Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 29, 2019 | Apr. 13, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Fat Brands, Inc | ||
Entity Central Index Key | 0001705012 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 29, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-29 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Interactive Data Current | 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 | $ 8,038,655 | ||
Entity Common Stock, Shares Outstanding | 11,876,659 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Current assets | ||
Cash | $ 25 | $ 653 |
Accounts receivable, net of allowance for doubtful accounts of $116 and $595, respectively | 4,144 | 1,779 |
Trade notes receivable, net of allowance for doubtful accounts of $37 and $37, respectively | 262 | 65 |
Assets classified as held for sale | 5,128 | |
Other current assets | 929 | 1,042 |
Total current assets | 10,488 | 3,539 |
Notes receivable - noncurrent, net of allowance for doubtful accounts of $86 and $112, respectively | 1,802 | 212 |
Due from affiliates | 25,967 | 15,514 |
Deferred income taxes | 2,032 | 2,236 |
Operating lease right of use assets | 860 | |
Goodwill | 10,912 | 10,391 |
Other intangible assets, net | 29,734 | 23,289 |
Other assets | 755 | 2,779 |
Total assets | 82,550 | 57,960 |
Current liabilities | ||
Accounts payable | 7,183 | 4,415 |
Deferred income, current portion | 895 | 1,076 |
Accrued expenses | 6,013 | 3,705 |
Accrued advertising | 762 | 369 |
Accrued interest payable | 1,268 | 2,250 |
Dividend payable on preferred shares (includes amounts due to related parties of $165 and $42 as of December 29, 2019 and December 30, 2018, respectively) | 1,422 | 391 |
Liabilities related to assets classified as held for sale | 3,325 | |
Current portion of operating lease liability | 241 | |
Current portion of long-term debt | 24,502 | 15,400 |
Total current liabilities | 45,611 | 27,606 |
Deferred income - noncurrent | 5,247 | 6,621 |
Acquisition purchase price payable | 4,504 | 3,497 |
Preferred shares, net | 15,327 | 14,191 |
Deferred dividend payable on preferred shares (includes amounts due to related parties of $60 and $39 as of December 29, 2019 and December 30, 2018, respectively) | 628 | 228 |
Operating lease liability, net of current portion | 639 | |
Long-term debt, net of current portion | 5,216 | |
Other liabilities | 78 | |
Total liabilities | 77,172 | 52,221 |
Commitments and contingencies (Note 19) | ||
Stockholders' equity | ||
Common stock, $.0001 par value; 25,000,000 shares authorized; 11,860,299 and 11,546,589 shares issued and outstanding at December 29, 2019 and December 30, 2018, respectively | 11,414 | 10,757 |
Accumulated deficit | (6,036) | (5,018) |
Total stockholders' equity | 5,378 | 5,739 |
Total liabilities and stockholders' equity | $ 82,550 | $ 57,960 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance for doubtful accounts | $ 116 | $ 595 |
Notes receivable, net of allowance | 37 | 37 |
Notes receivable - noncurrent, net of allowance for doubtful accounts | 86 | 112 |
Dividends payable to related parties, current | 165 | 42 |
Dividends payable to related parties, noncurrent | $ 60 | $ 39 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 11,860,299 | 11,546,589 |
Common stock, shares outstanding | 11,860,299 | 11,546,589 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Revenue | ||
Royalties | $ 14,895 | $ 12,097 |
Franchise fees | 3,433 | 2,136 |
Store opening fees | 352 | |
Advertising fees | 4,111 | 3,182 |
Other income | 66 | 67 |
Total revenue | 22,505 | 17,834 |
Costs and expenses | ||
General and administrative expense | 11,472 | 10,349 |
Advertising expense | 4,111 | 3,182 |
Refranchising loss | 219 | 67 |
Total costs and expenses | 15,802 | 13,598 |
Income from operations | 6,703 | 4,236 |
Other expense | ||
Interest expense, net of interest income of $2,128 and $1,125 due from affiliates during the fiscal years ended December 29, 2019 and December 30, 2018, respectively | (4,757) | (3,816) |
Interest expense related to preferred shares | (1,773) | (954) |
Other expense, net | (681) | (1,539) |
Total other expense, net | (7,211) | (6,309) |
Loss before income tax expense (benefit) | (508) | (2,073) |
Income tax expense (benefit) | 510 | (275) |
Net loss | $ (1,018) | $ (1,798) |
Basic and diluted loss per common share | $ (0.09) | $ (0.16) |
Basic and diluted weighted average shares outstanding | 11,823,455 | 10,970,814 |
Cash dividends declared per common share | $ 0 | $ 0.36 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Income Statement [Abstract] | ||
Interest income | $ 2,128 | $ 1,125 |
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 Dec. 31, 2017 | $ 2,622 | $ 1 | $ 2,621 | $ (613) | $ 2,009 |
Balance, Beginning, shares at Dec. 31, 2017 | 10,000,000 | ||||
Cumulative-effect adjustment from adoption of ASU 606, Revenue from Contracts with Customers | (2,607) | (2,607) | |||
Net loss | (1,798) | (1,798) | |||
Cash 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 stock in lieu of dividend payable to Fog Cutter Capital Group, Inc. | $ 3,036 | 3,036 | 3,036 | ||
Issuance of stock in lieu of dividend payable to Fog Cutter Capital Group, Inc., 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 | ||
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 | ||||
Net loss | (1,018) | (1,018) | |||
Common stock dividend | |||||
Common stock dividend, shares | 245,376 | ||||
Issuance of common stock in lieu of director fees payable | $ 360 | 360 | 360 | ||
Issuance of common stock in lieu of director fees payable, shares | 68,334 | ||||
Issuance of warrants to purchase common stock | $ 21 | 21 | 21 | ||
Issuance of warrants to placement agents | 16 | 16 | 16 | ||
Share-based compensation | 262 | 262 | 262 | ||
Cash paid in lieu of fractional shares | (2) | (2) | (2) | ||
Balance, Ending at Dec. 29, 2019 | $ 11,414 | $ 1 | $ 11,413 | $ (6,036) | $ 5,378 |
Balance, Ending, shares at Dec. 29, 2019 | 11,860,299 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (1,018) | $ (1,798) |
Adjustments to reconcile net loss to net cash provided by operations: | ||
Deferred income taxes | 204 | (504) |
Depreciation and amortization | 785 | 358 |
Share-based compensation | 262 | 439 |
Change in operating right of use assets | 683 | |
Gain on sale of refranchised restaurants | (1,795) | |
Accretion of loan fees and interest | 1,883 | 583 |
Accretion of preferred shares | 65 | 34 |
Accretion of purchase price liability | 557 | 7 |
Provision for bad debts | 77 | 76 |
Change in: | ||
Accounts receivable | (723) | (301) |
Trade notes receivable | 83 | 58 |
Prepaid expenses | 118 | (242) |
Other | (169) | (20) |
Accounts payables and accrued expense | 3,771 | 2,226 |
Accrued advertising | 203 | (271) |
Accrued interest payable | (982) | 2,232 |
Dividend payable on preferred shares | 1,431 | 619 |
Deferred income | (2,364) | (1,659) |
Total adjustments | 4,089 | 3,635 |
Net cash provided by operating activities | 3,071 | 1,837 |
Cash flows from investing activities | ||
Change in due from affiliates | (10,453) | (6,742) |
Payments made in connection with acquisitions, net | (2,332) | (7,595) |
Proceeds from sale of refranchised restaurants | 2,340 | |
Purchases of property and equipment | (45) | (148) |
Net cash used in investing activities | (10,490) | (14,485) |
Cash flows from financing activities | ||
Proceeds from borrowings and associated warrants, net of issuance costs | 23,022 | 17,066 |
Repayments of borrowings | (16,726) | (10,853) |
Issuance of preferred shares and associated warrants, net | 1,107 | 7,984 |
Change in operating lease liabilities | (530) | |
Dividends paid in cash | (2) | (878) |
Other | (80) | (50) |
Net cash provided by financing activities | 6,791 | 13,269 |
Net (decrease) increase in cash | (628) | 621 |
Cash at beginning of year | 653 | 32 |
Cash at end of year | 25 | 653 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 5,989 | 2,495 |
Cash paid for income taxes | 244 | 220 |
Supplemental disclosure of non-cash financing and investing activities: | ||
Dividends reinvested in common stock | 3,036 | |
Note payable to FCCG converted to common and preferred stock | 9,272 | |
Director fees converted to common stock | 360 | 510 |
Income taxes payable (receivable) offset against amounts due from affiliates | $ 51 | $ (195) |
Organization and Relationships
Organization and Relationships | 12 Months Ended |
Dec. 29, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Relationships | NOTE 1. ORGANIZATION AND RELATIONSHIPS Organization and Nature of Business 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 Company’s common stock trades on the Nasdaq Capital Market under the symbol “FAT.” As of December 29, 2019, FCCG continues to control a significant voting majority of the Company. The Company is a multi-brand franchisor specializing in fast casual and casual dining restaurant concepts around the world. As of December 29, 2019, the Company owns and franchises eight restaurant brands through various wholly owned subsidiaries: Fatburger, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Ponderosa Steakhouses, Bonanza Steakhouses, Yalla Mediterranean and Elevation Burger. Combined, these brands have over 370 locations open and more than 200 under development. Liquidity The Company recognized income from operations of $6,703,000 and $4,236,000 during the fiscal years ended December 29, 2019 and December 30, 2018, respectively. Net cash provided by operating activities totaled $3,070,000 and $1,837,000 for the fiscal years ended December 29, 2019 and December 30, 2018, respectively. Despite the profitability of the brands and their operations, the Company recognized net losses of $1,018,000 and $1,798,000 during fiscal years ended December 29, 2019 and December 30, 2018, respectively. These net losses were primarily due to (i) higher net interest expense during 2019 as compared to the prior year related to higher debt balances related to its Loan and Security Agreement (See Note 11) and (ii) higher net interest expense during 2019 compared to the prior year related to Series A Fixed Rate Cumulative Preferred Stock and Series A-1 Fixed Rate Cumulative Preferred Stock being outstanding for a full year in 2019 compared to a partial year in 2018 (See Note 13). Subsequent to December 29, 2019, on March 6, 2020, the Company completed a whole business securitization (the “Securitization”) through the creation of a bankruptcy-remote issuing entity, FAT Brands Royalty I, LLC (“FAT Royalty”) in which FAT Royalty issued new notes pursuant to an asset-backed securitization (the “Securitization Notes”) and indenture (the “Indenture”). Net proceeds from the issuance of the Securitization Notes were $37,314,000, which consists of the combined face amount of $40,000,000, net of discounts of $246,000 and debt offering costs of $2,440,000 (See Note 22). A portion of the proceeds from the Securitization was used to repay the remaining $26,771,000 in outstanding balance under the Loan and Security Agreement. The remaining proceeds from the Securitization will be used for working capital. Further, in March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States and other countries. As a result, Company franchisees have temporarily closed some retail locations, reduced or modified store operating hours, adopted a “to-go” only operating model, or a combination of these actions. These actions have reduced consumer traffic, all resulting in a negative impact to Company revenues. While the disruption is currently expected to be temporary, there is uncertainty around the duration and long-term changes in consumer behavior related to social distancing resulting from COVID-19 and the ultimate impact on our franchisees. While the Company expects COVID-19 to negatively impact its business, results of operations, and financial position, the related financial impact cannot be reasonably estimated at this time. However, the Company believes that the working capital from the Securitization combined with receipts collected from the limited operations of its franchisees, and disciplined management of the Company’ operating expenses will be sufficient for the twelve months of operations following the issuance of this Form 10-K. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 29, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation 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 Credit and Depository Risks The Company maintains cash deposits in national financial institutions. From time to time the balances for these accounts exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insured amount. Balances on interest bearing deposits at banks in the United States are insured by the FDIC up to $250,000 per account. As of December 29, 2019, the Company had no accounts with a combined uninsured balance. As of December 30, 2018, the Company had three accounts with a combined uninsured balance of $170,000. Accounts receivable Trade notes receivable – Assets classified as held for sale – 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: The franchise fee may be adjusted at management’s discretion or in a situation involving store transfers. Deposits are non-refundable upon acceptance of the franchise application. In the event a franchisee does not comply with their development timeline for opening franchise stores, the franchise rights may be terminated, and franchise fee revenue is recognized for non-refundable deposits. Store opening fees During the fourth quarter of 2019, the Company performed a study of other public company restaurant franchisors’ application of ASC 606 and determined that a preferred, alternative industry application exists in which the store opening fee portion of the franchise fees is amortized over the life of the franchise agreement rather than at milestones of standalone performance obligations in the franchise agreements. In order to provide financial reporting consistent with other franchise industry peers, the Company applied this preferred, alternative application of ASC 606 during the fourth quarter of 2019 on a prospective basis. As a result of the adoption of this preferred accounting treatment under ASC 606, the Company discontinued the recognition of store opening fees upon store opening and began accounting for the entire up-front deposit received from franchisees as described above in Franchise Fees. Immaterial Adjustments Related to Prior Periods”, Royalties: Advertising – Share-based compensation Earnings per share The Company declared a stock dividend on February 7, 2019 and issued 245,376 shares of common stock in satisfaction of the stock dividend (See Note 18). Unless otherwise noted, earnings per share and other share-based information for 2019 and 2018 have been adjusted retrospectively to reflect the impact of the stock dividend. Immaterial Adjustments Related to Prior Periods During the fourth quarter of 2019, the Company identified two immaterial potential adjustments to its previously issued financial statements. These potential adjustments are (1) its assessment of the Series A-1 Fixed Rate Cumulative Preferred Stock and (2) its treatment of the store opening component of its franchise fees under ASC 606. Based on its assessment of the Series A-1 Fixed Rate Cumulative Preferred Stock, the Company determined that an error occurred in the analysis of the rights that the holders of the Series A-1 Fixed Rate Cumulative Preferred Stock have with respect to the conversion of the securities into shares of the Company’s common stock. In our reassessment, the conversion rights did not represent a beneficial conversion feature as we had initially concluded at the time of issuance. The Company originally adopted ASC 606 on January 1, 2018. During the fourth quarter of 2019, the Company performed a study of other public company restaurant franchisors’ application of ASC 606 and determined that a preferred, alternative industry application exists in which the store opening fee portion of the franchise fees is amortized over the life of the franchise agreement rather than at milestones of standalone performance obligations in the franchise agreements. In order to provide financial reporting consistent with other franchise industry peers, the Company applied this preferred, alternative application of ASC 606 during the fourth quarter of 2019 on a prospective basis. In accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality, codified in ASC 250 (“ASC 250”), Presentation of Financial Statements, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Consolidated Statements of Income, Balance Sheets, Shareholders Equity and Cash Flows, also codified in ASC 250, management assessed the materiality of (1) the error in its treatment of the beneficial conversion feature related to the Series A-1 Fixed Rate Cumulative Preferred Stock and (2) the adoption of the preferential accounting treatment under ASC 606. Based on such analysis of quantitative and qualitative factors, the Company has determined that neither the error nor the adoption of the preferential accounting treatment under ASC 606, in aggregate or individually, were material to any of the reporting periods affected, and no amendments to previously filed 10-Q or 10-K reports with the SEC are required. Recently Adopted Accounting Standards In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In July 2018, the FASB issued ASU 2018-09, Codification Improvements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Adopting the new accounting standard for leases affected various financial statement line items for the fiscal year ended December 29, 2019. The following table provides the affected amounts as reported in these audited consolidated financial statements compared with what they would have been if the previous accounting guidance had remained in effect. As of December 29, 2019 (in thousands) Amounts As Reported Amounts Under Previous Audited Consolidated Balance Sheet: Operating lease right of use assets $ 860 $ - Operating lease right of use assets classified as held for sale 3,216 - Total operating lease right of use assets $ 4,076 $ - Operating lease liabilities $ 880 $ - Operating lease liabilities associated with operating lease right of use assets classified as held for sale 3,326 - Total operating lease liabilities $ 4,206 $ - Recently Issued Accounting Standards 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. The FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40). The FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes: For public companies, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of ASU 2019-12 on our audited consolidated financial statements and related disclosures. