Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 27, 2020 | Nov. 12, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Fat Brands, Inc | |
Entity Central Index Key | 0001705012 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 27, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-27 | |
Entity Current Reporting Status | 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 Common Stock, Shares Outstanding | 11,926,264 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Current assets | ||
Cash | $ 12,110 | $ 25 |
Restricted cash | 1,758 | |
Accounts receivable, net of allowance for doubtful accounts of $670 and $595, as of September 27, 2020 and December 29, 2019, respectively | 4,453 | 4,144 |
Trade and other notes receivable, net of allowance for doubtful accounts of $0 and $37 as of September 27, 2020 and December 29, 2019, respectively | 206 | 262 |
Assets classified as held for sale | 11,048 | 5,128 |
Other current assets | 1,611 | 929 |
Total current assets | 31,186 | 10,488 |
Noncurrent restricted cash | 400 | |
Notes receivable - noncurrent, net of allowance for doubtful accounts of $0 and $112, as of September 27, 2020 and December 29, 2019, respectively | 1,604 | 1,802 |
Due from affiliates | 38,732 | 25,967 |
Deferred income tax asset, net | 2,032 | |
Operating lease right of use assets | 4,708 | 860 |
Goodwill | 19,141 | 10,912 |
Other intangible assets, net | 52,959 | 29,734 |
Other assets | 863 | 755 |
Total assets | 149,593 | 82,550 |
Current liabilities | ||
Accounts payable | 8,159 | 7,183 |
Accrued expenses | 8,373 | 6,013 |
Deferred income, current portion | 1,812 | 895 |
Accrued advertising | 271 | 762 |
Accrued interest payable | 864 | 1,268 |
Dividend payable on preferred shares (includes amounts due to related parties of $8 and $149 as of September 27, 2020 and December 29, 2019, respectively) | 272 | 1,422 |
Liabilities related to assets classified as held for sale | 9,959 | 3,325 |
Current portion of operating lease liability | 585 | 241 |
Current portion of long-term debt | 1,571 | 24,502 |
Total current liabilities | 31,866 | 45,611 |
Deferred income - noncurrent | 8,872 | 5,247 |
Acquisition purchase price payable | 2,704 | 4,504 |
Preferred shares, net | 7,945 | 15,327 |
Deferred dividend payable on preferred shares (includes amounts due to related parties of $0 and $99 as of September 27, 2020 and December 29, 2019, respectively) | 418 | 628 |
Deferred income tax liability, net | 2,367 | |
Operating lease liability, net of current portion | 4,298 | 639 |
Long-term debt, net of current portion | 78,440 | 5,216 |
Other liabilities | 201 | |
Total liabilities | 137,111 | 77,172 |
Commitments and contingencies (Note 17) | ||
Stockholders' equity | ||
Preferred stock, $.0001 par value; 5,000,000 shares authorized; 663,127 and 0 shares issued and outstanding at September 27, 2020 and December 29, 2019, respectively | 13,041 | |
Common stock, $.0001 par value; 25,000,000 shares authorized; 11,926,264 and 11,860,299 shares issued and outstanding at September 27, 2020 and December 29, 2019, respectively | 12,666 | 11,414 |
Accumulated deficit | (13,225) | (6,036) |
Total stockholders' equity | 12,482 | 5,378 |
Total liabilities and stockholders' equity | $ 149,593 | $ 82,550 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 670 | $ 595 |
Notes receivable, allowance | 0 | 37 |
Notes receivable - noncurrent, allowance for doubtful accounts | 0 | 112 |
Dividends payable to related parties, current | 8 | 149 |
Dividends payable to related parties, noncurrent | $ 0 | $ 99 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 663,127 | 0 |
Preferred stock, shares outstanding | 663,127 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 11,926,264 | 11,860,299 |
Common stock, shares outstanding | 11,926,264 | 11,860,299 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Revenue | ||||
Royalties | $ 3,156 | $ 3,937 | $ 8,678 | $ 11,064 |
Franchise fees | 122 | 1,272 | 571 | 2,578 |
Store opening fees | 109 | 398 | ||
Advertising fees | 803 | 1,151 | 2,347 | 3,159 |
Management fees and other income | 8 | 15 | 23 | 54 |
Total revenue | 4,089 | 6,484 | 11,619 | 17,253 |
Costs and expenses | ||||
General and administrative expense | 2,990 | 3,422 | 10,626 | 9,242 |
Impairment of assets | 753 | 3,927 | ||
Refranchising loss (gain) | 325 | (902) | 1,869 | (851) |
Advertising expense | 814 | 1,151 | 2,358 | 3,159 |
Total costs and expenses | 4,882 | 3,671 | 18,780 | 11,550 |
(Loss) income from operations | (793) | 2,813 | (7,161) | 5,703 |
Other income (expense), net | ||||
Interest expense, net | (123) | (1,544) | (2,034) | (4,064) |
Interest expense related to preferred shares | (323) | (431) | (1,251) | (1,293) |
Change in fair value-derivative liability | (374) | 887 | ||
Loss on extinguishment of debt | (88) | (88) | ||
Gain on contingent consideration payable adjustment | 1,680 | 1,680 | ||
Other expense, net | (566) | (56) | (627) | (157) |
Total other income (expense), net | 206 | (2,031) | (1,433) | (5,514) |
(Loss) income before income tax (benefit) expense | (587) | 782 | (8,594) | 189 |
Income tax (benefit) expense | (19) | (372) | (1,405) | 253 |
Net (loss) income | $ (568) | $ 1,154 | $ (7,189) | $ (64) |
Basic and diluted (loss) income per common share | $ (0.05) | $ 0.1 | $ (0.60) | $ (0.01) |
Basic and diluted weighted average shares outstanding | 11,910,719 | 11,827,706 | 11,888,618 | 11,568,560 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Par Value [Member] | Additional Paid-In Capital [Member] | Preferred Stock [Member] | Preferred Stock Par Value [Member] | Preferred Stock Additional Paid In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance, Beginning at Dec. 30, 2018 | $ 10,757 | $ 1 | $ 10,756 | $ (5,018) | $ 5,739 | |||
Balance, Beginning, shares at Dec. 30, 2018 | 11,546,589 | |||||||
Net (loss) income | $ (64) | $ (64) | ||||||
Common stock dividend | ||||||||
Common stock dividend, shares | 245,376 | |||||||
Cash paid in lieu of fractional shares | $ (2) | $ (2) | $ (2) | |||||
Issuance of common stock in lieu of cash directors fees payable | $ 270 | 270 | 270 | |||||
Issuance of common stock in lieu of cash directors fees payable, shares | 51,942 | |||||||
Share-based compensation | $ 218 | 218 | 218 | |||||
Repurchase of warrants | ||||||||
Balance, Ending at Sep. 29, 2019 | $ 11,243 | 1 | $ 11,242 | $ (5,082) | $ 6,161 | |||
Balance, Ending, shares at Sep. 29, 2019 | 11,843,907 | |||||||
Balance, Beginning at Jun. 30, 2019 | $ 11,094 | 1 | $ 11,093 | $ (6,236) | $ 4,858 | |||
Balance, Beginning, shares at Jun. 30, 2019 | 11,826,765 | |||||||
Net (loss) income | 1,154 | 1,154 | ||||||
Issuance of common stock in lieu of cash directors fees payable | $ 90 | 90 | 90 | |||||
Issuance of common stock in lieu of cash directors fees payable, shares | 17,142 | |||||||
Share-based compensation | $ 59 | 59 | 59 | |||||
Balance, Ending at Sep. 29, 2019 | $ 11,243 | 1 | $ 11,242 | $ (5,082) | $ 6,161 | |||
Balance, Ending, shares at Sep. 29, 2019 | 11,843,907 | |||||||
Balance, Beginning at Dec. 29, 2019 | $ 11,414 | 1 | $ 11,413 | $ (6,036) | $ 5,378 | |||
Balance, Beginning, shares at Dec. 29, 2019 | 11,860,299 | |||||||
Net (loss) income | (7,189) | (7,189) | ||||||
Issuance of common stock in lieu of cash directors fees payable | $ 240 | 240 | 240 | |||||
Issuance of common stock in lieu of cash directors fees payable, shares | 65,965 | |||||||
Share-based compensation | $ 61 | 61 | 61 | |||||
Issuance of Series B preferred stock | $ 6,033 | 6,033 | 6,033 | |||||
Issuance of Series B preferred stock, shares | 360,000 | |||||||
Exchange of original Series B preferred stock for newly issued Series B preferred stock | $ 1,224 | 1,224 | 1,224 | |||||
Exchange of original Series B preferred stock for newly issued Series B preferred stock, shares | 60,677 | |||||||
Exchange of Series A preferred stock for newly issued Series B preferred stock | $ 1,861 | 1,861 | 1,861 | |||||
Exchange of Series A preferred stock for newly issued Series B preferred stock, shares | 74,449 | |||||||
Exchange of Series A-1 preferred stock for newly issued Series B preferred stock | $ 4,200 | 4,200 | 4,200 | |||||
Exchange of Series A-1 preferred stock for newly issued Series B preferred stock, shares | 168,001 | |||||||
Extinguishment of derivative liability | (887) | (887) | (887) | |||||
Grant of warrants to purchase stock | 2,258 | 2,258 | 2,258 | |||||
Repurchase of warrants | (330) | (330) | (330) | |||||
Dividends declared on Series B preferred stock | (277) | (277) | (277) | |||||
Correction of recorded conversion rights associated with Series A-1 preferred shares | (90) | (90) | (90) | |||||
Balance, Ending at Sep. 27, 2020 | $ 12,666 | 1 | 12,665 | $ 13,041 | 13,041 | (13,225) | 12,482 | |
Balance, Ending, shares at Sep. 27, 2020 | 11,926,264 | 663,127 | ||||||
Balance, Beginning at Jun. 28, 2020 | $ 9,069 | 1 | 9,068 | (12,657) | (3,588) | |||
Balance, Beginning, shares at Jun. 28, 2020 | 11,894,895 | |||||||
Net (loss) income | (568) | (568) | ||||||
Issuance of common stock in lieu of cash directors fees payable | $ 105 | 105 | 105 | |||||
Issuance of common stock in lieu of cash directors fees payable, shares | 31,369 | |||||||
Share-based compensation | $ 45 | 45 | 45 | |||||
Issuance of Series B preferred stock | $ 6,033 | 6,033 | 6,033 | |||||
Issuance of Series B preferred stock, shares | 360,000 | |||||||
Exchange of original Series B preferred stock for newly issued Series B preferred stock | $ 1,224 | 1,224 | 1,224 | |||||
Exchange of original Series B preferred stock for newly issued Series B preferred stock, shares | 60,677 | |||||||
Exchange of Series A preferred stock for newly issued Series B preferred stock | $ 1,861 | 1,861 | 1,861 | |||||
Exchange of Series A preferred stock for newly issued Series B preferred stock, shares | 74,449 | |||||||
Exchange of Series A-1 preferred stock for newly issued Series B preferred stock | $ 4,200 | 4,200 | 4,200 | |||||
Exchange of Series A-1 preferred stock for newly issued Series B preferred stock, shares | 168,001 | |||||||
Extinguishment of derivative liability | 1,516 | 1,516 | 1,516 | |||||
Grant of warrants to purchase stock | 2,261 | 2,261 | 2,261 | |||||
Repurchase of warrants | (330) | (330) | (330) | |||||
Dividends declared on Series B preferred stock | (277) | (277) | (277) | |||||
Balance, Ending at Sep. 27, 2020 | $ 12,666 | $ 1 | $ 12,665 | $ 13,041 | $ 13,041 | $ (13,225) | $ 12,482 | |
Balance, Ending, shares at Sep. 27, 2020 | 11,926,264 | 663,127 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 27, 2020 | Sep. 29, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (7,189) | $ (64) |
Adjustments to reconcile net loss to net cash (used in) provided by operations: | ||
Deferred income taxes | (1,633) | 77 |
Depreciation and amortization | 763 | 535 |
Share-based compensation | 61 | 218 |
Accretion of loan fees and interest | 589 | 1,718 |
Change in operating lease right of use assets | 750 | 510 |
Loss on extinguishment of debt | 88 | |
Gain on contingent consideration payable adjustment | (1,680) | |
Net loss (gain) on disposition of refranchising restaurants | 55 | (2,249) |
Accretion of preferred shares | 47 | 48 |
Accretion of purchase price liability | 381 | 426 |
Impairment of assets | 3,927 | |
Change in fair value of derivative liability | (887) | |
Provision for (recovery of) bad debts | 900 | (91) |
Change in operating assets and liabilities: | ||
Accounts receivable | 130 | (731) |
Trade and other notes receivable | 21 | |
Prepaid expenses and other current assets | (295) | 59 |
Accounts payable | 312 | 2,863 |
Accrued expenses | (87) | 512 |
Accrued advertising | (382) | 80 |
Accrued interest receivable from affiliate | (2,613) | (1,332) |
Tax Sharing Agreement liability | (158) | (30) |
Accrued interest payable | (404) | (941) |
Deferred income | (446) | (2,129) |
Dividend payable on preferred shares | (809) | 992 |
Other | 74 | (281) |
Total adjustments | (1,317) | 275 |
Net cash (used in) provided by operating activities | (8,506) | 211 |
Cash flows from investing activities | ||
Additions to property and equipment | (239) | (49) |
Payments received on loans receivable | 69 | |
Proceeds from disposition of refranchised restaurants | 1,093 | 1,710 |
Change in due from affiliates | (10,103) | (6,009) |
Acquisition of subsidiary, net of cash acquired | (23,944) | (2,332) |
Net cash used in investing activities | (33,124) | (6,680) |
Cash flows from financing activities | ||
Proceeds from borrowings and associated warrants, net of issuance costs | 74,045 | 23,022 |
Repayments of borrowings | (24,224) | (16,500) |
Proceeds from preferred stock offering and associated warrants, net of issuance costs | 8,021 | |
Payments made on acquisition purchase price liability | (500) | |
Redemption of preferred stock | (500) | |
Dividends paid in cash | (175) | (2) |
Repurchase of warrants | (330) | |
Change in operating lease liabilities | (464) | (287) |
Other | (106) | |
Net cash provided by financing activities | 55,873 | 6,127 |
Net increase (decrease) in cash and restricted cash | 14,243 | (342) |
Cash and restricted cash at beginning of period | 25 | 653 |
Cash and restricted cash at end of period | 14,268 | 311 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 5,420 | 4,576 |
Cash paid for income taxes | 84 | 190 |
Supplemental disclosure of non-cash financing and investing activities: | ||
Issuance of preferred stock in lieu of cash preferred dividends payable | 450 | |
Issuance of common stock in lieu of cash director fees payable | 240 | 270 |
Income taxes receivable to adjust amounts due from affiliates | $ (158) | $ 30 |
Organization and Relationships
Organization and Relationships | 9 Months Ended |
Sep. 27, 2020 | |
