographic Information and Major Franchisees | 12 Months Ended |
Dec. 30, 2018 | |
Geographic Information And Major Franchisees | |
Geographic Information and Major Franchisees | Note 18. geographic information AND MAJOR FRANCHISEES R Fiscal Year Ended December 30, 2018 Fiscal Year Ended December 31, 2017 United States $ 14,023 $ 1,681 Other countries 4,344 492 Total revenues $ 18,367 $ 2,173 Revenues are shown based on the geographic location of our licensee restaurants. All our assets are located in the United States. During the fiscal years ended December 30, 2018 and December 31, 2017, no individual franchisee accounted for more than 10% of the Company’s revenues. |
Operating Segments
Operating Segments | 12 Months Ended |
Dec. 30, 2018 | |
Segment Reporting [Abstract] | |
Operating Segments | NOTE 19. OPERATING SEGMENTS With minor exceptions, the Company’s operations are comprised exclusively of franchising a growing portfolio of restaurant brands. This growth strategy is centered on expanding the footprint of existing brands and acquiring new brands through a centralized management organization which provides substantially all executive leadership, marketing, training and accounting services. While there are variations in the brands, the nature of the Company’s business is fairly consistent across its portfolio. Consequently, management assesses the progress of the Company’s operations as a whole, rather than by brand or location which become more significant as the number of brands has increased. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM reviews financial performance and allocates resources at an overall level on a recurring basis. Therefore, management has determined that the Company has one operating and reportable segment. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 20. SUBSEQUENT EVENTS Pursuant to FASB ASC 855, Management has evaluated all events and transactions that occurred from December 30, 2018 through the date of issuance of these financial statements. During this period, the Company did not have any significant subsequent events, except as disclosed below: Loan Agreement On January 29, 2019, the Company refinanced its existing lending facility with FB Lending, LLC (See Note 9). The Company as borrower, and its subsidiaries and affiliates as guarantors, entered into a new Loan and Security Agreement (the “Loan and Security Agreement”) with The Lion Fund, L.P. and The Lion Fund II, L.P. (“Lion”). Pursuant to the Loan and Security Agreement, the Company borrowed $20.0 million from Lion, and utilized the proceeds to repay the existing $16.0 million term loan from FB Lending, LLC plus accrued interest and fees, and provide additional general working capital to the Company. The term loan under the Loan and Security Agreement matures on June 30, 2020. Interest on the term loan accrues at an annual fixed rate of 20.0% and is payable quarterly. The Company may prepay all or a portion of the outstanding principal and accrued unpaid interest under the Loan and Security Agreement at any time upon prior notice to Lion without penalty, other than a make-whole provision providing for a minimum of six months’ interest. The Company is required to prepay all or a portion of the outstanding principal and accrued unpaid interest under the Loan and Security Agreement in connection with certain dispositions of assets, extraordinary receipts, issuances of additional debt or equity, or a change of control of the Company. In connection with the Loan and Security Agreement, the Company issued to Lion a warrant to purchase up to 1,143,112 shares of the Company’s Common Stock at $0.01 per share (the “Lion Warrant”), exercisable only if the amounts outstanding under the Loan and Security Agreement are not repaid in full prior to October 1, 2019. If the Loan and Security Agreement is repaid in full prior to October 1, 2019, the Lion Warrant will terminate in its entirety. As security for its obligations under the Loan Agreement, the Company granted a lien on substantially all of its assets to Lion. In addition, certain of the Company’s direct and indirect subsidiaries and affiliates entered into a Guaranty (the “ Guaranty The Loan and Security Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company’s ability to, among other things, incur other indebtedness, grant liens, merge or consolidate, dispose of assets, pay dividends or make distributions, in each case subject to customary exceptions. The Loan and Security Agreement also includes customary events of default that include, among other things, non-payment, inaccuracy of representations and warranties, covenant breaches, events that result in a material adverse effect (as defined in the Loan and Security Agreement), cross default to other material indebtedness, bankruptcy, insolvency and material judgments. The occurrence and continuance of an event of default could result in the acceleration of the Company’s obligations under the Loan and Security Agreement and an increase in the interest rate by 5.0% per annum. Dividend Payable On February 7, 2019, the Company declared a stock dividend equal to 2.13% on its common stock, representing the number of shares equal to $0.12 per share of common stock based on the closing price as of February 6, 2019. The stock dividend was paid on February 28, 2019 to stockholders of record as of the close of business on February 19, 2019. The Company issued 245,376 shares of common stock at a per share price of $5.64 in satisfaction of the dividend. No fractional shares were issued, instead the Company paid stockholders cash-in-lieu of shares. Share Issuance On February 22, 2019, the Company issued a total of 15,384 shares of common stock at a value of $5.85 per share to the non-employee members of the board of directors as consideration for accrued directors’ fees. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 30, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS FOR THE FISCAL YEAR ENDED DECEMBER 30, 2018 Dollars in thousands Balance at Beginning of Period Charged to Costs and Expenses Deductions/ Recoveries Balance at End of Period Allowance for: Trade notes and accounts receivable $ 713 $ 89 $ (58 ) $ 744 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 30, 2018 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of operations The Company operates on a 52-week calendar and its fiscal year ends on the last Sunday of the calendar year. Consistent with the industry practice, the Company measures its stores’ performance based upon 7-day work weeks. Using the 52-week cycle ensures consistent weekly reporting for operations and ensures that each week has the same days, since certain days are more profitable than others. The use of this fiscal year means a 53 rd |
Principles of Consolidation | Principles of consolidation |
Use of Estimates in the Preparation of the Consolidated Financial Statements | Use of estimates in the preparation of the consolidated financial statements |
Financial Statement Reclassification | Financial statement reclassification |
Accounts Receivable | Accounts receivable |
Trade Notes Receivable | Trade notes receivable – |
Goodwill and Other Intangible Assets | Goodwill and other intangible assets |
Income Taxes | Income taxes The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. A two-step approach is utilized to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon the ultimate settlement. |
Franchise Fees and Royalty Revenue | Franchise fees and royalty revenue |
Store Opening Fees | Store opening fees – |
Advertising | Advertising – |
Share-based Compensation | Share-based compensation |