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 29, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 3. ACQUISITIONS Acquisition of Elevation Burger On June 19, 2019, the Company completed the acquisition of EB Franchises, LLC, a Virginia limited liability company, and its related companies (collectively, “Elevation Burger”) for a purchase price of up to $10,050,000. Elevation Burger is the franchisor of Elevation Burger restaurants, with 44 locations in the U.S. and internationally. The purchase price consists of $50,000 in cash, a contingent warrant to purchase 46,875 shares of the Company’s common stock at an exercise price of $8.00 per share (the “Elevation Warrant”), and the issuance to the Seller of a convertible subordinated promissory note (the “Elevation Note”) with a principal amount of $7,509,816, bearing interest at 6.0% per year and maturing in July 2026. The Elevation Warrant is only exercisable in the event that the Company merges with FCCG. The Seller Note is convertible under certain circumstances into shares of the Company’s common stock at $12.00 per share. In connection with the purchase, the Company also loaned $2,300,000 in cash to the Seller under a subordinated promissory note (the “Elevation Buyer Note”) bearing interest at 6.0% per year and maturing in August 2026. The balance owing to the Company under the Elevation Buyer Note may be used by the Company to offset amounts owing to the Seller under the Elevation Note under certain circumstances. In addition, the Seller will be entitled to receive earn-out payments of up to $2,500,000 if Elevation Burger realizes royalty fee revenue in excess of certain amounts. As of the date of the acquisition, the fair market value of this contingent consideration totaled $531,000. As of December 29, 2019, the contingent purchase price payable totaled $633,000 which includes the accretion of interest expense at an effective interest rate of 18%. The purchase documents contain customary representations and warranties of the Seller and provides that the Seller will, subject to certain limitations, indemnify the Company against claims and losses incurred or suffered by the Company as a result of, among other things, any inaccuracy of any representation or warranty of the Seller contained in the purchase documents. The preliminary assessment of the fair value of the net assets and liabilities acquired by the Company for the acquisition of Elevation Burger was estimated at $7,193,000. The allocation of the consideration to the preliminary valuation of net tangible and intangible assets acquired is presented in the table below (in thousands): Cash $ 10 Other assets 558 Intangible assets 7,140 Goodwill 521 Current liabilities (91 ) Deferred franchise fees (758 ) Other liabilities (187 ) Total net identifiable assets $ 7,193 The assessment of fair value is preliminary and is based on information that was available to management and through the end of the fiscal year. If additional information becomes available to management related to assets acquired or liabilities assumed subsequent to this preliminary assessment of fair value but not later than one year after the date of the acquisition, measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. Yalla Mediterranean Transactions 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, which includes gross franchise royalties as well as other items, as defined 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. As of December 29, 2019, the purchase price payable totaled $2,154,000 which includes the accretion of interest expense at an effective interest rate of 19%. 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. As of December 29, 2019, the purchase price payable totaled $1,718,000 which includes the accretion of interest expense at an effective interest rate of 5.4%. 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 preliminary 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 263 Accounts payable and accrued expenses (1,168 ) Total net identifiable assets $ 3,490 Acquisition of 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 127 shares of the Company’s Common Stock at $7.83 per share (the “Hurricane Warrants”). 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 |
Refranchising
Refranchising | 12 Months Ended |
Dec. 29, 2019 | |
Refranchising | |
Refranchising | nOTE 4. REFRANCHISING As part of its ongoing franchising efforts, the Company may, from time to time, make opportunistic acquisitions of operating restaurants in order to convert them to franchise locations or acquire existing franchise locations to resell to another franchisee across all of its brands. During the first quarter of 2019, the Company met all of the criteria requiring that certain assets used in the operation of certain restaurants be classified as held for sale. As a result, the following assets have been classified as held for sale on the accompanying audited consolidated balance sheet as of December 29, 2019 (in thousands): December 29, 2019 Property, plant and equipment $ 1,912 Operating lease right of use assets 3,216 Total $ 5,128 Operating lease liabilities related to the assets classified as held for sale in the amount of $3,326,000, have been classified as current liabilities on the accompanying audited consolidated balance sheet as of December 29, 2019. During the year ended December 29, 2019, the operating restaurants incurred restaurant costs and expenses, net of revenue of $2,014,000, compared to $67,000 in the prior period. In addition, the refranchising of these opportunistic acquisitions of operating restaurants for conversion to franchise locations and the acquisition of existing franchise locations to resell to another franchisee resulted in the gains on the six store sales of $1,795,000 during the fiscal year ended December 29, 2019 with no comparable activity in 2018: The following table highlights the results of the Company’s refranchising program during 2019 (in thousands): Fiscal year ended Restaurant costs and expenses, net of revenue $ (2,014 ) Gain on store sales 1,795 Refranchising loss $ (219 ) During the fiscal year ended December 29, 2019, a franchisee had entered into an agreement with the Company by which it agreed to sell two existing franchised locations to the Company for its refranchising program. Additionally, during the fiscal year, the Company had completed transactions to sell the two locations to new owners. Subsequent to December 29, 2019, as a result of COVID-19, the locations acquired from the existing franchisee became unavailable. The Company is evaluating the impact of the event and determining which existing operating restaurants will be used as a replacement for the new owners (See Note 22). |
Notes Receivable
Notes Receivable | 12 Months Ended |
Dec. 29, 2019 | |
Receivables [Abstract] | |
Notes Receivable | Note 5. NOTES RECEIVABLE Notes receivable consist of trade notes receivable and the Elevation Buyer Note. Trade notes receivable are created when a settlement is reached relating to a delinquent franchisee account 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 29, 2019, these trade notes receivable totaled $250,000, which was net of reserves of $123,000. As of December 30, 2018, these trade notes receivable totaled $277,000, which was net of reserves of $149,000. The Elevation Buyer Note was funded in connection with the purchase of Elevation Burger (See Note 3). The Company loaned $2,300,000 in cash to the Seller under a subordinated promissory note bearing interest at 6.0% per year and maturing in August 2026. This Note is subordinated in right of payment to all indebtedness of the Seller arising under any agreement or instrument to which the Seller or any of its affiliates is a party that evidences indebtedness for borrowed money that is senior in right of payment to the Elevation Buyer Note, whether existing on the effective date of the Elevation Buyer Note or arising thereafter. The balance owing to the Company under the Elevation Buyer Note may be used by the Company to offset amounts owing to the Seller under the Elevation Note under certain circumstances. As part of the total consideration for the Elevation acquisition, the Elevation Buyer Note was recorded at a carrying value of $1,903,000, which was net of a discount of $397,000. As of December 29, 2019, the balance of the Elevation Note was $1,814,000, which was net of a discount of $352,000. During the fiscal year ended December 29, 2019, the Company recognized $114,000 in interest income, with no comparable activity in 2018. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 29, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Note 6. GOODWILL Goodwill consists of the following (in thousands): December 29, 2019 December 30, 2018 Goodwill: Fatburger $ 529 $ 529 Buffalo’s 5,365 5,365 Hurricane 2,772 2,772 Ponderosa 1,462 1,462 Yalla 263 263 Elevation Burger 521 - Total goodwill $ 10,912 $ 10,391 |
Other Intangible Assets
Other Intangible Assets | 12 Months Ended |
Dec. 29, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Note 7. OTHER INTANGIBLE ASSETS Other intangible assets consist of trademarks and franchise agreements that were classified as identifiable intangible assets at the time of the brands’ acquisition by the Company or by FCCG prior to FCCG’s contribution of the brands to the Company at the time of the initial public offering (in thousands): December 29, 2019 December 30, 2018 Trademarks: Fatburger $ 2,135 $ 2,135 Buffalo’s 27 27 Hurricane 6,840 6,840 Ponderosa 7,230 7,230 Yalla 1,530 1,530 Elevation Burger 4,690 - Total trademarks 22,452 17,762 Franchise agreements: Hurricane – cost 4,180 4,180 Hurricane – accumulated amortization (482 ) (161 ) Ponderosa – cost 1,640 1,640 Ponderosa – accumulated amortization (243 ) (132 ) Elevation Burger – cost 2,450 - Elevation Burger – accumulated amortization (263 ) - Total franchise agreements 7,282 5,527 Total Other Intangible Assets $ 29,734 $ 23,289 The expected future amortization of the Company’s capitalized franchise agreements is as follows (in thousands): Fiscal year: 2020 $ 932 2021 932 2022 932 2023 932 2024 932 Thereafter 2,622 Total $ 7,282 |
Deferred Income
Deferred Income | 12 Months Ended |
Dec. 29, 2019 | |
Contract with Customer, Liability [Abstract] | |
Deferred Income | Note 8. DEFERRED INCOME Deferred income is as follows (in thousands): December 29, 2019 December 30, 2018 Deferred franchise fees $ 5,417 $ 6,711 Deferred royalties 422 653 Deferred advertising revenue 303 333 Total $ 6,142 $ 7,697 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 29, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9. 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 $25,967,000 due from FCCG and its affiliates will be applied first to reduce excess income tax payment obligations to FCCG under the Tax Sharing Agreement. 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 $51,000 was offset against amounts due from FCCG as of December 29, 2019. For the year ended December 30, 2018, the tax calculation resulted in an increase in the amount owed to the Company by FCCG in the amount of $195,000. (See Note 14.) 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 29, 2019 December 30, 2018 Deferred tax assets (liabilities) Deferred income $ 1,353 $ 1,779 Reserves and accruals 208 346 Intangibles (614 ) (532 ) Deferred state income tax (91 ) (72 ) Tax credits 244 126 Share-based compensation 192 131 Interest expense - 439 Fixed assets (137 ) - Net operating loss carryforwards 894 43 Other (17 ) (24 ) Total $ 2,032 $ 2,236 Components of the income tax expense (benefit) are as follows (in thousands): Fiscal Year Ended Fiscal Year Ended Current Federal $ 29 $ (79 ) State 34 88 Foreign 244 220 307 229 Deferred Federal 291 (381 ) State (88 ) (123 ) 203 (504 ) Total income tax expense (benefit) $ 510 $ (275 ) 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 29, 2019 December 30, 2018 Tax benefit at statutory rate $ (107 ) $ (435 ) State and local income taxes (43 ) (27 ) Foreign taxes 244 216 Tax credits (24 ) (203 ) Dividends on preferred stock 372 200 Meals and entertainment 42 6 Other 26 (32 ) Total income tax expense (benefit) $ 510 $ (275 ) As of December 29, 2019, 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 29, 2019. |
Leases
Leases | 12 Months Ended |
Dec. 29, 2019 | |
Leases [Abstract] | |
Leases | NOTE 10. LEASES The Company has recorded nine operating leases for corporate offices and for certain restaurant properties that are in the process of being refranchised. The Company is not a guarantor to the leases for the restaurant locations. The leases have remaining lease terms ranging from four months to 7.5 years. Five of the leases also have options to extend the term for 5 to 10 years. The Company recognized lease expense of $1,441,000 and $304,000 for the fiscal years ended December 29, 2019 and December 30, 2018, respectively. The weighted average remaining lease term of the operating leases (not including optional lease extensions) at December 29, 2019 was 5.8 years. Operating lease right of use assets and operating lease liabilities relating to the operating leases are as follows (in thousands): December 29, 2019 December 30, 2018 Right of use assets $ 4,076 $ - Lease liabilities $ 4,206 $ - The operating lease right of use assets and operating lease liabilities include obligations relating to the optional term extensions available on the five restaurant leases based on management’s intention to exercise the options. The weighted average discount rate used to calculate the carrying value of the right of use assets and lease liabilities was 15.9% as this was consistent with our incremental borrowing rate. The contractual future maturities of the Company’s operating lease liabilities as of December 29, 2019, including anticipated lease extensions, are as follows (in thousands): Fiscal year: 2020 $ 1,109 2021 870 2022 898 2023 924 2024 684 Thereafter 4,882 Total lease payments 9,367 Less imputed interest 5,161 Total $ 4,206 Supplemental cash flow information for the fiscal year ended December 29, 2019 related to leases is as follows (in thousands): Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 1,080 Operating lease right of use assets obtained in exchange for new lease obligations: Operating lease liabilities $ 856 |
Debt
Debt | 12 Months Ended |