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 “Initial Public Offering”). The Company’s common stock trades on the Nasdaq Capital Market under the symbol “FAT.” As of September 27, 2020, 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 September 27, 2020, the Company owns and franchises nine restaurant brands: Fatburger, Johnny Rockets, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Ponderosa Steakhouses, Bonanza Steakhouses, Yalla Mediterranean and Elevation Burger. Combined, as of September 27, 2020, these brands franchise over 700 units worldwide and have more than 200 additional units under development. The Company licenses the right to use its brand names and provides franchisees with operating procedures and methods of merchandising. Upon signing a franchise agreement, the franchisor is committed to provide training, some supervision and assistance, and access to operations manuals. As needed, the franchisor will also provide advice and written materials concerning techniques of managing and operating the restaurants. 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, 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 to our business from the COVID-19 pandemic is currently expected to be temporary, there is a great deal of uncertainty around the severity and duration of the disruption. We may experience longer-term effects on our business and economic growth and changes in consumer demand in the U.S. and worldwide. The effects of COVID-19 may materially adversely affect our business, results of operations, liquidity and ability to service our existing debt, particularly if these effects continue in place for a significant amount of time. Liquidity The Company recognized a loss from operations of $7,161,000 during the thirty-nine weeks ended September 27, 2020 and income from operations of $5,703,000 for the thirty-nine weeks ended September 29, 2019. The Company recognized net losses of $7,189,000 and $64,000 during the thirty-nine weeks ended September 27, 2020 and September 29, 2019, respectively. The reduction in earnings for 2020 is primarily due to reductions in revenues and impairment of assets due to the effects of COVID-19, coupled with higher general and administrative costs. 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 (the “Securitization Notes”) pursuant to an indenture and the supplement thereto (collectively, the “Indenture”). Net proceeds from the issuance of the Securitization Notes were $37,314,000, which consisted of the combined face amount of $40,000,000, net of discounts and debt offering costs (See Note 10). A portion of the proceeds from the Securitization was used to repay the remaining $26,771,000 in outstanding debt balance under the Lion Loan and Security Agreement and to pay the Securitization debt offering costs with the remaining proceeds being used for working capital. On September 21, 2020, FAT Royalty completed the sale of an additional $40 million of Series 2020-2 Fixed Rate Asset-Backed Notes (the “ M-2 Notes”), increasing the Company’s Securitization Notes to $80 million. Approximately $ of the proceeds from the M-2 Notes were used to acquire Johnny Rockets, with the During the second quarter of 2020, the Company received loan proceeds in the amount of $1,532,000 from the Paycheck Protection Program administered by the Small Business Administration (“PPP”) in response to economic difficulties resulting from the outbreak of COVID-19. These loan proceeds relate to FAT Brands Inc. as well as five restaurant locations that were part of the Company’s refranchising program. On July 13, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement”) to issue and sell in a public offering (the “Offering”) 360,000 shares of 8.25% Series B Cumulative Preferred Stock (“Series B Preferred Stock”) and 1,800,000 warrants (the “2020 Series B Warrants”) to purchase common stock at $5.00 per share. The Offering closed on July 16, 2020 with net proceeds to the Company of $8,021,000, which was net of $979,000 in underwriting and offering costs. While the Company expects the COVID-19 pandemic 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, Series B Preferred Stock Offering, and PPP proceeds, combined with royalties and franchise fees collected from the 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-Q. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Nature of operations rd 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. As part of these 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 and classifies the operational activities as refranchising gains or losses and the assets and associated liabilities as held-for sale. 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 September 27, 2020, the Company had uninsured deposits in the amount of $13,009,000. As of December 29, 2019, the Company had no accounts with uninsured balances. Restricted Cash – Accounts receivable Trade notes receivable – Assets classified as held for sale – Goodwill and other intangible assets Fair Value Measurements - ● Level 1 inputs are quoted prices in active markets for identical assets or liabilities. ● Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities. ● Level 3 inputs are unobservable and reflect the Company’s own assumptions. Other than the derivative liability, the Company does not have a material amount of financial assets or liabilities that are required to be measured at fair value on a recurring basis under U.S. GAAP (See Note 11). None of the Company’s non-financial assets or non-financial liabilities are required to be measured at fair value on a recurring basis. Assets recognized or disclosed at fair value in the consolidated financial statements on a nonrecurring basis include items such as property and equipment, operating lease assets, goodwill and other intangible assets, which are measured at fair value if determined to be impaired. The Company has not elected to use fair value measurement for any assets or liabilities for which fair value measurement is not presently required by U.S. GAAP. However, the Company believes the fair values of cash equivalents, restricted cash, accounts receivable, assets held for sale and accounts payable approximate their carrying amounts. 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 between franchisees. 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, at which point the 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 16). Unless otherwise noted, earnings per share and other share-based information for 2020 and 2019 have been adjusted retrospectively to reflect the impact of that 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 related to (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. A cumulative correction was recorded to additional paid in capital during the first quarter of 2020 in the amount of $90,000. 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 effective December 31, 2018. 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 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: |
Acquisitions and Significant Tr
Acquisitions and Significant Transactions | 9 Months Ended |
Sep. 27, 2020 | |
Business Combinations [Abstract] | |
Acquisitions and Significant Transactions | NOTE 3. ACQUISITIONS AND SIGNIFICANT TRANSACTIONS Acquisition of Johnny Rockets On September 21, 2020, the Company completed the acquisition of for a cash purchase price of approximately $24.8 million. The transaction was funded with proceeds from an increase in the Company’s securitization facility (See Note 10). Immediately following the closing of the acquisition of Johnny Rockets, the Company contributed the franchising subsidiaries of Johnny Rockets to FAT Royalty I, LLC pursuant to a Contribution Agreement. (See Note 10). The preliminary assessment of the fair value of the net assets and liabilities acquired by the Company through the acquisition of Johnny Rockets was estimated at $24,838,000. This preliminary assessment of fair value of the net assets and liabilities as well as the final purchase price were estimated at closing and are subject to change. The preliminary allocation of the consideration to the preliminary valuation of net tangible and intangible assets acquired is presented in the table below (in thousands): Cash $ 894 Accounts receivable 1,193 Assets held for sale 11,126 Goodwill 9,691 Other intangible assets 26,400 Other assets 412 Accounts payable (1,169 ) Accrued expenses (2,486 ) Deferred franchise fees (4,988 ) Deferred tax liability (6,032 ) Operating lease liability (10,028 ) Other liabilities (175 ) Total net identifiable assets $ 24,838 Revenues of $134,000 and net income $19,000 attributed to Johnny Rockets from the date of acquisition are included in the accompanying consolidated statements of operations for thirteen and thirty-nine weeks ended September 27, 2020. Proforma Information The table below presents the proforma revenue and net (loss) income of the Company for the thirteen and thirty-nine weeks ended September 27, 2020 and September 29, 2019, assuming the acquisition of Johnny Rockets had occurred on December 31, 2018 (the beginning of the Company’s 2019 fiscal year), pursuant to ASC 805-10-50 (in thousands). This proforma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition of Johnny Rockets occurred on this date nor does it purport to predict the results of operations for future periods. Thirteen Weeks Ended Thirty-nine Weeks Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Revenues $ 5,722 $ 11,039 $ 17,209 $ 30,004 Net (loss) income $ (702 ) $ 2,771 $ (8,694 ) $ 3,604 The proforma information above reflects the combination of the Company’s results as disclosed in the accompanying consolidated statements of operations for thirteen and thirty-nine weeks ended September 27, 2020 and the unaudited results of Johnny Rockets for the thirteen and thirty-nine weeks ended September 27, 2020 and September 29, 2019 with the following adjustments: ● Revenue – The unaudited proforma revenues and net (loss) income present franchise fee revenue and advertising revenue in accordance with ASC 606 in a manner consistent with the Company’s application thereof. As a non-public company, Johnny Rockets had not yet been required to adopt ASC 606. ● Overhead allocations from the former parent company have been adjusted to the estimated amount the Company would have allocated for the thirteen and thirty-nine weeks ended September 27, 2020 and September 29, 2019. ● Former parent company management fees have been eliminated from the proforma. ● Amortization of intangible assets has been adjusted to reflect the preliminary fair value at the assumed acquisition date. ● Depreciation on assets treated as held for sale by the Company has been eliminated. ● The proforma adjustments also include advertising expenses in accordance with ASC 606. ● The proforma interest expense has been adjusted to exclude actual Johnny Rockets interest expense incurred prior to the acquisition. All interest-bearing liabilities were paid off at closing. ● The proforma interest expense has been adjusted to include proforma interest expense that would have been incurred relating to the acquisition financing obtained by the Company. ● Non-recurring, non-operating gains and losses have been eliminated from the proforma statements. 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 at the time of the acquisition. 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 September 27, 2020, and December 29, 2019, the contingent purchase price payable totaled $704,000 and $633,000, respectively, which includes the accretion of interest expense at an effective interest rate of 18%. The assessment of the fair value of the net assets and liabilities acquired by the Company for the acquisition of Elevation Burger was $7,193,000. The allocation of the consideration to the valuation of net tangible and intangible assets acquired is presented in the table below (in thousands): Cash $ 10 Goodwill 521 Other intangible assets 7,140 Other assets 558 Current liabilities (91 ) Deferred franchise fees (758 ) Other liabilities (187 ) Total net identifiable assets $ 7,193 Descriptions of the Company’s assessment of impairment of the goodwill and other intangible assets acquired in this acquisition related to COVID-19 are in Note 6. |
Refranchising
Refranchising | 9 Months Ended |
Sep. 27, 2020 | |
Refranchising | |
Refranchising | nOTE 4. REFRANCHISING 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. As part of these 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 and classifies the operational activities as refranchising gains or losses and the assets and associated liabilities as held-for sale. Assets designated by the Company for refranchising meet the criteria requiring that they be classified as held for sale. As a result, the following assets have been classified as held for sale on the accompanying consolidated balance sheet as of September 27, 2020 and December 29, 2019 (in thousands): September 27, 2020 December 29, 2019 Property and equipment $ 1,106 $ 1,912 Operating lease right of use assets 9,942 3,216 Total $ 11,048 $ 5,128 Operating lease liabilities related to the assets classified as held for sale in the amount of $9,959,000 and $3,325,000, have been classified as current liabilities on the accompanying consolidated balance sheets as of September 27, 2020 and December 29, 2019. During the thirteen and thirty-nine weeks ended September 27, 2020, refranchising operations incurred losses of $325,000 and $1,869,000, respectively, compared to gains of $902,000 and $851,000, respectively, for the corresponding periods in 2019. The refranchising results for the thirty-nine weeks ended September 27, 2020, included operating expenses, net of food sales, in the amount of $1,114,000, a gain of $560,000 relating to the sale and refranchising of four restaurant locations, a loss of $615,000 on the closure and disposition of three restaurant locations and the establishment of a reserve of $700,000 relating to a prior sale. The 2019 period included gains on the sale and refranchising of two restaurants in the amount of $2,249,000 which were partially offset by restaurant operating expenses, net of food sales, in the amount of $1,398,000. |
Notes Receivable
Notes Receivable | 9 Months Ended |
Sep. 27, 2020 | |
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 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 September 27, 2020, there were no trade notes receivable. At December 29, 2019, trade notes receivable totaled $250,000, net of reserves of $123,000. 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 September 27, 2020, and December 29, 2019, the balance of the Elevation Note was $1,809,000 and $1,814,000, which were net of discounts of $288,000 and $352,000, respectively. During the thirteen and thirty-nine weeks ended September 27, 2020, the Company recognized $52,000 and $158,000, respectively, in interest income. During the thirteen and thirty-nine weeks ended September 29, 2019, the Company recognized $55,000 and $59,000 in interest income, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Note 6. GOODWILL and other intangible assets Goodwill Goodwill consists of the following (in thousands): September 27, 2020 December 29, 2019 Goodwill: Fatburger $ 529 $ 529 Buffalo’s 5,365 5,365 Hurricane 2,772 2,772 Ponderosa and Bonanza - 1,462 Yalla 263 263 Johnny Rockets 9,691 - Elevation Burger 521 521 Total goodwill $ 19,141 $ 10,912 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): September 27, 2020 December 29, 2019 Trademarks: Fatburger $ 2,135 $ 2,135 Buffalo’s 27 27 Hurricane 6,840 6,840 Ponderosa and Bonanza 5,518 7,230 Yalla 777 1,530 Johnny Rockets 19,900 - Elevation Burger 4,690 4,690 Total trademarks 39,887 22,452 Franchise agreements: Hurricane – cost 4,180 4,180 Hurricane – accumulated amortization (723 ) (482 ) Ponderosa and Bonanza – cost 1,640 1,640 Ponderosa and Bonanza – accumulated amortization (326 ) (243 ) Johnny Rockets – cost 6,500 - Johnny Rockets – accumulated amortization (12 ) - Elevation Burger – cost 2,450 2,450 Elevation Burger – accumulated amortization (637 ) (263 ) Total franchise agreements 13,072 7,282 Total other intangible assets $ 52,959 $ 29,734 The scheduled future amortization of the Company’s capitalized franchise agreements is as follows (in thousands): Fiscal year: 2020 $ 381 2021 1,523 2022 1,523 2023 1,523 2024 1,523 Thereafter 6,599 Total $ 13,072 In response to the adverse effects of COVID-19, we considered whether goodwill and other intangible assets needed to be evaluated for impairment as of September 27, 2020, specifically related to goodwill and the trademark assets. Given the uncertainty regarding the severity, duration and long-term effects of COVID-19, making estimates of the fair value of these assets at this time is significantly affected by assumptions related to ongoing operations including but not limited to the timing and extent of restrictions on restaurant operating hours, in-house dining limitations or other restrictions that have largely limited restaurants to take-out and delivery sales, customer engagement with our brands, the short-term and long-term impact on consumer discretionary spending, and overall global economic conditions. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The fair value technique used in this instance is classified as Level 3, where unobservable inputs are used when little or no market data is available. In performing the impairment review of the tradename, the Company used the relief of royalty method under the income approach method of valuation. Significant assumptions used to determine fair value under the relief of royalty method include future trends in sales, a royalty rate and a discount rate to be applied to the forecast revenue stream. In performing the impairment review of the franchise agreement assets, the Company used the residual earnings method under the income approach method of valuation. Significant assumptions used to determine fair value under the residual earnings method include future trends in sales, a royalty rate and a discount rate to be applied to the forecast revenue stream. As a result of these analyses, when considering the available facts, assessments and judgments, during the thirty-nine weeks ended September 27, 2020, the Company recorded goodwill impairment charges of $1,462,000 and tradename impairment charges of $2,465,000 relating to the Ponderosa, Yalla and Bonanza brands. The Company had not recognized impairment charges on its goodwill or intangible assets prior to the second quarter of 2020. Because of the risks and uncertainties related to the COVID-19 pandemic events, the negative effects on the operations of our franchisees could prove to be worse than we currently estimate and lead us to record additional non-cash goodwill or other intangible asset impairment charges in the future periods. |