Earnings Per Share | Earnings per share Subsequent to December 30, 2018, the Company declared a stock dividend on February 7, 2019 and issued 245,376 shares of common stock in satisfaction of the dividend (See Note 20). Earnings per share for 2018 and 2017 have been adjusted retrospectively to reflect the impact of the stock dividend. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts With Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods and services to customers. The updated standard replaces most existing revenue recognition guidance in U.S. GAAP. These standards became effective for the Company on January 1, 2018. These standards require that the transaction price received from customers be allocated to each separate and distinct performance obligation. The transaction price attributable to each separate and distinct performance obligation is then recognized as the performance obligations are satisfied as specified in the contract. The services we provide related to store openings contain separate and distinct performance obligations from the franchise right and thus those store opening fees will be recognized as revenue upon store opening. The balance of any upfront fees collected from franchisee not related to the store opening are amortized over the term of each respective franchise agreement. Previously, we recognized upfront franchise fees such as initial and renewal fees when the related services have been provided, which is when a store opened for initial fees and when renewal options became effective for renewal fees. These standards require any unamortized portion of fees received prior to adoption be presented in the consolidated balance sheet as a contract liability. The new standards also had an impact on transactions previously not included in the Company’s revenues and expenses such as franchisee contributions to and subsequent expenditures from advertising arrangements with franchisees. The Company did not previously include these contributions and expenditures in its consolidated statements of operations or cash flows. Under the new standards, the Company will recognize advertising fees and the related expense in its consolidated statements of operations or cash flows. The Company will also consolidate the assets and liabilities related to advertising funds on its balance sheet. These standards will not impact the recognition of our sales-based royalties from franchisees, which is generally our largest source of revenue. We have implemented internal controls related to the recognition and presentation of the Company’s revenues under these new standards. The Company adopted ASU 2014-09 on January 1, 2018 using the modified retrospective method, in which the cumulative effect of applying the standard would be recognized at the date of initial application. An adjustment to increase deferred revenue in the amount of $3,400,000 was established on the date of adoption relating to fees received through December 31, 2017 that would have been deferred and recognized over the term of each respective franchise store agreement if the new guidance had been applied in the past. A deferred tax asset of $793,000 related to this contract liability was also established on the date of adoption. These adjustments had the net effect of increasing beginning accumulated deficit by approximately $2,607,000. Adopting the new accounting standards for revenue affected several financial statement line items for the fiscal year ended December 30, 2018. The following tables provide the affected amounts as reported in these Unaudited Consolidated Financial Statements compared with what they would have been if the previous accounting guidance had remained in effect. As of December 30, 2018 (in thousands) Amounts As Reported Amounts Under Previous Accounting Guidance Unaudited Consolidated Balance Sheet: Cash $ 653 $ 501 Accounts receivable $ 1,779 $ 1,406 Other current assets $ 1,042 $ 1,038 Due from affiliates $ 15,514 $ 15,144 Deferred income taxes $ 2,236 $ 1,440 Buffalo’s Creative and Advertising Fund $ - $ 428 Buffalo’s Creative and Advertising Fund - Contra $ - $ (428 ) Accounts payable $ 4,415 $ 3,984 Deferred income $ 7,697 $ 4,644 Accrued expenses $ 3,705 $ 3,487 Accrued advertising $ 369 $ 463 Accumulated deficit $ (5,018 ) $ (3,092 ) For the fiscal year ended December 30, 2018 (in thousands except per share data) Amounts As Reported Amounts Under Previous Accounting Guidance Unaudited Consolidated Statement of Operations: Franchise fees and store opening fees $ 2,488 $ 1,809 Advertising fees $ 3,182 $ - Advertising expense $ (3,182 ) $ - Net loss $ (1,798 ) $ (2,478 ) Earnings per common share - basic $ (0.16 ) $ (0.23 ) Earnings per common share - diluted $ (0.16 ) $ (0.23 ) For the fiscal year ended December 30, 2018 (in thousands) Amounts As Reported Amounts Under Previous Accounting Guidance Unaudited Consolidated Statement of Cash Flows: Net loss $ (1,798 ) $ (2,478 ) Adjustments to reconcile net income to net cash provided by operating activities: Accounts receivable $ (301 ) $ (488 ) Deferred income $ (1,659 ) $ 931 Accounts payable and accrued expenses $ 2,226 $ 3,258 Accrued advertising $ (271 ) $ 115 Change in due from affiliates $ (6,742 ) $ (7,181 ) In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to reduce diversity in practice in how transactions are classified in the statement of cash flows. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), requiring a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. This ASU is effective for interim and annual period beginning after December 15, 2018 and requires a modified retrospective approach to adoption for lessees related to capital and operating leases existing at, or entered into after, the earliest comparative period presented in the financial statements, with certain practical expedients available. The adoption of this standard will result in the Company recording Right of Use Assets and Lease Liabilities on its consolidated financial statements. The dollar amount of the Right of Use Assets is projected to be approximately equal to the amount of the Lease Liabilities. The adoption of this standard is not expected to have a significant effect on the amount of lease expense recognized by the Company. In June 2018, the FASB issued ASU No.2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Prior to this update, Topic 718 applied only to share-based transactions to employees. Consistent with the accounting requirements for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. The amendments in the update are effective for public business entities form fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The adoption of this accounting standard is not expected to have a material effect on the Company’s consolidated financial statements. In July 2018, the FASB issued ASU 2018-09, Codification Improvements. This ASU makes amendments to multiple codification Topics. The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments in this ASU do not require transition guidance and will be effective upon issuance of this ASU. However, many of the amendments in this ASU do have transition guidance with effective dates for annual periods beginning after December 15, 2018. The Company is currently assessing the effect that this ASU will have on its financial position, results of operations, and disclosures. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, “Fair Value Measurement.” This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. The Company is currently assessing the effect that this ASU will have on its financial position, results of operations, and disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Affected Amounts Reported in Financial Statements | The following tables provide the affected amounts as reported in these Unaudited Consolidated Financial Statements compared with what they would have been if the previous accounting guidance had remained in effect. As of December 30, 2018 (in thousands) Amounts As Reported Amounts Under Previous Accounting Guidance Unaudited Consolidated Balance Sheet: Cash $ 653 $ 501 Accounts receivable $ 1,779 $ 1,406 Other current assets $ 1,042 $ 1,038 Due from affiliates $ 15,514 $ 15,144 Deferred income taxes $ 2,236 $ 1,440 Buffalo’s Creative and Advertising Fund $ - $ 428 Buffalo’s Creative and Advertising Fund - Contra $ - $ (428 ) Accounts payable $ 4,415 $ 3,984 Deferred income $ 7,697 $ 4,644 Accrued expenses $ 3,705 $ 3,487 Accrued advertising $ 369 $ 463 Accumulated deficit $ (5,018 ) $ (3,092 ) For the fiscal year ended December 30, 2018 (in thousands except per share data) Amounts As Reported Amounts Under Previous Accounting Guidance Unaudited Consolidated Statement of Operations: Franchise fees and store opening fees $ 2,488 $ 1,809 Advertising fees $ 3,182 $ - Advertising expense $ (3,182 ) $ - Net loss $ (1,798 ) $ (2,478 ) Earnings per common share - basic $ (0.16 ) $ (0.23 ) Earnings per common share - diluted $ (0.16 ) $ (0.23 ) For the fiscal year ended December 30, 2018 (in thousands) Amounts As Reported Amounts Under Previous Accounting Guidance Unaudited Consolidated Statement of Cash Flows: Net loss $ (1,798 ) $ (2,478 ) Adjustments to reconcile net income to net cash provided by operating activities: Accounts receivable $ (301 ) $ (488 ) Deferred income $ (1,659 ) $ 931 Accounts payable and accrued expenses $ 2,226 $ 3,258 Accrued advertising $ (271 ) $ 115 Change in due from affiliates $ (6,742 ) $ (7,181 ) |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Hurricane AMT, LLC [Member] | |
Schedule of Allocation of Tangible and Intangible Assets Acquired | The allocation of consideration to the net tangible and intangible assets acquired is presented in the table below (in thousands): Cash $ 358 Accounts receivable 352 Other assets 883 Intangible assets 11,020 Goodwill 2,772 Accounts payable and accrued expenses (643 ) Deferred franchise fees (1,885 ) Other liabilities (357 ) Total net identifiable assets $ 12,500 |
Schedule of Revenue and Earnings | The following table provides information regarding the revenue and earnings of Hurricane included in the accompanying consolidated financial statements since July 3, 2018 (in thousands): Hurricane Revenues Royalties $ 1,589 Franchise fees 22 Advertising fees 868 Other income 7 Total revenues 2,486 Expenses General and administrative 2,164 Income from operations 322 Other expense (217 ) Income before income tax expense 105 Income tax benefit (1 ) Net income $ 106 |
Schedule of Pro Forma Revenue and Earnings | The following unaudited pro forma information presents the revenue and earnings of Hurricane as if it had been acquired on January 1, 2018 (the beginning of the Company’s fiscal year) through December 30, 2018 (in thousands): Pro Forma Hurricane Revenues Royalties $ 3,282 Franchise fees 54 Advertising fees 1,751 Other income 7 Total revenues 5,094 Expenses General and administrative 5,282 Loss from operations (188 ) Other expense (347 ) Loss before income tax benefit (535 ) Income tax benefit (150 ) Net loss $ (385 ) |
Yalla Mediterranean, LLC [Member] | |
Schedule of Allocation of Tangible and Intangible Assets Acquired | The allocation of the total consideration recognized of $3,490,000 to the net tangible and intangible assets acquired in the Yalla Business is presented in the table below (in thousands): Cash $ 82 Accounts receivable 77 Inventory 95 Other assets 90 Property and equipment 2,521 Intangible assets 1,530 Goodwill 262 Accounts payable and accrued expenses (1,167 ) Total net identifiable assets $ 3,490 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill consists of the following (in thousands): December 30, 2018 December 31, 2017 Goodwill: Fatburger $ 529 $ 529 Buffalo’s 5,365 5,365 Hurricane 2,772 - Ponderosa 1,462 1,462 Yalla 263 - Total goodwill $ 10,391 $ 7,356 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consist of the following (in thousands): December 30, 2018 December 31, 2017 Trademarks: Fatburger $ 2,135 $ 2,135 Buffalo’s 27 27 Hurricane 6,840 - Ponderosa 7,230 7,230 Yalla 1,530 - Total trademarks 17,762 9,392 Franchise agreements: Hurricane – cost 4,180 - Hurricane – accumulated amortization (161 ) - Ponderosa – cost 1,640 1,640 Ponderosa – accumulated amortization (132 ) (21 ) Total franchise agreements 5,527 1,619 Total $ 23,289 $ 11,011 |
Schedule of Future Amortization | The expected future amortization of the Company’s capitalized franchise agreements is as follows (in thousands): Fiscal year: 2019 $ 432 2020 432 2021 432 2022 432 2023 432 Thereafter 3,367 Total $ 5,527 |
Deferred Income (Tables)
Deferred Income (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Contract with Customer, Liability [Abstract] | |
Schedule of Deferred Income | Deferred income is as follows (in thousands): December 30, 2018 December 31, 2017 Deferred franchise fees $ 6,711 $ 2,781 Deferred royalties 653 932 Deferred advertising revenue 333 - Total $ 7,697 $ 3,713 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Schedule of Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): December 30, 2018 December 31, 2017 Deferred tax assets (liabilities) Deferred income $ 1,779 $ 882 Reserves and accruals 346 451 Intangibles (532 ) (372 ) Deferred state income tax (72 ) (25 ) Tax credits 126 - Share-based compensation 131 - Interest expense 439 - Other 19 1 Total $ 2,236 $ 937 |
Schedule of Components of the Income Tax Provision (Benefit) | Components of the income tax (benefit) expense are as follows (in thousands): Fiscal Year Ended December 30, 2018 Fiscal Year Ended December 31, 2017 Current Federal $ (79 ) $ 134 State 88 24 Foreign 220 17 229 175 Deferred Federal (381 ) 320 State (123 ) (88 ) (504 ) 232 Total income tax (benefit) expense $ (275 ) $ 407 |
Schedule of Pretax Income | Income tax provision related to continuing operations differ from the amounts computed by applying the statutory income tax rate to pretax income as follows (in thousands): Fiscal Year Ended Fiscal Year Ended December 30, 2018 December 31, 2017 Tax benefit at statutory rate $ (435 ) $ (70 ) State and local income taxes (27 ) (41 ) Foreign taxes 216 - Tax credits (203 ) - Dividends on mandatorily redeemable preferred stock 200 - Tax law changes - 505 Other (26 ) 13 Total income tax (benefit) expense $ (275 ) $ 407 |
FCCG [Member] | |
Schedule of Net Operating Loss | The following schedule reflects the timing and amount of the NOL that is subject to potential expiration if unused by the end of the indicated fiscal year (in thousands): Fiscal year: 2019 $ 12,654 2020 25,045 2021 2,844 2022 46 2023 76 Thereafter 48,248 Total $ 88,913 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Term Loan [Member] | |
Schedule of Aggregate Values Assigned Upon Issuance of Each Component | The aggregate values assigned upon issuance of each component were as follows (in thousands): Warrants (equity component) Term Loan (debt component) Total Gross proceeds $ 571 $ 15,429 $ 16,000 Issuance costs - 868 868 Net proceeds $ 571 $ 14,561 $ 15,132 Balance sheet impact at issuance: Long-term debt, net of discount and offering costs $ - $ 14,561 $ 14,561 Additional paid-in capital $ 571 $ 78 $ 649 |
Mandatorily Redeemable Prefer_2
Mandatorily Redeemable Preferred Stock (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Series A Preferred Stock [Member] | |
Schedule of Mandatorily Redeemable Preferred Stock | The aggregate values assigned upon issuance of each component were as follows (amounts in thousands, except price per unit): Series A Warrants (equity component) Mandatorily Redeemable Series A Preferred Stock (debt component) Total Subscription Agreement: Gross proceeds $ 87 $ 7,913 $ 8,000 Issuance costs - 15 15 Net proceeds 87 7,898 7,985 Exchange Shares: 25 1,975 2,000 Total proceeds $ 112 $ 9,873 $ 9,985 Subscription price per unit $ 108.75 $ 9,891.25 $ 10,000 Balance sheet impact at issuance: Long-term debt, net of debt discount and offering costs $ - $ 9,873 $ 9,873 Additional paid-in capital $ 112 $ - $ 112 |
Series A-1 Preferred Stock [Member] | |