Dec. 29, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Note 11. 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 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. In connection with the Loan Agreement, the Company also issued warrants to purchase up to 509,604 shares of the Company’s Common Stock at $7.20 per share to the Lender (the “Lender Warrant”). Warrants were also issued to certain loan placement agents to purchase 66,691 shares of the Company’s common stock at $7.20 per share (the “Placement Agent Warrants”) (See Note 17). 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 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. On January 29, 2019, the Company refinanced the FB Lending term loan. The payoff amount was $18,095,000 which included principal in the amount of $16,400,000 and accrued interest and prepayment fees of $1,695,000. During the year ended December 29, 2019, the Company recorded interest expense of $1,337,000, primarily relating to the charge off of unaccreted debt discount of $349,000 and unamortized debt offering costs of $651,000. 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 extension fees, $1,360,000 of prepayment penalties, $222,000 in accretion expense and $217,000 for amortization of debt offering costs. The Lender Warrant will remain outstanding until it is exercised or expires (See Note 17). Loan and Security Agreement On January 29, 2019, the Company as borrower, and its subsidiaries and affiliates as guarantors, entered into a 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 was due to mature on June 30, 2020. Interest on the term loan accrued at an annual fixed rate of 20.0% and was payable quarterly. The Company was allowed to prepay all or a portion of the outstanding principal and accrued and 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 was 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 1,167,404 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 were not repaid in full prior to October 1, 2019. If the Loan and Security Agreement was repaid in full prior to October 1, 2019, the Lion Warrant would be terminated 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 subsidiaries and affiliates entered into a Guaranty (the “Guaranty”) in favor of Lion, pursuant to which they guaranteed the obligations of the Company under the Loan and Security Agreement and granted as security for their guaranty obligations a lien on substantially all of their assets. The Loan and Security Agreement contained customary affirmative and negative covenants, including covenants that limited or restricted 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 included customary events of default that included, 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 have resulted 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. On the issuance date, the Company evaluated the allocation of the proceeds between the Loan and Security Agreement and the Lion Warrant based on the relative fair values of each. Since the Lion Warrant only was to become effective if the amounts outstanding under the Loan and Security Agreement were not repaid in full prior to October 1, 2019, no value was assigned to it as of the grant date. The Company intended to refinance the debt prior to the beginning of the exercise period of the Lion Warrant. On June 19, 2019, the Company amended its existing loan facility with Lion. The Company entered into a First Amendment to Loan and Security Agreement (the “First Amendment”), which amended the Loan and Security Agreement originally dated January 29, 2019. Pursuant to the First Amendment, the Company increased its borrowings by $3,500,000 in order to fund the Elevation Buyer Note in connection with the acquisition of Elevation, acquire other assets and pay fees and expenses of the transactions. The First Amendment also added the acquired Elevation-related entities as guarantors and loan parties. On July 24, 2019, the Company entered into a first amendment to the Lion Warrant, which extended the date on which the Lion Warrant was initially exercisable from October 1, 2019 to June 30, 2020, which coincided with the maturity date of the loans made under the Loan Agreement. The Lender Warrant was only exercisable if the amounts outstanding under the Loan Agreement were not repaid in full prior to the Exercise Date. The Company agreed to pay the Lenders an extension fee of $500,000 in the form of an increase in the principal amount loaned under the Loan and Security Agreement, and on July 24, 2019 entered into a second amendment to the Loan Agreement (the “Second Amendment”) to reflect this increase. Under the Second Amendment, the parties also agreed to amend the Loan and Security Agreement to provide for a late fee of $400,000 payable if the Company failed to make any quarterly interest payment by the fifth business day after the end of each fiscal quarter. As of December 29, 2019, the total principal amount due under the Loan and Security Agreement was $24,000,000 and the net carrying value of obligation under the Loan and Security Agreement was $23,849,000, which is net of unamortized debt offering costs of $151,000. The Company recognized interest expense on the Loan and Security Agreement of $4,881,000 for the fiscal year ended December 29, 2019, which includes $227,000 for amortization of debt offering costs and a $500,000 loan extension fee, with no comparable activity in 2018. The effective interest rate for the facility under the Loan and Security Agreement during 2019 was 23.9%. The Company repaid the Loan and Security Agreement in full on March 9, 2020 (See Note 22). Elevation Note On June 19, 2019, the Company completed the acquisition of Elevation Burger. A portion of the purchase price included the issuance to the Seller of a convertible subordinated promissory note (the “Elevation Note”) with a principal amount of $7,509,816, bearing interest at 6.0% per year and maturing in July 2026. The Elevation Note is convertible under certain circumstances into shares of the Company’s common stock at $12.00 per share. In connection with the valuation of the acquisition of Elevation Burger, the Elevation Note was recorded on the financial statements of the Company at $6,185,000, which is net of a loan discount of $1,295,000 and debt offering costs of $30,000. As of December 29, 2019, the carrying value of the Elevation Note was $5,847,000 which is net of the loan discount of $1,149,000 and debt offering costs of $66,000. The Company recognized interest expense relating to the Elevation Note during the year ended December 29, 2019 in the amount of $383,000, which included amortization of the loan discount of $146,000 and amortization of $5,000 in debt offering costs, with no comparable activity is 2018. The effective interest rate for the Elevation Note during 2019 was 12.5%. The Company is required to make fully amortizing payments of $110,000 per month during the term of the Elevation Note. The Elevation Note is a general unsecured obligation of Company and is subordinated in right of payment to all indebtedness of the Company arising under any agreement or instrument to which Company or any of its Affiliates is a party that evidences indebtedness for borrowed money that is senior in right of payment. FCCG has guaranteed payment of the Elevation Note. |
Note Payable to FCCG
Note Payable to FCCG | 12 Months Ended |
Dec. 29, 2019 | |
Debt Disclosure [Abstract] | |
Note Payable to FCCG | Note 12. 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 1,010,420 shares of Common Stock of the Company, representing an exchange price of $7.20 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. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Dec. 29, 2019 | |
Equity [Abstract] | |
Preferred Stock | Note 13. PREFERRED STOCK Series B Cumulative Preferred Stock On October 3 and October 4, 2019, the Company completed the initial closing of its continuous public offering (the “Series B Preferred Offering”) of up to $30,000,000 of units (the “Series B Units”) at $25.00 per Series B Unit, with each Series B Unit comprised of one share of 8.25% Series B Cumulative Preferred Stock (“Series B Preferred Stock”) and 0.60 warrants (the “Series B Warrants”) to purchase common stock at $8.50 per share, exercisable for five years. The offering includes up to 1,200,000 shares of Series B Preferred Stock and Series B Warrants initially exercisable to purchase up to an aggregate of 720,000 shares of our common stock. The shares of Series B Preferred Stock and Series B Warrants will be issued separately but can only be purchased together in the Series B Preferred Offering. Each Warrant will be immediately exercisable and will expire on the five-year anniversary of the date of issuance. The Company will pay cumulative dividends on the Series B Preferred Stock from and including the date of original issuance in the amount of $2.0625 per share each year, which is equivalent to 8.25% of the $25.00 liquidation preference per share. Dividends on the Series B Preferred Stock will be payable quarterly in arrears based on the Company’s fiscal quarters. The Company may not redeem the Series B Preferred Stock before the first anniversary of the initial issuance date. After the first anniversary of the initial issuance date the Company has the option to redeem the Series B Preferred Stock, in whole or in part, for cash plus any accrued and unpaid dividends to the date of redemption at the following redemption price per share: ● After the first anniversary and on or prior to the second anniversary at $27.50 per share ● After the second anniversary and on or prior to the third anniversary at $26.125 per share ● After the third anniversary at $25.00 per share The Series B Preferred Stock will mature on the five-year anniversary of the initial issuance date or the earlier liquidation, dissolution or winding-up of the Company. Upon maturity, the holders of Series B Preferred Stock will be entitled to receive cash redemption of their shares in an amount equal to $25.00 per share plus any accrued and unpaid dividends. Holders of Series B Preferred Stock have the option to cause the Company to redeem all or any portion of their Series B Preferred Stock following the first anniversary of the initial issuance date for cash at the following redemption prices per share, plus any accrued and unpaid dividends: ● After the first anniversary and on or prior to the second anniversary at $22.00 per share ● After the second anniversary and on or prior to the third anniversary at $22.50 per share ● After the third anniversary and on or prior to the fourth anniversary at $23.00 per share ● After the fourth anniversary at $25.00 per share The rights of holders of Series B Preferred Stock to receive their liquidation preference also will be subject to the proportionate rights of our Series A Fixed Rate Cumulative Preferred Stock and any other class or series of our capital stock ranking in parity with the Series B Preferred Stock as to liquidation. As of December 29, 2019, there were 57,140 shares of Series B Preferred Stock outstanding. The Company classified the Series B Preferred Stock as long-term debt because it contains an unconditional obligation requiring the Company to redeem the instruments at the maturity date or upon the election of the holders as described above in cash. The associated Series B Warrants have been recorded as additional paid-in capital. On the issuance date, the Company allocated the proceeds between the Series B Preferred Stock and the Series B 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 B Warrants Series B Total Series B Preferred Offering: Gross proceeds $ 21 $ 1,407 $ 1,428 Issuance costs - (360 ) (360 ) Net proceeds $ 21 $ 1,047 $ 1,068 Subscription price per unit $ 0.37 $ 24.63 $ 25.00 Consolidated balance sheet impact at issuance: Long-term debt, net of debt discount and offering costs $ - $ 1,047 $ 1,047 Additional paid-in capital $ 21 $ - $ 21 As of December 29, 2019, the net Series B Preferred Stock balance was $1,071,000 including an unaccreted debt discount of $15,000 and unamortized debt offering costs of $342,000. The Company recognized interest expense on the Series B Preferred Stock of $47,000 for the fiscal year ended December 29, 2019, which includes accretion expense of the debt discount of $6,000 and amortization of debt offering costs of $17,000. The effective interest rate for the Series B Preferred Stock for 2019 was 19.8%. 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 29, 2019, 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 127 shares of the Company’s Common Stock at $7.83 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 102,125 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 25,530 of the Company’s common stock at an exercise price of $7.83 per share (the “Exchange Warrants”); and ● $7,272,053 of the Note Balance was exchanged for 1,010,420 shares of Common Stock of the Company, representing an exchange price of $7.20 per share, which was the closing trading price of the Common Stock on June 26, 2018. The Company classifies the Series A Preferred Stock as long-term debt because it contains an obligation to issue a variable number of common shares for a fixed monetary amount. As of December 29, 2019, the net Series A Preferred Stock balance was $9,913,000 including an unaccreted debt discount of $76,000 and unamortized debt offering costs of $11,000. The Company recognized interest expense on the Series A Preferred Stock of $1,415,000 for the fiscal year ended December 29, 2019, which includes accretion expense of $22,000 and $3,000 for the amortization of debt offering costs. For the fiscal year ended December 30, 2018, the Company recognized interest expense on the Series A Preferred Stock of $785,000 which includes accretion expense of $13,000 and $2,000 for the amortization of debt offering costs. The effective interest rate for the Series A Preferred Stock for 2019 was 14.3%. 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 29, 2019, 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 $11.75 per share of Common Stock. As of December 29, 2019, there were 45,000 shares of Series A-1 Preferred Stock outstanding. The Company classifies the Series A-1 Preferred Stock as long-term debt because it contains an obligation to issue a variable number of common shares for a fixed monetary amount. As of December 29, 2019, the net Series A-1 Preferred Stock balance was $4,343,000 including an unaccreted debt discount of $133,000 and unamortized debt offering costs of $24,000. The Company recognized interest expense on the Series A-1 Preferred Stock of $309,000 for the fiscal year ended December 29, 2019, which included recognized accretion expense of $32,000 and $7,000 for the amortization of debt offering costs. The Company recognized interest expense on the Series A-1 Preferred Stock of $135,000 for the fiscal year ended December 30, 2018 which included accretion expense on the Series A-1 Preferred Stock of $15,000 and $4,000 for the amortization of debt offering costs. The effective interest rate for the Series A-1 Preferred Stock for 2019 was 7.2%. The issuance of the Series A Preferred Stock and Series A-1 Preferred Stock 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. 29, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 14. 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 $25,967,000 as of December 29, 2019 compared to $15,514,000 as of December 30, 2018. The receivable from FCCG bears interest at a rate of 10% per annum. During the fiscal years ended December 29, 2019 and December 30, 2018, the Company recorded accrued interest income on the balance of the receivable due from FCCG of $1,528,000 and $825,000, respectively. The net balance 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”). During the fiscal years ended December 29, 2019 and December 30, 2018, the Company recorded accrued interest income of $600,000 and $300,000, respectively. 