Deferred Income
Deferred Income | 9 Months Ended |
Sep. 27, 2020 | |
Contract with Customer, Liability [Abstract] | |
Deferred Income | Note 7. DEFERRED INCOME Deferred income is as follows (in thousands): September 27, 2020 December 29, 2019 Deferred franchise fees $ 9,890 $ 5,417 Deferred royalties 275 422 Deferred vendor incentives 519 303 Total $ 10,684 $ 6,142 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 27, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8. Income Taxes Effective October 20, 2017, the Company entered into a Tax Sharing Agreement with FCCG that provides that FCCG will, to the extent permitted by applicable law, file consolidated federal, California and Oregon (and possibly other jurisdictions where revenue is generated, at FCCG’s election) income tax returns with the Company and its subsidiaries. The Company will pay FCCG the amount that its current tax liability would have been had it filed a separate return. To the extent the Company’s required payment exceeds its share of the actual combined income tax liability (which may occur, for example, due to the application of FCCG’s net operating loss carryforwards), the Company will be permitted, in the discretion of a committee of its board of directors comprised solely of directors not affiliated with or having an interest in FCCG, to pay such excess to FCCG by issuing an equivalent amount of its common stock in lieu of cash, valued at the fair market value at the time of the payment. An inter-company receivable of approximately $33,382,000 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 benefit as of September 27, 2020, calculated as if the Company files its tax returns on a stand-alone basis. The amount receivable from FCCG determined by this calculation of $158,000 and $30,000 was added to amounts due from FCCG as of September 27, 2020 and September 29, 2019, respectively. (See Note 12.) Deferred taxes reflect the net effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for calculating taxes payable on a stand-alone basis. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): September 27, 2020 December 29, 2019 Deferred tax (liabilities) assets Deferred income $ 1,372 $ 1,353 Reserves and accruals 218 208 Intangibles (6,420 ) (614 ) Deferred state income tax (19 ) (91 ) Tax credits 313 244 Share-based compensation 193 192 Property and equipment (125 ) (137 ) Net operating loss carryforwards 2,069 894 Other 32 (17 ) Total $ (2,367 ) $ 2,032 Components of the income tax (benefit) expense are as follows (in thousands): Thirty-nine Weeks Thirty-nine Weeks Current Federal $ (118 ) $ 116 State 33 30 Foreign 313 30 228 176 Deferred Federal (1,359 ) 139 State (274 ) (62 ) (1,633 ) 77 Total income tax (benefit) expense $ (1,405 ) $ 253 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): Thirty-nine Weeks Thirty-nine Weeks September 27, 2020 September 29, 2019 Tax benefit at statutory rate $ (1,805 ) $ 40 State and local income taxes (190 ) - Foreign taxes 313 30 Tax credits (92 ) 112 Dividends on preferred stock 123 51 Impairment of goodwill 266 - Other (20 ) 20 Total income tax (benefit) expense $ (1,405 ) $ 253 |
Leases
Leases | 9 Months Ended |
Sep. 27, 2020 | |
Leases [Abstract] | |
Leases | NOTE 9. LEASES The Company has recorded fifteen operating leases for its corporate offices and for certain restaurant properties that are in the process of being refranchised and classified as held for sale. The leases have remaining lease terms ranging from three months to eighteen years. The Company recognized lease expense of $1,092,000 and $1,089,000 for the thirty-nine weeks ended September 27, 2020 and September 29, 2019, respectively. The Company recognized lease expense of $372,000 and $355,000 for the thirteen weeks ended September 27, 2020 and September 29, 2019, respectively. The weighted average remaining lease term of the operating leases (not including optional lease extensions) at September 27, 2020 was 7.8 years. Operating lease right of use assets and operating lease liabilities relating to the operating leases are as follows (in thousands): September 27, 2020 December 29, 2019 Right of use assets $ 14,650 $ 4,076 Lease liabilities $ 14,842 $ 4,206 At the adoption of ASC 842, the 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 the Company’s incremental borrowing rate at that time. Subsequent to the adoption of ASC 842, the Company calculated the carrying value of new right of use assets and lease liabilities at the then prevailing incremental borrowing rate which ranged from 8.7% to 9.1% during the nine months ended September 27, 2020. The contractual future maturities of the Company’s operating lease liabilities as of September 27, 2020, including anticipated lease extensions, are as follows (in thousands): Fiscal year: 2020 $ 676 2021 2,951 2022 3,124 2023 3,227 2024 3,137 Thereafter 7,645 Total lease payments 20,760 Less imputed interest (5,918 ) Total $ 14,842 Supplemental cash flow information for the thirty-nine weeks ended September 27, 2020 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 $ 633 Operating lease right of use assets obtained in exchange for new lease obligations: Operating lease liabilities $ 12,168 |
Debt
Debt | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Note 10. DEBT 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 notes (the “Securitization Notes”) pursuant to an indenture and the supplement thereto, each dated March 6, 2020 (collectively, the “Indenture”). The Securitization Notes issued in March 2020 consist of the following (the “Series AB Notes”): Note Public Seniority Issue Amount Coupon First Call Date Final Legal 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 Series AB 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 Series AB Notes. A portion of the proceeds from the Series AB Notes were used to repay the remaining $26,771,000 in outstanding balance under the Loan and Security Agreement (the “Loan and Security Agreement”) with The Lion Fund, L.P. and The Lion Fund II, L.P. (collectively, “Lion”) and to pay Securitization debt offering costs. The remaining proceeds from the Securitization were available for working capital. On September 21, 2020, FAT Royalty completed the sale of an additional $40 million face amount of Series 2020-2 Fixed Rate Asset-Backed Notes (the “Series M-2 Notes”), increasing the Company’s Securitization Notes to $80 million. The Series M-2 Notes consist of the following: Note Seniority Issue Amount Coupon First Call Date Final Legal Maturity Date M-2 Subordinated $ 40,000,000 9.75 % 4/27/2021 4/27/2026 Net proceeds from the issuance of the Series M-2 Notes were $35,241,000, which consists of the face amount of $40,000,000, net of discounts of $3,200,000 and debt offering costs of $1,559,000. The discount and offering costs will be accreted as additional interest expense over the expected term of the Series M-2 Notes. The Series M-2 Notes are subordinate to the Series A-2 Notes and Series B-2 Notes. All Securitization Notes issued under the Base Indenture are secured by an interest in substantially all of the assets of FAT Royalty, including the Johnny Rockets companies, that have been contributed to FAT Royalty and are obligations only of FAT Royalty under the Base Indenture and not obligations of the Company. While the Securitization Notes are outstanding, scheduled payments of principal and interest are required to be made on a quarterly basis, with the scheduled principal payments of $1,000,000 per quarter on each of the Series A-2 and Series B-2 Notes and $200,000 per quarter on the Series M-2 Notes beginning the second quarter of 2021. It is expected that the Securitization Notes will be repaid prior to the Final Legal Maturity Date, with the anticipated repayment date occurring in January 2023 for the A-2 Notes, October 2023 for the B-2 Notes and April 2026 for the Series M-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 utilized for additional principal amortization, as defined in the Indenture. In connection with the Securitization, FAT Royalty and each of the Franchise Entities (as defined in the Indenture) entered into a Management Agreement with the Company, dated as of the Closing Date (the “Management Agreement”), pursuant to which the Company agreed to act as manager of FAT Royalty and each of the Franchise Entities. The Management Agreement provides for a management fee payable monthly by FAT Royalty to the Company in the amount of $200,000, subject to three percent (3%) annual increases (the “Management Fee”). The primary responsibilities of the manager are to perform certain franchising, distribution, intellectual property and operational functions on behalf of the Franchise Entities pursuant to the Management Agreement. The Notes are secured by substantially all of the assets of FAT Royalty, including the equity interests in the Franchise Entities. The restrictions placed on the Company’s subsidiaries require that the Company’s principal and interest obligations have first priority, after the payment of the Management Fee and certain other FAT Royalty expenses (as defined in the Indenture), and amounts are segregated monthly to ensure appropriate funds are reserved to pay the quarterly principal and interest amounts due. The amount of monthly cash flow that exceeds the required monthly debt service 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 of 1933, as amended (the “Securities Act”), or the securities laws of any jurisdiction. The Notes are subject to certain financial and non-financial covenants, including a debt service coverage ratio calculation, as defined in the Indenture. 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 in accordance with the provisions in the Indenture. As of September 27, 2020, the Company was in compliance with these covenants. As of September 27, 2020, the recorded balance of the Securitization Notes was $72,791,000, which is net of debt offering costs of $3,797,000 and original issue discount of $3,412,000. The Company recognized interest expense on the Securitization Notes of $930,000 for the thirteen weeks ended September 27, 2020, which includes $109,000 for amortization of debt offering costs and $21,000 for amortization of the original issue discount. The Company recognized interest expense on the Securitization Notes of $2,103,000 for the thirty-nine weeks ended September 27, 2020, which includes $246,000 for amortization of debt offering costs and $33,000 for amortization of the original issue discount. The average effective interest rate of the Securitization Notes was 9.7% for the thirty-nine weeks ended September 27, 2020. Loan and Security Agreement On January 29, 2019, the Company as borrower, and its subsidiaries and affiliates as guarantors, entered into the Loan and Security Agreement with 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. 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 by June 30, 2020, as extended. If the Loan and Security Agreement was repaid in full prior to June 30, 2020, 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 was subsequently amended several times which allowed the Company to increase its borrowing by $3,500,000 in connection with the acquisition of Elevation Burger; extended the exercise date of the Lion Warrant to June 30, 2020; extended the due date for certain quarterly payments and imposed associated extension and other loan fees. 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. The Company recognized interest expense on the Loan and Security Agreement of $1,783,000 for the thirty-nine weeks ended September 27, 2020, which includes $212,000 for amortization of all unaccreted debt offering costs at the time of the repayment and $650,000 in penalties and fees. The Company recognized interest expense on the Loan and Security Agreement of $1,812,000 and $3,608,000 for the thirteen and thirty-nine weeks ended September 29, 2019, respectively. 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 $7,510,000, 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 September 27, 2020, the carrying value of the Elevation Note was $5,849,000 which is net of the loan discount of $940,000 and debt offering costs of $58,000. The Company recognized interest expense relating to the Elevation Note during the thirteen weeks ended September 27, 2020 in the amount of $153,000, which included amortization of the loan discount of $69,000 and amortization of $3,000 in debt offering costs. The Company recognized interest expense relating to the Elevation Note during the thirty-nine weeks ended September 27, 2020 in the amount of $517,000, which included amortization of the loan discount of $210,000 and amortization of $8,000 in debt offering costs. The Company recognized interest expense of $139,000 and $162,000 on the Elevation Note for the thirteen and thirty-nine weeks ended September 29, 2019, respectively. The effective interest rate for the Elevation Note during the thirty-nine weeks ended September 27, 2020 was 11.9%. 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. Paycheck Protection Program Loans During the thirty-nine weeks ended September 27, 2020, the Company received loan proceeds in the amount of approximately $1,532,000 under the Paycheck Protection Program (the “PPP Loans”) and Economic Injury Disaster Loan Program (the “EIDL Loans”). The Paycheck Protection Program, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. At inception, the PPP Loans and EIDL Loans related to FAT Brands Inc. as well as five restaurant locations that were part of the Company’s refranchising program. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loans, there can be no assurance that the Company will be eligible for forgiveness of the loan, in whole or in part. Any unforgiven portion of the PPP Loans is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. As of September 27, 2020, the balance remaining on the PPP Loans and EIDL Loans was $1,180,000 related to FAT Brands Inc. as the five restaurant locations were closed or refranchised during the second and third quarters of 2020 (Note 4). |
