Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 28, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | ARC Group, Inc. | ||
Entity Central Index Key | 1,452,872 | ||
Trading Symbol | arck | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-Known Seasoned Issuer | No | ||
Entity Common Stock, Shares Outstanding | 6,974,008 | ||
Entity Public Float | $ 2,290,510 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 145,346 | $ 50,923 |
Accounts receivable, net | 166,987 | 67,395 |
Accounts receivable, net - related party | 1,505 | 14,568 |
Ad funds receivable, net | 36,837 | |
Ad funds receivable, net - related party | 2,280 | |
Inventory | 45,417 | 45,250 |
Notes receivable, net | 28,522 | 63,742 |
Interest receivable, net | 838 | |
Deposits | 21,189 | 1,806 |
Other current assets | 5,923 | |
Total current assets | 454,006 | 244,522 |
Notes receivable, net of current portion | 5,106 | 29,379 |
Property and equipment, net | 99,114 | 80,948 |
Total assets | 558,226 | 354,849 |
Liabilities and stockholders' deficit | ||
Accounts payable and accrued expenses | 467,264 | 735,331 |
Accounts payable and accrued expenses - related party | 94,150 | 98,434 |
Accrued interest | 13,472 | 2,594 |
Settlement agreements payable | 264,997 | 253,724 |
Accrued legal settlement | 155,935 | 148,105 |
Notes payable - in default | 0 | 7,000 |
Notes payable - related party | 30,503 | 232,572 |
Contingent consideration | 199,682 | 20,897 |
Other current liabilities | 9,147 | 5,096 |
Total current liabilities | 1,235,150 | 1,503,753 |
Total liabilities | 1,235,150 | 1,503,753 |
Stockholders' equity deficit: | ||
Class A common stock - $0.01 par value: 100,000,000 shares authorized, 6,950,869 and 6,647,464 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 69,509 | 66,475 |
Additional paid-in capital | 3,995,306 | 3,747,953 |
Stock subscriptions payable | 26,853 | 150,000 |
Accumulated deficit | (4,768,592) | (5,113,332) |
Total stockholders' deficit | (676,924) | (1,148,904) |
Total liabilities and stockholders' deficit | $ 558,226 | $ 354,849 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Class A common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Class A common stock, shares authorized | 100,000,000 | 100,000,000 |
Class A common stock, shares issued | 6,950,869 | 6,647,464 |
Class A common stock, shares outstanding | 6,950,869 | 6,647,464 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue: | ||
Restaurant sales | $ 3,612,951 | $ 130,861 |
Franchise and other revenue | 676,007 | 630,791 |
Franchise and other revenue - related party | 156,705 | 513,796 |
Total net revenue | 4,445,663 | 1,275,448 |
Restaurant operating costs: | ||
Cost of sales | 1,201,825 | 28,082 |
Labor | 1,159,026 | 32,258 |
Occupancy | 238,376 | 17,030 |
Other operating expenses | 779,644 | 10,807 |
Professional Fees | 407,512 | 169,190 |
Employee compensation expense | 388,944 | 502,493 |
General and administrative expenses | 354,950 | 980,670 |
Loss on impairment of investment in Paradise on Wings | 348,143 | |
Total operating expenses | 4,530,277 | 2,088,673 |
Loss from operations | (84,614) | (813,225) |
Other income / (expense): | ||
Interest expense | (29,980) | (37,703) |
Interest income | 2,340 | 896 |
Gain on write-off of liabilities | 251,238 | |
Loss from investment in Paradise on Wings | (222,685) | |
Gain on sale of investment in Paradise on Wings - related party | 24,000 | |
Gain on settlement of litigation | 82,642 | |
Gain on settlement of liabilities | 175,449 | |
Gain on write-off of notes payable | 7,000 | |
Gain on write-off of stock subscriptions payable | 150,000 | |
Other income | 24,756 | 913 |
Total other income / (expense) | 429,354 | (488) |
Net income / (loss) | $ 344,740 | $ (813,713) |
Net income / (loss) per share - basic and fully diluted (in dollars per share) | $ 0.05 | $ (0.12) |
Weighted average number of shares outstanding - basic and fully diluted (in shares) | 6,817,310 | 6,608,225 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Deficit - USD ($) | Common Stock | Additional Paid-in Capital | Stock Subscriptions Payable | Accumulated Deficit | Total |
Balance at Dec. 31, 2015 | $ 65,211 | $ 3,638,466 | $ 199,863 | $ (4,299,619) | $ (396,079) |
Balance (in shares) at Dec. 31, 2015 | 6,521,035 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock issued for services | $ 914 | 90,286 | (49,863) | 41,337 | |
Common stock issued for services (in shares) | 91,429 | ||||
Common stock issued for settlement of liabilities | $ 350 | 19,201 | 19,551 | ||
Common stock issued for settlement of liabilities (in shares) | 35,000 | ||||
Net income / (loss) | (813,713) | (813,713) | |||
Balance at Dec. 31, 2016 | $ 66,475 | 3,747,953 | 150,000 | (5,113,332) | $ (1,148,904) |
Balance (in shares) at Dec. 31, 2016 | 6,647,464 | 6,647,464 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock issued for services | $ 2,681 | 217,706 | 26,853 | $ 247,240 | |
Common stock issued for services (in shares) | 268,110 | ||||
Common stock issued for payment of consulting fees due | $ 353 | 29,647 | 30,000 | ||
Common stock issued for payment of consulting fees due (in shares) | 35,295 | ||||
Write-off of stock subscriptions payable | (150,000) | (150,000) | |||
Net income / (loss) | 344,740 | 344,740 | |||
Balance at Dec. 31, 2017 | $ 69,509 | $ 3,995,306 | $ 26,853 | $ (4,768,592) | $ (676,924) |
Balance (in shares) at Dec. 31, 2017 | 6,950,869 | 6,950,869 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | ||
Net income / (loss) | $ 344,740 | $ (813,713) |
Adjustments to reconcile net income / (loss) to net cash provided / (used) by operating activities: | ||
Depreciation expense | 17,180 | 507 |
Stock-based compensation expense | 247,240 | 41,337 |
Stock-based payment for consulting fees due | 30,000 | |
Change in fair value of contingent consideration | 178,785 | 20,897 |
Loss from investment in Paradise on Wings | 222,685 | |
Gain on sale of investment in Paradise on Wings - related party | (24,000) | |
Loss on settlement of litigation | (82,642) | |
Gain on settlement of liabilities | (175,449) | |
Gain on write-off of accounts payable | (251,238) | |
Gain on write-off of notes payable | (7,000) | |
Gain on write-off of stock subscriptions payable | (150,000) | |
Loss on impairment of investment in Paradise on Wings | 348,143 | |
Seediv compensation expense | 251,309 | |
Changes in operating assets and liabilities, net of acquisition of Seediv: | ||
Accounts receivable | (99,592) | (55,671) |
Accounts receivable - related party | 13,063 | 50,515 |
Ad fund receivable | (36,837) | |
Ad fund receivable - related party | (2,280) | |
Inventory | (167) | (4,676) |
Interest receivable | 838 | (838) |
Interest receivable - related party | 11,380 | |
Deposits | (19,383) | |
Other assets | (5,923) | 6,538 |
Accounts payable and accrued liabilities | (16,829) | 82,493 |
Accounts payable and accrued liabilities - related party | (4,284) | 72,097 |
Accrued interest | 10,878 | 420 |
Settlement agreements payable | 11,273 | 15,052 |
Accured legal settlement | 7,830 | |
Other liabilities | 4,051 | (471) |
Net cash provided / (used) by operating activities | 248,345 | (10,087) |
Cash flows from investing activities | ||
Issuance of notes receivable | (7,659) | (86,717) |
Issuance of notes receivable - related party | (419,849) | |
Repayments of notes receivable | 67,152 | |
Repayments of notes receivable - related party | 541,487 | |
Sale of investment in Paradise on Wings - related party | 24,000 | |
Purchases of fixed assets | (35,346) | (1,213) |
Acquisition of Seediv | 4,424 | |
Net cash provided by investing activities | 48,147 | 38,132 |
Cash flows from financing activities | ||
Proceeds from issuance of notes payable - related party | 433,771 | 840,353 |
Repayments of notes payable - related party | (635,840) | (824,250) |
Net cash provided / (used) by financing activities | (202,069) | 16,103 |
Net decrease in cash and cash equivalents | 94,423 | 44,148 |
Cash and cash equivalents, beginning of period | 50,923 | 6,775 |
Cash and cash equivalents, end of period | 145,346 | 50,923 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | 0 | 0 |
Schedule of non-cash financing activities | ||
Stock issued for settlement of litigation | $ 0 | $ 19,551 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2017 | |
Description Of Business [Abstract] | |