Schedule of Mandatorily Redeemable Preferred Stock | The aggregate values assigned upon issuance of each component were as follows (amounts in thousands, except price per unit): Conversion Feature (equity component) Hurricane Warrants (equity component) Mandatorily Redeemable Series A-1 Preferred Stock (debt component) Total Hurricane Acquisition: Gross proceeds $ 90 $ 91 $ 4,319 $ 4,500 Issuance costs - - 35 35 Net proceeds $ 90 $ 91 $ 4,284 $ 4,465 Subscription price per unit $ 201.07 $ 201.07 $ 9,597.86 $ 10,000.00 Balance sheet impact at issuance: Long-term debt, net of debt discount and offering costs $ - $ - $ 4,284 $ 4,284 Additional paid-in capital $ 90 $ 91 $ - $ 181 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Equity [Abstract] | |
Schedule of Stock Option Activity | The Company’s stock option activity for the fiscal year ended December 30, 2018 can be summarized as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Stock options outstanding at December 31, 2017 362,500 $ 12.00 8.8 Grants 335,000 $ 6.08 9.9 Forfeited (30,000 ) $ 12.00 9.1 Expired - $ - - Stock options outstanding at December 30, 2018 667,500 $ 9.03 9.3 Stock options exercisable at December 30, 2018 119,173 $ 12.00 8.8 |
Schedule of Assumptions Used for Stock-based Compensation | The assumptions used in the Black-Scholes valuation model to record the stock-based compensation are as follows: Including Non-Employee Options Expected dividend yield 4.00% - 8.91 % Expected volatility 30.23% - 31.73 % Risk-free interest rate 1.60% - 2.85 % Expected term (in years) 5.50 – 5.75 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Warrant Activity | The Company’s warrant activity for the fiscal year ended December 30, 2018 is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Warrants outstanding at December 31, 2017 80,000 $ 15.00 3.81 Grants 745,556 $ 7.51 4.50 Exercised - $ - - Forfeited - $ - - Expired - $ - - Warrants outstanding at December 30, 2018 825,556 $ 8.23 4.43 Warrants exercisable at December 30, 2018 825,556 $ 8.23 4.43 |
Schedule of Assumptions Used for Stock-based Compensation, Warrants | The weighted average fair value of the warrants granted from the Offering through December 30, 2018 and the assumptions used in the Black-Scholes valuation model are as follows: Warrants Expected dividend yield 4.00% - 6.63 % Expected volatility 31.73 % Risk-free interest rate 0.99% - 1.91 % Expected term (in years) 5.00 |
Dividends on Common Stock (Tabl
Dividends on Common Stock (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Equity [Abstract] | |
Schedule of Quarterly Dividends | The Company’s Board of Directors has declared the following quarterly dividends on common stock during the fiscal year ended December 30, 2018: Declaration Date Record Date Payment Date Dividend per Share Amount of Dividend February 8, 2018 March 30, 2018 April 16, 2018 $ 0.12 $ 1,200,000 June 27, 2018 July 6, 2018 July 16, 2018 $ 0.12 1,351,517 October 8, 2018 October 18, 2018 October 31, 2018 $ 0.12 1,362,362 $ 3,913,879 |
Geographic Information and Ma_2
Geographic Information and Major Franchisees (Tables) | 12 Months Ended |
Dec. 30, 2018 | |
Geographic Information And Major Franchisees | |
Schedule of Revenues by Geographic Area | R Fiscal Year Ended December 30, 2018 Fiscal Year Ended December 31, 2017 United States $ 14,023 $ 1,681 Other countries 4,344 492 Total revenues $ 18,367 $ 2,173 |
Organization and Relationships
Organization and Relationships (Details Narrative) - USD ($) $ in Thousands | Dec. 03, 2018 | Jul. 03, 2018 | Oct. 20, 2017 | Dec. 31, 2017 | Dec. 30, 2018 |
Proceeds from initial pubilc offering | $ 20,930 | $ 20,930 | |||
Fog Cutter Capital Group Inc [Member] | |||||
Exchange of note payable related party | 30,000 | ||||
Fog Cutter Capital Group Inc [Member] | Homestyle Dining LLC [Member] | |||||
Purchase price of acquisition | $ 10,550 | ||||
Hurricane AMT, LLC [Member] | |||||
Purchase price of acquisition | $ 12,500 | ||||
Yalla Mediterranean, LLC [Member] | |||||
Purchase price of acquisition | $ 3,490 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 30, 2018 | Dec. 31, 2017 | |
Store opening fees | |||
Adjustment to increase deferred revenue | $ (50) | $ (1,659) | $ 3,400 |
Cumulative adjustments in accumulated deficit | 2,607 | ||
Contract Liability [Member] | |||
Deferred tax asset on contract liability | $ 793 | ||
February 7, 2019 [Member] | |||
Number of common stock share issued | 245,376 | ||
Domestic Stores [Member] | |||
Store opening fees | $ 45 | ||
International Stores [Member] | |||
Store opening fees | $ 60 | ||
Domestic and International Stores [Member] | |||
Store opening description | If the fees collected are less than the respective store opening fee amounts, the full up-front fees are recognized at opening. The $45,000 and $60,000 are based on out-of-pocket costs to the Company for each store opening and are primarily comprised of labor expenses associated with training, store design, and supply chain setup. | ||
Tax Sharing Agreement [Member] | |||
Income tax likely being realized | The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon the ultimate settlement. | ||
Minimum [Member] | |||
Interest rate percentage | 6.00% | ||
Royalty fee percentage | 0.75% | ||
Maximum [Member] | |||
Interest rate percentage | 7.50% | ||
Royalty fee percentage | 6.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Affected Amounts Reported in Financial Statements (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 30, 2018 | Mar. 20, 2017 | |
Cash | $ 32 | $ 653 | |
Accounts receivable | 918 | 1,779 | |
Other current assets | 153 | 1,042 | |
Due from affiliates | 7,963 | 15,514 | |
Deferred income taxes | 937 | 2,236 | |
Buffalo's Creative and Advertising Fund | |||
Buffalo's Creative and Advertising Fund - Contra | |||
Accounts payable | 2,439 | 4,415 | |
Deferred income | 3,713 | 7,697 | |
Accrued expenses | 1,761 | 3,705 | |
Accrued advertising | 348 | 369 | |
Accumulated deficit | (613) | (5,018) | |
Franchise fees and store opening fees | 2,488 | ||
Advertising fees | 3,182 | ||
Advertising expense | (3,182) | ||
Net loss | (613) | $ (1,798) | |
Earnings per common share - basic | $ (0.16) | ||
Earnings per common share - diluted | $ (0.16) | ||
Accounts receivable | (221) | $ (301) | |
Deferred income | (1,659) | ||
Accounts payable and accrued expenses | 1,604 | 2,226 | |
Accrued advertising | $ 43 | (271) | |
Change in due from affiliates | (6,742) | ||
Amounts Under Previous Accounting Guidance [Member] | |||
Cash | 501 | ||
Accounts receivable | 1,406 | ||
Other current assets | 1,038 | ||
Due from affiliates | 15,144 | ||
Deferred income taxes | 1,440 | ||
Buffalo's Creative and Advertising Fund | 428 | ||
Buffalo's Creative and Advertising Fund - Contra | (428) | ||
Accounts payable | 3,984 | ||
Deferred income | 4,644 | ||
Accrued expenses | 3,487 | ||
Accrued advertising | 463 | ||
Accumulated deficit | (3,092) | ||
Franchise fees and store opening fees | 1,809 | ||
Advertising fees | |||
Advertising expense | |||
Net loss | $ (2,478) | ||
Earnings per common share - basic | $ (0.23) | ||
Earnings per common share - diluted | $ (0.23) | ||
Accounts receivable | $ (488) | ||
Deferred income | 931 | ||
Accounts payable and accrued expenses | 3,258 | ||
Accrued advertising | 115 | ||
Change in due from affiliates | $ (7,181) |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - USD ($) | Dec. 03, 2018 | Jul. 03, 2018 | Dec. 30, 2018 |
Series A-1 Preferred Stock [Member] | |||
Number of warrants to purchase common stock | 56,250 | ||
Exercise price per share | $ 8 | ||
Preferred stock stated liquidation preference per share | $ 100 | ||
Preferred stock, dividend rate, percentage | 6.00% | ||
Preferred stock, redemption per share | $ 100 | ||
Common stock, redemption rate per share | $ 12 | ||
Hurricane AMT, LLC [Member] | |||
Purchase price of business | $ 12,500,000 | ||
Payment of cash to acquire business | 8,000,000 | ||
Issuance of equity | 4,500,000 | ||
Equity units value per unit | $ 10,000 | ||
Number of units sold | 450 | ||