Preferred Stock
Preferred Stock | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
Preferred Stock | Note 11. PREFERRED STOCK Series B Cumulative Preferred Stock On July 13, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement”) to issue and sell in a public offering (the “Offering”) 360,000 shares of 8.25% Series B Cumulative Preferred Stock (“Series B Preferred Stock”) and 1,800,000 warrants, plus 99,000 additional warrants pursuant to the underwriter’s overallotment option (the “2020 Series B Offering Warrants”), to purchase common stock at $5.00 per share. In the Underwriting Agreement, the Company agreed to pay the underwriters an underwriting discount of 8.0% of the gross proceeds received by the Company in the Offering and issue five-year warrants exercisable for 1% of the number of Series B Preferred Stock shares and the number of 2020 Series B Offering Warrants sold in the Offering. In connection with the Offering, on July 15, 2020 the Company filed an Amended and Restated Certificate of Designation of Rights and Preferences of Series B Cumulative Preferred Stock with the Secretary of State of Delaware, designating a total of 850,000 shares of Series B Preferred Stock (the “Certificate of Designation”), and on July 16, 2020 entered into a Warrant Agency Agreement with VStock Transfer, LLC, to act as the Warrant Agent for the Series B Offering Warrants (the “Warrant Agency Agreement”). The Certificate of Designation amends and restates the terms of the Series B Cumulative Preferred Stock issued in October 2019 (the “Original Series B Preferred”). At the time of the Offering, there were 57,140 shares of the Original Series B Preferred outstanding, together with warrants to purchase 34,284 shares of the Company’s common stock at an exercise price of $8.50 per share (the “Series B Warrants”). The Offering closed on July 16, 2020 with net proceeds to the Company of $8,021,000, which was net of $979,000 in underwriting and offering costs. Holders of Series B Cumulative Preferred Stock shall be entitled to receive, when, as and if declared by the FAT Board or a duly authorized committee thereof, in its sole discretion, out of funds of the Company legally available for the payment of distributions, cumulative preferential cash dividends at a rate per annum equal to the 8.25% multiplied by $25.00 per share stated liquidation preference of the Series B Preferred Stock. The dividends shall accrue without interest and accumulate, whether or not earned or declared, on each issued and outstanding share of the Series B Preferred Stock from (and including) the original date of issuance of such share and shall be payable monthly in arrears on a date selected by the Company each calendar month that is no later than twenty (20) days following the end of each calendar month. If the Company fails to pay dividends on the Series B Preferred Stock in full for any twelve accumulated, accrued and unpaid dividend periods, the dividend rate shall increase to 10% until the Company has paid all accumulated accrued and unpaid dividends on the Series B Preferred Stock in full and has paid accrued dividends during the two most recently completed dividend periods in full, at which time the 8.25% dividend rate shall be reinstated The Company may redeem the Series B Preferred Stock, in whole or in part, at the option of the Company, for cash, at the following redemption price per share, plus any unpaid dividends: (i) After July 16, 2020 and on or prior to July 16, 2021: $27.50 per share. (ii) After July 16, 2021 and on or prior to July 16, 2022: $27.00 per share. (iii) After July 16, 2022 and on or prior to July 16, 2023: $26.50 per share. (iv) After July 16, 2023 and on or prior to July 16, 2024: $26.00 per share. (v) After July 16, 2024 and on or prior to July 16, 2025: $25.50 per share. (vi) After July 16, 2025: $25.00 per share. As a result of the amended and restated terms of the Series B Cumulative Preferred Stock, the Company classified the Series B Preferred Stock as equity as of July 15, 2020. Concurrent with the Offering, the holders of the outstanding 57,140 shares of Original Series B Preferred became subject to the new terms of the Certificate of Designation. At the time of the amendment and restatement of the Certificate of Designation, the adjusted basis of the Original Series B Preferred on the Company’s books was $1,112,000, net of unamortized debt discounts and debt offering costs. As a result of the amendment and restatement of the Certificate of Designation, the recorded value of the new Series B Stock was $1,136,000 with $292,000 allocated to the 2020 Series B Offering Warrants, resulting in an aggregate loss on the exchange of $296,000. The original holders were also issued 3,537 shares of new Series B Preferred Shares in payment of $88,000 accrued and outstanding dividends relating to the Original Series B Preferred at a price of $25 per share. The Company entered into an agreement to exchange 15,000 shares of Series A Fixed Rate Cumulative Preferred Stock owned by FCCG for 60,000 shares of Series B Preferred Stock valued at $1,500,000, pursuant to a Settlement, Redemption and Release Agreement. At the time of the exchange, the adjusted basis of the Series A Preferred on the Company’s books was $1,489,000, net of unamortized debt discounts and debt offering costs, and the Company recognized a loss on the exchange in the amount of $11,000. The Company also agreed to issue 14,449 shares of Series B Preferred Stock valued at $361,224 as consideration for accrued dividends due to FCCG. The Company entered into an agreement to exchange all of the outstanding shares of Series A-1 Fixed Rate Cumulative Preferred Stock for 168,000 shares of Series B Preferred Stock valued at $4,200,000, pursuant to a Settlement, Redemption and Release Agreement with the holders of such shares. At the time of the exchange, the adjusted basis of the Series A Preferred on the Company’s books was $4,421,000, net of unamortized debt discounts and debt offering costs, and the Company recognized a gain on the exchange in the amount of $221,000. As of September 27, 2020, the Series B Preferred Stock consisted of 663,127 shares outstanding with a balance of $13,041,000. The Company declared preferred dividends to the holders of the Series B Preferred Stock totaling $277,000 during the thirteen and thirty-nine weeks ended September 27, 2020. 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 Company issued 100,000 shares of Series A Preferred stock in the following two transactions: (i) On June 7, 2018, the Company entered into a Subscription Agreement for the issuance and sale (the “Series A 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. On July 13, 2020, the Company entered into the following transactions pertaining to the outstanding Series A Preferred Stock: 1. The Company entered into an agreement to redeem 80,000 outstanding shares of the Series A Preferred Stock, plus accrued dividends thereon, held by Trojan Investments, LLC pursuant to a Stock Redemption Agreement that provides for the redemption at face value of a portion of such shares for cash from the proceeds of the Offering and the balance to be redeemed in $2 million tranches every six months, with the final payment due by December 31, 2021. 2. The Company redeemed 5,000 outstanding shares of Series A Preferred Stock, plus accrued dividends thereon, held by Ridgewood Select Value Fund LP and its affiliate at face value for cash from the proceeds of the Offering. 3. The Company exchanged 15,000 outstanding shares of Series A Preferred Stock, plus accrued dividends thereon, held by FCCG at face value for shares of Series B Preferred Stock valued at $25.00 per share. The Company classifies the Series A Preferred Stock as debt. As of September 27, 2020, there were 80,000 shares of Series A Preferred Stock outstanding, with a balance of $7,945,000 which is net of debt offering costs of $7,000. The Company recognized interest expense on the Series A Preferred Stock of $1,056,000 for the thirty-nine weeks ended September 27, 2020, which includes accretion expense of $14,000 as well as $2,000 for the amortization of debt offering costs. For the thirteen weeks ended September 27, 2020, the Company recognized interest expense of $350,000, which includes accretion expense of $4,000. The Company recognized interest expense on the Series A Preferred Stock of $1,062,000 for the thirty-nine weeks ended September 29, 2019, which includes accretion expense of $17,000 as well as $2,000 for the amortization of debt offering costs. For the thirteen weeks ended September 29, 2019, the Company recognized interest expense of $354,000, which includes accretion expense of $6,000 as well as $1,000 for the amortization of the debt offering costs. The year-to-date effective interest rate for the Series A Preferred Stock for 2020 was 14.9%. Derivative Liability Relating to the Conversion Feature of the Series A Preferred Stock Holders of Series A Preferred Stock had the option to 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 could be settled in cash or common stock of the Company, at the option of the holder (the “Conversion Option”). If a holder elected to receive common stock, the shares would 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. On June 8, 2020, the Conversion Option became exercisable. As of that date, the Company calculated the estimated fair value of the Conversion Option to be $2,403,000 and recorded a derivative liability in that amount, together with an offsetting reduction in Additional Paid-In Capital. On July 13, 2020, the Company entered into agreements with each of the holders of the Series A Preferred Stock regarding the redemption of their shares. Holders of 85,000 of the outstanding shares agreed to a full redemption in periodic cash payments. FCCG, the holder of the remaining 15,000 outstanding shares, agreed to redeem its Series A Preferred Stock in exchange for newly issued Series B Preferred Stock of the Company. As a result of these agreements, the Conversion Option was terminated for all holders as of July 13, 2020. Immediately prior to the termination, the fair value of the Conversion Option was determined to be $1,516,000 and resulted in the recognition of $887,000 in income from the decrease in the value of the derivative liability. With the termination of the Conversion Option, the $1,516,000 remaining balance in derivative liability was written off with an offsetting credit to Additional Paid-in Capital. Series A-1 Fixed Rate Cumulative Preferred Stock On July 3, 2018, the Company filed a Certificate of Designation of Rights and Preferences of Series A-1 Fixed Rate Cumulative Preferred Stock (the “Series A-1 Certificate of Designation”) with the Secretary of State of the State of Delaware, designating a total of 200,000 shares of Series A-1 Fixed Rate Cumulative Preferred Stock (the “Series A-1 Preferred Stock”). The Company issued 45,000 shares of Series A-1 Preferred Stock. The Company classified the Series A-1 Preferred Stock as long-term debt because it contained an obligation to issue a variable number of common shares for a fixed monetary amount. On July 13, 2020, the Company entered into a Settlement, Redemption and Release Agreement (the “Series A-1 Agreement”) with the holders of the Series A-1 Preferred Stock, to exchange all outstanding shares of Series A-1 Preferred Stock for shares of newly issued Series B Preferred. The Series A-1 Agreement also included a negotiated $300,000 reduction in the redemption value of the Series A-1 Preferred Stock. The Company recognized a $221,000 gain as a result of the reduction during the thirteen weeks ended September 27, 2020. Prior to the exchange, the Company recognized interest expense on the Series A-1 Preferred Stock of $87,000 for the thirty-nine weeks ended September 27, 2020, which included a net reduction in the debt discount of $15,000, as well as $3,000 in amortization of debt offering costs. The Company recognized a recovery of previously accrued interest expense on the Series A-1 Preferred Stock of $36,000 for the thirteen weeks ended September 27, 2020. The Company recognized interest expense on the Series A-1 Preferred Stock of $232,000 for the thirty-nine weeks ended September 29, 2019, which included recognized accretion expense of $24,000, as well as $5,000 for the amortization of debt offering costs, with no comparable activity in 2018. The Company recognized interest expense on the Series A-1 Preferred Stock of $78,000 for the thirteen weeks ended September 29, 2019, which included recognized accretion expense of $8,000, as well as $2,000 for the amortization of debt offering costs. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 27, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 12. Related Party Transactions Due from Affiliates 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. 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. As of September 27, 2020, the balance receivable under the Intercompany Agreement was $33,382,000. Effective July 5, 2018, the Company made a preferred capital investment in Homestyle Dining LLC, a Delaware limited liability corporation (“HSD”) in the amount of $4.0 million (the “Preferred Interest”). FCCG owns all of the common interests in HSD. The holder of the Preferred Interest is entitled to a 15% priority return on the outstanding balance of the investment (the “Preferred Return”). Any available cash flows from HSD on a quarterly basis are to be distributed to pay the accrued Preferred Return and repay the Preferred Interest until fully retired. On or before the five-year anniversary of the investment, the Preferred Interest is to be fully repaid, together with all previously accrued but unpaid Preferred Return. FCCG has unconditionally guaranteed repayment of the Preferred Interest in the event HSD fails to do so. As of September 27, 2020, the balance receivable, including accrued and unpaid interest income, under the Preferred Interest was $5,350,000. During the thirty-nine weeks ended September 27, 2020 and September 29, 2019, the Company recorded receivables from FCCG in the amount of $158,000 and $30,000, respectively, under the Tax Sharing Agreement, which was added to the intercompany receivable. (See Note 8). |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | Note 13. SHAREHOLDERS’ Equity As of September 27, 2020, and December 29, 2019, the total number of authorized shares of common stock was 25,000,000, and there were 11,926,264 and 11,860,299 shares of common stock outstanding, respectively. Below are the changes to the Company’s common stock during the thirty-nine weeks ended September 27, 2020: ● On February 11, 2020, the non-employee members of the board of directors elected to receive their compensation in shares of the Company’s common stock in lieu of cash. As such, the Company issued a total of 16,360 shares of common stock at a value of $4.585 per share to the non-employee members of the board of directors as consideration for accrued directors’ fees. ● On May 12, 2020, the non-employee members of the board of directors elected to receive their compensation in shares of the Company’s common stock in lieu of cash. As such, the Company issued a total of 13,677 shares of common stock at a value of $3.29 per share to the non-employee members of the board of directors as consideration for accrued directors’ fees. ● On August 4, 2020, certain non-employee members of the board of directors elected to receive their compensation in shares of the Company’s common stock in lieu of cash. As such, the Company issued a total of 35,928 shares of common stock at a value of $3.34 per share to these non-employee members of the board of directors as consideration for accrued directors’ fees. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