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. During the fiscal year ended December 29, 2019, the Company recorded a payable to FCCG in the amount of $51,000 under the Tax Sharing Agreement, which was offset against the intercompany receivable. During the fiscal year ended December 30, 2018, the Company recorded a receivable due from FCCG in the amount of $195,000 relating to the Tax Sharing Agreement. (See Note 9). Subsequent to December 29, 2019, on April 24, 2020, the Company entered into an Intercompany Revolving Credit Agreement with FCCG (“Intercompany Agreement”). The Company had previously extended credit to FCCG pursuant to a certain Intercompany Promissory Note (the “Original Note”), dated October 20, 2017, with an initial principal balance of $11,906,000. Subsequent to the issuance of the Original Note, the Company and certain of its direct or indirect subsidiaries made additional intercompany advances in the aggregate amount of $10,523,000. Pursuant to the Intercompany Agreement, the revolving credit facility bears interest at a rate of 10% per annum, has a five-year term with no prepayment penalties, and has a maximum capacity of $35,000,000. All additional borrowings under the Intercompany Agreement are subject to the approval of the Board of Directors, in advance, on a quarterly basis and may be subject to other conditions as set forth by the Company. The initial balance under the Intercompany Agreement totaled $21,067,000 including the balance of the Original Note, borrowings subsequent to the Original Note, accrued and unpaid interest income, and other adjustments through December 29, 2019. (See Note 22). On October 3 and October 4, 2019, the Company completed the initial closing of its continuous public offering (the “Series B Preferred Offering”) of up to $30,000,000 of units (the “Series B Units”) at $25.00 per Series B Unit, with each Series B Unit comprised of one share of 8.25% Series B Cumulative Preferred Stock (“Series B Preferred Stock”) and 0.60 warrants (the “Series B Warrants”) to purchase common stock at $8.50 per share, exercisable for five years. At the initial closing of the Preferred Offering, the Company completed the sale of 43,080 Series B Units for gross proceeds of $1,077,000. The following reportable related persons participated in the initial closing of the Company’s Preferred Offering: ● Andrew Wiederhorn, the Company’s Chief Executive Officer, acquired 20,000 Series B Units for $500,000 comprised of 20,000 shares of Series B Preferred Stock and 12,000 Series B Warrants to purchase 12,000 shares of the Company’s Common Stock at $8.50 per share, and ● Squire Junger, a member of the Company’s Board of Directors, acquired 5,000 Series B Units for $125,000 comprised of 5,000 shares of Series B Preferred Stock and 3,000 Series B Warrants to purchase 3,000 shares of the Company’s Common Stock at $8.50 per share. ● In aggregate, Mr. Wiederhorn, Mr. Junger, and other related parties acquired 33,000 Series B Units for $825,000 comprised of 33,000 shares of Series B Preferred Stock and 19,800 Series B Warrants to purchase 19,800 shares of the Company’s Common Stock at $8.50 per share. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 29, 2019 | |
Equity [Abstract] | |
Shareholders' Equity | Note 15. SHAREHOLDERS’ EQUITY As of December 29, 2019 and December 30, 2018, the total number of authorized shares of common stock was 25,000,000, and there were 11,860,299 and 11,546,589 (unadjusted for the February 28, 2019 stock dividend) shares of common stock outstanding, respectively. Below are the changes to the Company’s common stock during the fiscal year ended December 29, 2019: ● 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 stock dividend. Unless otherwise noted, the common stock share and share price information presented in these Notes to the Audited Financial Statements for periods prior to February 28, 2019 have been adjusted retrospectively to reflect the impact of the stock dividend. ● 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. ● On May 21, 2019, the Company issued a total of 19,416 shares of common stock at a value of $4.64 per share to the non-employee members of the board of directors as consideration for accrued directors’ fees. ● On September 24, 2019, the Company issued a total of 17,142 shares of common stock at a value of $5.25 per share to the non-employee members of the board of directors as consideration for accrued directors’ fees. ● On November 14, 2019, the Company issued a total of 16,392 shares of common stock at a value of $5.49 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. 29, 2019 | |
Equity [Abstract] | |
Share-Based Compensation | Note 16. 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 1,021,250 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 fiscal year ended December 29, 2019 can be summarized as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Stock options outstanding at December 30, 2018 681,633 $ 8.84 8.1 Grants 106,908 $ 5.64 9.7 Forfeited (66,060 ) $ 7.90 8.7 Expired - $ Stock options outstanding at December 29, 2019 722,481 $ 8.45 8.5 Stock options exercisable at December 29, 2019 328,483 $ 9.94 8.1 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% - 10.43 % Expected volatility 30.23% - 31.73 % Risk-free interest rate 1.52% - 2.85 % Expected term (in years) 5.50 – 5.75 The Company recognized share-based compensation expense in the amount of $262,000 and $439,000, respectively, during the fiscal years ended December 29, 2019 and December 30, 2018. As of December 29, 2019, there remains $150,000 of related share-based compensation expense relating to non-vested grants, which will be recognized over the remaining vesting period, subject to future forfeitures. |
Warrants
Warrants | 12 Months Ended |
Dec. 29, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Warrants | Note 17. WARRANTS From the Offering through December 29, 2019, the Company has issued the following outstanding warrants to purchase shares of its common stock: ● Warrants issued on October 20, 2017 to purchase 81,700 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 $14.69 per share, and the Common Stock Warrants were valued at $124,000 at the date of grant. 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 102,125 shares of the Company’s common stock at an exercise price of $7.83 per share (the “Subscription Warrants”). The Subscription Warrants were issued as part of the Subscription Agreement (see Note 13). The Subscription Warrants were valued at $87,000 at the date of grant. 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 25,530 shares of the Company’s common stock at an exercise price of $7.83 per share (the “Exchange Warrants”). The Exchange Warrants were issued as part of the Exchange (See Note 13). The Exchange Warrants were valued at $25,000 at the date of grant. 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 57,439 shares of the Company’s common stock at an exercise price of $7.83 per share (the “Hurricane Warrants”). The Hurricane Warrants were issued as part of the acquisition of Hurricane. The Hurricane Warrants were valued at $58,000 at the date of grant. 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 509,604 shares of the Company’s common stock at an exercise price of $7.20 per share (the “Lender Warrant”). The Lender Warrant was issued as part of the $16 million credit facility with FB Lending, LLC (See Note 11). The Lender Warrant was valued at $592,000 at the date of grant. 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 66,691 shares of the Company’s common stock at an exercise price of $7.20 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 11). The Placement Agent Warrants were valued at $78,000 at the date of grant. 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. ● Warrants issued on January 29, 2019, in connection with the Loan and Security Agreement (See Note 11), to purchase up to 1,167,404 shares of the Company’s Common Stock at an exercise price of $0.01 per share (the “Lion Warrant”), exercisable at any time between July 1, 2020 and January 29, 2024, but only if the amounts outstanding under the Loan and Security Agreement are not repaid in full on or before June 30, 2020. If the Loan and Security Agreement is repaid in full on or before June 30, 2020, the Lion Warrant will terminate in its entirety. The Lion Warrants were not valued at the date of grant due to the contingency relating to their exercise. The Lion Warrants were cancelled on March 9, 2020 in connection with the repayment of the Loan and Security Agreement in full. (See Note 22) ● Warrants issued on June 19, 2019, in connection with the acquisition of Elevation Burger (See Note 3), to purchase 46,875 shares of the Company’s common stock at an exercise price of $8.00 per share (the “Elevation Warrant”), exercisable for a period of five years, but only in the event of a merger of the Company and FCCG, commencing on the second business day following the potential merger and ending on the five year anniversary thereafter, at which time the Elevation Warrant shall terminate The Elevation Warrants were not valued at the date of grant due to the contingency relating to their exercise. ● Warrants issued between October 3, 2019 and December 29, 2019, in connection with the sale of Series B Units (See Note 13), to purchase 34,284 shares of the Company’s common stock at an exercise price of $8.50 per share (the “Series B Warrants”), exercisable for a period of five years from October 3, 2019. The outstanding Series B Warrants were valued at $21,000 at the date of grant. The Company’s warrant activity for the fiscal year ended December 29, 2019 is as follows: Number of Shares Weighted Average Weighted Average Remaining Contractual Warrants outstanding at December 30, 2018 843,089 $ 8.06 3.5 Grants 1,248,563 0.54 5.0 Exercised - - - Forfeited - - - Expired - - - Warrants outstanding at December 29, 2019 2,091,652 $ 3.57 4.3 Warrants exercisable at December 29, 2019 877,373 $ 8.08 3.5 The weighted average fair value of the warrants granted from the Offering through December 29, 2019 and the assumptions used in the Black-Scholes valuation model are as follows: Warrants Expected dividend yield 4.00% - 6.63 % Expected volatility 30.23% - 31.73 % Risk-free interest rate 0.99% - 1.91 % Expected term (in years) 3.80 - 5.00 |
Dividends on Common Stock
Dividends on Common Stock | 12 Months Ended |
Dec. 29, 2019 | |
Equity [Abstract] | |
Dividends on Common Stock | Note 18. DIVIDENDS ON COMMON STOCK 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 stock dividend. No fractional shares were issued, instead the Company paid stockholders cash-in-lieu of shares. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 29, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 19. 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, FAT Brands, Inc., Andrew Wiederhorn, Ron Roe, James Neuhauser, Edward H. Rensi, Marc L. Holtzman, Squire Junger, Silvia Kessel, Jeff Lotman, Fog Cutter Capital Group Inc., and Tripoint Global Equities, LLC (collectively” the “Original Defendants”) were named as defendants in a putative securities class action lawsuit entitled Rojany v. FAT Brands, Inc. Rojany Rojany Alden v. FAT Brands Alden Rojany Alden Rojany Adam Vignola, et al. v. FAT Brands Inc., et al. On August 24, 2018, the Original Defendants were named as defendants in a putative securities class action lawsuit entitled Vignola v. FAT Brands, Inc. Vignola Rojany Vignola Rojany 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 6,137 square feet of space, pursuant to a lease that expires on September 29, 2025, as well as an additional 2,915 square feet of space pursuant to a lease amendment that expires on February 29, 2024. The Company leases 1,775 square feet of space in Plano, Texas for pursuant to a lease that expires on March 31, 2021. As part of the acquisition of Elevation Burger, the Company assumed a lease of 5,057 square feet of space in Falls Church, Virginia that expires on December 31, 2020. The Company subleases approximately 2,500 square feet of this lease to an unrelated third party. The Company is not a guarantor to the leases of the Yalla restaurants that are being refranchised. 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. 29, 2019 | |
Geographic Information And Major Franchisees | |
Geographic Information and Major Franchisees | Note 20. geographic information AND MAJOR FRANCHISEES R Fiscal Year Ended Fiscal Year Ended United States $ 18,624 $ 14,023 Other countries 3,881 4,344 Total revenues $ 22,505 $ 18,367 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 29, 2019 and December 30, 2018, no individual franchisee accounted for more than 10% of the Company’s revenues. |
Operating Segments
Operating Segments | 12 Months Ended |
Dec. 29, 2019 | |
Segment Reporting [Abstract] | |
Operating Segments | NOTE 21. 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. As part of its ongoing franchising efforts, the Company will, from time to time, make opportunistic acquisitions of operating restaurants in order to convert them to franchise locations. During the refranchising period, the Company may operate the restaurants. 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. 29, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 22. SUBSEQUENT EVENTS Pursuant to FASB ASC 855, Management has evaluated all events and transactions that occurred from December 29, 2019 through the date of issuance of these audited consolidated financial statements. During this period, the Company did not have any significant subsequent events, except as disclosed below: COVID-19 In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States and other countries. As a result, Company franchisees have temporarily closed some retail locations, reduced or modified store operating hours, adopted a “to-go” only operating model, or a combination these actions. These actions have reduced consumer traffic, all resulting in a negative impact to Company revenues. While the disruption is currently expected to be temporary, there is uncertainty around the duration. Therefore, while the Company expects this matter to negatively impact our business, results of operations, and financial position, the related financial impact cannot be reasonably estimated at this time. As additional information becomes available regarding the potential impact and the duration of the negative financial effects of the current pandemic, the Company may determine that an impairment adjustment to the recorded value of trademarks, goodwill and other intangible assets may be necessary. The Securitization described below had the effect of increasing the Company’s cash position and liquidity and is expected to help preserve its financial flexibility during the period of uncertainty caused by the pandemic. Lion Loan and Security Agreement From January 6, 2020 through February 21, 2020, the Company entered into a series of amendments to the Lion Loan and Security Agreement (the “Third Through Seventh Amendments”), which granted five successive extensions of the due date for the payment of the quarterly interest payment which was originally due January 6, 2020 (the “January Quarterly Interest”). The final result of the Third Through Seventh Amendments, extended the due date for the payment of the January Quarterly Interest payment to March 13, 2020. The Company agreed to pay Lion a total extension fee of $650,000 with the interest payment. Upon payment of the January Quarterly Interest and the extension fee, Lion agreed to waive other late fees which may accrue relating to the payment and waive any default or event of default relating to the conversion of EB Franchises, LLC from a Virginia limited liability company to a Delaware limited liability company. On March 6, 2020, the Company repaid the Lion Loan and Security Agreement in full by making a total payment of approximately $26,771,000. This consisted of $24,000,000 in principle, approximately $2,120,000 in accrued interest and $651,000 in penalties and fees. As a result of the prepayment, the Lion Warrant was cancelled in its entirety. Securitization On March 6, 2020, the Company completed a whole business securitization (the “Securitization”) through the creation of a bankruptcy-remote issuing entity, FAT Brands Royalty I, LLC (“FAT Royalty”) in which FAT Royalty issued new notes pursuant to an asset-backed securitization (the “Securitization Notes”) and indenture (the “Indenture”). The new notes consist of the following: Note Public Rating Seniority Issue Amount Coupon Optional Prepayment Date Final Maturity Date A-2 BB Senior $ 20,000,000 6.50% 4/27/2021 4/27/2026 B-2 B Senior Subordinated $ 20,000,000 9.00% 4/27/2021 4/27/2026 Net proceeds from the issuance of the Securitization Notes were $37,314,000, which consists of the combined face amount of $40,000,000, net of discounts of $246,000 and debt offering costs of $2,440,000. The discount and offering costs will be accreted as additional interest expense over the expected term of the Securitization Notes. A portion of the proceeds from the Securitization was used to repay the remaining $26,771,000 in outstanding balance under the Loan and Security Agreement with Lion. As a result of