Fees and expenses related to acquisition | $ 206,000 | ||
Intangible asset remaining terms | 13 years | ||
Total consideration amount | $ 12,500,000 | ||
Hurricane AMT, LLC [Member] | Series A-1 Fixed Rate Cumulative Preferred Stock [Member] | |||
Number of preferred shares designated | 100 | ||
Yalla Mediterranean, LLC [Member] | |||
Total consideration amount | $ 3,490,000 | ||
Yalla Mediterranean, LLC [Member] | Intellectual Property Purchase Agreement [Member] | |||
Earn-out payable | $ 1,700,000 | ||
Purchase price description | The purchase price for the intellectual property will be paid in the form of an earn-out, calculated as the greater of $1,500,000 or 400% of Yalla Income | ||
Purchase price of intellectual property | $ 1,790,000 | ||
Total consideration amount | $ 3,490,000 | ||
Yalla Mediterranean Restaurants [Member] | Master Agreement [Member] | |||
Purchase price description | The purchase price will be the greater of $1,000,000 or the sum of (i) the first $1,750,000 of gross sale proceeds received from the sale of the Yalla Mediterranean restaurants to franchisee/purchasers, plus (ii) the amount, if any, by which fifty percent (50%) of the net proceeds (after taking into consideration operating income or loss and transaction costs and expenses) from the sale of the Yalla Mediterranean restaurants exceeds $1,750,000. |
Acquisitions - Schedule of Allo
Acquisitions - Schedule of Allocation of Tangible and Intangible Assets Acquired (Details) - USD ($) $ in Thousands | Dec. 03, 2018 | Jul. 03, 2018 |
Hurricane AMT, LLC [Member] | ||
Cash | $ 358 | |
Accounts receivable | 352 | |
Other assets | 883 | |
Intangible assets | 11,020 | |
Goodwill | 2,772 | |
Accounts payable and accrued expenses | (643) | |
Deferred franchise fees | (1,885) | |
Other liabilities | (357) | |
Total net identifiable assets | $ 12,500 | |
Yalla Mediterranean, LLC [Member] | ||
Cash | $ 82 | |
Accounts receivable | 77 | |
Inventory | 95 | |
Other assets | 90 | |
Property and equipment | 2,521 | |
Intangible assets | 1,530 | |
Goodwill | 262 | |
Accounts payable and accrued expenses | (1,167) | |
Total net identifiable assets | $ 3,490 |
Acquisitions - Schedule of Reve
Acquisitions - Schedule of Revenue and Earnings (Details) - Hurricane AMT, LLC [Member] - USD ($) $ in Thousands | Jul. 03, 2018 | Dec. 30, 2018 |
Revenues: Royalties | $ 1,589 | |
Revenues: Franchise fees | 22 | |
Revenues: Advertising fees | 868 | $ 1,751 |
Revenues: Other income | 7 | 7 |
Total revenues | 2,486 | |
Expenses: General and administrative | 2,164 | |
Income from operations | 322 | |
Other expense | (217) | |
Income before income tax expense | 105 | $ (535) |
Income tax benefit | (1) | |
Net income | $ 106 |
Acquisitions - Schedule of Pro
Acquisitions - Schedule of Pro Forma Revenue and Earnings (Details) - Hurricane AMT, LLC [Member] - USD ($) $ in Thousands | Jul. 03, 2018 | Dec. 30, 2018 |
Revenues: Royalties | $ 3,282 | |
Revenues: Franchise fees | 54 | |
Advertising fees | $ 868 | 1,751 |
Other income | 7 | 7 |
Total revenues | 5,094 | |
Expenses: General and administrative | 5,282 | |
Income from operations | (188) | |
Other Income | (347) | |
Loss before income tax benefit | $ 105 | (535) |
Income tax benefit | (150) | |
Net income | $ (385) |
Trade Notes Receivable (Details
Trade Notes Receivable (Details Narrative) $ in Thousands | Dec. 30, 2018USD ($) |
Trade notes receivable | $ 277 |
Trade notes receivable, reserves | $ 149 |
Minimum [Member] | |
Debt instrument rate of interest | 6.00% |
Maximum [Member] | |
Debt instrument rate of interest | 7.50% |
Goodwill - Schedule of Goodwill
Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands | Dec. 30, 2018 | Dec. 31, 2017 |
Total goodwill | $ 10,391 | $ 7,356 |
Fatburger [Member] | ||
Total goodwill | 529 | 529 |
Buffalo's [Member] | ||
Total goodwill | 5,365 | 5,365 |
Hurricane [Member] | ||
Total goodwill | 2,772 | |
Ponderosa [Member] | ||
Total goodwill | 1,462 | 1,462 |
Yalla [Member] | ||
Total goodwill | $ 263 |
Other Intangible Assets - Sched
Other Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 30, 2018 | Dec. 31, 2017 |
Total trademarks | $ 17,762 | $ 9,392 |
Total franchise agreements | 5,527 | 1,619 |
Total | 23,289 | 11,011 |
Fatburger [Member] | ||
Total trademarks | 2,135 | 2,135 |
Buffalo's [Member] | ||
Total trademarks | 27 | 27 |
Hurricane [Member] | ||
Total trademarks | 6,840 | |
Hurricane [Member] | Franchise Agreements [Member] | ||
Cost | 4,180 | |
Accumulated amortization | (161) | |
Ponderosa [Member] | ||
Total trademarks | 7,230 | 7,230 |
Ponderosa [Member] | Franchise Agreements [Member] | ||
Cost | 1,640 | 1,640 |
Accumulated amortization | (132) | (21) |
Yalla [Member] | ||
Total trademarks | $ 1,530 |
Other Intangible Assets - Sch_2
Other Intangible Assets - Schedule of Future Amortization (Details) - USD ($) $ in Thousands | Dec. 30, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 432 | |
2020 | 432 | |
2021 | 432 | |
2022 | 432 | |
2023 | 432 | |
Thereafter | 3,367 | |
Total | $ 5,527 | $ 1,619 |
Deferred Income - Schedule of D
Deferred Income - Schedule of Deferred Income (Details) - USD ($) $ in Thousands | Dec. 30, 2018 | Dec. 31, 2017 |
Contract with Customer, Liability [Abstract] | ||
Deferred franchise fees | $ 6,711 | $ 2,781 |
Deferred royalties | 653 | 932 |
Deferred advertising revenue | 333 | |
Total | $ 7,697 | $ 3,713 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 30, 2018USD ($) | |
Income tax examination, description | On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJ Act") was enacted into law. One major provision of the TCJ Act was the reduction of the corporate tax rate from 34% to 21%, effective January 1, 2018. |
Income tax rate | 21.00% |
Fog Cutter Capital Group Inc [Member] | |
Due from related party | $ 15,514 |
Net operating loss carryforward | 88,913 |
Taxes payable | $ 195 |
Income Taxes - Schedule of Net
Income Taxes - Schedule of Net Operating Loss (Details) - FCCG [Member] $ in Thousands | Dec. 30, 2018USD ($) |
Total | $ 88,913 |
2019 [Member] | |
Total | 12,654 |
2020 [Member] | |
Total | 25,045 |
2021 [Member] | |
Total | 2,844 |
2022 [Member] | |
Total | 46 |
2023 [Member] | |
Total | 76 |
Thereafter [Member] | |
Total | $ 48,248 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 30, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Deferred income | $ 1,779 | $ 882 |
Reserves and accruals | 346 | 451 |
Intangibles | (532) | (372) |
Deferred state income tax | (72) | (25) |
Tax credits | 126 | |
Share-based compensation | 131 | |
Interest expense | 439 | |
Other | 19 | 1 |
Total | $ 2,236 | $ 937 |
Income Taxes - Schedule of Co_2
Income Taxes - Schedule of Components of the Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 30, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Current: Federal | $ (79) | $ 134 | |
Current: State | 88 | 24 | |
Current: Foreign | 220 | 17 | |
Current Income Tax Expense (Benefit), Total | 229 | 175 | |
Deferred: Federal | (381) | 320 | |
Deferred: State | (123) | (88) | |
Deferred: Income Tax Expense (Benefit), Total | (504) | 232 | |
Total income tax (benefit) expense | $ 407 | $ (275) | $ 407 |
Income Taxes - Schedule of Pret
Income Taxes - Schedule of Pretax Income (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 30, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Tax benefit at statutory rate | $ (435) | $ (70) | |
State and local income taxes | (27) | (41) | |
Foreign taxes | 216 | ||
Tax credits | (203) | ||
Dividends on mandatorily redeemable preferred stock | 200 | ||
Tax law changes | 505 | ||
Other | (26) | 13 | |
Total income tax (benefit) expense | $ 407 | $ (275) | $ 407 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jul. 03, 2018 | Apr. 27, 2018 | Dec. 31, 2017 | Dec. 30, 2018 |
Interest expense | $ 205 | $ 3,816 | ||
Term Loan [Member] | ||||
Line of credit | 15,400 | |||
Interest expense | 3,301 | |||
Line of credit gross | 16,400 | |||