Share-Based Compensation | Note 14. SHARE-BASED COMPENSATION Effective September 30, 2017, the Company adopted the 2017 Omnibus Equity Incentive Plan (the “Plan”). The Plan is a comprehensive incentive compensation plan under which the Company can grant equity-based and other incentive awards to officers, employees and directors of, and consultants and advisers to, FAT Brands Inc. and its subsidiaries. The Plan provides a maximum of 1,021,250 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 September 27, 2020 can be summarized as follows: Number of Shares Weighted Weighted Average Remaining Contractual Stock options outstanding at December 29, 2019 722,481 $ 8.45 7.7 Grants - $ - - Forfeited (158,284 ) $ 7.98 8.0 Expired - $ - - Stock options outstanding at September 27, 2020 564,197 $ 8.58 7.7 Stock options exercisable at September 27, 2020 289,337 $ 9.58 7.5 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 $45,000 and $61,000 during the thirteen and thirty-nine weeks ended September 27, 2020, respectively. The Company recognized share-based compensation expense in the amount of $59,000 and $218,000 during the thirteen and thirty-nine weeks ended September 29, 2019, respectively. As of September 27, 2020, there remains $32,000 of share-based compensation expense relating to non-vested grants, which will be recognized over the remaining vesting period, subject to future forfeitures. |
Warrants
Warrants | 9 Months Ended |
Sep. 27, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Warrants | Note 15. WARRANTS Warrant Repurchases On July 30, 2020, the Company entered into an agreement (the “Lender Warrant Purchase Agreement”) to reacquire for $249,500, warrants that had been issued on July 3, 2018 and which granted the right 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 former $16 million credit facility with FB Lending, LLC, which was repaid on January 29, 2019. The Lender Warrant was valued at $592,000 at the date of grant and may have been exercised at any time beginning on the issue date and ending on July 3, 2023. On August 11, 2020, the Company purchased a portion of the outstanding Placement Agent Warrants for $12,626. The reacquired Placement Agent Warrants were issued on July 3, 2018 and granted the right to purchase 25,787 shares of the Company’s common stock at an exercise price of $7.20 per share. As of September 27, 2020, there were remaining outstanding Placement Agent Warrants granting rights to purchase 40,904 shares of the Company’s common stock at an exercise price of $7.20 per share. Between August 19, 2020 and September 17, 2020, the Company engaged in several open market purchases of the 2020 Series B Offering Warrants. For payment of total consideration of $67,894, the Company acquired warrants which had been issued on July 16, 2020 and which granted the right to purchase a total of 51,627 shares of the Company’s common stock at an exercise price of $5.00 per share. As a result of these transactions, the remaining outstanding 2020 Series B Offering Warrants grant rights to purchase 2,132,573 shares of the Company’s common stock, beginning on the earlier of one year from the date of issuance or the consummation of a consolidation, merger or other similar business combination transaction involving the Company and its parent company, FCCG. Warrant Exchange In connection with the July 13, 2020 Offering of 8.25% Series B Cumulative Preferred Stock, the Company entered into agreements with certain holders of the Original Series B Preferred to exchange the 34,224 outstanding Series B Warrants for 285,200 new Series B Offering Warrants valued at $292,000, pursuant to Warrant Exchange Agreements, in consideration of their consent to amend and restate the terms of the Series B Cumulative Preferred Stock. As a result of the warrant exchange the Company recognized a loss of $271,000. (See Note 11) The original Series B Warrants had been issued between October 3, 2019 and December 29, 2019, in connection with the sale of Original Series B Preferred and granted the right to purchase 34,284 shares of the Company’s common stock at an exercise price of $8.50 per share, exercisable for a period of five years from October 3, 2019. Outstanding Warrants As of September 27, 2020, the Company had 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 common 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 11). 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 11). 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 40,904 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 10). The remaining Placement Agent Warrants had been valued at $48,000 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 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. 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, to purchase 60 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. These warrants have not yet been presented by the holders for exchange with 2020 Series B Offering Warrants (See Note 11). ● Warrants issued on July 16, 2020, in connection with Series B Preferred Stock Offering (See Note 11), to purchase 2,132,573 shares of the Company’s common stock at an exercise price of $5.00 per share (the “2020 Series B Offering Warrants”), exercisable beginning on the earlier of one year from the date of issuance or the consummation of a consolidation, merger or other similar business combination transaction involving the Company (or any of its subsidiaries) and its parent company, FCCG, and will expire on July 16, 2025. The Series B Offering Warrants were valued at $2,162,000 at the date of grant. ● Warrants issued on July 16, 2020, to purchase 2020 Series B Offering Warrants, which would grant the holder the right to purchase 18,990 shares of the Company’s common stock at an exercise price of $5.00 per share (the “2020 Series B Offering Warrants”), exercisable beginning on the earlier of one year from the date of issuance or the consummation of a consolidation, merger or other similar business combination transaction involving the Company (or any of its subsidiaries) and its parent company, FCCG, and will expire on July 16, 2025. The exercise price to purchase the 2020 Series B Offering Warrant is $0.01 per underlying share of common stock. These warrants were valued at $64,000 at the date of grant. The Company’s warrant activity for the thirteen weeks ended September 27, 2020 is as follows: Number of Weighted Weighted Warrants outstanding at December 29, 2019 2,091,652 $ 3.57 3.6 Grants 2,203,190 $ 4.96 4.8 Forfeited (1,788,646 ) $ 2.51 3.8 Warrants outstanding at September 27, 2020 2,506,196 $ 5.58 4.5 Warrants exercisable at September 27, 2020 307,758 $ 9.57 2.6 The range of assumptions used to establish the value of the warrants using 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 In addition to the warrants to purchase common stock described above, the Company has also granted the following warrants on other securities to the underwriters in connection with the Series B Preferred Stock Offering (See Note 11): ● Warrants issued on July 16, 2020, to purchase 3,600 shares of the Company’s Series B Preferred Stock at an exercise price of $24.95 per share, exercisable beginning on the earlier of one year from the date of issuance or the consummation of a consolidation, merger or other similar business combination transaction involving the Company (or any of its subsidiaries) and its parent company, FCCG, and will expire on July 16, 2025. The Series B Offering Warrants were valued at $2,000 at the date of grant. |
Dividends on Common Stock
Dividends on Common Stock | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
Dividends on Common Stock | Note 16. DIVIDENDS ON COMMON STOCK Our Board of Directors did not declare a dividend on common stock during the thirty-nine weeks ended September 27, 2020. 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 | 9 Months Ended |
Sep. 27, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 17. Commitments and Contingencies Litigation Eric Rojany, et al. v. FAT Brands Inc., et al. Daniel Alden, et al. v. FAT Brands Inc., et al. On June 7, 2018, 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 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 | 9 Months Ended |
Sep. 27, 2020 | |
Geographic Information And Major Franchisees | |
Geographic Information and Major Franchisees | Note 18. geographic information AND MAJOR FRANCHISEES R Thirteen Weeks Ended Thirty-nine Weeks Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 United States $ 3,500 $ 5,364 $ 9,773 $ 14,435 Other countries 589 1,120 1,846 2,818 Total revenues $ 4,089 $ 6,484 $ 11,619 $ 17,253 Revenues are shown based on the geographic location of our franchisees’ restaurants. All our assets are located in the United States. During the thirty-nine weeks ended September 27, 2020 and September 29, 2019, no individual franchisee accounted for more than 10% of the Company’s revenues. |
Operating Segments
Operating Segments | 9 Months Ended |
Sep. 27, 2020 | |
Segment Reporting [Abstract] | |
Operating Segments | NOTE 19. OPERATING SEGMENTS With minor exceptions, the Company’s operations are comprised exclusively of franchising a growing portfolio of restaurant brands. This growth strategy is centered on expanding the footprint of existing brands and acquiring new brands through a centralized management organization which provides substantially all executive leadership, marketing, training and accounting services. While there are variations in the brands, the nature of the Company’s business is fairly consistent across its portfolio. Consequently, management assesses the progress of the Company’s operations as a whole, rather than by brand or location, which become more significant as the number of brands has increased. 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 | 9 Months Ended |
Sep. 27, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 20. SUBSEQUENT EVENTS Pursuant to FASB ASC 855, Management has evaluated all events and transactions that occurred from September 27, 2020 through the date of issuance of these financial statements. During this period, the Company did not have any significant subsequent events. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of operations rd 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. As part of these 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 and classifies the operational activities as refranchising gains or losses and the assets and associated liabilities as held-for sale. |
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 September 27, 2020, the Company had uninsured deposits in the amount of $13,009,000. As of December 29, 2019, the Company had no accounts with uninsured balances. |
Restricted Cash | Restricted Cash – |
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 |
Fair Value Measurements | Fair Value Measurements - ● Level 1 inputs are quoted prices in active markets for identical assets or liabilities. ● Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities. ● Level 3 inputs are unobservable and reflect the Company’s own assumptions. Other than the derivative liability, the Company does not have a material amount of financial assets or liabilities that are required to be measured at fair value on a recurring basis under U.S. GAAP (See Note 11). None of the Company’s non-financial assets or non-financial liabilities are required to be measured at fair value on a recurring basis. Assets recognized or disclosed at fair value in the consolidated financial statements on a nonrecurring basis include items such as property and equipment, operating lease assets, goodwill and other intangible assets, which are measured at fair value if determined to be impaired. The Company has not elected to use fair value measurement for any assets or liabilities for which fair value measurement is not presently required by U.S. GAAP. However, the Company believes the fair values of cash equivalents, restricted cash, accounts receivable, assets held for sale and accounts payable approximate their carrying amounts. |
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 between franchisees. 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, at which point the 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 16). Unless otherwise noted, earnings per share and other share-based information for 2020 and 2019 have been adjusted retrospectively to reflect the impact of that 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 related to (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. A cumulative correction was recorded to additional paid in capital during the first quarter of 2020 in the amount of $90,000. 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 effective December 31, 2018. 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 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: |
Acquisitions and Significant _2
Acquisitions and Significant Transactions (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Johnny Rockets [Member] | |
Schedule of Allocation of Tangible and Intangible Assets Acquired | The initial allocation of the consideration to the preliminary valuation of net tangible and intangible assets acquired is presented in the table below (in thousands): Cash $ 894 Accounts receivable 1,193 Assets held for sale 11,126 Goodwill 9,691 Other intangible assets 26,400 Other assets 412 Accounts payable (1,169 ) Accrued expenses (2,486 ) Deferred franchise fees (4,988 ) Deferred tax liability (6,032 ) Operating lease liability (10,028 ) Other liabilities (175 ) Total net identifiable assets $ 24,838 |
Schedule of Proforma Revenue and Net (Loss) Income | This proforma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition of Johnny Rockets occurred on this date nor does it purport to predict the results of operations for future periods. Thirteen Weeks Ended Thirty-nine Weeks Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Revenues $ 5,722 $ 11,039 $ 17,209 $ 30,004 Net (loss) income $ (702 ) $ 2,771 $ (8,694 ) $ 3,604 |
Elevation Burger [Member] | |
Schedule of Allocation of Tangible and Intangible Assets Acquired | The allocation of the consideration to the valuation of net tangible and intangible assets acquired is presented in the table below (in thousands): Cash $ 10 Goodwill 521 Other intangible assets 7,140 Other assets 558 Current liabilities (91 ) Deferred franchise fees (758 ) Other liabilities (187 ) Total net identifiable assets $ 7,193 |
Refranchising (Tables)
Refranchising (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
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 consolidated balance sheet as of September 27, 2020 and December 29, 2019 (in thousands): September 27, 2020 December 29, 2019 Property and equipment $ 1,106 $ 1,912 Operating lease right of use assets 9,942 3,216 Total $ 11,048 $ 5,128 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill consists of the following (in thousands): September 27, 2020 December 29, 2019 Goodwill: Fatburger $ 529 $ 529 Buffalo’s 5,365 5,365 Hurricane 2,772 2,772 Ponderosa and Bonanza - 1,462 Yalla 263 263 Johnny Rockets 9,691 - Elevation Burger 521 521 Total goodwill $ 19,141 $ 10,912 |