Description of Business | Note 1. Description of Business ARC Group, Inc., a Nevada corporation (the “Company”), was incorporated in April 2000. The Company’s business is focused on the development of the Dick’s Wings ® Dick’s Wings & Grill ® On December 19, 2016, the Company acquired all of the issued and outstanding membership interests of Seediv, LLC, a Louisiana limited liability company (“Seediv”), for $600,000 and an earn-out payment. Seediv is the owner and operator of the Dick’s Wings & Grill restaurant located at 100 Marketside Avenue, Suite 301, in the Nocatee development in Ponte Vedra, Florida 32081 (the “Nocatee Restaurant”) and the Dick’s Wings & Grill restaurant located at 6055 Youngerman Circle in Argyle Village in Jacksonville, Florida 32244 (the “Youngerman Circle Restaurant”; together with the Nocatee Restaurant, the “Nocatee and Youngerman Restaurants”). A description of the Company’s acquisition of Seediv is set forth herein under Note 5 – Acquisition of Seediv At December 31, 2017, the Company had 22 restaurants and two concession stands. Of the 22 restaurants, 17 were located in Florida and five were located in Georgia. The Company’s concession stands were also located in Florida. Two of the Company’s restaurants were owned by the Company, and the remaining 20 restaurants were owned and operated by franchisees. The Company’s concession stands at TIAA Bank Field were also owned by the Company. The Company acquired the Nocatee and Youngerman Restaurants during 2016, which increased the number of Company-owned restaurants by two and reduced the number of franchised restaurants by two during 2016, and opened four new franchised restaurants during 2016. The Company did not open or acquire any Company-owned or franchised restaurants during 2017. One franchised restaurant closed during 2017. No Company-owned restaurants closed during 2017, and no Company-owned or franchised restaurants closed during 2016. The Company establishes franchised restaurants by entering into franchise agreements with qualified parties. It generates revenue from franchisees by granting them the right to use the name “Dick’s Wings” and offer the Dick’s Wings product line in exchange for royalty payments, franchise fees and area development fees. The Company generates revenue through its Company-owned restaurants by selling the “Dick’s Wings” product line to the restaurants’ customers. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies This summary of significant accounting policies is provided to assist the reader in understanding the Company’s financial statements. The financial statements and notes thereto are representations of the Company’s management. The Company’s management is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the financial statements. Basis of Presentation The Company’s financial statements have been prepared using GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. All intercompany accounts and transactions were eliminated in consolidation. Going Concern The Company incurred net losses of $813,713 for the year ended December 31, 2016 and experienced negative cash flows from operations for that year. The Company also had an accumulated deficit of $5,113,332 and a working capital deficit of $1,259,231 at December 31, 2016. Those facts created an uncertainty about the Company’s ability to continue as a going concern as of December 31, 2016. The Company generated net income of $344,740 and cash flows from operations of $248,345 for the year ended December 31, 2017. The improvement was due primarily to its acquisition of two Company-owned restaurants in December 2016. In addition, the Company has received continued financial support from related parties. As a result of these factors, the Company believes that the substantial doubt about its ability to continue as a going concern had been alleviated as of December 31, 2017. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications Certain amounts in the Company’s financial statements for the 2016 fiscal year have been reclassified to conform to the 2017 fiscal year presentation. These reclassifications did not result in any change to the previously reported total assets, net loss or stockholders’ deficit. Segment Disclosure The Company has a single brand, all of the restaurants of which operate in the full-service casual dining industry in the United States. Pursuant to the standards of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting Franchise Operations The Company enters into franchise agreements with each of its franchisees to build and operate restaurants using the Dicks Wings brand within a defined geographic area. The agreements have a 10-year term and can be renewed for one additional 10-year term. The Company provides the use of its Dick’s Wings trademarks and Dick’s Wings system, which includes uniform operating procedures, standards for consistency and quality of products, technical knowledge, and procedures for accounting, inventory control and management, in return for the royalty payments, franchise fees and area development fees. Franchisees are required to operate their restaurants in compliance with their franchise agreements, which includes adherence to operating and quality control procedures established by the Company. The Company is not required to provide loans, leases, or guarantees to franchisees or the franchisees’ employees and vendors. If a franchisee becomes financially distressed, the Company is not required to provide financial assistance. If financial distress leads to insolvency of the franchisee or the filing of a petition by or against the franchisee under bankruptcy laws, the Company has the right, but not the obligation, to acquire the franchise at fair value as determined by an independent appraiser selected by the Company. Franchisees generally remit royalty payments weekly for the prior week’s sales. Franchise and area development fees are paid upon the signing of the related franchise agreements. Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less on the date of purchase to be cash equivalents in accordance with ASC Topic 305, Cash and Cash Equivalents Accounts Receivable Accounts receivable are recorded in accordance with ASC Topic 310, Receivables of contractually-determined receivables primarily for Accounts receivable, net of the allowance for doubtful accounts, represents the estimated net realizable value of the Company’s accounts receivable. Provisions for doubtful accounts are recorded based on historical collection experience, the age of the receivables and current economic conditions. The accounts receivable balance at December 31, 2017 was comprised primarily of credit card sales by Company-owned restaurants, royalties due from the Company’s franchisees, and sales proceeds due from the concessionaire of the Company’s concessions stands, all of which the Company collected in full in January 2018. Accordingly, the allowance for doubtful accounts was zero at December 31, 2017. The accounts receivable balance at December 31, 2016 was comprised primarily of credit card sales by Company-owned restaurants and unpaid royalties due from one of the Company’s franchisees that was behind in its payments, all of which the Company collected in full in early 2017. Accordingly, the allowance for doubtful accounts was zero at December 31, 2016. Inventory Inventory consists primarily of food and beverage products and is accounted for at the lower of cost or net realizable value using the first in, first out method of inventory valuation in accordance with ASC Topic 330, Inventory Property and Equipment Property and equipment is recorded at cost, less accumulated depreciation and amortization, in accordance with ASC Topic 360, Property, Plant and Equipment The Company reviews property and equipment for impairment at least quarterly and whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable in accordance with ASC 360. Recoverability is measured by comparison of the carrying amount of the assets to the future undiscounted net cash flows that the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Long-Lived Assets The Company reviews long-lived assets for impairment at least quarterly or whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable in accordance with ASC 360. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the individual restaurant level. The Company evaluates the recoverability of a restaurant’s long-lived assets, including buildings, intangibles, leasehold improvements, furniture, fixtures, and equipment over the remaining life of the primary asset in the asset group, after considering the potential impact of planned operational improvements, marketing programs, and anticipated changes in the trade area. In determining future cash flows, significant estimates are made by management with respect to future operating results for each restaurant over the remaining life of the primary asset in the asset group. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset carrying amount exceeds its fair value based on the Company’s estimate of discounted future cash flows. The Company accounts for exit or disposal activities, including restaurant closures, in accordance with ASC Topic 420, Exit or Disposal Cost Obligations Financial Instruments The Company accounts for its financial instruments in accordance with ASC Topic 825, Financial Instruments Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in the Company’s principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In accordance with ASC Topic 820, Fair Value Measurements and Disclosures The levels of fair value hierarchy are: Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date; Level 2: Observable inputs other than quoted prices included in Level 1, such as: (i) quoted prices for similar assets and liabilities in active markets, (ii) quoted prices for identical or similar assets and liabilities in markets that are not active, and (iii) other inputs that are observable or can be corroborated by observable market data; and Level 3: Unobservable inputs for which there is little or no market data available. A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. In contrast, the Company considers unobservable data to be data that reflects the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Investment in Paradise on Wings On January 20, 2014, the Company purchased a 50% ownership interest in Paradise on Wings Franchise Group, LLC, a Utah limited liability company that is the franchisor of the Wing Nutz ® Note 4. Investment in Paradise on Wings The Company accounted for its investment in Paradise on Wings under the equity method of accounting in accordance with ASC Topic 323 Investments – Equity Method and Joint Ventures The Company reviews its investment in Paradise on Wings for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable in accordance with ASC 323. The standard for determining whether an impairment must be recorded under ASC 323 is whether an “other-than-temporary” decline in value of the investment has occurred. The evaluation and measurement of impairments under ASC 323 involves Acquisition of Seediv On December 19, 2016, the Company acquired all of the issued and outstanding membership interests of Seediv. A description of the Company’s acquisition of Seediv is set forth herein under Note 5. Acquisition of Seediv. The Company determined that the acquisition of Seediv constituted a business combination as defined by ASC Topic 805, Business Combinations Note 5. Acquisition of Seediv Fair Value Measurements and Disclosures General Advertising Fund The Company has established a general advertising fund that it uses to pay for advertising costs, sales promotions, market research and other support functions intended to maximize general public recognition and acceptance of the Dick’s Wings brand. Company-owned and franchised restaurants are required to contribute at least 1%, but not more than 2%, of their gross revenue to the Company’s general advertising fund. Contributions made by franchisees to the general advertising fund and marketing and advertising expenses paid by the general advertising fund are not recognized as revenues and expenses. They instead constitute agency transactions. These contributions are recorded as a liability against which specific costs are charged. The Company accounts for the cash and cash equivalents held by the general advertising fund as restricted cash on its accompanying consolidated balance sheets. The restricted cash of this fund is classified as current as it is expected to be utilized to fund short-term obligations of the general advertising fund. The Company did not have any restricted cash at December 31, 2017 and 2016. Revenue Recognition The Company’s revenue consists primarily of proceeds from the sale of food and beverage products at its Company-owned restaurants and concession stands, and royalty payments, franchise fees and area development fees that it receives from its franchisees. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery or performance has occurred, the sales price is fixed and determinable, and collectability is reasonably assured in accordance with ASC Topic 605, Revenue Recognition The Company records gift cards under a Dick’s Wings system-wide program. Gift cards sold are recorded as a gift card liability. When redeemed, the gift card liability account is offset by recording the transaction as revenue. Breakage income represents the value associated with the portion of gift cards sold that will most likely never be redeemed. Based on the Company’s historical gift card redemption patterns and the fact that the Company’s gift cards have no expiration dates or dormancy fees, the Company can reasonably estimate the amount of gift card balances for which redemption is remote and record breakage income based on this estimate. The Company updates its estimate of the breakage rate periodically and, if necessary, adjusts the gift card liability balance accordingly. Revenue from restaurant sales was $3,612,951 for the year ended December 31, 2017 and was comprised of $3,502,080 in sales generated by the Company’s two Company-owned restaurants and $110,871 in sales generated by the Company’s two concession stands. Revenue from restaurants sales was $130,861 for the year ended December 31, 2016 and was comprised entirely of sales generated by the Company’s two Company-owned restaurants. Franchise and other revenue was $832,712 for the year ended December 31, 2017 and was comprised of $829,069 in royalties and $3,643 in sales of merchandise. Franchisee and other revenue was $1,144,587 for the year ended December 31, 2016 and was comprised of $1,004,587 in royalties, $105,000 in franchise fees and $35,000 in licensing fees associated with its concession stands. Payments Received From Vendors Vendor allowances include allowances and other funds that the Company receives from vendors. Certain of these funds are determined based on various quantitative contract terms. The Company also receives vendor allowances from certain manufacturers and distributors calculated based upon purchases made by franchisees. Vendor allowances are not recognized as revenue. Instead, they are recognized as a reduction in costs. The Company generally receives payment from vendors approximately 30 days from the end of a month for that month’s purchases. Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the fair value recognition provisions of ASC Topic 718, Compensation – Stock Compensation The Company accounts for non-employee stock-based compensation in accordance with ASC 718 and ASC Topic 505, Equity The Company uses the Black-Scholes pricing model to determine the fair value of the stock-based compensation that it grants to employees and non-employees. The Black-Scholes pricing model takes into consideration such factors as the estimated term of the securities, the conversion or exercise price of the securities, the volatility of the price of the Company’s common stock, interest rates, and the probability that the securities will be converted or exercised to determine the fair value of the securities. The selection of these criteria requires management’s judgment and may impact the Company’s net income or loss. The computation of volatility is intended to produce a volatility value that is representative of the Company’s expectations about the future volatility of the price of its common stock over an expected term. The Company used its share price history to determine volatility and cannot predict what the price of its shares of common stock will be in the future. As a result, the volatility value that the Company calculated may differ from the actual volatility of the price of its shares of common stock in the future. Operating Leases Rent expense for leases that contain scheduled rent increases is recognized on a straight-line basis over the lease term, including cancelable option periods where failure to exercise such options would result in an economic penalty such that the renewal appears reasonably assured. The straight-line rent calculation and rent expense includes the rent holiday period, which is the period of time between taking control of a leased site and the rent commencement date. The amount by which straight-line rent exceeds actual lease payment requirements in the early years of the lease is accrued as deferred rent liability and reduced in later years when the actual cash payment requirements exceed the straight-line expense. Contingent rents are generally amounts due as a result of sales in excess of amounts stipulated in certain restaurant leases and are included in rent expense as they are incurred. Landlord contributions are recorded when received as a deferred rent liability and amortized as a reduction of rent expense on a straight-line basis over the lease term. Marketing and Advertising Contributions to the national advertising fund related to Company-owned restaurants are expensed as contributed and local advertising costs for Company-owned restaurants are expensed as incurred. All other marketing and advertising costs are expenses as incurred. The Company incurred $90,120 and $46,545 for marketing and advertising costs during the years ended December 31, 2017 and 2016, respectively. Start-Up Costs Start-up costs consists of costs associated with the opening of new Company-owned restaurants and varies based on the number of new locations opening and under construction. These costs are expensed as incurred in accordance with ASC Topic 720, Other Expenses Sales Taxes Sales taxes collected from customers are excluded from revenue. Sales taxes payable are included in accrued expenses until the taxes are remitted to