Debt discount | 349 | |||
Unamortized debt offering costs | 651 | |||
Additional principal amount | 400 | |||
Prepayment penalties | 1,360 | |||
Accretion expense | 222 | |||
Amortization of debt offering costs | $ 217 | |||
Maximum [Member] | ||||
Debt interest rate | 7.50% | |||
First Year [Member] | ||||
Prepayment penalty percentage | 10.00% | |||
Second Year [Member] | ||||
Prepayment penalty percentage | 5.00% | |||
Securities Purchase Agreement [Member] | ||||
Interest expense | $ 62 | |||
Debt offering cost | 143 | |||
Investment banking fee | $ 170 | |||
Loan and Security Agreement [Member] | ||||
Debt maturity date | Jun. 30, 2020 | |||
Debt interest rate | 15.00% | |||
Term loan borrowings | $ 16,000 | |||
Loan Agreement [Member] | Maximum [Member] | ||||
Debt interest rate, additional default | 5.00% | |||
Loan Agreement [Member] | Lender [Member] | ||||
Warrants issued to purchase shares | 499,000 | |||
Exercise price per share | $ 7.35 | |||
Loan Agreement [Member] | Placement Agent [Member] | ||||
Warrants issued to purchase shares | 65,306 | |||
Exercise price per share | $ 7.35 | |||
TCA Global Credit Master Fund, LP [Member] | ||||
Line of credit | $ 5,000 | |||
Proceeds from issuance of debt | $ 2,000 | |||
Debt maturity date | Oct. 27, 2019 | |||
Debt interest rate | 15.00% | |||
Commitment fees, rate | 2.00% | |||
Repayment of borrowings | $ 2,000 | |||
TCA Global Credit Master Fund, LP [Member] | Banking [Member] | ||||
Payment for investment banking fee | $ 170 |
Debt - Schedule of Aggregate Va
Debt - Schedule of Aggregate Values Assigned Upon Issuance of Each Component (Details) $ in Thousands | 12 Months Ended |
Dec. 30, 2018USD ($) | |
Gross proceeds | $ 16,000 |
Issuance costs | 868 |
Net proceeds | 15,132 |
Long-term debt, net of discount and offering costs | 14,561 |
Additional paid-in capital | 649 |
Term Loan [Member] | |
Gross proceeds | 15,429 |
Issuance costs | 868 |
Net proceeds | 14,561 |
Long-term debt, net of discount and offering costs | 14,561 |
Additional paid-in capital | 78 |
Warrant [Member] | |
Gross proceeds | 571 |
Issuance costs | |
Net proceeds | 571 |
Long-term debt, net of discount and offering costs | |
Additional paid-in capital | $ 571 |
Note Payable to FCCG (Details N
Note Payable to FCCG (Details Narrative) - USD ($) | Jun. 27, 2018 | Jun. 26, 2018 | Oct. 20, 2017 | Dec. 30, 2018 | Dec. 31, 2017 |
Notes payable, balance | $ 10,222,000 | ||||
Related party debt balance amount converted | $ 7,272,053 | ||||
Note Exchange Agreement [Member] | |||||
Debt principal balance | $ 30,000,000 | ||||
Related party debt balance amount converted | $ 2,000,000 | $ 7,272,053 | |||
Warrants issued to purchase shares | 25,000 | ||||
Warrants exercise price | $ 8 | ||||
Note Exchange Agreement [Member] | Common Stock [Member] | |||||
Number of shares converted | 989,395 | ||||
Conversion price per share | $ 7.35 | ||||
Note Exchange Agreement [Member] | Series A Fixed Rate Cumulative Preferred Stock [Member] | |||||
Number of shares converted | 20,000 | ||||
Conversion price per share | $ 100 | ||||
Fatburger And Buffalo [Member] | Unsecured Promissory Note [Member] | |||||
Debt principal balance | $ 30,000,000 | ||||
Debt interest rate | 10.00% | ||||
Maturity term | 5 years | ||||
Fog Cutter Capital Group Inc [Member] | |||||
Debt interest rate | 10.00% | ||||
Repayments of notes payable | $ 19,778,000 | ||||
Related party debt balance amount converted | $ 950,000 | ||||
Interest expense | $ 888,000 | $ 405,000 | |||
Fog Cutter Capital Group Inc [Member] | Note Exchange Agreement [Member] | |||||
Related party debt balance amount converted | $ 9,272,053 | ||||
FCCG [Member] | Note Exchange Agreement [Member] | |||||
Warrants issued to purchase shares | 25,000 | ||||
Warrants exercise price | $ 8 |
Mandatorily Redeemable Prefer_3
Mandatorily Redeemable Preferred Stock (Details Narrative) - USD ($) | Oct. 31, 2018 | Jul. 16, 2018 | Jul. 16, 2018 | Jul. 03, 2018 | Jun. 27, 2018 | Jun. 27, 2018 | Jun. 26, 2018 | Jun. 08, 2018 | Jun. 07, 2018 | Apr. 16, 2018 | Oct. 20, 2017 | Dec. 31, 2017 | Dec. 30, 2018 | Dec. 31, 2017 |
Proceeds from initial pubilc offering | $ 20,930,000 | $ 20,930,000 | ||||||||||||
Related party debt balance amount converted | $ 7,272,053 | |||||||||||||
Interest expense | $ 205,000 | 3,816,000 | ||||||||||||
Fog Cutter Capital Group Inc [Member] | ||||||||||||||
Number of shares issued | 176,877 | 157,765 | 157,765 | 989,395 | 153,600 | |||||||||
Related party debt balance amount converted | $ 950,000 | |||||||||||||
Interest expense | $ 888,000 | $ 405,000 | ||||||||||||
Hurricane AMT, LLC [Member] | ||||||||||||||
Sale of units in transactions | 450 | |||||||||||||
Issuance of equity | $ 4,500,000 | |||||||||||||
Equity units value per unit | $ 10,000 | |||||||||||||
Common Stock [Member] | ||||||||||||||
Number of shares issued | 2,000,000 | |||||||||||||
Subscription Agreement [Member] | ||||||||||||||
Sale of units in transactions | 800 | |||||||||||||
Sales price of shares issuance and sale | $ 10,000 | |||||||||||||
Proceeds from initial pubilc offering | $ 8,000,000 | |||||||||||||
Subscription Agreement [Member] | Warrant [Member] | ||||||||||||||
Number of shares eligible for warrants | 125 | |||||||||||||
Warrants exercise price | $ 8 | |||||||||||||
Subscription Agreement [Member] | Series A Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | 100,000 | |||||||||||||
Note Exchange Agreement [Member] | ||||||||||||||
Number of shares eligible for warrants | 25,000 | 25,000 | ||||||||||||
Warrants exercise price | $ 8 | $ 8 | ||||||||||||
Related party debt balance amount converted | $ 2,000,000 | $ 7,272,053 | ||||||||||||
Debt principal balance | $ 30,000,000 | |||||||||||||
Note Exchange Agreement [Member] | Fog Cutter Capital Group Inc [Member] | ||||||||||||||
Related party debt balance amount converted | $ 9,272,053 | |||||||||||||
Note Exchange Agreement [Member] | Common Stock [Member] | ||||||||||||||
Number of shares converted | 989,395 | |||||||||||||
Conversion price per share | $ 7.35 | |||||||||||||
Series A Preferred Stock [Member] | ||||||||||||||
Number of shares designated | 100,000 | |||||||||||||
Liquidation preference shares | $ 100 | |||||||||||||
Cash dividend rate | 9.90% | |||||||||||||
Deferred dividend rate | 4.00% | |||||||||||||
Cash redemption price per share | $ 100 | $ 100 | ||||||||||||
Preferred stock, face value | $ 9,888,000 | |||||||||||||
Debt discount | 99,000 | |||||||||||||
Unamortized debt offering costs | 14,000 | |||||||||||||
Interest expense | 785,000 | |||||||||||||
Accretion expense | 13,000 | |||||||||||||
Amortization of debt offering costs | $ 2,000 | |||||||||||||
Preferred stock, shares outstanding | 100,000 | |||||||||||||
Series A Preferred Stock [Member] | Subscription Agreement [Member] | ||||||||||||||
Number of shares issued | 80,000 | |||||||||||||
Series A Preferred Stock [Member] | On Or Prior to June 30, 2021 [Member] | ||||||||||||||
Cash redemption price per share | $ 115 | |||||||||||||
Series A Preferred Stock [Member] | After June 30, 2021 and On Or Prior to June 30, 2022 [Member] | ||||||||||||||
Cash redemption price per share | 110 | |||||||||||||
Series A Preferred Stock [Member] | After June 30, 2022 [Member] | ||||||||||||||
Cash redemption price per share | $ 100 | |||||||||||||
Series A Fixed Rate Cumulative Preferred Stock [Member] | ||||||||||||||
Proceeds from initial pubilc offering | $ 8,000,000 | |||||||||||||
Series A Fixed Rate Cumulative Preferred Stock [Member] | Subscription Agreement [Member] | ||||||||||||||
Number of preferred stock designated | 100 | |||||||||||||
Series A Fixed Rate Cumulative Preferred Stock [Member] | Note Exchange Agreement [Member] | ||||||||||||||
Number of preferred stock designated | 200 | 200 | ||||||||||||
Number of shares converted | 20,000 | |||||||||||||
Conversion price per share | $ 100 | $ 100 | ||||||||||||