Schedule of Intangible Assets | 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): September 27, 2020 December 29, 2019 Trademarks: Fatburger $ 2,135 $ 2,135 Buffalo’s 27 27 Hurricane 6,840 6,840 Ponderosa and Bonanza 5,518 7,230 Yalla 777 1,530 Johnny Rockets 19,900 - Elevation Burger 4,690 4,690 Total trademarks 39,887 22,452 Franchise agreements: Hurricane – cost 4,180 4,180 Hurricane – accumulated amortization (723 ) (482 ) Ponderosa and Bonanza – cost 1,640 1,640 Ponderosa and Bonanza – accumulated amortization (326 ) (243 ) Johnny Rockets – cost 6,500 - Johnny Rockets – accumulated amortization (12 ) - Elevation Burger – cost 2,450 2,450 Elevation Burger – accumulated amortization (637 ) (263 ) Total franchise agreements 13,072 7,282 Total other intangible assets $ 52,959 $ 29,734 |
Schedule of Future Amortization | The scheduled future amortization of the Company’s capitalized franchise agreements is as follows (in thousands): Fiscal year: 2020 $ 381 2021 1,523 2022 1,523 2023 1,523 2024 1,523 Thereafter 6,599 Total $ 13,072 |
Deferred Income (Tables)
Deferred Income (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Contract with Customer, Liability [Abstract] | |
Schedule of Deferred Income | Deferred income is as follows (in thousands): September 27, 2020 December 29, 2019 Deferred franchise fees $ 9,890 $ 5,417 Deferred royalties 275 422 Deferred vendor incentives 519 303 Total $ 10,684 $ 6,142 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
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): September 27, 2020 December 29, 2019 Deferred tax (liabilities) assets Deferred income $ 1,372 $ 1,353 Reserves and accruals 218 208 Intangibles (6,420 ) (614 ) Deferred state income tax (19 ) (91 ) Tax credits 313 244 Share-based compensation 193 192 Property and equipment (125 ) (137 ) Net operating loss carryforwards 2,069 894 Other 32 (17 ) Total $ (2,367 ) $ 2,032 |
Schedule of Components of the Income Tax (Benefit) Expense | Components of the income tax (benefit) expense are as follows (in thousands): Thirty-nine Weeks Thirty-nine Weeks Current Federal $ (118 ) $ 116 State 33 30 Foreign 313 30 228 176 Deferred Federal (1,359 ) 139 State (274 ) (62 ) (1,633 ) 77 Total income tax (benefit) expense $ (1,405 ) $ 253 |
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): Thirty-nine Weeks Thirty-nine Weeks September 27, 2020 September 29, 2019 Tax benefit at statutory rate $ (1,805 ) $ 40 State and local income taxes (190 ) - Foreign taxes 313 30 Tax credits (92 ) 112 Dividends on preferred stock 123 51 Impairment of goodwill 266 - Other (20 ) 20 Total income tax (benefit) expense $ (1,405 ) $ 253 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
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): September 27, 2020 December 29, 2019 Right of use assets $ 14,650 $ 4,076 Lease liabilities $ 14,842 $ 4,206 |
Schedule of Contractual Future Maturities of Operating Lease Liabilities | The contractual future maturities of the Company’s operating lease liabilities as of September 27, 2020, including anticipated lease extensions, are as follows (in thousands): Fiscal year: 2020 $ 676 2021 2,951 2022 3,124 2023 3,227 2024 3,137 Thereafter 7,645 Total lease payments 20,760 Less imputed interest (5,918 ) Total $ 14,842 |
Summary of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information for the thirty-nine weeks ended September 27, 2020 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 $ 633 Operating lease right of use assets obtained in exchange for new lease obligations: Operating lease liabilities $ 12,168 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Securitization Notes [Member] | |
Schedule of Securitization of Notes | The Securitization Notes issued in March 2020 consist of the following (the “Series AB Notes”): Note Public Seniority Issue Amount Coupon First Call Date Final Legal 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 |
Series M-2 Notes [Member] | |
Schedule of Securitization of Notes | The Series M-2 Notes consist of the following: Note Seniority Issue Amount Coupon First Call Date Final Legal Maturity Date M-2 Subordinated $ 40,000,000 9.75 % 4/27/2021 4/27/2026 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
Schedule of Stock Option Activity | The Company’s stock option activity for fiscal year ended September 27, 2020 can be summarized as follows: Number of Shares Weighted Weighted Average Remaining Contractual Stock options outstanding at December 29, 2019 722,481 $ 8.45 7.7 Grants - $ - - Forfeited (158,284 ) $ 7.98 8.0 Expired - $ - - Stock options outstanding at September 27, 2020 564,197 $ 8.58 7.7 Stock options exercisable at September 27, 2020 289,337 $ 9.58 7.5 |
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) | 9 Months Ended |
Sep. 27, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Warrant Activity | The Company’s warrant activity for the thirteen weeks ended September 27, 2020 is as follows: Number of Weighted Weighted Warrants outstanding at December 29, 2019 2,091,652 $ 3.57 3.6 Grants 2,203,190 $ 4.96 4.8 Forfeited (1,788,646 ) $ 2.51 3.8 Warrants outstanding at September 27, 2020 2,506,196 $ 5.58 4.5 Warrants exercisable at September 27, 2020 307,758 $ 9.57 2.6 |
Schedule of Assumptions Used for Stock-based Compensation, Warrants | The range of assumptions used to establish the value of the warrants using 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) | 9 Months Ended |
Sep. 27, 2020 | |
Geographic Information And Major Franchisees | |
Schedule of Revenues by Geographic Area | R Thirteen Weeks Ended Thirty-nine Weeks Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 United States $ 3,500 $ 5,364 $ 9,773 $ 14,435 Other countries 589 1,120 1,846 2,818 Total revenues $ 4,089 $ 6,484 $ 11,619 $ 17,253 |
Organization and Relationships
Organization and Relationships (Details Narrative) | Sep. 21, 2020USD ($) | Jul. 16, 2020USD ($)$ / sharesshares | Jul. 13, 2020$ / sharesshares | Mar. 06, 2020USD ($) | Oct. 20, 2017 | Sep. 27, 2020USD ($) | Sep. 29, 2019USD ($) | Sep. 27, 2020USD ($)Integer | Sep. 29, 2019USD ($) |
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 "Initial Public Offering"). The Company's common stock trades on the Nasdaq Capital Market under the symbol "FAT." As of September 27, 2020, 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 nine restaurant brands: Fatburger, Johnny Rockets, Buffalo's Cafe, Buffalo's Express, Hurricane Grill & Wings, Ponderosa Steakhouses, Bonanza Steakhouses, Yalla Mediterranean and Elevation Burger. Combined, as of September 27, 2020, these brands franchise over 700 units worldwide and have more than 200 additional units under development | ||||||||
Number of franchise brands | Integer | 9 | ||||||||
Number of franchise units worldwide | Integer | 700 | ||||||||
Number of franchises minimum, under development | Integer | 200 | ||||||||
(Loss) income from operations | $ (793,000) | $ 2,813,000 | $ (7,161,000) | $ 5,703,000 | |||||
Net (loss) income | (568,000) | $ 1,154,000 | (7,189,000) | $ (64,000) | |||||
Series B Preferred Stock [Member] | |||||||||
Number of warrants to purchase preferred stock | shares | 3,600 | ||||||||
Warrants purchase price per share | $ / shares | $ 24.95 | ||||||||
Underwriting Agreement [Member] | |||||||||
Net proceeds offering amount | $ 8,021,000 | ||||||||
Underwriting and offering costs | $ 979,000 | ||||||||
Underwriting Agreement [Member] | 2020 Series B Warrants [Member] | |||||||||
Number of warrants to purchase preferred stock | shares | 1,800,000 | ||||||||
Warrants purchase price per share | $ / shares | $ 5 | ||||||||
Underwriting Agreement [Member] | Series B Preferred Stock [Member] | |||||||||
Number of shares issued | shares | 360,000 | ||||||||
Preferred stock percentage | 8.25% | ||||||||
Johnny Rockets [Member] | |||||||||
Net (loss) income | $ 19,000 | 19,000 | 19,000 | ||||||
Securitization Notes [Member] | |||||||||
Debt outstanding amount | 80,000,000 | ||||||||
Proceeds from issuance of secured debt | 35,241,000 | $ 37,314,000 | |||||||
Debt face amount | 40,000,000 | 40,000,000 | 72,791,000 | 72,791,000 | |||||
Debt discount | 3,200,000 | 246,000 | 3,412,000 | 3,412,000 | |||||
Debt offering costs | 1,559,000 | 2,440,000 | 3,797,000 | 3,797,000 | |||||
Repayment of secured debt | $ 26,771,000 | ||||||||
Securitization Notes [Member] | Johnny Rockets [Member] | |||||||||
Proceeds from issuance of secured debt | $ 24,838,000 | ||||||||
PPP Loans [Member] | |||||||||
Debt outstanding amount | 1,180,000 | $ 1,180,000 | |||||||
Loan proceeds | $ 1,532,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | Feb. 07, 2019 | Mar. 29, 2020 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 |
Accounts receivable, net of allowance for doubtful accounts | $ 4,453 | $ 4,144 | |||
FDIC insured amount | 250 | ||||
Uninsured balance | 13,009 | ||||
Restricted cash | 1,758 | ||||
Non-current restricted cash | 400 | ||||
Accounts receivable, allowance for doubtful accounts | $ 670 | $ 595 | |||
Number of common stock share issued | 245,376 | ||||
Additional paid in capital | $ 90 | ||||
Domestic Versus 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 store 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. | ||||
Minimum [Member] | |||||
Rate for trade notes | 6.00% | ||||
Store opening fees | $ 35 | ||||
Royalty fee percentage | 0.75% | ||||
Maximum [Member] | |||||
Rate for trade notes | 7.50% | ||||
Store opening fees | $ 60 | ||||
Royalty fee percentage | 6.00% | ||||
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. | ||||
Lower Rate Range [Member] | |||||
Rate for trade notes | 6.00% | ||||
Upper Rate Range [Member] | |||||
Rate for trade notes | 7.50% | ||||
Lower Range [Member] | |||||
Estimated useful lives of intangible assets | 9 years | ||||
Upper Range [Member] | |||||
Estimated useful lives of intangible assets | 25 years | ||||
Accounts Receivable [Member] | No Customer [Member] | |||||
Concentration risk, percentage | 10.00% | ||||
No Customers [Member] | |||||
Accounts receivable, net of allowance for doubtful accounts | $ 4,453 | ||||
Two Customers [Member] | Accounts Receivable [Member] | |||||
Concentration risk, percentage | 20.00% |
Acquisitions and Significant _3
Acquisitions and Significant Transactions (Details Narrative) | Sep. 21, 2020USD ($) | Jun. 19, 2019USD ($)Integer$ / sharesshares | Sep. 27, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 29, 2019USD ($) | Sep. 27, 2020USD ($) | Sep. 29, 2019USD ($) | Dec. 29, 2019USD ($) |
Fees and expensesrelated to acquisition | $ (566,000) | $ (56,000) | $ (627,000) | $ (157,000) | ||||
Revenues | 4,089,000 | $ 6,484,000 | 6,484,000 | 11,619,000 | 17,253,000 | |||
Net income (loss) | $ (568,000) | $ 1,154,000 | $ (7,189,000) | $ (64,000) | ||||
Notes receivable | $ 250,000 | |||||||
Maximum [Member] | ||||||||
Debt, interest rate percentage | 7.50% | 7.50% | ||||||
Elevation Note [Member] | ||||||||
Debt, interest rate percentage | 11.90% | 11.90% | ||||||
Elevation Burger [Member] | Elevation Note [Member] | ||||||||
Principal amount of note | $ 7,510,000 | |||||||
Debt, interest rate percentage | 6.00% | |||||||
Maturity date | Jul. 31, 2026 | |||||||
Share price | $ / shares | $ 12 | |||||||
Johnny Rockets [Member] | ||||||||
Purchase price of business | $ 24,800,000 | |||||||
Fees and expensesrelated to acquisition | 574,000 | |||||||
Fair value of the net assets and liabilities acquired by the Company | 24,838,000 | |||||||
Revenues | $ 134,000 | $ 134,000 | ||||||
Net income (loss) | $ 19,000 | 19,000 | 19,000 | |||||
Elevation Burger [Member] | ||||||||
Purchase price of business | $ 10,050,000 | |||||||
Fair value of the net assets and liabilities acquired by the Company | 7,193,000 | |||||||
Payment of cash to acquire business | $ 50,000 | |||||||
Number of warrants to purchase common stock | shares | 46,875 | |||||||
Number of locations | Integer | 44 | |||||||
Exercise price per share | $ / shares | $ 8 | |||||||
Principal amount of note | $ 7,509,816 | |||||||
Fair market value of contingent consideration | 531,000 | |||||||
Purchase price payable amount | $ 704,000 | $ 704,000 | $ 633,000 | |||||
Effective accretion interest rate | 18.00% | 18.00% | ||||||
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 | $ 1,809,000 | $ 1,814,000 | |||||
Debt, interest rate percentage | 6.00% | |||||||
Maturity date | Aug. 31, 2026 | |||||||
Share price | $ / shares | $ 12 | |||||||
Notes receivable | $ 2,300,000 |
Acquisitions and Significant _4
Acquisitions and Significant Transactions - Schedule of Allocation of Tangible and Intangible Assets Acquired (Details) - USD ($) | Sep. 27, 2020 | Sep. 21, 2020 | Dec. 29, 2019 | Jun. 19, 2019 |
Goodwill | $ 19,141,000 | $ 10,912,000 | ||
Johnny Rockets [Member] | ||||
Cash | $ 894,000 | |||
Accounts receivable | 1,193,000 | |||
Assets held for sale | 11,126,000 | |||
Goodwill | 9,691,000 | |||
Other intangible assets | 26,400,000 | |||
Other assets | 412,000 | |||
Accounts payable | (1,169,000) | |||
Accrued expenses | (2,486,000) | |||
Current liabilities | ||||
Deferred franchise fees | (4,988,000) | |||
Deferred tax liability | (6,032,000) | |||
Operating lease liability | (10,028,000) | |||
Other liabilities | (175,000) | |||
Total net identifiable assets | $ 24,838,000 | |||
Elevation Burger [Member] | ||||
Cash | $ 10,000 | |||
Accounts receivable | ||||
Assets held for sale | ||||
Goodwill | 521,000 | |||
Other intangible assets | 7,140,000 | |||
Other assets | 558,000 | |||
Accounts payable | ||||
Accrued expenses | ||||
Current liabilities | (91,000) | |||
Deferred franchise fees | (758,000) | |||
Deferred tax liability | ||||
Operating lease liability | ||||
Other liabilities | (187,000) | |||
Total net identifiable assets | $ 7,193,000 |
Acquisitions and Significant _5
Acquisitions and Significant Transactions - Schedule of Proforma Revenue and Net (Loss) Income (Details) - Johnny Rockets [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Total revenues | $ 5,722 | $ 11,039 | $ 17,209 | $ 30,004 |
Net (loss) income | $ (702) | $ 2,771 | $ (8,694) | $ 3,604 |
Refranchising (Details Narrativ
Refranchising (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 27, 2020 | Sep. 30, 2019 | Sep. 27, 2020 | Sep. 30, 2019 | Dec. 29, 2019 | |
Refranchising | |||||
Operating lease liabilities related to the assets classified as held for sale | $ 9,959 | $ 9,959 | $ 3,325 | ||
Refranchising operations incurred losses | $ 325 | 1,869 | |||
Gain on refranchising operations | $ 902 | 560 | $ 851 | ||
Operating expenses,net of food sales | 1,114 | 1,398 | |||
Loss on refranchising operations | 615 | ||||
Gain on sale of refranchising business | $ 700 | $ 2,249 |
Refranchising - Schedule of Rem
Refranchising - Schedule of Remaining Assets Classified as Held for Sale (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Refranchising | ||
Property and equipment | $ 1,106 | $ 1,912 |
Operating lease right of use assets | 9,942 | 3,216 |
Total | $ 11,048 | $ 5,128 |
Notes Receivable (Details Narra
Notes Receivable (Details Narrative) - USD ($) | Jun. 19, 2019 | Sep. 27, 2020 | Sep. 30, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 |
Trade notes receivable | $ 250,000 | |||||
Trade notes receivable, reserves | 123,000 | |||||
Interest income on notes receivable | $ 52,000 | $ 55,000 | $ 158,000 | $ 59,000 | ||
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 | 1,809,000 | 1,814,000 | |||