the appropriate taxing authorities in accordance with ASC 450, Contingencies Income Taxes The Company uses the liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes In determining whether a valuation allowance is required, the Company takes into account all evidence with regard to the utilization of a deferred tax asset including past earnings history, expected future earnings, the character and jurisdiction of such earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of a deferred tax asset, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. The Company has evaluated the available evidence about future taxable income and other possible sources of realization of deferred tax assets and has established a valuation allowance of $465,018 and $965,216 at December 31, 2017 and 2016, respectively. Net deferred tax assets were comprised of the following at December 31, 2017 and 2016, respectively: December 31, 2017 December 31, 2016 Deferred tax assets: Net operating loss carryforwards $ 465,018 $ 965,216 Deferred tax liabilities -0- -0- Valuation allowance (465,018 ) (965,216 ) Net deferred tax assets $ -0- $ -0- The Company had net operating loss carry-forwards of approximately $1,860,071 and $2,533,376 at December 31, 2017 and 2016, respectively, that may be offset against future taxable income. No tax benefit has been reported in the financial statements for the Company’s 2017 and 2016 fiscal years because the potential tax benefit is offset by a valuation allowance of the same amount. The Company had no uncertain tax positions at December 31, 2017 and 2016. Effective January 1, 2018, the federal corporate income tax rate was decreased from 34% to 21%. The effect of this change on deferred taxes and the valuation allowance at December 31, 2017 was $244,147. The valuation allowance as of December 31, 2017 includes $105,629 of net operating loss carry forwards that relate to stock compensation expense for income tax reporting purposes that upon realization, would be recorded as additional paid-in capital. There were no such net operating loss carry forwards as of December 31, 2016. The valuation allowance reduces deferred tax assets to an amount that management believes will more likely than not be realized. A reconciliation of the difference between the provision for income taxes and income taxes at the statutory U.S. federal income tax rate for the years ended December 31, 2017 and 2016 is as follows: December 31, 2017 December 31, 2016 Income tax provision at statutory rate $ 123,612 $ 861,348 State income taxes 14,906 103,868 Stock compensation expense 105,629 -0- Effect of change in federal tax rate 244,147 -0- Other 11,904 -0- Change in valuation allowance (500,198 ) (965,216 ) Net tax provision $ -0- $ -0- Utilization of net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations contained in the Internal Revenue Code of 1986, as amended, as well as similar state and foreign provisions. These ownership changes may limit the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income and tax, respectively. On November 2, 2012, William D. Leopold purchased 2,218,572 shares of the Company’s common stock, which represented approximately 41.2% of the outstanding shares of the Company’s common stock on that date, from Michael Rosenberger, who was then serving as the Company’s Chief Executive Officer, Chief Financial Officer, Secretary and sole member of the Company’s board of directors. This transaction could be deemed to have resulted in a change in ownership of the Company. On July 31, 2017, Seenu G. Kasturi, the Company’s President, Chief Financial Officer and Chairman of the Board of Directors, purchased 2,647,144 shares of the Company’s common stock, which represented approximately 38.4% of the outstanding shares of the Company’s common stock on that date, from William D. Leopold. This transaction could be deemed to have resulted in a change in ownership of the Company. Subsequent ownership changes could further affect the limitation in future years. These annual limitation provisions may result in the expiration of certain net operating losses and credits before utilization. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue From Contracts With Customers Revenue From Contracts With Customers – Deferral of the Effective Date The Company determined that the new revenue guidance will impact the timing of recognition of franchise fees. Under existing guidance, these fees are typically recognized upon the opening of restaurants. Under the new guidance, the fees will have to be deferred and recognized as revenue over the term of the individual franchise agreements. However, the effect of the required deferral of fees received in a given year will be mitigated by the recognition of revenue from fees retrospectively deferred from prior years. The Company presently expects to use the modified retrospective method of adoption when the new guidance is adopted in the first fiscal quarter of 2018. Upon adoption, the Company will recognize a deferral in revenue from franchise fees on its balance sheet of approximately $196,478 and an increase in the Company’s accumulated deficit by the same amount. The Company also determined that the new revenue guidance will impact the accounting for transactions related to the Company’s general advertising fund. Currently, franchisee contributions to and expenditures by the fund are not included in the Company’s Consolidated Statements of Operations. Under the new guidance, the Company will include contributions to and expenditures by the fund within the Company’s Consolidated Statements of Operations. While this change will materially impact the gross amount of reported franchise revenue and expenses, the impact will be an increase to both revenue and expense that, for the most part, will offset such that the impact on gross profit and net income, if any, will not be material. Additionally, the Company determined that the new revenue guidance will impact the accounting for transactions related to the Company’s gift card program. Estimated breakage income on gift cards will be recognized as gift cards are utilized instead of the Company’s current policy of deferring the breakage income until it is deemed remote that the unused gift card balance will be redeemed. The Company determined that this change will not have a material impact on its consolidated financial statements. The table below presents the expected effects these changes would have had on the Company’s consolidated financial statements in 2017 and 2016 had this guidance been adopted by the Company on January 1, 2016: Fiscal Year 2017 Fiscal Year 2016 As Effects of Upon As Effects of Upon Franchise and other revenue $ 832,712 $ 34,500 $ 867,212 $ 1,144,587 $ (73,622 ) $ 1,070,965 Advertising fund fees -0- 294,888 294,888 -0- 367,153 367,153 Advertising expenses -0- (294,888 ) (294,888 ) -0- (367,153 ) (367,153 ) Net income / (loss) $ 344,740 $ 34,500 $ 379,240 $ (813,713 ) $ (73,622 ) $ (887,335 ) Net income / (loss) per share – basic and fully diluted $ 0.05 $ 0.01 $ 0.06 $ (0.12 ) $ (0.01 ) $ (0.13 ) In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern Note 2. Significant Accounting Policies – Going Concern These facts created an uncertainty about the Company’s ability to continue as a going concern as of December 31, 2016. However, In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory In February 2016, the FASB issued ASU 2016-02, Leases In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business The Company reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to the Company’s operations or that no material effect is expected on the Company’s financial statements as a result of future adoption. |
Net Income _ (Loss) Per Share
Net Income / (Loss) Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Income / (Loss) Per Share | Note 3. Net Income / (Loss) Per Share The Company calculates basic and diluted net income / (loss) per share in accordance with ASC Topic 260, Earnings per Share The Company did not have any securities outstanding at December 31, 2017 and 2016 that were exercisable or convertible into shares of the Company’s common stock. As a result, basic net income / (loss) per share was equal to diluted net income / (loss) per share for the years ended December 31, 2017 and 2016 . |
Investment in Paradise on Wings
Investment in Paradise on Wings | 12 Months Ended |
Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in Paradise on Wings | Note 4. Investment in Paradise on Wings On January 20, 2014, the Company entered into a contribution agreement with Paradise on Wings. In connection with the execution of the contribution agreement, on January 20, 2014, the Company and the incumbent members of Paradise on Wings entered into an amended and restated operating agreement of Paradise on Wings to reflect the terms of the contribution agreement. The transactions contemplated by the contribution agreement and operating agreement were completed on January 20, 2014. Under the terms of the contribution agreement, the Company (sometimes referred to herein as the “Class B Member”) acquired 117.65 Class B membership interests in Paradise on Wings, representing all of the outstanding Class B membership interests and a 50% ownership interest in Paradise on Wings (the “Class B Membership Interests”). The incumbent members of Paradise on Wings (the “Class A Members”) converted their existing membership interests into a total of 117.65 Class A membership interests in Paradise on Wings, representing all of the outstanding Class A membership interests and a 50% ownership interest in Paradise on Wings (the “Class A Membership Interests”). The Company agreed to pay $400,000 in cash, of which $350,000 was paid prior to closing and $50,000 was due upon closing, and $400,000 in shares of the Company’s common stock to Paradise on Wings in consideration for the Class B Membership Interests (the “Capital Contribution”). The shares of common stock (the “ARC Shares”) were valued based upon the opening bid price of the common stock on the OTCmarkets.com on the morning of the closing date, which was $1.70 per share. Accordingly, the Company issued 235,295 shares of common stock to Paradise on Wings on the closing date. Under the operating agreement, the power to manage the business and affairs of Paradise on Wings has been vested in the managers of Paradise on Wings. The Class A Members may appoint up to two managers, which manager(s) have a total of 50% of the vote of all managers. The Company, as the owner of all of the Class B Membership Interests, may appoint one manager who has a total of 50% of the vote of all managers. Notwithstanding the foregoing, the Contributed Capital may not be used to pay salaries or bonuses to any of the Class A Members or Class B Members, and the vote of 60% of the total outstanding Class A Membership Interests and Class B Membership Interests is required in the event Paradise on Wings wishes to use the Contributed Capital for any permitted purpose. The Class A Membership Interests are identical to the Class B Membership Interests in all respects except that the Class A Membership Interests have a preferred right to distributions from Paradise on Wings with respect to the ARC Shares. The Class A Members, through their ownership of the Class A Membership Interests, are entitled to receive a total of 50% of all items of income, gain, losses, deductions and expenses (including 100% of any such items associated with the ARC Shares), and the Company, through its ownership of the Class B Membership Interests, was entitled to receive 50% of all items of income, gain, losses, deductions and expenses (with the exception of any such items associated with the ARC Shares). The Company accounted for its 50% ownership interest in Paradise on Wings using the equity method of accounting because the Company had the ability to exert significant influence, but not control, over the operating and financial policies of Paradise on Wings. The investment was initially recorded and subsequently adjusted for the Company’s share of the net income and loss, and cash contributions and distributions, to or from Paradise on Wings. The Company reported its income from Paradise on Wings as income from investment in Paradise on Wings in its statements of operations and reported its investment in Paradise on Wings as equity investment in Paradise on Wings in its balance sheets. The Company performed a review of its investment in Paradise on Wings at the end of its 2016 fiscal year and determined that, for the reasons more fully described in Note 8. Fair Value Measurements On September 30, 2017, the Company sold its 50% ownership interest in Paradise on Wings to Seenu G. Kasturi, the Company’s President, Chief Financial Officer and Chairman of the Board of Directors, for $24,000. The purchase price of $24,000 was reflected in Gain on Sale of Investment in Paradise on Wings – Related Party on the Company’s Consolidated Statements of Operations. Set forth below is a summary of the unaudited income statement of Paradise on Wings for the years ended December 31, 2017 and 2016 provided to the Company by Paradise on Wings. The information for the year ended December 31, 2017 reflects the period commencing January 1, 2017 and ending September 30, 2017, the date that the Company sold its Statement of Operations Year Year Revenue $ 226,273 $ 384,653 Operating expenses (484,436 ) (830,023 ) Loss from operations (258,163 ) (445,370 ) Other expense (182,398 ) — Net loss $ (440,561 ) $ (445,370 ) Company’s share of net loss $ (220,281 ) $ (247,717 ) Set forth below is a summary of the unaudited balance sheet of Paradise on Wings at December 31, 2016 provided to the Company by Paradise on Wings. No balance sheet information has been provided at December 31, 2017 because the Company sold its Balance Sheet December 31, Current assets $ 3,549 Equity investment 141,168 Total assets $ 144,717 Total liabilities $ 110,596 Equity 34,121 Total liabilities and equity $ 144,717 |
Acquisition of Seediv
Acquisition of Seediv | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisition of Seediv | Note 5. Acquisition of Seediv On December 19, 2016, the Company entered into a membership interest purchase agreement with Seenu G. Kasturi pursuant to which the Company agreed to acquire all of the issued and outstanding membership interests of Seediv from Mr. Kasturi. Seediv is the owner and operator of the Nocatee and Youngerman Restaurants. The closing of the acquisition occurred simultaneously with the execution of the membership interest purchase agreement by the Company and Mr. Kasturi on December 19, 2016. The Company agreed to pay Mr. Kasturi $600,000 for the membership interests on the closing date, consisting of: (a) a cash payment of $13,665, (b) the cancellation and termination of accounts receivable originally owed to the Company by DWG Acquisitions, LLC, a Louisiana limited liability company (“DWG Acquisitions”), and subsequently transferred to Seediv, in the amount of $259,123, and (c) the cancellation and termination of debt originally owed to the Company by Raceland QSR, LLC, a Louisiana limited liability company (“Raceland QSR”), and subsequently transferred to Seediv, in the amount of $327,212. The Company also agreed to pay Mr. Kasturi an earn-out payment (the “Earn-Out Payment”) calculated as follows: (x) the amount equal to: (i) 5.5, multiplied by the sum of plus less provided, however At any time on or prior to April 16, 2018, Mr. Kasturi may elect to receive all or part of the Earn-Out Payment in the form of shares of the Company’s common stock; provided, however, OTCQB m As of December 19, 2016, Mr. Kasturi owned Blue Victory loaned the Company during the year ended December 31, 2016. As of December 19, 2016, Mr. Kasturi The acquisition was accounted for as a business combination. Based upon its analysis of the above facts, the Company determined that the acquisition of Seediv was a transaction involving entities under common control. Accordingly, the assets acquired and liabilities assumed were recorded based on their carrying value at the time of the acquisition and the excess of the purchase price over the aggregate carrying value of the net assets acquired was allocated to Seediv compensation expense. The assets acquired and liabilities assumed were comprised of the following: Cash and cash equivalents $ 18,089 Inventory 40,574 Other current assets 6,538 Leasehold improvements, net 46,541 Furniture and equipment, net 33,701 Total assets acquired 145,443 Accounts payable – related party (1,026 ) Accrued expenses (126,878 ) Notes payable – related party (234,286 ) Total liabilities assumed (362,190 ) Seediv compensation expense 251,309 Net consideration paid $ 34,562 In connection with the acquisition of Seediv, the Company recorded $20,897 of contingent consideration as the estimated initial fair value of the Earnout Payment. A description of the manner by which the Earnout Payment was valued is set forth herein under Note 8. Fair Value Measurements As of December 31, 2017, the Company calculated the Earnout Payment in accordance with the provisions of the membership interest purchase agreement and determined that the Earnout Payment was $199,682. The Company recognized additional Seediv compensation expense in the amount of $178,785 in connection with the Earnout Payment and included the amount within general and administrative expenses in the Company’s Consolidated Statements of Operations. The following table summarizes certain unaudited pro forma financial information as if the acquisition of Seediv had occurred on January 1, 2016: Year Ended December 31, Year Ended December 31, Revenue $ 4,445,663 $ 4,643,904 Loss from continuing operations (84,614 ) (845,508 ) Net income / (loss) 344,740 (1,467,086 ) Net income / (loss) per share – basic and fully diluted $ 0.05 $ (0.22 ) The results of operations for Seediv were included in the Company’s results of operations beginning December 19, 2016. The actual amounts of revenue