Exchange Shares [Member] | Note Exchange Agreement [Member] | ||||||||||||||
Related party debt balance amount converted | $ 7,272,053 | |||||||||||||
Exchange Shares [Member] | Note Exchange Agreement [Member] | Common Stock [Member] | ||||||||||||||
Number of shares converted | 989,395 | |||||||||||||
Conversion price per share | $ 7.35 | $ 7.35 | ||||||||||||
Series A-1 Preferred Stock [Member] | ||||||||||||||
Number of shares designated | 200,000 | |||||||||||||
Liquidation preference shares | $ 100 | |||||||||||||
Cash dividend rate | 6.00% | |||||||||||||
Cash redemption price per share | $ 100 | |||||||||||||
Number of shares eligible for warrants | 56,250 | |||||||||||||
Warrants exercise price | $ 8 | |||||||||||||
Conversion price per share | $ 12 | |||||||||||||
Preferred stock, face value | $ 4,303,000 | |||||||||||||
Debt discount | 166,000 | |||||||||||||
Unamortized debt offering costs | 31,000 | |||||||||||||
Accretion expense | 15,000 | |||||||||||||
Amortization of debt offering costs | $ 4,000 | |||||||||||||
Preferred stock, shares issued | 45,000 | |||||||||||||
Preferred stock, shares outstanding | 45,000 | |||||||||||||
Interest expense | $ 135,000 |
Mandatorily Redeemable Prefer_4
Mandatorily Redeemable Preferred Stock - Schedule of Mandatorily Redeemable Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 20, 2017 | Dec. 31, 2017 | Dec. 30, 2018 |
Gross proceeds | $ 20,930 | $ 20,930 | |
Issuance costs | 868 | ||
Net proceeds | 7,984 | ||
Long-term debt, net of debt discount and offering costs | 14,561 | ||
Additional paid-in capital | 649 | ||
Series A Fixed Rate Cumulative Preferred Stock [Member] | |||
Gross proceeds | 8,000 | ||
Issuance costs | 15 | ||
Net proceeds | 7,985 | ||
Exchange shares | 2,000 | ||
Total proceeds | $ 9,985 | ||
Subscription price per unit | $ 10 | ||
Long-term debt, net of debt discount and offering costs | $ 9,873 | ||
Additional paid-in capital | 112 | ||
Series A Fixed Rate Cumulative Preferred Stock [Member] | Mandatorily Redeemable Preferred Stock [Member] | |||
Gross proceeds | 7,913 | ||
Issuance costs | 15 | ||
Net proceeds | 7,898 | ||
Exchange shares | 1,975 | ||
Total proceeds | $ 9,873 | ||
Subscription price per unit | $ 9,891.25 | ||
Long-term debt, net of debt discount and offering costs | $ 9,873 | ||
Additional paid-in capital | |||
Series A Fixed Rate Cumulative Preferred Stock [Member] | Series A Warrants [Member] | |||
Gross proceeds | 87 | ||
Issuance costs | |||
Net proceeds | 87 | ||
Exchange shares | 25 | ||
Total proceeds | $ 112 | ||
Subscription price per unit | $ 108.75 | ||
Long-term debt, net of debt discount and offering costs | |||
Additional paid-in capital | 112 | ||
Series A-1 Fixed Rate Cumulative Preferred Stock [Member] | |||
Gross proceeds | 4,500 | ||
Issuance costs | 35 | ||
Net proceeds | $ 4,465 | ||
Subscription price per unit | $ 10 | ||
Long-term debt, net of debt discount and offering costs | $ 4,284 | ||
Additional paid-in capital | 181 | ||
Series A-1 Fixed Rate Cumulative Preferred Stock [Member] | Mandatorily Redeemable Preferred Stock [Member] | |||
Gross proceeds | 4,319 | ||
Issuance costs | 35 | ||
Net proceeds | $ 4,284 | ||
Subscription price per unit | $ 9,597.86 | ||
Long-term debt, net of debt discount and offering costs | $ 4,284 | ||
Additional paid-in capital | |||
Series A-1 Fixed Rate Cumulative Preferred Stock [Member] | Conversion Feature [Member] | |||
Gross proceeds | 90 | ||
Issuance costs | |||
Net proceeds | $ 90 | ||
Subscription price per unit | $ 201.07 | ||
Long-term debt, net of debt discount and offering costs | |||
Additional paid-in capital | 90 | ||
Series A-1 Fixed Rate Cumulative Preferred Stock [Member] | Hurricane Warrants [Member] | |||
Gross proceeds | 91 | ||
Issuance costs | |||
Net proceeds | $ 91 | ||
Subscription price per unit | $ 201.07 | ||
Long-term debt, net of debt discount and offering costs | |||
Additional paid-in capital | $ 91 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2018 | Jul. 05, 2018 | Oct. 20, 2017 | |
Fog Cutter Capital Group Inc [Member] | |||
Due from related party | $ 15,514 | ||
Debt interest rate | 10.00% | ||
Accrued interest income receivable | 1,125 | ||
Taxes payable | $ 195 | ||
Homestyle Dining LLC [Member] | |||
Debt interest rate | 15.00% | ||
Principal amount | $ 4,000 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - USD ($) | Dec. 10, 2018 | Oct. 31, 2018 | Sep. 20, 2018 | Jul. 16, 2018 | Jul. 16, 2018 | Jun. 27, 2018 | Jun. 15, 2018 | Apr. 16, 2018 | Dec. 30, 2018 | Dec. 31, 2017 |
Common stock, shares authorized | 25,000,000 | 25,000,000 | ||||||||
Common stock, shares issued | 11,546,589 | 10,000,000 | ||||||||
Common stock, shares outstanding | 11,546,589 | 10,000,000 | ||||||||
Share issued price per share | $ 5.64 | |||||||||
Related party debt balance amount converted | $ 7,272,053 | |||||||||
Non-Employees [Member] | ||||||||||
Number of shares issued | 16,698 | 10,482 | 41,772 | |||||||
Share issued price per share | $ 5.39 | $ 8.59 | $ 7.90 | |||||||
Fog Cutter Capital Group Inc [Member] | ||||||||||
Number of shares issued | 176,877 | 157,765 | 157,765 | 989,395 | 153,600 | |||||
Share issued price per share | $ 6.31 | $ 6.085 | $ 6.085 | $ 7.35 | $ 6.25 | |||||
Related party debt balance amount converted | $ 950,000 |
Share-Based Compensation (Detai
Share-Based Compensation (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 30, 2018USD ($)shares | |
Options vesting period | 3 years |
Options vesting description | All of the stock options issued by the Company to date have included a vesting period of three years, with one-third of each grant vesting annually. |
Stock based compensation expense | $ 439 |
Stock based compensation to non-vested grants | $ 433 |
2017 Omnibus Equity Incentive Plan [Member] | Maximum [Member] | |
Number of shares available for grant | shares | 1,000,000 |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Stock Option Activity (Details) | 12 Months Ended |
Dec. 30, 2018$ / sharesshares | |
Equity [Abstract] | |
Number of Shares, Stock options outstanding, beginning balance | 362,500 |
Number of Shares, Grants | 335,000 |
Number of Shares, Forfeited | (30,000) |
Number of Shares, Expired | |
Number of Shares, Stock options outstanding, ending balance | 667,500 |
Number of Shares, Stock options exercisable, ending balance | 119,173 |
Weighted Average Exercise Price, Stock options outstanding, beginning balance | $ / shares | $ 12 |
Weighted Average Exercise Price, Grants | $ / shares | 6.08 |
Weighted Average Exercise Price, Forfeited | $ / shares | 12 |
Weighted Average Exercise Price, Stock options outstanding, ending balance | $ / shares | 9.03 |
Weighted Average Exercise Price, Stock options exercisable, ending balance | $ / shares | $ 12 |
Weighted Average Remaining Contractual Life (Years), Stock options outstanding, beginning balance | 8 years 9 months 18 days |
Weighted Average Remaining Contractual Life (Years), Grants | 9 years 10 months 25 days |
Weighted Average Remaining Contractual Life (Years), Forfeited | 9 years 1 month 6 days |
Weighted Average Remaining Contractual Life (Years), Stock options outstanding, ending balance | 9 years 3 months 19 days |
Weighted Average Remaining Contractual Life (Years), Stock options exercisable, ending balance | 8 years 9 months 18 days |
Share-Based Compensation - Sc_2
Share-Based Compensation - Schedule of Assumptions Used for Stock-based Compensation (Details) - Including Non-Employee Options [Member] | 12 Months Ended |
Dec. 30, 2018 | |
Minimum [Member] | |
Expected dividend yield | 4.00% |
Expected volatility | 30.23% |
Risk-free interest rate | 1.60% |
Expected term (in years) | 5 years 6 months |
Maximum [Member] | |
Expected dividend yield | 8.91% |
Expected volatility | 31.73% |
Risk-free interest rate | 2.85% |
Expected term (in years) | 5 years 9 months |
Warrants (Details Narrative)
Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jul. 03, 2018 | Jun. 27, 2018 | Jun. 07, 2018 | Oct. 20, 2017 |