the prepayment, the Lion Warrant was cancelled in its entirety. The remaining proceeds from the Securitization will be used for working capital. While the Securitization Notes are outstanding, scheduled payments of principal and interest are required to be made on a quarterly basis. It is expected that the Securitization Notes will be repaid prior to the Final Maturity Date, with the anticipated repayment date occurring in January 2023 for the A-2 Notes and October 2023 for the B-2 Notes (the “Anticipated Repayment Dates”). If the Company has not repaid or refinanced the Securitization Notes prior to the applicable Anticipated Repayment Date, additional interest expense will begin to accrue and all additional proceeds will be trapped for full amortization, as defined in the related agreements. The Notes are secured by substantially all of the assets of FAT Royalty, including the equity interests in the FAT Brands Franchising Entities as defined in the Indenture. The restrictions placed on the Company’s subsidiaries require that the Company’s principal and interest obligations have first priority and amounts are segregated weekly to ensure appropriate funds are reserved to pay the quarterly principal and interest amounts due. The amount of weekly cash flow that exceeds the required weekly interest reserve is generally remitted to the Company. Once the required obligations are satisfied, there are no further restrictions, including payment of dividends, on the cash flows of the subsidiaries. The Notes have not been and will not be registered under the Securities Act or the securities laws of any jurisdiction. No Notes or any interest or participation thereof may be reoffered, resold, pledged or otherwise transferred unless such Note meets certain requirements as described in the Indenture. The Notes are subject to certain financial and non-financial covenants, including a debt service coverage ratio calculation, as defined in the related agreements. The covenants, among other things, may limit the ability of certain subsidiaries to declare dividends, make loans or advances or enter into transactions with affiliates. In the event that certain covenants are not met, the Notes may become partially or fully due and payable on an accelerated schedule. In addition, the Company may voluntarily prepay, in part or in full, the Notes at any time following the Par Call Date, subject to certain make-whole interest obligations. Intercompany Agreement Subsequent to December 29, 2019, on April 24, 2020, the Company entered into an Intercompany Revolving Credit Agreement with FCCG (“Intercompany Agreement”). The Company had previously extended credit to FCCG pursuant to a certain Intercompany Promissory Note (the “Original Note”), dated October 20, 2017, with an initial principal balance of $11,906,000. Subsequent to the issuance of the Original Note, the Company and certain of its direct or indirect subsidiaries made additional intercompany advances in the aggregate amount of $10,523,000. Pursuant to the Intercompany Agreement, the revolving credit facility bears interest at a rate of 10% per annum, has a five-year term with no prepayment penalties, and has a maximum capacity of $35,000,000. All additional borrowings under the Intercompany Agreement are subject to the approval of the Board of Directors, in advance, on a quarterly basis and may be subject to other conditions as set forth by the Company. The initial balance under the Intercompany Agreement totaled $21,067,000 including the balance of the Original Note, borrowings subsequent to the Original Note, accrued and unpaid interest income, and other adjustments through December 29, 2019. (See Note 14). Refranchising During the fiscal year ended December 29, 2019, a franchisee had entered into an agreement with the Company by which it agreed to sell two existing franchised locations to the Company for its refranchising program. Additionally, during the fiscal year, the Company had completed transactions to sell the two locations to new owners. Subsequent to December 29, 2019, as a result of COVID-19, the locations acquired from the existing franchisee became unavailable. The Company is evaluating the impact of the event and determining which existing operating restaurants will be used as a replacement for the new owners (See Note 4). |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 29, 2019 | |
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 29, 2019 Dollars in thousands Balance at Charged to Deductions/ Recoveries Balance at Allowance for: Trade notes and accounts receivable $ 744 $ 102 $ 607 $ 239 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 29, 2019 | |
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 |
Credit and Depository Risks | Credit and Depository Risks The Company maintains cash deposits in national financial institutions. From time to time the balances for these accounts exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insured amount. Balances on interest bearing deposits at banks in the United States are insured by the FDIC up to $250,000 per account. As of December 29, 2019, the Company had no accounts with a combined uninsured balance. As of December 30, 2018, the Company had three accounts with a combined uninsured balance of $170,000. |
Accounts Receivable | Accounts receivable |
Trade Notes Receivable | Trade notes receivable – |
Assets Classified as Held for Sale | Assets classified as held for sale – |
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 | Franchise Fees: The franchise fee may be adjusted at management’s discretion or in a situation involving store transfers. Deposits are non-refundable upon acceptance of the franchise application. In the event a franchisee does not comply with their development timeline for opening franchise stores, the franchise rights may be terminated, and franchise fee revenue is recognized for non-refundable deposits. |
Store Opening Fees | Store opening fees During the fourth quarter of 2019, the Company performed a study of other public company restaurant franchisors’ application of ASC 606 and determined that a preferred, alternative industry application exists in which the store opening fee portion of the franchise fees is amortized over the life of the franchise agreement rather than at milestones of standalone performance obligations in the franchise agreements. In order to provide financial reporting consistent with other franchise industry peers, the Company applied this preferred, alternative application of ASC 606 during the fourth quarter of 2019 on a prospective basis. As a result of the adoption of this preferred accounting treatment under ASC 606, the Company discontinued the recognition of store opening fees upon store opening and began accounting for the entire up-front deposit received from franchisees as described above in Franchise Fees. Immaterial Adjustments Related to Prior Periods”, |
Royalties | Royalties: |
Advertising | Advertising – |
Share-based Compensation | Share-based compensation |
Earnings Per Share | Earnings per share The Company declared a stock dividend on February 7, 2019 and issued 245,376 shares of common stock in satisfaction of the stock dividend (See Note 18). Unless otherwise noted, earnings per share and other share-based information for 2019 and 2018 have been adjusted retrospectively to reflect the impact of the stock dividend. |
Immaterial Adjustments Related to Prior Periods | Immaterial Adjustments Related to Prior Periods During the fourth quarter of 2019, the Company identified two immaterial potential adjustments to its previously issued financial statements. These potential adjustments are (1) its assessment of the Series A-1 Fixed Rate Cumulative Preferred Stock and (2) its treatment of the store opening component of its franchise fees under ASC 606. Based on its assessment of the Series A-1 Fixed Rate Cumulative Preferred Stock, the Company determined that an error occurred in the analysis of the rights that the holders of the Series A-1 Fixed Rate Cumulative Preferred Stock have with respect to the conversion of the securities into shares of the Company’s common stock. In our reassessment, the conversion rights did not represent a beneficial conversion feature as we had initially concluded at the time of issuance. The Company originally adopted ASC 606 on January 1, 2018. During the fourth quarter of 2019, the Company performed a study of other public company restaurant franchisors’ application of ASC 606 and determined that a preferred, alternative industry application exists in which the store opening fee portion of the franchise fees is amortized over the life of the franchise agreement rather than at milestones of standalone performance obligations in the franchise agreements. In order to provide financial reporting consistent with other franchise industry peers, the Company applied this preferred, alternative application of ASC 606 during the fourth quarter of 2019 on a prospective basis. In accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality, codified in ASC 250 (“ASC 250”), Presentation of Financial Statements, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Consolidated Statements of Income, Balance Sheets, Shareholders Equity and Cash Flows, also codified in ASC 250, management assessed the materiality of (1) the error in its treatment of the beneficial conversion feature related to the Series A-1 Fixed Rate Cumulative Preferred Stock and (2) the adoption of the preferential accounting treatment under ASC 606. Based on such analysis of quantitative and qualitative factors, the Company has determined that neither the error nor the adoption of the preferential accounting treatment under ASC 606, in aggregate or individually, were material to any of the reporting periods affected, and no amendments to previously filed 10-Q or 10-K reports with the SEC are required. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In July 2018, the FASB issued ASU 2018-09, Codification Improvements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Adopting the new accounting standard for leases affected various financial statement line items for the fiscal year ended December 29, 2019. The following table provides the affected amounts as reported in these audited consolidated financial statements compared with what they would have been if the previous accounting guidance had remained in effect. As of December 29, 2019 (in thousands) Amounts As Reported Amounts Under Previous Audited Consolidated Balance Sheet: Operating lease right of use assets $ 860 $ - Operating lease right of use assets classified as held for sale 3,216 - Total operating lease right of use assets $ 4,076 $ - Operating lease liabilities $ 880 $ - Operating lease liabilities associated with operating lease right of use assets classified as held for sale 3,326 - Total operating lease liabilities $ 4,206 $ - |
Recently Issued Accounting Standards | Recently Issued Accounting Standards 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. The FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40). The FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes: For public companies, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of ASU 2019-12 on our audited consolidated financial statements and related disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Affected Amounts Reported in Consolidated Financial Statements | The following table provides the affected amounts as reported in these audited consolidated financial statements compared with what they would have been if the previous accounting guidance had remained in effect. As of December 29, 2019 (in thousands) Amounts As Reported Amounts Under Previous Audited Consolidated Balance Sheet: Operating lease right of use assets $ 860 $ - Operating lease right of use assets classified as held for sale 3,216 - Total operating lease right of use assets $ 4,076 $ - Operating lease liabilities $ 880 $ - Operating lease liabilities associated with operating lease right of use assets classified as held for sale 3,326 - Total operating lease liabilities $ 4,206 $ - |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Yalla Mediterranean, LLC [Member] | |
Schedule of Allocation of Tangible and Intangible Assets Acquired | The preliminary 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 263 Accounts payable and accrued expenses (1,168 ) Total net identifiable assets $ 3,490 |
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 |
Elevation Burger [Member] | |
Schedule of Allocation of Tangible and Intangible Assets Acquired | The allocation of the consideration to the preliminary valuation of net tangible and intangible assets acquired is presented in the table below (in thousands): Cash $ 10 Other assets 558 Intangible assets 7,140 Goodwill 521 Current liabilities (91 ) Deferred franchise fees (758 ) Other liabilities (187 ) Total net identifiable assets $ 7,193 |
Refranchising (Tables)
Refranchising (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Refranchising | |
Schedule of Remaining Assets Classified as Held for Sale | As a result, the following assets have been classified as held for sale on the accompanying audited consolidated balance sheet as of December 29, 2019 (in thousands): December 29, 2019 Property, plant and equipment $ 1,912 Operating lease right of use assets 3,216 Total $ 5,128 |
Schedule of Gain on Refranchising Restaurant Costs and Expenses | The following table highlights the results of the Company’s refranchising program during 2019 (in thousands): Fiscal year ended Restaurant costs and expenses, net of revenue $ (2,014 ) Gain on store sales 1,795 Refranchising loss $ (219 ) |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill consists of the following (in thousands): December 29, 2019 December 30, 2018 Goodwill: Fatburger $ 529 $ 529 Buffalo’s 5,365 5,365 Hurricane 2,772 2,772 Ponderosa 1,462 1,462 Yalla 263 263 Elevation Burger 521 - Total goodwill $ 10,912 $ 10,391 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Other intangible assets consist of trademarks and franchise agreements that were classified as identifiable intangible assets at the time of the brands’ acquisition by the Company or by FCCG prior to FCCG’s contribution of the brands to the Company at the time of the initial public offering (in thousands): December 29, 2019 December 30, 2018 Trademarks: Fatburger $ 2,135 $ 2,135 Buffalo’s 27 27 Hurricane 6,840 6,840 Ponderosa 7,230 7,230 Yalla 1,530 1,530 Elevation Burger 4,690 - Total trademarks 22,452 17,762 Franchise agreements: Hurricane – cost 4,180 4,180 Hurricane – accumulated amortization (482 ) (161 ) Ponderosa – cost 1,640 1,640 Ponderosa – accumulated amortization (243 ) (132 ) Elevation Burger – cost 2,450 - Elevation Burger – accumulated amortization (263 ) - Total franchise agreements 7,282 5,527 Total Other Intangible Assets $ 29,734 $ 23,289 |
Schedule of Future Amortization | The expected future amortization of the Company’s capitalized franchise agreements is as follows (in thousands): Fiscal year: 2020 $ 932 2021 932 2022 932 2023 932 2024 932 Thereafter 2,622 Total $ 7,282 |
Deferred Income (Tables)
Deferred Income (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Contract with Customer, Liability [Abstract] | |
Schedule of Deferred Income | Deferred income is as follows (in thousands): December 29, 2019 December 30, 2018 Deferred franchise fees $ 5,417 $ 6,711 Deferred royalties 422 653 Deferred advertising revenue 303 333 Total $ 6,142 $ 7,697 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Income Tax Disclosure [Abstract] | |
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 29, 2019 December 30, 2018 Deferred tax assets (liabilities) Deferred income $ 1,353 $ 1,779 Reserves and accruals 208 346 Intangibles (614 ) (532 ) Deferred state income tax (91 ) (72 ) Tax credits 244 126 Share-based compensation 192 131 Interest expense - 439 Fixed assets (137 ) - Net operating loss carryforwards 894 43 Other (17 ) (24 ) Total $ 2,032 $ 2,236 |
Schedule of Components of the Income Tax Provision (Benefit) | Components of the income tax expense (benefit) are as follows (in thousands): Fiscal Year Ended Fiscal Year Ended Current Federal $ 29 $ (79 ) State 34 88 Foreign 244 220 307 229 Deferred Federal 291 (381 ) State (88 ) (123 ) 203 (504 ) Total income tax expense (benefit) $ 510 $ (275 ) |