and net income for Seediv that are included in the Company’s Consolidated Statements of Operations for the year ended December 31, 2017 were $3,504,833 and $127,733, respectively, and for the year ended December 31, 2016 were $130,861 and $13,210, respectively. Acquisition-related costs were $50,000 during the year ended December 31, 2016 and were included in general and administrative expense in the Company’s Consolidated Statement of Operations. These non-recurring costs were eliminated from the unaudited pro forma net income from continuing operations for the year ended December 31, 2016. The unaudited pro forma financial information has been presented for informational purposes only and is not necessarily indicative of the actual results that would have occurred had the acquisition been consummated on January 1, 2016 or of the future results of the combined entities |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 6. Inventory Inventory was comprised of the following at December 31, 2017 and 2016, respectively: December 31, December 31, Food $ 23,987 $ 25,942 Beverages 21,430 19,308 Total $ 45,417 $ 45,250 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Note 7. Property and Equipment, Net Property and equipment were comprised of the following at December 31, 2017 and 2016, respectively: December 31, December 31, Leasehold improvements $ 69,472 $ 62,125 Furniture, fixtures and equipment 78,621 50,140 Subtotal 148,093 112,265 Less: accumulated depreciation (48,979 ) (31,317 ) Total $ 99,114 $ 80,948 Depreciation expense was $17,180 and $507 during the years ended December 31, 2017 and 2016, respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 8. Fair Value Measurements On January 20, 2014, the Company purchased a 50% ownership interest in Paradise on Wings. On December 19, 2016, the Company acquired all of the issued and outstanding membership interests of Seediv. A description of the investment in Paradise on Wings and the acquisition of Seediv is set forth herein under Note 4. Investment in Paradise on Wings Note 5. Acquisition of Seediv The Company performed a review of its investment in Paradise on Wings at the end of its 2016 fiscal year to determine whether an impairment must be recorded. As described more fully in Note 4. Investment in Paradise on Wings Note 2. Significant Account Policies – Investment in Paradise on Wings On September 30, 2017, the Company sold its 50% ownership interest in Paradise on Wings to Seenu G. Kasturi for $24,000. Paradise on Wings incurred a loss of $440,561 during the period beginning January 1, 2017 and ending September 30, 2017. As a result, the carrying amount of the Company’s investment in Paradise on Wings was zero at September 30, 2017. The Company recognized a gain on the sale of investment in Paradise on Wings of $24,000 during the year ended December 31, 2017. The Company recorded the gain within other income / (expense) in the Company’s Consolidated Statements of Operations. In connection with the acquisition of Seediv, the Company agreed to pay contingent consideration in the form of an earn-out payment. The Company determined that the fair value of the liability for the contingent consideration was estimated to be $20,897 at the acquisition date. The fair value of this liability did not change from the initial valuation calculated on the acquisition date. Accordingly, the fair value of the liability was $20,897 on December 31, 2016. The Company determined the fair value of the contingent consideration based on a probability-weighted approach derived from earn-out criteria estimates and a probability assessment with respect to the likelihood of achieving the earn-out criteria. The measurement was based upon significant inputs not observable in the market, including internal projections and an analysis of the target markets. The resultant probability-weighted contingent consideration was discounted using a discount rate based upon the weighted-average cost of capital. At each reporting date, the Company revalues the contingent consideration to the reporting date fair value and records increases and decreases in the fair value as income or expense under general and administrative expenses in the Company’s Consolidated Statements of Operations. Increases or decreases in the fair value of the contingent consideration may result from, among other things, changes in discount periods and rates, changes in the timing and amount of earn-out criteria, and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria. As of December 31, 2017, the Company calculated the Earnout Payment in accordance with the provisions of the membership interest purchase agreement and determined that the Earnout Payment was $199,682. The Company recognized additional Seediv compensation expense in the amount of $178,785 in connection with the Earnout Payment and the liability for the contingent consideration was increased to $176,675 at December 31, 2017. The following table presents the contingent consideration recorded by the Company in connection with the acquisition of Seediv within the fair value hierarchy utilized to measure fair value on a recurring basis at December 31, 2017 and 2016, respectively: Level 1 Level 2 Level 3 December 31, 2017 $ -0- $ 199,682 $ -0- December 31, 2016 $ -0- $ -0- $ 20,897 The fair value measurement of the contingent consideration represented a Level 3 fair value measurement at December 31, 2016 because it was based on significant inputs not observed in the market. Key assumptions included discount rates and probability-adjusted achievement estimates of the EBITDA targets for the Nocatee and Youngerman Circle Restaurants that were not observable in the market. As of the end of the Earnout Period on December 31, 2017, the actual EBITDA for the Nocatee and Youngerman Circle Restaurants was utilized to compute the ending contingent consideration liability. Accordingly, the contingent consideration liability was transferred into the Level 2 valuation hierarchy at December 31, 2017 because it was based on other significant observable inputs. The following table presents activating in our financial assets and liabilities measured at fair value under the Level 3 valuation hierarchy using significant unobservable inputs as of and for the year ended December 31, 2017: Total Balance at December 31, 2015 $ -0- Contingent consideration related to acquisition of Seediv 20,897 Balance at December 31, 2016 $ 20,897 Transfer of contingent consideration to Level 2 (20,897 ) Balance at December 31, 2017 $ -0- The Company’s other financial instruments consist of cash and cash equivalents, accounts and ad fund receivables, notes receivable, accounts payable, accrued expenses and notes payable. The estimated fair values of the cash and cash equivalents, accounts and ad fund receivables, accounts payable, and accrued expenses approximate their respective carrying amounts due to the short-term maturities of these instruments. The estimated fair values of the notes receivable and notes payable also approximates their respective carrying amounts since their terms are similar to those in the lending market for comparable loans with comparable risks. The fair value of related-party transactions is not determinable due to their related-party nature. None of these instruments are held for trading purposes. |
Notes Receivable
Notes Receivable | 12 Months Ended |
Dec. 31, 2017 | |
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |
Notes Receivable | Note 9. Notes Receivable Notes Receivable – Unrelated Parties In May and June 2013, the Company made loans to certain of its franchisees in the aggregate original principal amount of $40,507. The loans were for terms ranging from one year to three years in duration, were payable in monthly installments, and did not require the payment of any interest. The loans were repaid in full during the year ended December 31, 2016. In September 2014, the Company made a loan to one of its franchisees in the aggregate original principal amount of $6,329. The loan is for a term of three years, is payable in monthly installments, and does not require the payment of any interest. A total of $25 and $1,783 of principal was outstanding under the loan at December 31, 2017 and 2016, respectively. In June 2016, the Company made a loan to one of its franchisees under a promissory note in the aggregate original principal amount of $25,000. In July 2016, the Company made an additional loan to the same franchisee under a line of credit agreement for an aggregate original principal amount of up to $28,136. In September 2016, the Company made an additional loan to the same franchisee under a second line of credit agreement for an aggregate original principal amount of up to $25,000. The loan under the promissory note is for a term of two years, is payable in monthly installments beginning January 1, 2017, and accrues interest at a rate of 5% per annum beginning September 1, 2016. The loan under the $28,136 line of credit agreement was for a term of