Common Stock Warrants [Member] | ||||
Number of shares eligible for warrants | 80,000 | |||
Warrants exercise price | $ 15 | |||
Common stock warrants value | $ 124 | |||
Subscription Warrants [Member] | ||||
Number of shares eligible for warrants | 100,000 | |||
Warrants exercise price | $ 8 | |||
Common stock warrants value | $ 87 | |||
Exchange Warrants [Member] | ||||
Number of shares eligible for warrants | 25,000 | |||
Warrants exercise price | $ 8 | |||
Common stock warrants value | $ 25 | |||
Hurricane Warrants [Member] | ||||
Number of shares eligible for warrants | 56,250 | |||
Warrants exercise price | $ 8 | |||
Common stock warrants value | $ 58 | |||
Lender Warrant [Member] | ||||
Number of shares eligible for warrants | 499,000 | |||
Warrants exercise price | $ 7.35 | |||
Common stock warrants value | $ 592 | |||
Lender Warrant [Member] | FB Lending, LLC [Member] | ||||
Term loan borrowings | $ 16,000 | |||
Placement Agent Warrants [Member] | ||||
Number of shares eligible for warrants | 65,306 | |||
Warrants exercise price | $ 7.35 | |||
Common stock warrants value | $ 78 | |||
Placement Agent Warrants [Member] | FB Lending, LLC [Member] | ||||
Term loan borrowings | $ 16,000 |
Warrants - Summary of Warrant A
Warrants - Summary of Warrant Activity (Details) - Warrant [Member] | 12 Months Ended |
Dec. 30, 2018$ / sharesshares | |
Number of Shares, Warrants Outstanding, Beginning balance | 80,000 |
Number of Shares, Warrants Grants | 745,556 |
Number of Shares, Warrants Exercised | |
Number of Shares, Warrants Forfeited | |
Number of Shares, Warrants Expired | |
Number of Shares, Warrants Outstanding, Ending balance | 825,556 |
Number of Shares, Warrants Exercisable Ending Balance | 825,556 |
Weighted Average Exercise Price, Warrants outstanding, Beginning balance | $ / shares | $ 15 |
Weighted Average Exercise Price, Warrants grants | $ / shares | 7.51 |
Weighted Average Exercise Price, Warrants outstanding, Ending balance | $ / shares | 8.23 |
Weighted Average Exercise Price, Warrants exercisable ending balance | $ / shares | $ 8.23 |
Weighted Average Remaining Contractual Life (Years), Warrants outstanding, Beginning balance | 3 years 9 months 22 days |
Weighted Average Remaining Contractual Life (Years), Warrants Grants | 4 years 6 months |
Weighted Average Remaining Contractual Life (Years), Warrants outstanding, Ending balance | 4 years 5 months 5 days |
Weighted Average Remaining Contractual Life (Years), Warrants exercisable | 4 years 5 months 5 days |
Warrants - Schedule of Assumpti
Warrants - Schedule of Assumptions Used for Stock-based Compensation, Warrants (Details) - Warrant [Member] | 12 Months Ended |
Dec. 30, 2018 | |
Measurement Input, Expected Dividend Rate [Member] | Minimum [Member] | |
Fair value of assumptions, percentage | 4.00% |
Measurement Input, Expected Dividend Rate [Member] | Maximum [Member] | |
Fair value of assumptions, percentage | 6.63% |
Measurement Input, Price Volatility [Member] | |
Fair value of assumptions, percentage | 31.73% |
Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | |
Fair value of assumptions, percentage | 0.99% |
Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | |
Fair value of assumptions, percentage | 1.91% |
Measurement Input, Expected Term [Member] | |
Fair value of assumptions, expected term | 5 years |
Dividends on Common Stock (Deta
Dividends on Common Stock (Details Narrative) - USD ($) | Oct. 31, 2018 | Jul. 16, 2018 | Jul. 16, 2018 | Jun. 27, 2018 | Apr. 16, 2018 | Dec. 31, 2018 | Dec. 30, 2018 |
Dividend payable date | Feb. 28, 2019 | ||||||
Dividend payable record date | Feb. 19, 2019 | ||||||
Shares issued price per share | $ 5.64 | ||||||
February 7, 2019 [Member] | |||||||
Common stock dividend rate | 2.13% | ||||||
Dividend declared per share | $ 0.12 | ||||||
February 28, 2019 [Member] | |||||||
Number of common stock share issued | 245,376 | ||||||
Fog Cutter Capital Group Inc [Member] | |||||||
Number of common stock share issued | 176,877 | 157,765 | 157,765 | 989,395 | 153,600 | ||
Shares issued price per share | $ 6.31 | $ 6.085 | $ 6.085 | $ 7.35 | $ 6.25 | ||
Dividend payable | $ 1,116,091 | $ 960,000 | $ 960,000 | $ 960,000 |
Dividends on Common Stock - Sch
Dividends on Common Stock - Schedule of Quarterly Dividends (Details) | 12 Months Ended |
Dec. 30, 2018USD ($)$ / shares | |
Record date | Feb. 19, 2019 |
Payment date | Feb. 28, 2019 |
Amount of dividend | $ 3,913,879 |
February 8, 2018 [Member] | |
Declaration date | Feb. 8, 2018 |
Record date | Mar. 30, 2018 |
Payment date | Apr. 16, 2018 |
Dividend per share | $ / shares | $ 0.12 |
Amount of dividend | $ 1,200,000 |
June 27, 2018 [Member] | |
Declaration date | Jun. 27, 2018 |
Record date | Jul. 6, 2018 |
Payment date | Jul. 16, 2018 |
Dividend per share | $ / shares | $ 0.12 |
Amount of dividend | $ 1,351,517 |
October 8, 2018 [Member] | |
Declaration date | Oct. 8, 2018 |
Record date | Oct. 18, 2018 |
Payment date | Oct. 31, 2018 |
Dividend per share | $ / shares | $ 0.12 |
Amount of dividend | $ 1,362,362 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 12 Months Ended |
Dec. 30, 2018ft² | |
Beverly Hills, California [Member] | |
Square feet of space | 5,478 |
Operating lease expiration date | Apr. 30, 2020 |
Plano,TX [Member] | |
Square feet of space | 1,775 |
Operating lease expiration date | Mar. 31, 2021 |
Geographic Information and Ma_3
Geographic Information and Major Franchisees (Details Narrative) | 12 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Geographic Information And Major Franchisees | ||
Franchise revenue percentage description | No individual franchisee accounted for more than 10% of the Company's revenues | No individual franchisee accounted for more than 10% of the Company's revenues |
Geographic Information and Ma_4
Geographic Information and Major Franchisees - Schedule of Revenues by Geographic Area (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Total Revenue | $ 18,367 | $ 2,173 |
United States [Member] | ||
Total Revenue | 14,023 | 1,681 |
Other Countries [Member] | ||
Total Revenue | $ 4,344 | $ 492 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Feb. 22, 2019 | Feb. 07, 2019 | Jan. 29, 2019 | Jul. 03, 2018 | Dec. 30, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||
Dividend payable date | Feb. 28, 2019 | |||||
Dividend payable record date | Feb. 19, 2019 | |||||
Shares issued price per unit | $ 5.64 | |||||
Loan and Security Agreement [Member] | ||||||
Loan maturity date | Jun. 30, 2020 | |||||
Loan interest rate | 15.00% | |||||
Subsequent Event [Member] | ||||||
Common stock dividend rate | 2.13% | |||||
Dividend declared per share | $ 0.12 | |||||
Dividend payable date | Feb. 28, 2019 | |||||
Dividend payable record date | Feb. 19, 2019 | |||||
Dividend reinvest on share | 245,376 | |||||
Shares issued price per unit | $ 5.64 | |||||
Subsequent Event [Member] | Non-employee [Member] | ||||||
Common stock, par value | $ 5.85 | |||||
Number of shares issued | 15,384 | |||||
Subsequent Event [Member] | FB Lending, LLC [Member] | ||||||
Repayment of debt | $ 16,000 | |||||
Subsequent Event [Member] | Loan and Security Agreement [Member] | Lion Fund, L.P. and The Lion Fund II, L.P [Member] | ||||||
Proceeds from loan | $ 20,000 | |||||
Loan maturity date | Jun. 30, 2020 | |||||
Loan interest rate | 20.00% | |||||
Warrants issued to purchase shares | 1,143,112 | |||||
Common stock, par value | $ 0.01 | |||||
Increase in interest rate | 5.00% |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - Trade Notes and Accounts Receivable [Member] $ in Thousands | 12 Months Ended |
Dec. 30, 2018USD ($) | |
Valuation and Qualifying Accounts, Balance at Beginning of Period | $ 713 |
Valuation and Qualifying Accounts, Charged to Costs and Expenses | 89 |
Valuation and Qualifying Accounts, Deductions (Recoveries) | (58) |
Valuation and Qualifying Accounts, Balance at End of Period | $ 744 |