Debt discount | $ 397,000 | $ 288,000 | $ 288,000 | $ 352,000 | ||
Minimum [Member] | ||||||
Debt, interest rate percentage | 6.00% | 6.00% | ||||
Maximum [Member] | ||||||
Debt, interest rate percentage | 7.50% | 7.50% |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 27, 2020 | Sep. 29, 2019 | |
Goodwill impairment charges | $ 266 | |
Ponderosa and Bonanza Brands [Member] | ||
Goodwill impairment charges | 1,462 | |
Tradename impairment charges | $ 2,465 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Total goodwill | $ 19,141 | $ 10,912 |
Fatburger [Member] | ||
Total goodwill | 529 | 529 |
Buffalo's [Member] | ||
Total goodwill | 5,365 | 5,365 |
Hurricane [Member] | ||
Total goodwill | 2,772 | 2,772 |
Ponderosa and Bonanza [Member] | ||
Total goodwill | 1,462 | |
Yalla [Member] | ||
Total goodwill | 263 | 263 |
Johnny Rockets [Member] | ||
Total goodwill | 9,691 | |
Elevation Burger [Member] | ||
Total goodwill | $ 521 | $ 521 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Total trademarks | $ 39,887 | $ 22,452 |
Total franchise agreements | 13,072 | 7,282 |
Total Other Intangible Assets | 52,959 | 29,734 |
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 | (723) | (482) |
Ponderosa and Bonanza [Member] | ||
Total trademarks | 5,518 | 7,230 |
Ponderosa and Bonanza [Member] | Franchise Agreements [Member] | ||
Cost | 1,640 | 1,640 |
Accumulated amortization | (326) | (243) |
Yalla [Member] | ||
Total trademarks | 777 | 1,530 |
Johnny Rockets [Member] | ||
Total trademarks | 19,900 | |
Johnny Rockets [Member] | Franchise Agreements [Member] | ||
Cost | 6,500 | |
Accumulated amortization | (12) | |
Elevation Burger [Member] | ||
Total trademarks | 4,690 | 4,690 |
Elevation Burger [Member] | Franchise Agreements [Member] | ||
Cost | 2,450 | 2,450 |
Accumulated amortization | $ (637) | $ (263) |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Schedule of Future Amortization (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 381 | |
2021 | 1,523 | |
2022 | 1,523 | |
2023 | 1,523 | |
2024 | 1,523 | |
Thereafter | 6,599 | |
Total | $ 13,072 | $ 7,282 |
Deferred Income - Schedule of D
Deferred Income - Schedule of Deferred Income (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Contract with Customer, Liability [Abstract] | ||
Deferred franchise fees | $ 9,890 | $ 5,417 |
Deferred royalties | 275 | 422 |
Deferred advertising revenue | 519 | 303 |
Total | $ 10,684 | $ 6,142 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | Sep. 27, 2020 | Sep. 29, 2019 |
Fog Cutter Capital Group Inc [Member] | ||
Due from related party | $ 33,382 | |
Tax Sharing Agreement [Member] | ||
Due from related party | $ 158 | $ 30 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Income Tax Disclosure [Abstract] | ||
Deferred income | $ 1,372 | $ 1,353 |
Reserves and accruals | 218 | 208 |
Intangibles | (6,420) | (614) |
Deferred state income tax | (19) | (91) |
Tax credits | 313 | 244 |
Share-based compensation | 193 | 192 |
Property and equipment | (125) | (137) |
Net operating loss carryforwards | 2,069 | 894 |
Other | (32) | (17) |
Total | $ (2,367) | $ 2,032 |
Income Taxes - Schedule of Co_2
Income Taxes - Schedule of Components of the Income Tax (Benefit) Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Current: Federal | $ (118) | $ 116 | ||
Current: State | 33 | 30 | ||
Current: Foreign | 313 | 30 | ||
Current income tax expense (benefit), total | 228 | 176 | ||
Deferred: Federal | (1,359) | 139 | ||
Deferred: State | (274) | (62) | ||
Deferred: income tax expense (benefit), total | (1,633) | 77 | ||
Total income tax (benefit) expense | $ (19) | $ (372) | $ (1,405) | $ 253 |
Income Taxes - Schedule of Stat
Income Taxes - Schedule of Statutory Income Tax Rate to Pretax Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Tax benefit at statutory rate | $ (1,805) | $ 40 | ||
State and local income taxes | (190) | |||
Foreign taxes | 313 | 30 | ||
Tax credits | (92) | 112 | ||
Dividends on preferred stock | 123 | 51 | ||
Impairment of goodwill | 266 | |||
Other | (20) | 20 | ||
Total income tax (benefit) expense | $ (19) | $ (372) | $ (1,405) | $ 253 |
Leases (Details Narrative)
Leases (Details Narrative) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 27, 2020USD ($)Integer | Sep. 29, 2019USD ($) | |
Number of leased properties | Integer | 15 | |||
Lease expense | $ | $ 372 | $ 355 | $ 1,092 | $ 1,089 |
Weighted average remaining lease term | 7 years 9 months 18 days | 7 years 9 months 18 days | ||
Weighted average discount rate | 15.90% | 15.90% | ||
Minimum [Member] | ||||
Leases remaining term | 3 months | 3 months | ||
Prevailing incremental borrowing rate | 8.70% | 8.70% | ||
Maximum [Member] | ||||
Leases remaining term | 8 years | 8 years | ||
Prevailing incremental borrowing rate | 9.10% | 9.10% |
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 | Sep. 27, 2020 | Dec. 29, 2019 |
Right of use assets | $ 4,708 | $ 860 |
Corporate Offices and For Certain Restaurant Properties [Member] | ||
Right of use assets | 14,650 | 4,076 |
Lease liabilities | $ 14,842 | $ 4,206 |
Leases - Schedule of Contractua
Leases - Schedule of Contractual Future Maturities of Operating Lease Liabilities (Details) - Corporate Offices and For Certain Restaurant Properties [Member] - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
2020 | $ 676 | |
2021 | 2,951 | |
2022 | 3,124 | |
2023 | 3,227 | |
2024 | 3,137 | |
Thereafter | 7,645 | |
Total lease payments | 20,760 | |
Less imputed interest | (5,918) | |
Total | $ 14,842 | $ 4,206 |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Cash Flow Information Related to Leases (Details) - Corporate Offices and For Certain Restaurant Properties [Member] $ in Thousands | 9 Months Ended |
Sep. 27, 2020USD ($) | |
Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases | $ 633 |
Operating lease right of use assets obtained in exchange for new lease obligations: Operating lease liabilities | $ 12,168 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Sep. 21, 2020 | Mar. 06, 2020 | Jun. 19, 2019 | Jan. 29, 2019 | Jun. 30, 2021 | Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Jun. 29, 2019 |
Minimum [Member] | ||||||||||
Debt, interest rate percentage | 6.00% | 6.00% | ||||||||
Maximum [Member] | ||||||||||
Debt, interest rate percentage | 7.50% | 7.50% | ||||||||
Loan and Security Agreement [Member] | ||||||||||
Amortization of debt offering costs | $ 212,000 | |||||||||
Interest expense | $ 1,812,000 | 1,783,000 | $ 3,608,000 | |||||||
Increase in borrowings | $ 3,500,000 | |||||||||
Debt, penalties and fees | 650,000 | |||||||||
Loan and Security Agreement [Member] | Lion Fund, L.P. and The Lion Fund II, L.P [Member] | ||||||||||
Debt instrument, maturity date | Jun. 30, 2020 | |||||||||
Proceeds from loan | $ 20,000,000 | |||||||||
Debt, interest rate percentage | 20.00% | |||||||||
Number of warrants to purchase common stock | 1,167,404 | |||||||||
Exercise price per share | $ 0.01 | |||||||||
Loan and Security Agreement [Member] | Lion Fund, L.P. and The Lion Fund II, L.P [Member] | FB Lending, LLC [Member] | ||||||||||
Repayment of debt | $ 16,000,000 | |||||||||
Original beginning warrant exercise date | Jun. 30, 2020 | |||||||||
Lion Loan and Security Agreement [Member] | ||||||||||
Debt principle amount | $ 24,000,000 | |||||||||
Repayment of debt | 26,771,000 | |||||||||
Accrued interest | 2,120,000 | |||||||||
Debt, penalties and fees | 651,000 | |||||||||
Securitization Notes [Member] | ||||||||||
Proceeds from issuance of debt | 37,314,000 | |||||||||
Debt principle amount | $ 40,000,000 | 40,000,000 | $ 72,791,000 | 72,791,000 | ||||||
Debt discount | 3,200,000 | 246,000 | 3,412,000 | 3,412,000 | ||||||
Debt offering costs | 1,559,000 | 2,440,000 | 3,797,000 | 3,797,000 | ||||||
Debt outstanding amount | 80,000,000 | |||||||||
Amortization of debt offering costs | 109,000 | 246,000 | ||||||||
Interest expense | 930,000 | 2,103,000 | ||||||||
Amortization of original issue discount | $ 21,000 | $ 33,000 | ||||||||
Effective interest rate percentage | 9.70% | 9.70% | ||||||||
Securitization Notes [Member] | Loan and Security Agreement [Member] | ||||||||||
Debt outstanding amount | $ 26,771,000 | |||||||||
Securitization Notes [Member] | Management Agreement [Member] | ||||||||||
Debt description | The Management Agreement provides for a management fee payable monthly by FAT Royalty to the Company in the amount of $200,000, subject to three percent (3%) annual increases (the "Management Fee"). The primary responsibilities of the manager are to perform certain franchising, distribution, intellectual property and operational functions on behalf of the Franchise Entities pursuant to the Management Agreement. | |||||||||
Series M-2 Notes [Member] | ||||||||||
Proceeds from issuance of debt | $ 35,241,000 | |||||||||
Debt principle amount | $ 40,000,000 | 40,000,000 | ||||||||
Amortization of debt discount | 3,200,000 | |||||||||
Amortization of debt offering costs | 1,559,000 | |||||||||
Series M-2 Notes [Member] | Forecast [Member] | ||||||||||
Debt principal payments | $ 200,000 | |||||||||
Debt instrument, maturity date | Apr. 27, 2026 | |||||||||
Series M-2 Notes [Member] | Minimum [Member] | ||||||||||
Proceeds from issuance of debt | 40,000,000 | |||||||||
Series A-2, B-2 and M-2 Notes [Member] | Maximum [Member] | ||||||||||
Proceeds from issuance of debt | $ 80,000,000 | |||||||||
Series A-2 Notes [Member] | Forecast [Member] | ||||||||||
Debt principal payments | $ 1,000,000 | |||||||||
Debt instrument, maturity date | Apr. 27, 2026 | |||||||||
Series B-2 Notes [Member] | Forecast [Member] | ||||||||||
Debt principal payments | $ 1,000,000 | |||||||||
Debt instrument, maturity date | Apr. 27, 2026 | |||||||||
Elevation Note [Member] | ||||||||||
Amortization of debt discount | 69,000 | 210,000 | ||||||||
Amortization of debt offering costs | 3,000 | 8,000 | ||||||||
Interest expense | $ 153,000 | $ 139,000 | $ 517,000 | $ 162,000 | ||||||
Debt, interest rate percentage | 11.90% | 11.90% | ||||||||
Elevation Note [Member] | Elevation Burger [Member] | ||||||||||
Debt discount | $ 1,295,000 | $ 940,000 | $ 940,000 | |||||||
Debt offering costs | 30,000 | 58,000 | 58,000 | |||||||
Debt outstanding amount | $ 6,185,000 | 5,849,000 | 5,849,000 | |||||||
Debt instrument, maturity date | Jul. 31, 2026 | |||||||||
Debt, interest rate percentage | 6.00% | |||||||||
Principal amount of note | $ 7,510,000 | |||||||||
Share price | $ 12 | |||||||||
PPP Loans [Member] | ||||||||||
Proceeds from issuance of debt | 1,532,000 | |||||||||
Debt outstanding amount | $ 1,180,000 | $ 1,180,000 | ||||||||
Debt description | Any unforgiven portion of the PPP Loans is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. | |||||||||
Debt, interest rate percentage | 1.00% | 1.00% |
Debt - Schedule of Securitizati
Debt - Schedule of Securitization of Notes (Details) - USD ($) $ in Thousands | Sep. 21, 2020 | Mar. 06, 2020 |
Securitization Note A-2 [Member] | ||
Public Rating | BB | |
Seniority | Senior | |
Issue Amount | $ 20,000 | |
Coupon | 6.50% | |
First Call Date | Apr. 27, 2021 | |
Final Legal Maturity Date | Apr. 27, 2026 | |
Securitization Note B-2 [Member] | ||
Public Rating | B | |
Seniority | Senior Subordinated | |
Issue Amount | $ 20,000 | |
Coupon | 9.00% | |
First Call Date | Apr. 27, 2021 | |
Final Legal Maturity Date | Apr. 27, 2026 | |
Securitization Note M-2 [Member] | ||
Seniority | Senior Subordinated | |
Issue Amount | $ 40,000 | |
Coupon | 9.75% | |
First Call Date | Apr. 27, 2021 | |
Final Legal Maturity Date | Apr. 27, 2026 |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) - USD ($) | Jul. 16, 2020 | Jul. 16, 2020 | Jul. 13, 2020 | Jul. 13, 2020 | Jun. 27, 2018 | Jun. 08, 2018 | Jun. 07, 2018 | Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Jul. 15, 2020 | Dec. 29, 2019 | Jul. 13, 2018 | Jul. 03, 2018 | Oct. 20, 2017 |
Preferred stock, shares outstanding | 663,127 | 663,127 | 0 | |||||||||||||
Preferred shares issued | 663,127 | 663,127 | 0 | |||||||||||||
Number of shares designated | 5,000,000 | 5,000,000 | 5,000,000 | |||||||||||||
Change in fair value of derivative liability | $ (374,000) | $ 887,000 | ||||||||||||||
Fog Cutter Capital Group Inc [Member] | ||||||||||||||||
Amount of related party debt | $ 950,000 | |||||||||||||||
Related party debt prior to conversion | 10,222,000 | |||||||||||||||
Underwriting Agreement [Member] | ||||||||||||||||
Issuance of public offering | $ 8,021,000 | |||||||||||||||
Subscription Agreement [Member] | ||||||||||||||||
Sale of units in transactions | 800 | |||||||||||||||
Number of stock sold value | $ 10,000 | |||||||||||||||
Issuance of public offering | $ 8,000,000 | |||||||||||||||
Note Exchange Agreement [Member] | ||||||||||||||||
Debt face amount | $ 30,000,000 | |||||||||||||||
Converted to preferred stock | $ 2,000,000 | |||||||||||||||
Number of shares converted | 200 | |||||||||||||||
Note Exchange Agreement [Member] | Fog Cutter Capital Group Inc [Member] | ||||||||||||||||
Amount of related party debt | $ 9,272,053 | |||||||||||||||
Note Exchange Agreement [Member] | Warrant [Member] | ||||||||||||||||
Warrants price per share | $ 7.83 | |||||||||||||||
Number of shares eligible for warrants | 25,530 | |||||||||||||||
Series B Cumulative Preferred Stock [Member] | ||||||||||||||||
Preferred stock, carrying shares | 60,000 | 60,000 | ||||||||||||||
Liquidation preference shares | $ 25 | $ 25 | ||||||||||||||
Carrying value of original preferred stock | $ 1,489,000 | $ 1,489,000 | ||||||||||||||
Preferred stock, carrying value | $ 1,500,000 | $ 1,500,000 | ||||||||||||||
Number of shares issued | 14,449 | |||||||||||||||
Number of shares designated | 57,140 | 57,140 | ||||||||||||||
Preferred shares outstanding value | $ 13,041,000 | $ 13,041,000 | ||||||||||||||
Series B Cumulative Preferred Stock [Member] | Underwriting Agreement [Member] | ||||||||||||||||
Sale of units in transactions | 360,000 | |||||||||||||||
Comprised of one share percentage | 8.25% | |||||||||||||||
Series B Cumulative Preferred Stock [Member] | First Anniversary and on Prior to the Second Anniversary [Member] | ||||||||||||||||
Redemption price per share | $ 27.50 | $ 27.50 | ||||||||||||||
Series B Cumulative Preferred Stock [Member] | Second Anniversary and on Prior to the Third Anniversary [Member] | ||||||||||||||||
Redemption price per share | 27 | 27 | ||||||||||||||
Series B Cumulative Preferred Stock [Member] | After the Third Anniversary [Member] | ||||||||||||||||
Redemption price per share | 26.50 | 26.50 | ||||||||||||||
Series B Cumulative Preferred Stock [Member] | After the Third Anniversary and On Prior to the Fourth Anniversary [Member] | ||||||||||||||||
Redemption price per share | 26 | 26 | ||||||||||||||
Series B Cumulative Preferred Stock [Member] | After Third Before Fifth Anniversery [Member] | ||||||||||||||||
Redemption price per share | 25 | 25 | ||||||||||||||
Series B Cumulative Preferred Stock [Member] | After the Fifth Anniversary [Member] | ||||||||||||||||
Redemption price per share | $ 25.50 | $ 25.50 | ||||||||||||||
2020 Series B Offering Warrants [Member] | ||||||||||||||||
Warrant Outstanding | 1,800,000 | 1,800,000 | ||||||||||||||
Additional underwriters overallotment shares | 99,000 | |||||||||||||||
Warrants price per share | $ 5 | $ 5 | ||||||||||||||
Underwriters discount | 8.00% | 8.00% | ||||||||||||||
Warrants outstanding value | $ 292,000 | $ 292,000 | ||||||||||||||
Series B Preferred Stock [Member] | ||||||||||||||||
Warrants price per share | $ 24.95 | $ 24.95 | ||||||||||||||