two years, was payable in monthly installments beginning January 1, 2017, and did not require the payment of any interest. The loan was repaid in full during the year ended December 31, 2017. The loan under the $25,000 line of credit agreement is for a term of two years, is payable in monthly installments beginning January 1, 2017 and accrues interest at a rate of 5% per annum beginning October 1, 2016. A total of $25,944 and $78,020 of principal was outstanding under the loans at December 31, 2017 and 2016, respectively, and a total of $838 of accrued interest was outstanding under the loans at December 31, 2016. No accrued interest was outstanding under the loans at December 31, 2017. In September 2016, the Company made a loan to one of its franchisees in the aggregate original principal amount of $13,869. The loan was due and payable in full on November 15, 2018, was payable in monthly installments beginning December 15, 2016, and accrued interest at a rate of 5% per annum beginning October 1, 2016. A total of $13,318 of principal was outstanding under the loan at December 31, 2016. No accrued interest was outstanding under the loan at December 31, 2016. The loan was repaid in full during the year ended December 31, 2017. In October 2017, the Company made a loan to one of its franchisees in the aggregate original principal amount of $7,659. The loan is due and payable in full on December 1, 2020, is payable in monthly installments beginning January 1, 2018, and does not require the payment of any interest. The full amount of the loan was outstanding on December 31, 2017. The carrying value of the Company’s outstanding notes receivable was $33,628 and $93,121 at December 31, 2017 and 2016, respectively, all of which was due from unrelated third parties. Of these amounts, $28,522 and $5,106 were classified as short-term and long-term notes receivable, respectively, at December 31, 2017, and $63,742 and $29,379 were classified as short-term and long-term notes receivable, respectively, at December 31, 2016. The Company had interest receivable of $838 outstanding at December 31, 2016. The Company did not have any interest receivable outstanding at December 31, 2017. The Company generated interest income of $2,340 and $896 during the years ended December 31, 2017 and 2016, respectively. Notes Receivable – Related Parties During the year ended December 31, 2015, the Company loaned a total of $121,638 to Raceland QSR. The Company loaned an additional $419,849 to Raceland QSR during the year ended December 31, 2016. The loan accrued interest at a rate of 6% per year and was payable on demand. Raceland QSR did not make any interest payments under the loan during the year ended December 31, 2016. All accrued but unpaid interest was written off during the year ended December 31, 2016. During the year ended 2016, the Company recorded an allowance for uncollectible notes receivable of $271,590. Raceland QSR subsequently transferred the outstanding balance of the note receivable to Seediv in December 2016, and the outstanding balance of the loan was repaid in full on December 19, 2016 when the Company acquired Seediv. A description of the acquisition of Seediv by the Company is set forth herein under Note 5. Acquisition of Seediv |
Debt Obligations
Debt Obligations | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Note 10. Debt Obligations During the fourth quarter of 2008, the Company issued promissory notes to four investors for a total original principal amount of $11,000 in return for aggregate cash proceeds of $11,000. The notes bore interest at a rate of 6% per annum and provided for the payment of all principal and interest three years after the date of the respective notes. The notes provided for the payment of a penalty in an amount equal to 10% of the principal amount of the notes in the event they were not paid by the end of the term. In April 2015, the Company repaid notes to two of these investors representing a total original principal amount of $4,000. As a result, a total original principal balance of $7,000 was outstanding under the two remaining notes at December 31, 2016. These notes were in default. As of December 31, 2017, in accordance with ASC 450, the Company determined that the probability that the Company would have to repay either of the promissory notes to the investors was remote. Accordingly, the Company concluded that the total original principal amount outstanding under the notes should be written off as of December 31, 2017. The Company recorded the write-off within other income / (expense) in its Consolidated Statements of Operations. On September 13, 2013, the Company entered into a loan agreement with Blue Victory pursuant to which Blue Victory agreed to extend a revolving line of credit facility to the Company for up to $1 million. Under the terms of the loan agreement, Blue Victory agreed to make loans to the Company in such amounts as the Company may request from time to time, provided that the total amount of loans requested in any calendar month may not exceed $150,000. All loan requests are subject to approval by Blue Victory. The Company may use the proceeds from the credit facility for general working capital purposes. The credit facility is unsecured, accrues interest at a rate of 6% per annum, and will terminate upon the earlier to occur of the fifth anniversary of the loan agreement or the occurrence of an event of default. The outstanding principal balance of the credit facility and any accrued and unpaid interest thereon are payable in full on the termination date. Loans may be prepaid by the Company without penalty and borrowed again at any time prior to the termination date. The obligation of the Company to pay the outstanding balance of the credit facility is evidenced by a promissory note that was issued by the Company to Blue Victory on September 13, 2013. Blue Victory has the right, at any time on or after September 13, 2013, to convert all or any portion of the outstanding principal of the credit facility, together with accrued interest payable thereon, into shares of the Company’s common stock at a conversion rate equal to: (i) the closing price of the common stock on the date immediately preceding the conversion date if the common stock is then listed on the OTCQB or a national securities exchange, (ii) the average of the most recent bid and ask prices on the date immediately preceding the conversion date if the common stock is then listed on any of the tiers of the OTC Markets Group, Inc., or (iii) in all other cases, the fair market value of the common stock as determined by the Company and Blue Victory. Notwithstanding the above, in the event the Company does not have adequate shares of common stock authorized and available for issuance to be able to fulfill a conversion request, or the Company would breach its obligations under the rules or regulations of any trading market on which its shares of common stock are then listed if it fulfilled a conversion request, On March 24, 2017, the Company and Blue Victory entered into an amendment to the loan agreement, dated September 13, 2013, pursuant to which Blue Victory had extended a line of credit facility to the Company for up to $1 million. Under the terms of the amendment, the Company and Blue Victory agreed to reduce the maximum amount of funds available under the credit facility from $1 million to $50,000. Pursuant to the terms of the amendment, the promissory note that was issued by the Company to Blue Victory on September 13, 2013 to evidence the obligation of the Company to pay the outstanding balance of the credit facility, was terminated in its entirety. The obligation of the Company to pay any future outstanding balance of the credit facility was evidenced by a new promissory note that was issued by the Company to Blue Victory on March 24, 2017. During the year ended December 31, 2016, the Company borrowed $840,353 under the credit facility, of which $824,250 was repaid by the Company during the year ended December 31, 2016. Accordingly, the amount of principal outstanding under the credit facility was $16,103 at December 31, 2016. During the year ended December 31, 2017, the Company borrowed $61,721 under the credit facility and repaid $77,824 to Blue Victory under the credit facility. Accordingly, there was no principal outstanding under the credit facility at December 31, 2017. On December 19, 2016, the Company acquired Seediv. In connection therewith, the Company assumed debt owed by Seediv to Blue Victory pursuant to the terms of a promissory note issued by Seediv in favor of Blue Victory in the amount of $216,469. The promissory note During the year ended December 31, 2017, the Company borrowed $372,049 from Blue Victory and repaid $341,546 to Blue Victory under a separate loan. The loan accrued interest at a rate of 6% per annum and was payable on demand The Company repaid the loan in full subsequent to December 31, 2017 The carrying value of the Company’s outstanding promissory notes, net of unamortized discount, was $30,503 and $239,572 at December 31, 2017 and 2016, respectively, as follows: December 31, December 31, 2017 2016 Notes payable – related party $ 30,503 $ 232,572 Notes payable – in default -0- 7,000 Total notes payable, net $ 30,503 $ 239,572 |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders Equity Note [Abstract] | |