Schedule of Statutory Income Tax Rate to 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 29, 2019 December 30, 2018 Tax benefit at statutory rate $ (107 ) $ (435 ) State and local income taxes (43 ) (27 ) Foreign taxes 244 216 Tax credits (24 ) (203 ) Dividends on preferred stock 372 200 Meals and entertainment 42 6 Other 26 (32 ) Total income tax expense (benefit) $ 510 $ (275 ) |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Leases [Abstract] | |
Summary of Operating Lease Right of Use Assets and Operating Lease Liabilities Relating to Operating Leases | Operating lease right of use assets and operating lease liabilities relating to the operating leases are as follows (in thousands): December 29, 2019 December 30, 2018 Right of use assets $ 4,076 $ - Lease liabilities $ 4,206 $ - |
Schedule of Contractual Future Maturities of Operating Lease Liabilities | The contractual future maturities of the Company’s operating lease liabilities as of December 29, 2019, including anticipated lease extensions, are as follows (in thousands): Fiscal year: 2020 $ 1,109 2021 870 2022 898 2023 924 2024 684 Thereafter 4,882 Total lease payments 9,367 Less imputed interest 5,161 Total $ 4,206 |
Summary of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information for the fiscal year ended December 29, 2019 related to leases is as follows (in thousands): Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 1,080 Operating lease right of use assets obtained in exchange for new lease obligations: Operating lease liabilities $ 856 |
Preferred Stock (Tables)
Preferred Stock (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Equity [Abstract] | |
Schedule of Aggregate Value of Preferred Stock | The aggregate values assigned upon issuance of each component were as follows (amounts in thousands, except price per unit): Series B Warrants Series B Total Series B Preferred Offering: Gross proceeds $ 21 $ 1,407 $ 1,428 Issuance costs - (360 ) (360 ) Net proceeds $ 21 $ 1,047 $ 1,068 Subscription price per unit $ 0.37 $ 24.63 $ 25.00 Consolidated balance sheet impact at issuance: Long-term debt, net of debt discount and offering costs $ - $ 1,047 $ 1,047 Additional paid-in capital $ 21 $ - $ 21 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Equity [Abstract] | |
Schedule of Stock Option Activity | 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 fiscal year ended December 29, 2019 can be summarized as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Stock options outstanding at December 30, 2018 681,633 $ 8.84 8.1 Grants 106,908 $ 5.64 9.7 Forfeited (66,060 ) $ 7.90 8.7 Expired - $ Stock options outstanding at December 29, 2019 722,481 $ 8.45 8.5 Stock options exercisable at December 29, 2019 328,483 $ 9.94 8.1 |
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% - 10.43 % Expected volatility 30.23% - 31.73 % Risk-free interest rate 1.52% - 2.85 % Expected term (in years) 5.50 – 5.75 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Warrant Activity | The Company’s warrant activity for the fiscal year ended December 29, 2019 is as follows: Number of Shares Weighted Average Weighted Average Remaining Contractual Warrants outstanding at December 30, 2018 843,089 $ 8.06 3.5 Grants 1,248,563 0.54 5.0 Exercised - - - Forfeited - - - Expired - - - Warrants outstanding at December 29, 2019 2,091,652 $ 3.57 4.3 Warrants exercisable at December 29, 2019 877,373 $ 8.08 3.5 |
Schedule of Assumptions Used for Stock-based Compensation, Warrants | The weighted average fair value of the warrants granted from the Offering through December 29, 2019 and the assumptions used in the Black-Scholes valuation model are as follows: Warrants Expected dividend yield 4.00% - 6.63 % Expected volatility 30.23% - 31.73 % Risk-free interest rate 0.99% - 1.91 % Expected term (in years) 3.80 - 5.00 |
Geographic Information and Ma_2
Geographic Information and Major Franchisees (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Geographic Information And Major Franchisees | |
Schedule of Revenues by Geographic Area | R Fiscal Year Ended Fiscal Year Ended United States $ 18,624 $ 14,023 Other countries 3,881 4,344 Total revenues $ 22,505 $ 18,367 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Subsequent Events [Abstract] | |
Schedule of Securitization of Notes | The new notes consist of the following: Note Public Rating Seniority Issue Amount Coupon Optional Prepayment Date Final Maturity Date A-2 BB Senior $ 20,000,000 6.50% 4/27/2021 4/27/2026 B-2 B Senior Subordinated $ 20,000,000 9.00% 4/27/2021 4/27/2026 |
Organization and Relationships
Organization and Relationships (Details Narrative) $ in Thousands | Mar. 06, 2020USD ($) | Oct. 20, 2017 | Dec. 29, 2019USD ($)Integer | Dec. 30, 2018USD ($) |
Ownership percentage, description | 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 Company's common stock trades on the Nasdaq Capital Market under the symbol "FAT". As of December 29, 2019, FCCG continues to control a significant voting majority of the Company. | |||
Initial public offering percentage | 20.00% | |||
Franchising brands and locations, description | The Company owns and franchises eight restaurant brands through various wholly owned subsidiaries: Fatburger, Buffalo's Cafe, Buffalo's Express, Hurricane Grill & Wings, Ponderosa Steakhouses, Bonanza Steakhouses, Yalla Mediterranean and Elevation Burger. Combined, these brands have over 370 locations open and more than 200 under development. | |||
Number of franchise brands | Integer | 8 | |||
Number of franchise locations | Integer | 370 | |||
Number of franchises minimum, under development | Integer | 200 | |||
Income from operations | $ 6,703 | $ 4,236 | ||
Cash provided by operating activities | 3,071 | 1,837 | ||
Net losses | $ (1,018) | $ (1,798) | ||
Subsequent Event [Member] | Securitization Notes [Member] | ||||
Proceeds from issuance of secured debt | $ 37,314 | |||
Debt face amount | 40,000 | |||
Debt discount | 246 | |||
Debt offering costs | 2,440 | |||
Repayment of secured debt | $ 26,771 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | Feb. 07, 2019 | Sep. 29, 2019 | Dec. 29, 2019 | Dec. 30, 2018 |
Accounts receivable, net of allowance for doubtful accounts | $ 116 | $ 595 | ||
FDIC insured amount | 250 | |||
Uninsured balance | ||||
Number of common stock share issued | 245,376 | |||
Right of use assets | 860 | |||
Lease liabilities | $ 880 | |||
Domestic and International Stores [Member] | ||||
Store opening description | If the fees collected were less than the respective store opening fee amounts, the full up-front fees were recognized at opening. The store opening fees were 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. | |||
December 31, 2018 [Member] | ASU 2016-02 [Member] | ||||
Right of use assets | $ 4,313 | |||
Lease liabilities | $ 4,225 | |||
Maximum [Member] | ||||
Royalty rate | 6.00% | |||
Estimated weighted average useful lives | 25 years | |||
Store opening fees | $ 60 | |||
Royalty fee percentage | 7.50% | |||
Minimum [Member] | ||||
Royalty rate | 0.75% | |||
Estimated weighted average useful lives | 9 years | |||
Store opening fees | $ 35 | |||
Royalty fee percentage | 6.00% | |||
Accounts Receivable [Member] | No Customer [Member] | ||||
Concentration risk, percentage | 10.00% | |||
Two Customers [Member] | ||||
Accounts receivable, net of allowance for doubtful accounts | $ 4,144 | |||
Two Customers [Member] | Accounts Receivable [Member] | ||||
Concentration risk, percentage | 20.00% | |||
Three Accounts [Member] | ||||
Uninsured balance | $ 170 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Affected Amounts Reported in Consolidated Financial Statements (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Operating lease right of use assets | $ 860 | |
Operating lease right of use assets classified as held for sale | 3,216 | |
Total operating lease right of use assets | 4,076 | |
Operating lease liabilities | 880 | |
Operating lease liabilities associated with operating lease right of use assets classified as held for sale | 3,326 | |
Total operating lease liabilities | 4,206 | |
Amounts Under Previous Accounting Guidance [Member] | ||
Operating lease right of use assets | ||
Operating lease right of use assets classified as held for sale | ||
Total operating lease right of use assets | ||
Operating lease liabilities | ||
Operating lease liabilities associated with operating lease right of use assets classified as held for sale | ||
Total operating lease liabilities |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) | Jun. 19, 2019USD ($)Integer$ / sharesshares | Dec. 03, 2018USD ($) | Jul. 03, 2018USD ($)$ / sharesshares | Dec. 29, 2019USD ($) | Dec. 30, 2018USD ($) |
Notes receivable | $ 250,000 | $ 277,000 | |||
Hurricane Warrants [Member] | |||||
Number of warrants to purchase common stock | shares | 57,439 | ||||
Exercise price per share | $ / shares | $ 7.83 | ||||
Elevation Burger [Member] | Elevation Note [Member] | |||||
Principal amount of note | $ 7,509,816 | ||||
Debt, interest rate percentage | 6.00% | 12.50% | |||
Maturity date | Jul. 31, 2026 | ||||
Share price | $ / shares | $ 12 | ||||
Yalla Mediterranean, LLC [Member] | |||||
Purchase price of acquisition | $ 3,490,000 | ||||
Yalla Mediterranean, LLC [Member] | Intellectual Property Purchase Agreement [Member] | |||||
Purchase price of business | $ 2,154,000 | ||||
Effective accretion interest rate | 19.00% | ||||
Purchase price of acquisition | $ 3,490,000 | ||||
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, which includes gross franchise royalties as well as other items, as defined in the IP Agreement. | ||||
Purchase price of intellectual property | $ 1,790,000 | ||||
Yalla Mediterranean Restaurants [Member] | Master Agreement [Member] | |||||
Purchase price of business | $ 1,718,000 | ||||
Earn-out payable | $ 1,700,000 | ||||
Effective accretion interest rate | 5.40% | ||||
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. | ||||
Hurricane AMT, LLC [Member] | |||||
Payment of cash to acquire business | $ 8,000,000 | ||||
Issuance of equity | 4,500,000 | ||||
Purchase price of acquisition | 12,500,000 | ||||
Equity units value per unit | $ 10,000 | ||||
Number of units sold | shares | 450 | ||||
Hurricane AMT, LLC [Member] | Hurricane Warrants [Member] | |||||
Number of warrants to purchase common stock | shares | 127 | ||||
Exercise price per share | $ / shares | $ 7.83 | ||||
Hurricane AMT, LLC [Member] | Series A-1 Fixed Rate Cumulative Preferred Stock [Member] | |||||
Number of preferred shares designated | shares | 100 | ||||
Elevation Burger [Member] | |||||
Purchase price of business | $ 10,050,000 | ||||
Number of locations | Integer | 44 | ||||
Payment of cash to acquire business | $ 50,000 | ||||
Number of warrants to purchase common stock | shares | 46,875 | ||||
Exercise price per share | $ / shares | $ 8 | ||||
Fair market value of contingent consideration | $ 531,000 | ||||
Purchase price payable amount | $ 633,000 | ||||
Effective accretion interest rate | 18.00% | ||||
Purchase price of acquisition | 7,193,000 | ||||
Elevation Burger [Member] | Maximum [Member] | |||||
Earn-out payable | 2,500,000 | ||||
Elevation Burger [Member] | Elevation Buyer Note [Member] | |||||
Purchase price of business | $ 1,903,000 | $ 1,814,000 | |||
Debt, interest rate percentage | 6.00% | ||||
Maturity date | Aug. 31, 2026 | ||||
Notes receivable | $ 2,300,000 |
Acquisitions - Schedule of Allo
Acquisitions - Schedule of Allocation of Tangible and Intangible Assets Acquired (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Jun. 19, 2019 | Dec. 30, 2018 | Dec. 03, 2018 | Jul. 03, 2018 |
Goodwill | $ 10,912 | $ 10,391 | |||
Yalla Mediterranean, LLC [Member] | |||||
Cash | $ 82 | ||||
Accounts receivable | 77 | ||||
Inventory | 95 | ||||
Other assets | 90 | ||||
Property and equipment | 2,521 | ||||
Intangible assets | 1,530 | ||||
Goodwill | 263 | ||||
Accounts payable and accrued expenses | (1,168) | ||||
Total net identifiable assets | $ 3,490 | ||||
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 | ||||
Elevation Burger [Member] | |||||
Cash | $ 10 | ||||
Other assets | 558 | ||||
Intangible assets | 7,140 | ||||
Goodwill | 521 | ||||
Current liabilities | (91) | ||||
Deferred franchise fees | (758) | ||||
Other liabilities | (187) | ||||
Total net identifiable assets | $ 7,193 |
Refranchising (Details Narrativ
Refranchising (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Refranchising | ||
Operating lease liabilities related to the assets classified as held for sale | $ 3,325 | |
Refranchising restaurant costs and expenses, net of revenue | 2,014 | $ 67 |
Gain on store sales | $ 1,795 |
Refranchising - Schedule of Rem
Refranchising - Schedule of Remaining Assets Classified as Held for Sale (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Refranchising | ||
Property, plant and equipment | $ 1,912 | |
Operating lease right of use assets | 3,216 | |
Total | $ 5,128 |
Refranchising - Schedule of Gai
Refranchising - Schedule of Gain on Refranchising Restaurant Costs and Expenses (Details) $ in Thousands | 12 Months Ended |
Dec. 29, 2019USD ($) | |
Gain on store sales | $ 1,795 |
Restaurant Sales [Member] | |
Restaurant costs and expenses, net of revenue | (2,014) |
Gain on store sales | 1,795 |
Refranchising loss | $ (219) |
Notes Receivable (Details Narra
Notes Receivable (Details Narrative) - USD ($) | Jun. 19, 2019 | Dec. 29, 2019 | Dec. 30, 2018 |
Trade notes receivable | $ 250,000 | $ 277,000 | |
Trade notes receivable, reserves | 123,000 | $ 149,000 | |
Interest income on notes receivable | 114,000 | ||
Elevation Burger [Member] | |||
Net carrying value of total consideration | $ 10,050,000 | ||
Elevation Burger [Member] | Elevation Buyer Note [Member] | |||
Debt, interest rate percentage | 6.00% | ||
Trade notes receivable | $ 2,300,000 | ||
Maturity date | Aug. 31, 2026 | ||
Net carrying value of total consideration | $ 1,903,000 | 1,814,000 | |
Debt discount | $ 397,000 | $ 352,000 | |
Minimum [Member] | |||
Debt, interest rate percentage | 6.00% | ||
Maximum [Member] | |||
Debt, interest rate percentage | 7.50% |
Goodwill - Schedule of Goodwill
Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Total goodwill | $ 10,912 | $ 10,391 |
Fatburger [Member] | ||
Total goodwill | 529 | 529 |
Buffalo's [Member] | ||
Total goodwill | 5,365 | 5,365 |
Hurricane [Member] | ||
Total goodwill | 2,772 | 2,772 |
Ponderosa [Member] | ||
Total goodwill | 1,462 | 1,462 |
Yalla [Member] | ||
Total goodwill | 263 | 263 |
Elevation Burger [Member] | ||
Total goodwill | $ 521 |
Other Intangible Assets - Sched
Other Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Total trademarks | $ 22,452 | $ 17,762 |
Total franchise agreements | 7,282 | 5,527 |
Total Other Intangible Assets | 29,734 | 23,289 |
Fatburger [Member] | ||
Total trademarks | 2,135 | 2,135 |
Buffalo's [Member] | ||
Total trademarks | 27 | 27 |
Hurricane [Member] | ||
Total trademarks | 6,840 | 6,840 |
Hurricane [Member] | Franchise Agreements [Member] | ||
Cost | 4,180 | 4,180 |
Accumulated amortization | (482) | (161) |
Ponderosa [Member] | ||
Total trademarks | 7,230 | 7,230 |
Ponderosa [Member] | Franchise Agreements [Member] | ||
Cost | 1,640 | 1,640 |
Accumulated amortization | (243) | (132) |
Yalla [Member] | ||
Total trademarks | 1,530 | 1,530 |
Elevation Burger [Member] | ||
Total trademarks | 4,690 | |
Elevation Burger [Member] | Franchise Agreements [Member] | ||
Cost | 2,450 | |
Accumulated amortization | $ (263) |
Other Intangible Assets - Sch_2
Other Intangible Assets - Schedule of Future Amortization (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 932 | |
2021 | 932 | |
2022 | 932 | |
2023 | 932 | |
2024 | 932 | |
Thereafter | 2,622 | |
Total | $ 7,282 | $ 5,527 |
Deferred Income - Schedule of D
Deferred Income - Schedule of Deferred Income (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Contract with Customer, Liability [Abstract] | ||
Deferred franchise fees | $ 5,417 | $ 6,711 |
Deferred royalties | 422 | 653 |
Deferred advertising revenue | 303 | 333 |
Total | $ 6,142 | $ 7,697 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - Fog Cutter Capital Group Inc [Member] - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Due from related party | $ 25,967 | $ 15,514 |
Amounts decreasing (increasing) intercompany receivable for taxes | $ 51 | $ (195) |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Income Tax Disclosure [Abstract] | ||
Deferred income | $ 1,353 | $ 1,779 |
Reserves and accruals | 208 | 346 |
Intangibles | (614) | (532) |
Deferred state income tax | (91) | (72) |
Tax credits | 244 | 126 |
Share-based compensation | 192 | 131 |
Interest expense | 439 | |
Fixed assets | (137) | |
Net operating loss carryforwards | 894 | 43 |
Other | (17) | (24) |