Preferred stock, shares outstanding | 663,127 | 663,127 | 57,140 | |||||||||||||
Preferred stock, carrying value | $ 13,041,000 | $ 13,041,000 | ||||||||||||||
Declared Dividend | 277,000 | 277,000 | ||||||||||||||
Number of shares designated | 850,000 | |||||||||||||||
Number of shares eligible for warrants | 3,600 | 3,600 | ||||||||||||||
Series B Preferred Stock [Member] | Underwriting Agreement [Member] | ||||||||||||||||
Number of shares issued | 360,000 | |||||||||||||||
Series B Warrants [Member] | ||||||||||||||||
Warrants price per share | $ 8.50 | |||||||||||||||
Number of warrant to purchase shares of common stock | 34,284 | |||||||||||||||
Original Series B Preferred Stock [Member] | ||||||||||||||||
Carrying value of original preferred stock | 1,112,000 | 1,112,000 | ||||||||||||||
Preferred stock, carrying value | $ 0 | 0 | ||||||||||||||
Agregate loss on exchange | $ 296,000 | |||||||||||||||
Preferred shares issued | 3,537 | 3,537 | ||||||||||||||
Accrued and outstanding dividend | $ 88,000 | |||||||||||||||
Preferred stock price per share | $ 25 | $ 25 | ||||||||||||||
Series A Fixed Rate Cumulative Preferred Stock [Member] | ||||||||||||||||
Preferred stock, shares outstanding | 15,000 | 15,000 | ||||||||||||||
Series A Fixed Rate Cumulative Preferred Stock [Member] | Subscription Agreement [Member] | ||||||||||||||||
Number of shares designated | 100 | |||||||||||||||
Series A Fixed Rate Cumulative Preferred Stock [Member] | Note Exchange Agreement [Member] | ||||||||||||||||
Number of shares converted | 20,000 | |||||||||||||||
Conversion price per share | $ 100 | |||||||||||||||
Series A Preferred Stock [Member] | ||||||||||||||||
Preferred stock, shares outstanding | 80,000 | 80,000 | ||||||||||||||
Carrying value of original preferred stock | $ 7,000 | $ 7,000 | ||||||||||||||
Agregate loss on exchange | 11,000 | |||||||||||||||
Accrued and outstanding dividend | 361,224 | |||||||||||||||
Number of shares designated | 100,000 | |||||||||||||||
Issuance of public offering | $ 2,000,000 | |||||||||||||||
Converted to preferred stock | $ 1,516,000 | $ 2,403,000 | ||||||||||||||
Redemption of shares | 80,000 | |||||||||||||||
Preferred shares outstanding value | 7,945,000 | 7,945,000 | ||||||||||||||
Interest expense | 350,000 | 354,000 | 1,056,000 | 1,062,000 | ||||||||||||
Accretion expense | $ 4,000 | 6,000 | 14,000 | 17,000 | ||||||||||||
Amortization of debt offering costs | 1,000 | $ 2,000 | 2,000 | |||||||||||||
Effective interest rate | 14.90% | 14.90% | ||||||||||||||
Fair value of derivative liability | $ 887,000 | $ 887,000 | ||||||||||||||
Change in fair value of derivative liability | $ 1,516,000 | |||||||||||||||
Series A Preferred Stock [Member] | Ridgewood Select Value Fund LP [Member] | ||||||||||||||||
Number of redeemed outstanding shares of preferred stock | 5,000 | 5,000 | ||||||||||||||
Series A Preferred Stock [Member] | FCCG [Member] | ||||||||||||||||
Number of exchanged outstanding shares of preferred stock | 15,000 | 15,000 | ||||||||||||||
Series A Preferred Stock [Member] | FCCG [Member] | Holders [Member] | ||||||||||||||||
Number of shares issued | 85,000 | |||||||||||||||
Series A Preferred Stock [Member] | Subscription Agreement [Member] | ||||||||||||||||
Number of shares issued | 80,000 | |||||||||||||||
Series A-1 Preferred Stock [Member] | ||||||||||||||||
Preferred stock, shares outstanding | 0 | 0 | ||||||||||||||
Carrying value of original preferred stock | $ 4,421,000 | $ 4,421,000 | ||||||||||||||
Preferred shares issued | 45,000 | |||||||||||||||
Value of Series B preferred stock exchanged for shares | 4,200,000 | 4,200,000 | ||||||||||||||
Aggregate gain on exchange | 221,000 | |||||||||||||||
Number of shares designated | 200,000 | |||||||||||||||
Interest expense | $ 36,000 | 78,000 | 87,000 | 232,000 | ||||||||||||
Accretion expense | 8,000 | 15,000 | 24,000 | |||||||||||||
Amortization of debt offering costs | $ 2,000 | $ 3,000 | $ 5,000 | |||||||||||||
Redemption value of preferred stock | $ 300,000 | |||||||||||||||
Series A Warrants [Member] | Subscription Agreement [Member] | ||||||||||||||||
Warrant Outstanding | 127 | |||||||||||||||
Warrants price per share | $ 7.83 | |||||||||||||||
Subscription Warrants [Member] | Subscription Agreement [Member] | ||||||||||||||||
Number of warrant to purchase shares of common stock | 102,125 | |||||||||||||||
Exchange Shares [Member] | Note Exchange Agreement [Member] | Common Stock | ||||||||||||||||
Amount of related party debt | $ 7,272,053 | |||||||||||||||
Number of shares converted | 1,010,420 | |||||||||||||||
Conversion price per share | $ 7.20 | |||||||||||||||
Series B Preferred Offering [Member] | ||||||||||||||||
Number of stock sold value | $ 8,021,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | Sep. 27, 2020 | Apr. 24, 2020 | Sep. 29, 2019 | Jul. 05, 2018 | Oct. 20, 2017 |
Maximum [Member] | |||||
Debt, interest rate percentage | 7.50% | ||||
Homestyle Dining LLC [Member] | |||||
Debt face amount | $ 4,000 | ||||
Debt, interest rate percentage | 15.00% | ||||
Outstanding balance receivable, including accrued and unpaid interest income | $ 5,350 | ||||
Intercompany Revolving Credit Agreement [Member] | |||||
Balance receivable | 33,382 | ||||
Intercompany Revolving Credit Agreement [Member] | FCCG [Member] | Subsequent To October 20, 2017 [Member] | Additional Intercompany advances [Member] | |||||
Debt, interest rate percentage | 10.00% | ||||
Intercompany Revolving Credit Agreement [Member] | FCCG [Member] | Intercompany Promissory Note [Member] | |||||
Debt face amount | $ 21,067 | $ 11,906 | |||
Intercompany Revolving Credit Agreement [Member] | FCCG [Member] | Intercompany Promissory Note [Member] | Maximum [Member] | |||||
Debt face amount | $ 35,000 | ||||
Tax Sharing Agreement [Member] | |||||
Balance receivable | $ 158 | $ 30 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - $ / shares | Aug. 04, 2020 | May 12, 2020 | Feb. 11, 2020 | Sep. 27, 2020 | Dec. 29, 2019 | Feb. 07, 2019 |
Common stock, shares authorized | 25,000,000 | 25,000,000 | ||||
Common stock, shares outstanding | 11,926,264 | 11,860,299 | ||||
Share issued price per share | $ 5.64 | |||||
Non-Employees [Member] | ||||||
Number of shares issued | 35,928 | 13,677 | 16,360 | |||
Share issued price per share | $ 3.34 | $ 3.29 | $ 4.585 |
Share-Based Compensation (Detai
Share-Based Compensation (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 30, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
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 | $ 45 | $ 59 | $ 61 | $ 218 |
Stock based compensation to non-vested grants | $ 32 | |||
2017 Omnibus Equity Incentive Plan [Member] | Maximum [Member] | ||||
Number of shares available for grant | 1,021,250 | 1,021,250 |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Stock Option Activity (Details) | 9 Months Ended |
Sep. 27, 2020$ / sharesshares | |
Equity [Abstract] | |
Number of Shares, Stock options outstanding, beginning balance | shares | 722,481 |
Number of Shares, Grants | shares | |
Number of Shares, Forfeited | shares | (158,284) |
Number of Shares, Expired | shares | |
Number of Shares, Stock options outstanding, ending balance | shares | 564,197 |
Number of Shares, Stock options exercisable, ending balance | shares | 289,337 |
Weighted Average Exercise Price, Stock options outstanding, beginning balance | $ / shares | $ 8.45 |
Weighted Average Exercise Price, Grants | $ / shares | |
Weighted Average Exercise Price, Forfeited | $ / shares | 7.98 |
Weighted Average Exercise Price, Expired | $ / shares | |
Weighted Average Exercise Price, Stock options outstanding, ending balance | $ / shares | 8.58 |
Weighted Average Exercise Price, Stock options exercisable, ending balance | $ / shares | $ 9.58 |
Weighted Average Remaining Contractual Life (Years), Stock options outstanding, beginning balance | 7 years 8 months 12 days |
Weighted Average Remaining Contractual Life (Years), Grants | 0 years |
Weighted Average Remaining Contractual Life (Years), Forfeited | 8 years |
Weighted Average Remaining Contractual Life (Years), Expired | 0 years |
Weighted Average Remaining Contractual Life (Years), Stock options outstanding, ending balance | 7 years 8 months 12 days |
Weighted Average Remaining Contractual Life (Years), Stock options exercisable, ending balance | 7 years 6 months |
Share-Based Compensation - Sc_2
Share-Based Compensation - Schedule of Assumptions Used for Stock-based Compensation (Details) - Including Non-Employee Options [Member] | 9 Months Ended |
Sep. 27, 2020 | |
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 | Aug. 11, 2020 | Jul. 16, 2020 | Jul. 16, 2020 | Jul. 13, 2020 | Jul. 03, 2018 | Oct. 20, 2017 | Sep. 27, 2020 | Dec. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Jun. 19, 2019 | Feb. 07, 2019 | Jun. 27, 2018 | Jun. 07, 2018 |
Repurchase of outstanding warrants | $ 330 | $ 330 | ||||||||||||
Shares issued price per share | $ 5.64 | |||||||||||||
Series B Preferred Stock [Member] | ||||||||||||||
Number of shares eligible for warrants | 3,600 | 3,600 | ||||||||||||
Warrants price per share | $ 24.95 | $ 24.95 | ||||||||||||
Warrants expiration date | Jul. 16, 2025 | Jul. 16, 2025 | ||||||||||||
Fair value of warrants | $ 2 | |||||||||||||
Elevation Burger [Member] | ||||||||||||||
Number of shares eligible for warrants | 46,875 | |||||||||||||
Warrants price per share | $ 8 | |||||||||||||
Series B Cumulative Preferred Stock [Member] | ||||||||||||||
Percentage for cumulative preferred stock | 8.25% | |||||||||||||
Lender Warrant [Member] | ||||||||||||||
Issuance of warrants | $ 249,500 | |||||||||||||
Number of shares eligible for warrants | 509,604 | |||||||||||||
Warrants price per share | $ 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 | 25,787 | 40,904 | 40,904 | |||||||||||
Warrants price per share | $ 7.20 | $ 7.20 | $ 7.20 | |||||||||||
Repurchase of outstanding warrants | $ 12,626 | |||||||||||||
2020 Series B Offering Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | 2,132,573 | 2,132,573 | ||||||||||||
Company acquired warrants and issued | $ 67,894 | |||||||||||||
2020 Series B Offering Warrants [Member] | Grant Holder [member] | ||||||||||||||
Number of shares eligible for warrants | 18,990 | 18,990 | ||||||||||||
Warrants price per share | $ 5 | $ 5 | ||||||||||||
Warrants expiration date | Jul. 16, 2025 | Jul. 16, 2025 | ||||||||||||
Fair value of warrants | $ 64 | |||||||||||||
Shares issued price per share | $ 0.01 | $ 0.01 | ||||||||||||
2020 Series B Offering Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | 51,627 | 51,627 | ||||||||||||
Warrants price per share | $ 5 | $ 5 | ||||||||||||
Series B Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | 60 | |||||||||||||
Warrants price per share | $ 8.50 | |||||||||||||
Exchange of warrants | 34,224 | |||||||||||||
Warrants exercisable, term | 5 years | |||||||||||||
Series B Warrants [Member] | Elevation Burger [Member] | ||||||||||||||
Number of shares eligible for warrants | 34,284 | |||||||||||||
Warrants price per share | $ 8.50 | |||||||||||||
Warrants exercisable date, description | Exercisable for a period of five years from October 3, 2019 | |||||||||||||
New Series B Offering Warrants [Member] | ||||||||||||||
Issuance of warrants | $ 292,000 | |||||||||||||
Outstanding of warrants for Series B | 285,200 | |||||||||||||
Loss on warrant exchange | $ 271,000 | |||||||||||||
Common Stock Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | 81,700 | |||||||||||||
Warrants price per share | $ 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 price per share | $ 7.83 | |||||||||||||
Common stock warrants value | $ 87 | |||||||||||||
Exchange Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | 25,530 | |||||||||||||
Warrants price per share | $ 7.83 | |||||||||||||
Common stock warrants value | $ 25 | |||||||||||||
Hurricane Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | 57,439 | |||||||||||||
Warrants price per share | $ 7.83 | |||||||||||||
Common stock warrants value | $ 58 | |||||||||||||
Placement Agent Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | 40,904 | |||||||||||||
Warrants price per share | $ 7.20 | |||||||||||||
Common stock warrants value | $ 48 | |||||||||||||
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 price per share | $ 8 | |||||||||||||
Warrants exercisable, term | 5 years | |||||||||||||
2020 Series B Offering Warrants [Member] | ||||||||||||||
Number of shares eligible for warrants | 2,132,573 | 2,132,573 | ||||||||||||
Warrants price per share | $ 5 | $ 5 | ||||||||||||
Warrants expiration date | Jul. 16, 2025 | Jul. 16, 2025 | ||||||||||||
Fair value of warrants | $ 2,162 |
Warrants - Summary of Warrant A
Warrants - Summary of Warrant Activity (Details) - Warrant [Member] | 9 Months Ended |
Sep. 27, 2020$ / sharesshares | |
Number of Shares, Warrants Outstanding, Beginning balance | shares | 2,091,652 |
Number of Shares, Warrants Grants | shares | 2,203,190 |
Number of Shares, Warrants Forfeited | shares | (1,788,646) |
Number of Shares, Warrants Outstanding, Ending balance | shares | 2,506,196 |
Number of Shares, Warrants Exercisable Ending Balance | shares | 307,758 |
Weighted Average Exercise Price, Warrants outstanding, Beginning balance | $ / shares | $ 3.57 |
Weighted Average Exercise Price, Warrants Grants | $ / shares | 4.96 |
Weighted Average Exercise Price, Warrants Forfeited | $ / shares | 2.51 |
Weighted Average Exercise Price, Warrants outstanding, Ending balance | $ / shares | 5.58 |
Weighted Average Exercise Price, Warrants exercisable ending balance | $ / shares | $ 9.57 |
Weighted Average Remaining Contractual Life (Years), Warrants outstanding, Beginning balance | 3 years 7 months 6 days |
Weighted Average Remaining Contractual Life (Years), Warrants Grants | 4 years 9 months 18 days |
Weighted Average Remaining Contractual Life (Years), Warrants Forfeited | 3 years 9 months 18 days |
Weighted Average Remaining Contractual Life (Years), Warrants outstanding, Ending balance | 4 years 6 months |
Weighted Average Remaining Contractual Life (Years), Warrants exercisable | 2 years 7 months 6 days |
Warrants - Schedule of Assumpti
Warrants - Schedule of Assumptions Used for Stock-based Compensation, Warrants (Details) | Sep. 27, 2020Integer |
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 | Sep. 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 | |
Share issued price per share | $ 5.64 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Jul. 16, 2020USD ($) | Sep. 27, 2020ft² | Oct. 08, 2020USD ($) |
Prejudice in exchange for payment amount | $ | $ 75,000 | ||
Elevation Subleases [Member] | Unrelated Third party [Member] | |||
Square feet of space | 2,500 | ||
Plaintiff's [Member] | |||
Individual compensatory rescissory damages | $ | $ 5,000 | ||
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) | 9 Months Ended | |
Sep. 27, 2020 | Sep. 29, 2019 | |
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 | 3 Months Ended | 9 Months Ended | |||
Sep. 27, 2020 | Sep. 30, 2019 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Total revenues | $ 4,089 | $ 6,484 | $ 6,484 | $ 11,619 | $ 17,253 |
United States [Member] | |||||
Total revenues | 3,500 | 5,364 | 9,773 | 14,435 | |
Other Countries [Member] | |||||
Total revenues | $ 589 | $ 1,120 | $ 1,846 | $ 2,818 |
Operating Segments (Details Nar
Operating Segments (Details Narrative) | 9 Months Ended |
Sep. 27, 2020Integer | |
Segment Reporting [Abstract] | |
Number of operating segment | 1 |
Number of reportable segment | 1 |