Total | $ 2,032 | $ 2,236 |
Income Taxes - Schedule of Co_2
Income Taxes - Schedule of Components of the Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Current: Federal | $ 29 | $ (79) |
Current: State | 34 | 88 |
Current: Foreign | 244 | 220 |
Current income tax expense (benefit), total | 307 | 229 |
Deferred: Federal | 291 | (381) |
Deferred: State | (88) | (123) |
Deferred: income tax expense (benefit), total | 203 | (504) |
Total income tax expense (benefit) | $ 510 | $ (275) |
Income Taxes - Schedule of Stat
Income Taxes - Schedule of Statutory Income Tax Rate to Pretax Income (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Tax benefit at statutory rate | $ (107) | $ (435) |
State and local income taxes | (43) | (27) |
Foreign taxes | 244 | 216 |
Tax credits | (24) | (203) |
Dividends on preferred stock | 372 | 200 |
Meals and entertainment | 42 | 6 |
Other | 26 | (32) |
Total income tax expense (benefit) | $ 510 | $ (275) |
Leases (Details Narrative)
Leases (Details Narrative) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019USD ($)Integer | Dec. 30, 2018USD ($) | |
Number of leased properties | Integer | 9 | |
Lease expense | $ | $ 1,441 | $ 304 |
Weighted average remaining lease term | 5 years 9 months 18 days | |
Weighted average discount rate | 15.90% | |
Minimum [Member] | ||
Leases remaining term | 4 months | |
Lease options to extend | 5 years | |
Maximum [Member] | ||
Leases remaining term | 7 years 6 months | |
Lease options to extend | 10 years |
Leases - Summary of Operating L
Leases - Summary of Operating Lease Right of Use Assets and Operating Lease Liabilities Relating to Operating Leases (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Right of use assets | $ 860 | |
Lease liabilities | 880 | |
Corporate Offices and For Certain Restaurant Properties [Member] | ||
Right of use assets | 4,076 | |
Lease liabilities | $ 4,206 |
Leases - Schedule of Contractua
Leases - Schedule of Contractual Future Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Total | $ 880 | |
Corporate Offices and For Certain Restaurant Properties [Member] | ||
2020 | 1,109 | |
2021 | 870 | |
2022 | 898 | |
2023 | 924 | |
2024 | 684 | |
Thereafter | 4,882 | |
Total lease payments | 9,367 | |
Less imputed interest | 5,161 | |
Total | $ 4,206 |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Operating lease right of use assets obtained in exchange for new lease obligations: Operating lease liabilities | $ 683 | |
Corporate Offices and For Certain Restaurant Properties [Member] | ||
Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases | 1,080 | |
Operating lease right of use assets obtained in exchange for new lease obligations: Operating lease liabilities | $ 856 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Jul. 24, 2019 | Jun. 19, 2019 | Jan. 29, 2019 | Jul. 03, 2018 | Apr. 27, 2018 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 30, 2018 | Jun. 03, 2018 |
Interest expense | $ 4,757,000 | $ 3,816,000 | |||||||
Term Loan [Member] | |||||||||
Interest expense | $ 3,301,000 | ||||||||
Term loan borrowings | $ 16,000,000 | ||||||||
Warrants issued to purchase shares | 509,604 | ||||||||
Exercise price per share | $ 7.20 | ||||||||
Accretion expense | 222,000 | ||||||||
Payment for extension fee | 400,000 | ||||||||
Prepayment penalties | 1,360,000 | ||||||||
Amortization of debt offering costs | 217,000 | ||||||||
FB Lending Term Loan [Member] | |||||||||
Interest expense | 1,337,000 | ||||||||
Repayment of borrowings | $ 18,095,000 | ||||||||
Debt face amount | 16,400,000 | ||||||||
Accrued interest and prepayment fees | $ 1,695,000 | ||||||||
Accretion expense | 349,000 | ||||||||
Unamortized debt offering costs | $ 651,000 | ||||||||
Securities Purchase Agreement [Member] | |||||||||
Interest expense | 62,000 | ||||||||
Debt offering cost | 143,000 | ||||||||
Investment banking fee | $ 170,000 | ||||||||
Loan and Security Agreement (Debt Component) [Member] | |||||||||
Debt, interest rate percentage | 23.90% | ||||||||
Interest expense | $ 4,881,000 | ||||||||
Warrants issued to purchase shares | 1,167,404 | ||||||||
Exercise price per share | $ 0.01 | ||||||||
Debt face amount | 24,000,000 | ||||||||
Unamortized debt offering costs | 151,000 | ||||||||
Payment for extension fee | $ 500,000 | ||||||||
Amortization of debt offering costs | 227,000 | ||||||||
Increase in borrowings | $ 3,500,000 | ||||||||
Late fee | $ 400,000 | ||||||||
Debt outstanding amount | 23,849,000 | ||||||||
Loan extension fee | $ 500,000 | ||||||||
Debt description | The Company repaid the Loan and Security Agreement in full on March 9, 2020 | ||||||||
Loan and Security Agreement (Debt Component) [Member] | Lion Warrant [Member] | |||||||||
Warrant extended date, description | Extended the date on which the Lion Warrant was initially exercisable from October 1, 2019 to June 30, 2020, which coincided with the maturity date of the loans made under the Loan Agreement. | ||||||||
Loan and Security Agreement (Debt Component) [Member] | Placement Agent Warrants [Member] | |||||||||
Warrants issued to purchase shares | 66,691 | ||||||||
Exercise price per share | $ 7.20 | ||||||||
Loan and Security Agreement (Debt Component) [Member] | Hurricane Acquisition [Member] | |||||||||
Payment of cash for acquisition | $ 8,000,000 | ||||||||
TCA Global Credit Master Fund, LP [Member] | |||||||||
Proceeds from issuance of debt | $ 2,000,000 | ||||||||
Debt maturity date | Oct. 27, 2019 | ||||||||
Debt, interest rate percentage | 15.00% | ||||||||
Commitment fees, rate | 2.00% | ||||||||
Repayment of borrowings | $ 2,000,000 | ||||||||
TCA Global Credit Master Fund, LP [Member] | Banking [Member] | |||||||||
Payment for investment banking fee | $ 170,000 | ||||||||
TCA Global Credit Master Fund, LP [Member] | Maximum [Member] | |||||||||
Line of credit | $ 5,000,000 | ||||||||
Lion Fund, L.P. and The Lion Fund II, L.P [Member] | Loan and Security Agreement (Debt Component) [Member] | |||||||||
Debt maturity date | Jun. 30, 2020 | ||||||||
Debt, interest rate percentage | 20.00% | ||||||||
Warrants issued to purchase shares | 1,167,404 | ||||||||
Exercise price per share | $ 0.01 | ||||||||
Proceeds from loan | $ 20,000,000 | ||||||||
Lion Fund, L.P. and The Lion Fund II, L.P [Member] | Loan and Security Agreement (Debt Component) [Member] | FB Lending, LLC [Member] | |||||||||
Repayment of borrowings | $ 16,000,000 | ||||||||
Original beginning warrant exercise date | Oct. 1, 2019 | ||||||||
Warrant exercise extended date | Jun. 30, 2020 | ||||||||
Increase in interest rate | 5.00% | ||||||||
Elevation Burger [Member] | Elevation Note [Member] | |||||||||
Debt maturity date | Jul. 31, 2026 | ||||||||
Debt, interest rate percentage | 6.00% | 12.50% | |||||||
Interest expense | $ 383,000 | ||||||||
Amortization of debt offering costs | 5,000 | ||||||||
Debt outstanding amount | $ 6,185,000 | 5,847,000 | |||||||
Principal amount of note | $ 7,509,816 | ||||||||
Share price | $ 12 | ||||||||
Debt discount | $ 1,295,000 | 1,149,000 | |||||||
Debt offering costs | $ 30,000 | 66,000 | |||||||
Amortization of debt discount | 146,000 | ||||||||
Amortization of payments per month | $ 110,000 |
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. 29, 2019 |
Notes payable, balance | $ 10,222,000 | ||||
Note Exchange Agreement [Member] | |||||
Debt face amount | $ 30,000,000 | ||||
Warrants issued to purchase shares | 25,000 | ||||
Warrants exercise price | $ 8 | ||||
Common Stock [Member] | Note Exchange Agreement [Member] | |||||
Amount of the related party debt balance | $ 7,272,053 | ||||
Number of shares converted | 1,010,420 | ||||
Conversion price per share | $ 7.20 | ||||
Series A Fixed Rate Cumulative Preferred Stock [Member] | Note Exchange Agreement [Member] | |||||
Number of shares converted | 20,000 | ||||
Conversion price per share | $ 100 | ||||
Fatburger And Buffalo [Member] | Unsecured Promissory Note [Member] | |||||
Debt face amount | $ 30,000,000 | ||||
Debt, interest rate percentage | 10.00% | ||||
Maturity term | 5 years | ||||
Fog Cutter Capital Group Inc [Member] | |||||
Debt, interest rate percentage | 10.00% | ||||
Repayments of notes payable | $ 19,778,000 | ||||
Amount of the related party debt balance | $ 950,000 | ||||
Interest expense | $ 888,000 | ||||
Fog Cutter Capital Group Inc [Member] | Note Exchange Agreement [Member] | |||||
Amount of the related party debt balance | $ 9,272,053 |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) | Oct. 04, 2019USD ($)PerUnit$ / shares | Oct. 03, 2019USD ($)PerUnit$ / shares | Feb. 07, 2019shares | Jul. 03, 2018$ / sharesshares | Jun. 27, 2018USD ($)$ / sharesshares | Jun. 26, 2018USD ($)$ / sharesshares | Jun. 26, 2018USD ($)$ / shares | Jun. 08, 2018$ / sharesshares | Jun. 07, 2018USD ($)$ / sharesshares | Dec. 29, 2019USD ($)$ / sharesshares | Dec. 29, 2019USD ($)$ / sharesshares | Dec. 30, 2018USD ($) | Dec. 30, 2018USD ($) | Oct. 20, 2017USD ($) |
Issuance of public offering | $ 1,428,000 | |||||||||||||
Preferred stock, shares outstanding | shares | 57,140 | 57,140 | ||||||||||||
Interest expense | $ 1,773,000 | $ 954,000 | ||||||||||||
Number of shares issued | shares | 245,376 | |||||||||||||
Fog Cutter Capital Group Inc [Member] | ||||||||||||||
Amount of related party debt | $ 950,000 | |||||||||||||
Related party debt prior to conversion | $ 10,222,000 | |||||||||||||
Subscription Agreement [Member] | ||||||||||||||
Issuance of public offering | $ 8,000,000 | |||||||||||||
Sale of units in transactions | shares | 800 | |||||||||||||
Sales price of shares issuance and sale | $ 10,000 | |||||||||||||
Subscription Agreement [Member] | Series A Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | shares | 127 | |||||||||||||
Note Exchange Agreement [Member] | ||||||||||||||
Warrants price per share | $ / shares | $ 8 | |||||||||||||
Number of shares eligible for warrants | shares | 25,000 | |||||||||||||
Debt face amount | $ 30,000,000 | |||||||||||||
Converted to preferred stock | $ 2,000,000 | |||||||||||||
Note Exchange Agreement [Member] | Fog Cutter Capital Group Inc [Member] | ||||||||||||||
Amount of related party debt | $ 9,272,053 | |||||||||||||
Common Stock [Member] | Note Exchange Agreement [Member] | ||||||||||||||
Amount of related party debt | $ 7,272,053 | |||||||||||||
Number of shares converted | shares | 1,010,420 | |||||||||||||
Conversion price per share | $ / shares | $ 7.20 | $ 7.20 | ||||||||||||
Warrant [Member] | Subscription Agreement [Member] | ||||||||||||||
Warrants price per share | $ / shares | $ 7.83 | |||||||||||||
Number of shares eligible for warrants | shares | 102,125 | |||||||||||||
Warrant [Member] | Note Exchange Agreement [Member] | ||||||||||||||
Warrants price per share | $ / shares | $ 7.83 | |||||||||||||
Number of shares eligible for warrants | shares | 25,530 | |||||||||||||
Series B Preferred Stock [Member] | ||||||||||||||
Annual cumulative dividend per share | $ / shares | $ 24.63 | $ 24.63 | ||||||||||||
Comprised of one share percentage | 8.25% | 8.25% | ||||||||||||
Issuance of public offering | $ 1,407,000 | |||||||||||||
Equivalent preferred stock percentage | 8.25% | |||||||||||||
Liquidation preference shares | $ / shares | $ 25 | $ 25 | ||||||||||||
Preferred stock, carrying value | $ 1,071,000 | $ 1,071,000 | ||||||||||||
Debt discount | $ 15,000 | 15,000 | ||||||||||||
Unamortized debt offering costs | 342,000 | |||||||||||||
Interest expense | 47,000 | |||||||||||||
Accretion expense | 6,000 | |||||||||||||
Amortization of debt offering costs | $ 17,000 | |||||||||||||
Effective interest rate | 19.80% | 19.80% | ||||||||||||
Series B Preferred Stock [Member] | First Anniversary and on Prior to the Second Anniversary [Member] | ||||||||||||||
Redemption price per share | $ / shares | $ 27.50 | $ 27.50 | ||||||||||||
Accrued and unpaid dividends redemption price per share | $ / shares | 22 | 22 | ||||||||||||
Series B Preferred Stock [Member] | Second Anniversary and on Prior to the Third Anniversary [Member] | ||||||||||||||
Redemption price per share | $ / shares | 26.125 | 26.125 | ||||||||||||
Accrued and unpaid dividends redemption price per share | $ / shares | 22.50 | 22.50 | ||||||||||||
Series B Preferred Stock [Member] | After the Third Anniversary [Member] | ||||||||||||||
Redemption price per share | $ / shares | 25 | 25 | ||||||||||||
Series B Preferred Stock [Member] | After the Third Anniversary and On Prior to the Fourth Anniversary [Member] | ||||||||||||||
Accrued and unpaid dividends redemption price per share | $ / shares | 23 | 23 | ||||||||||||
Series B Preferred Stock [Member] | After the Fourth Anniversary [Member] | ||||||||||||||
Accrued and unpaid dividends redemption price per share | $ / shares | $ 25 | $ 25 | ||||||||||||
Series B Warrant [Member] | ||||||||||||||
Price per unit | $ / shares | $ 8.50 | $ 8.50 | ||||||||||||
Warrants to purchase common stock per unit | PerUnit | 0.60 | 0.60 | ||||||||||||
Exercisable period | 5 years | 5 years | ||||||||||||
Series A Preferred Stock [Member] | ||||||||||||||
Liquidation preference shares | $ / shares | $ 100 | |||||||||||||
Redemption price per share | $ / shares | $ 100 | |||||||||||||
Preferred stock, shares outstanding | shares | 100,000 | 100,000 | ||||||||||||
Preferred stock, carrying value | $ 9,913,000 | $ 9,913,000 | ||||||||||||
Debt discount | $ 76,000 | 76,000 | ||||||||||||
Unamortized debt offering costs | 11,000 | |||||||||||||
Interest expense | 1,415,000 | $ 785,000 | ||||||||||||
Accretion expense | 22,000 | 13,000 | ||||||||||||
Amortization of debt offering costs | $ 3,000 | 2,000 | ||||||||||||
Effective interest rate | 14.30% | 14.30% | ||||||||||||
Number of shares designated | shares | 100,000 | |||||||||||||
Cash dividend rate | 9.90% | |||||||||||||
Deferred dividend rate | 4.00% | |||||||||||||
Series A Preferred Stock [Member] | Subscription Agreement [Member] | ||||||||||||||
Number of shares issued | shares | 80,000 | |||||||||||||
Series A Preferred Stock [Member] | On Or Prior to June 30, 2021 [Member] | ||||||||||||||
Redemption price per share | $ / shares | $ 115 | $ 115 | ||||||||||||
Series A Preferred Stock [Member] | After June 30, 2021 and On Or Prior to June 30, 2022 [Member] | ||||||||||||||
Redemption price per share | $ / shares | 110 | 110 | ||||||||||||
Series A Preferred Stock [Member] | After June 30, 2022 [Member] | ||||||||||||||
Redemption price per share | $ / shares | 100 | 100 | ||||||||||||
Series A Fixed Rate Cumulative Preferred Stock [Member] | Subscription Agreement [Member] | ||||||||||||||
Number of preferred stock designated | shares | 100 | |||||||||||||
Series A Fixed Rate Cumulative Preferred Stock [Member] | Note Exchange Agreement [Member] | ||||||||||||||
Number of preferred stock designated | shares | 200 | |||||||||||||
Number of shares converted | shares | 20,000 | |||||||||||||
Conversion price per share | $ / shares | $ 100 | |||||||||||||
Exchange Shares [Member] | Common Stock [Member] | Note Exchange Agreement [Member] | ||||||||||||||
Amount of related party debt | $ 7,272,053 | |||||||||||||
Number of shares converted | shares | 1,010,420 | |||||||||||||
Conversion price per share | $ / shares | $ 7.20 | |||||||||||||
Series A-1 Preferred Stock [Member] | ||||||||||||||
Warrants price per share | $ / shares | $ 7.83 | |||||||||||||
Liquidation preference shares | $ / shares | $ 100 | |||||||||||||
Redemption price per share | $ / shares | 100 | 100 | ||||||||||||
Accrued and unpaid dividends redemption price per share | $ / shares | $ 100 | $ 100 | ||||||||||||
Preferred stock, shares outstanding | shares | 45,000 | 45,000 | ||||||||||||
Preferred stock, carrying value | $ 4,343,000 | $ 4,343,000 | ||||||||||||
Debt discount | $ 133,000 | 133,000 | ||||||||||||
Unamortized debt offering costs | 24,000 | |||||||||||||
Interest expense | 309,000 | 135,000 | ||||||||||||
Accretion expense | 32,000 | 15,000 | ||||||||||||
Amortization of debt offering costs | $ 7,000 | $ 4,000 | ||||||||||||
Effective interest rate | 7.20% | 7.20% | ||||||||||||
Number of shares designated | shares | 200,000 | |||||||||||||
Cash dividend rate | 6.00% | |||||||||||||
Preferred stock, shares issued | shares | 45,000 | 45,000 | ||||||||||||
Number of shares eligible for warrants | shares | 57,150 | |||||||||||||
Share price | $ / shares | $ 11.75 | $ 11.75 | ||||||||||||
Maximum [Member] | ||||||||||||||
Total number of warrants to purchase common shares offered in the Series B Preferred offering | $ 720,000 | |||||||||||||
Total number of Series B Preferred shares offered in the offering | $ 1,200,000 | |||||||||||||
Series B Preferred Offering [Member] | Series B Unit [Member] | ||||||||||||||
Price per unit | $ / shares | $ 25 | $ 25 | ||||||||||||
Series B Preferred Offering [Member] | Maximum [Member] | Series B Unit [Member] | ||||||||||||||
Total Series B offering amount | $ 30,000,000 | $ 30,000,000 |
Preferred Stock - Schedule of A
Preferred Stock - Schedule of Aggregate Value of Preferred Stock (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 29, 2019USD ($)$ / shares | |
Gross proceeds | $ 1,428 |
Issuance costs | (360) |
Net proceeds | $ 1,068 |
Subscription price per unit | $ / shares | $ 25 |
Long-term debt, net of debt discount and offering costs | $ 1,047 |
Additional paid-in capital | 21 |
Series B Preferred Stock [Member] | |
Gross proceeds | 1,407 |
Issuance costs | (360) |
Net proceeds | $ 1,047 |
Subscription price per unit | $ / shares | $ 24.63 |
Long-term debt, net of debt discount and offering costs | $ 1,047 |
Additional paid-in capital | |
Series B Warrants [Member] | |
Gross proceeds | 21 |
Issuance costs | |
Net proceeds | $ 21 |
Subscription price per unit | $ / shares | $ 0.37 |
Long-term debt, net of debt discount and offering costs | |
Additional paid-in capital | $ 21 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Oct. 04, 2019 | Oct. 03, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | Apr. 24, 2020 | Jul. 05, 2018 | Oct. 20, 2017 |
Andrew Wiederhorn [Member] | |||||||
Class of warrants or rights to purchase common stock | 12,000 | ||||||
Squire Junger [Member] | |||||||
Class of warrants or rights to purchase common stock | 3,000 | ||||||
Mr. Wiederhorn, Mr. Junger, and Other Related Parties [Member] | |||||||
Class of warrants or rights to purchase common stock | 19,800 | ||||||
Series B Unit [Member] | Andrew Wiederhorn [Member] | |||||||
Stock issued during period acquisition, shares | 20,000 | ||||||
Stock issued during period acquisition, value | $ 500,000 | ||||||
Series B Unit [Member] | Squire Junger [Member] | |||||||
Stock issued during period acquisition, shares | 5,000 | ||||||
Stock issued during period acquisition, value | $ 125,000 | ||||||
Series B Unit [Member] | Mr. Wiederhorn, Mr. Junger, and Other Related Parties [Member] | |||||||
Stock issued during period acquisition, shares | 33,000 | ||||||
Stock issued during period acquisition, value | $ 825,000 | ||||||
Series B Preferred Stock [Member] | |||||||
Comprised of one share percentage | 8.25% | 8.25% | |||||
Series B Preferred Stock [Member] | Andrew Wiederhorn [Member] | |||||||
Stock issued during period acquisition, shares | 20,000 | ||||||
Common stock price per shares | $ 8.50 | ||||||
Series B Preferred Stock [Member] | Squire Junger [Member] | |||||||
Stock issued during period acquisition, shares | 5,000 | ||||||
Common stock price per shares | $ 8.50 | ||||||
Series B Preferred Stock [Member] | Mr. Wiederhorn, Mr. Junger, and Other Related Parties [Member] | |||||||
Stock issued during period acquisition, shares | 33,000 | ||||||
Series B Warrant [Member] | |||||||
Price per unit | $ 8.50 | $ 8.50 | |||||
Exercisable period | 5 years | 5 years | |||||
Series B Warrant [Member] | Andrew Wiederhorn [Member] | |||||||
Class of warrants or rights to purchase common stock | 12,000 | ||||||
Series B Warrant [Member] | Squire Junger [Member] | |||||||
Class of warrants or rights to purchase common stock | 3,000 | ||||||
Series B Warrant [Member] | Mr. Wiederhorn, Mr. Junger, and Other Related Parties [Member] | |||||||
Class of warrants or rights to purchase common stock | 19,800 | ||||||
Series B Preferred Offering [Member] | Series B Unit [Member] | |||||||
Price per unit | $ 25 | $ 25 | |||||
Maximum [Member] | Series B Preferred Offering [Member] | Series B Unit [Member] | |||||||
Total Series B offering amount | $ 30,000,000 | $ 30,000,000 | |||||
Fog Cutter Capital Group Inc [Member] | |||||||
Due from related party | $ 25,967,000 | $ 15,514,000 | |||||
Debt, interest rate percentage | 10.00% | ||||||
Accrued interest income receivable | $ 1,528,000 | 825,000 | |||||
Taxes payable | 51,000 | ||||||
Intercompany tax receivable | 195,000 | ||||||
Homestyle Dining LLC [Member] | |||||||
Debt, interest rate percentage | 15.00% | ||||||
Accrued interest income receivable | $ 600,000 | $ 300,000 | |||||
Debt face amount | $ 4,000,000 | ||||||
FCCG [Member] | Intercompany Revolving Credit Agreement [Member] | Intercompany Promissory Note [Member] | |||||||
Debt face amount | $ 11,906,000 | ||||||
FCCG [Member] | Subsequent Event [Member] | Intercompany Revolving Credit Agreement [Member] | Intercompany Promissory Note [Member] | |||||||
Debt, interest rate percentage | 10.00% | ||||||
Debt face amount | $ 21,067,000 | ||||||
FCCG [Member] | Subsequent Event [Member] | Intercompany Revolving Credit Agreement [Member] | Intercompany Promissory Note [Member] | Maximum [Member] | |||||||
Debt face amount | 35,000,000 | ||||||
FCCG [Member] | Subsequent Event [Member] | Intercompany Revolving Credit Agreement [Member] | Intercompany Promissory Note [Member] | Additional Intercompany advances [Member] | |||||||
Debt face amount | $ 10,523,000 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - $ / shares | Nov. 14, 2019 | Sep. 24, 2019 | May 21, 2019 | Feb. 22, 2019 | Feb. 07, 2019 | Dec. 29, 2019 | Dec. 30, 2018 |
Common stock, shares authorized | 25,000,000 | 25,000,000 | |||||
Common stock, shares issued | 11,860,299 | 11,546,589 | |||||
Common stock, shares outstanding | 11,860,299 | 11,546,589 | |||||
Common stock, dividend percentage | 2.13% | ||||||
Common stock, dividend per share | $ 0.12 | $ 0 | $ 0.36 | ||||
Dividend, payable date | Feb. 28, 2019 | ||||||
Dividend, closing of business date | Feb. 19, 2019 | ||||||
Number of shares issued | 245,376 | ||||||
Share issued price per share | $ 5.64 | ||||||
Non-Employees [Member] | |||||||
Number of shares issued | 16,392 | 17,142 | 19,416 | 15,384 | |||
Share issued price per share | $ 5.49 | $ 5.25 | $ 4.64 | $ 5.85 |
Share-Based Compensation (Detai
Share-Based Compensation (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
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 | $ 262 | $ 439 |
Stock based compensation to non-vested grants | $ 150 | |
2017 Omnibus Equity Incentive Plan [Member] | Maximum [Member] | ||
Number of shares available for grant | 1,021,250 |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Stock Option Activity (Details) | 12 Months Ended |
Dec. 29, 2019$ / sharesshares | |
Equity [Abstract] | |
Number of Shares, Stock options outstanding, beginning balance | shares | 681,633 |
Number of Shares, Grants | shares | 106,908 |
Number of Shares, Forfeited | shares | (66,060) |
Number of Shares, Expired | shares | |
Number of Shares, Stock options outstanding, ending balance | shares | 722,481 |
Number of Shares, Stock options exercisable, ending balance | shares | 328,483 |
Weighted Average Exercise Price, Stock options outstanding, beginning balance | $ / shares | $ 8.84 |
Weighted Average Exercise Price, Grants | $ / shares | 5.64 |
Weighted Average Exercise Price, Forfeited | $ / shares | 7.90 |
Weighted Average Exercise Price, Expired | $ / shares | |
Weighted Average Exercise Price, Stock options outstanding, ending balance | $ / shares | 8.45 |
Weighted Average Exercise Price, Stock options exercisable, ending balance | $ / shares | $ 9.94 |
Weighted Average Remaining Contractual Life (Years), Stock options outstanding, beginning balance | 8 years 1 month 6 days |
Weighted Average Remaining Contractual Life (Years), Grants | 9 years 8 months 12 days |
Weighted Average Remaining Contractual Life (Years), Forfeited | 8 years 8 months 12 days |
Weighted Average Remaining Contractual Life (Years), Stock options outstanding, ending balance | 8 years 6 months |
Weighted Average Remaining Contractual Life (Years), Stock options exercisable, ending balance | 8 years 1 month 6 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. 29, 2019 | |
Minimum [Member] | |
Expected dividend yield | 4.00% |
Expected volatility | 30.23% |
Risk-free interest rate | 1.52% |
Expected term (in years) | 5 years 6 months |
Maximum [Member] | |
Expected dividend yield | 10.43% |
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 | Jun. 19, 2019 | Jan. 29, 2019 | Oct. 20, 2017 | Dec. 29, 2019 | Jul. 03, 2018 | Jun. 27, 2018 | Jun. 07, 2018 |
Elevation Burger [Member] | |||||||
Number of shares eligible for warrants | 46,875 | ||||||
Warrants exercise price | $ 8 | ||||||
Loan and Security Agreement (Debt Component) [Member] | |||||||
Number of shares eligible for warrants | 1,167,404 | ||||||
Warrants exercise price | $ 0.01 | ||||||
Warrants exercisable date, description | Exercisable at any time between July 1, 2020 and January 29, 2024 | ||||||
Common Stock Warrants [Member] | |||||||
Number of shares eligible for warrants | 81,700 | ||||||
Warrants exercise price | $ 14.69 | ||||||
Common stock warrants value | $ 124 | ||||||
Warrants exercisable date, description | Exercisable commencing April 20, 2018 through October 20, 2022. | ||||||
Subscription Warrants [Member] | |||||||
Number of shares eligible for warrants | 102,125 | ||||||
Warrants exercise price | $ 7.83 | ||||||
Common stock warrants value | $ 87 | ||||||
Exchange Warrants [Member] | |||||||
Number of shares eligible for warrants | 25,530 | ||||||
Warrants exercise price | $ 7.83 | ||||||
Common stock warrants value | $ 25 | ||||||
Hurricane Warrants [Member] | |||||||
Number of shares eligible for warrants | 57,439 | ||||||
Warrants exercise price | $ 7.83 | ||||||
Common stock warrants value | $ 58 | ||||||
Lender Warrant [Member] | |||||||
Number of shares eligible for warrants | 509,604 | ||||||
Warrants exercise price | $ 7.20 | ||||||
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 | 66,691 | ||||||
Warrants exercise price | $ 7.20 | ||||||
Common stock warrants value | $ 78 | ||||||
Placement Agent Warrants [Member] | FB Lending, LLC [Member] | |||||||
Term loan borrowings | $ 16,000 | ||||||
Elevation Warrant [Member] | Elevation Burger [Member] | |||||||
Number of shares eligible for warrants | 46,875 | ||||||
Warrants exercise price | $ 8 | ||||||
Warrants exercisable, term | 5 years | ||||||
Warrants exercisable term, description | Cancelled on March 9, 2020 in connection with the repayment of the Loan and Security Agreement. | ||||||
Series B Warrants [Member] | Elevation Burger [Member] | |||||||
Number of shares eligible for warrants | 34,284 | ||||||
Warrants exercise price | $ 8.50 | ||||||
Common stock warrants value | $ 21 | ||||||
Warrants exercisable date, description | exercisable for a period of five years from October 3, 2019 |
Warrants - Summary of Warrant A
Warrants - Summary of Warrant Activity (Details) - Warrant [Member] | 12 Months Ended |
Dec. 29, 2019$ / sharesshares | |
Number of Shares, Warrants Outstanding, Beginning balance | 843,089 |
Number of Shares, Warrants Grants | 1,248,563 |
Number of Shares, Warrants Exercised | |
Number of Shares, Warrants Forfeited | |
Number of Shares, Warrants Expired | |
Number of Shares, Warrants Outstanding, Ending balance | 2,091,652 |
Number of Shares, Warrants Exercisable Ending Balance | 877,373 |
Weighted Average Exercise Price, Warrants outstanding, Beginning balance | $ / shares | $ 8.06 |
Weighted Average Exercise Price, Warrants grants | $ / shares | 0.54 |
Weighted Average Exercise Price, Warrants outstanding, Ending balance | $ / shares | 3.57 |
Weighted Average Exercise Price, Warrants exercisable ending balance | $ / shares | $ 8.08 |
Weighted Average Remaining Contractual Life (Years), Warrants outstanding, Beginning balance | 3 years 6 months |
Weighted Average Remaining Contractual Life (Years), Warrants Grants | 5 years |
Weighted Average Remaining Contractual Life (Years), Warrants outstanding, Ending balance | 4 years 3 months 19 days |
Weighted Average Remaining Contractual Life (Years), Warrants exercisable | 3 years 6 months |
Warrants - Schedule of Assumpti
Warrants - Schedule of Assumptions Used for Stock-based Compensation, Warrants (Details) | Dec. 29, 2019Integer |
Expected Dividend Yield [Member] | Minimum [Member] | |
Warrants, measurement input, percentage | 4 |
Expected Dividend Yield [Member] | Maximum [Member] | |
Warrants, measurement input, percentage | 6.63 |
Expected Volatility [Member] | Minimum [Member] | |
Warrants, measurement input, percentage | 30.23 |
Expected Volatility [Member] | Maximum [Member] | |
Warrants, measurement input, percentage | 31.73 |
Risk-free Interest Rate [Member] | Minimum [Member] | |
Warrants, measurement input, percentage | 0.99 |
Risk-free Interest Rate [Member] | Maximum [Member] | |
Warrants, measurement input, percentage | 1.91 |
Expected Term [Member] | Minimum [Member] | |
Warrants, expected term | 3 years 9 months 18 days |
Expected Term [Member] | Maximum [Member] | |
Warrants, expected term | 5 years |
Dividends on Common Stock (Deta
Dividends on Common Stock (Details Narrative) - $ / shares | Feb. 07, 2019 | Dec. 29, 2019 |
Equity [Abstract] | ||
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 | |
Number of common stock share issued | 245,376 | |
Shares issued price per share | $ 5.64 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 12 Months Ended |
Dec. 29, 2019ft² | |
Elevation Subleases [Member] | Unrelated Third party [Member] | |
Square feet of space | 2,500 |
Beverly Hills, California [Member] | |
Square feet of space | 6,137 |
Operating lease expiration date | Sep. 29, 2025 |
Additional square feet of space | 2,915 |
Additional operating lease expiration date | Feb. 29, 2024 |
Plano,TX [Member] | |
Square feet of space | 1,775 |
Operating lease expiration date | Mar. 31, 2021 |
Falls Church, VA [Member] | |
Square feet of space | 5,057 |
Operating lease expiration date | Dec. 31, 2020 |
Geographic Information and Ma_3
Geographic Information and Major Franchisees (Details Narrative) | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
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. 29, 2019 | Dec. 30, 2018 | |
Total revenues | $ 22,505 | $ 17,834 |
United States [Member] | ||
Total revenues | 18,624 | 14,023 |
Other Countries [Member] | ||
Total revenues | $ 3,881 | $ 4,344 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) $ in Thousands | Mar. 06, 2020 | Feb. 21, 2020 | Apr. 24, 2020 | Oct. 20, 2017 |
Intercompany Revolving Credit Agreement [Member] | Intercompany Promissory Note [Member] | FCCG [Member] | ||||
Debt principle amount | $ 11,906 | |||
Subsequent Event [Member] | Securitization Notes [Member] | ||||
Debt principle amount | $ 40,000 | |||
Proceeds from issuance of securitization notes | 37,314 | |||
Debt discounts, net | 246 | |||
Debt offering costs | 2,440 | |||
Repayment of secured debt | 26,771 | |||
Subsequent Event [Member] | Lion Loan and Security Agreement [Member] | ||||
Security, extension fee with interest | $ 650 | |||
Repayment of debt | 26,771 | |||
Debt principle amount | 24,000 | |||
Debt interest amount | 2,120 | |||
Debt, penalties and fees | $ 651 | |||
Subsequent Event [Member] | Intercompany Revolving Credit Agreement [Member] | Intercompany Promissory Note [Member] | FCCG [Member] | ||||
Debt principle amount | $ 21,067 | |||
Debt, interest rate percentage | 10.00% | |||
Subsequent Event [Member] | Intercompany Revolving Credit Agreement [Member] | Intercompany Promissory Note [Member] | FCCG [Member] | Maximum [Member] | ||||
Debt principle amount | $ 35,000 | |||
Subsequent Event [Member] | Intercompany Revolving Credit Agreement [Member] | Intercompany Promissory Note [Member] | FCCG [Member] | Additional Intercompany advances [Member] | ||||
Debt principle amount | $ 10,523 |
Subsequent Events - Schedule of
Subsequent Events - Schedule of Securitization of Notes (Details) - Subsequent Event [Member] $ in Thousands | Mar. 06, 2020USD ($) |
Securitization Note A-2 [Member] | |
Public Rating | BB |
Seniority | Senior |
Issue Amount | $ 20,000 |
Coupon | 6.50% |
Optional Prepayment Date | Apr. 27, 2021 |
Final Maturity Date | Apr. 27, 2026 |
Securitization Note B-2 [Member] | |
Public Rating | B |
Seniority | Senior Subordinated |
Issue Amount | $ 20,000 |
Coupon | 9.00% |
Optional Prepayment Date | Apr. 27, 2021 |
Final Maturity Date | Apr. 27, 2026 |
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. 29, 2019USD ($) | |
Valuation and Qualifying Accounts, Balance at Beginning of Period | $ 744 |
Valuation and Qualifying Accounts, Charged to Costs and Expenses | 102 |
Valuation and Qualifying Accounts, Deductions/ Recoveries | 607 |
Valuation and Qualifying Accounts, Balance at End of Period | $ 239 |