Capital Stock | Note 11. Capital Stock The Company’s authorized capital consisted of 100,000,000 shares of Class A common stock, par value $0.01 per share, at December 31, 2017 and 2016, of which 6,950,869 and 6,647,464 shares of common stock were outstanding at December 31, 2017 and 2016, respectively, and 10,000,000 shares of preferred stock, none of which was outstanding at December 31, 2017 and 2016. On September 27, 2011, the Company entered into an agreement with a consultant pursuant to which the Company agreed to issue 142,857 shares of its common stock to the consultant as payment for consulting services to be performed by the consultant during a term commencing on the date of the agreement and ending June 30, 2012. The shares were valued at the closing price of the Company’s common stock on the date of grant for total consideration of $150,000. The Company recognized $150,000 of stock compensation in connection therewith and credited stock subscription payable. As of December 31, 2017, in accordance with ASC 450, the Company determined that the probability that the Company would have to issue any shares of common stock to the consultant, or pay any other form of consideration to the consultant, was remote. Accordingly, the Company concluded that the $150,000 of stock subscription payable should be written off as of December 31, 2017. The Company recorded the write-off within other income / (expense) in its Consolidated Statements of Operations. In January 2013, the Company appointed Richard W. Akam to serve as its Chief Operating Officer. In connection therewith, the Company entered into an employment agreement with Mr. Akam. The employment agreement provides in part that the Company will grant Mr. Akam shares of its common stock equal in value to $50,000 on January 1st of each year thereafter if Mr. Akam is continuously employed by the Company through January 1st of the applicable year. The number of shares of common stock that the Company will issue to Mr. Akam for each applicable year will be calculated based on the average of the last sales price of shares of the Company’s common stock as reported on the OTCQB for the month of January of the applicable year. On January 31, 2017, the Company and Richard W. Akam entered into an amendment to the employment agreement, pursuant to which, among other things, the parties removed the provision relating to the grant of shares of the Company’s common stock to Mr. Akam on January 1 st Note 14. Commitments and Contingencies – Employment Agreements In January 2016, Mr. Akam earned 71,429 . In August 2016, the Company issued 35,000 shares of its common stock to Guiseppe Cala (“Cala”) pursuant to the terms of a A description of the settlement and release agreement is set forth herein under Note 16. Judgments in Legal Proceedings In November 2016, the Company issued 20,000 shares of its common stock to one of its non-executive employees as incentive compensation. On January 18, 2017, the Company appointed Seenu G. Kasturi as its President, Chief Financial Officer and Chairman of the board of directors. In connection therewith, the Company entered into an employment agreement with Mr. Kasturi to serve as the President and Chief Financial Officer of the Company. The employment agreement provides in part that Mr. Kasturi will be paid annual compensation in the amount of $80,000 per year, consisting of: (i) an initial annual base salary of $26,000, and (ii) equity awards equal in value to $54,000 per year. Note 14. Commitments and Contingencies – Employment Agreements The Company recognized $40,500 of stock compensation expense during the year ended December 31, 2017 in connection with the vesting of the shares of common stock earned by Mr. Kasturi on April 1, July 1 and October 1, 2017. The Company also recognized $13,353 of stock compensation expense during the year ended December 31, 2017 in connection with the vesting of the shares of common stock to be earned by Mr. Kasturi on January 1, 2018. This amount was credited to stock subscriptions payable. In May 2017, the Company entered into an agreement with Maxim Group LLC (“Maxim”) to provide general financial advisory and investment banking services to the Company for a term of one year. Under the terms of the agreement, the Company agreed to pay Maxim $5,000 per month during the term of the agreement and issue 225,000 shares of common stock to Maxim upon the execution of the agreement. The Company recognized $180,000 of stock compensation expense during the year ended December 31, 2017 in connection with the issuance of the shares. In August 2017, the Company approved the issuance of a total of 2,750 shares of its common stock to certain of its non-executive employees as incentive compensation. . In August 2017, the Company approved the issuance of a total of 13,000 shares of its common stock to certain of its franchisees as incentive compensation. . In August 2017, the Company issued 35,295 shares of its common stock to a consultant as payment for $30,000 of consulting fees then due and payable by the Company. The Company recognized a total of $247,240 and $41,337 for stock compensation expense during the years ended December 31, 2017 and 2016, respectively. The Company had a total of $26,853 and $150,000 of stock subscription payable outstanding at December 31, 2017 and 2016, respectively. |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Stock Options and Warrants [Abstract] | |
Stock Options and Warrants | Note 12. Stock Options and Warrants The Company did not issue any stock options or warrants exercisable into shares of the Company’s common stock during the years ended December 31, 2017 and 2016, and no stock options or warrants were exercised during the years ended December 31, 2017 and 2016. There were no stock options or warrants outstanding at December 31, 2017 and 2016. |
Stock Compensation Plans
Stock Compensation Plans | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Compensation Plans | Note 13. Stock Compensation Plans American Restaurant Concepts, Inc. 2011 Stock Incentive Plan In August 2011, the Company adopted the American Restaurant Concepts, Inc. 2011 Stock Incentive Plan. Under the plan, 1,214,286 shares of common stock may be granted to employees, officers and directors of, and consultants and advisors to, the Company under awards that may be made in the form of stock options, warrants, stock appreciation rights, restricted stock, restricted units, unrestricted stock and other equity-based or equity-related awards. As of December 31, 2017, 142,858 shares of the Company’s common stock remained available for issuance under the plan. The plan terminates in August 2021. On August 18, 2011, the Company filed a registration statement on Form S-8, File No. 333- 176383 ARC Group, Inc. 2014 Stock Incentive Plan In June 2014, the Company adopted the ARC Group, Inc. 2014 Stock Incentive Plan. Under the plan, 1,000,000 shares of common stock may be granted to employees, officers and directors of, and consultants and advisors to, the Company under awards that may be made in the form of stock options, warrants, stock appreciation rights, restricted stock, restricted units, unrestricted stock and other equity-based or equity-related awards. As of December 31, 2017, all 1,000,000 shares of the Company’s common stock remained available for issuance under the plan. The plan terminates in June 2024. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 14. Commitments and Contingencies Employment Agreements and Arrangements Richard W. Akam On January 22, 2013, the Company appointed Richard W. Akam to serve as its Chief Operating Officer. In connection therewith, the Company entered into an employment agreement with Mr. Akam pursuant to which it agreed to pay him an annual base salary of $150,000, subject to annual adjustment and discretionary bonuses, plus certain standard and customary fringe benefits. The initial term of the employment agreement is for one year and automatically renews for additional one-year terms until terminated by Mr. Akam or the Company. The employment agreement provided that, on July 22, 2013, the Company would grant Mr. Akam shares of its common stock equal in value to $50,000 if Mr. Akam was continuously employed by the Company through that date. The number of shares of common stock that the Company would issue to Mr. Akam would be calculated based on the last sales price of the Company’s common stock as reported on the OTCQB on July 22, 2013. The employment agreement also provided that the Company would grant Mr. Akam additional shares of its common stock equal in value to $50,000 on January 1st of each year thereafter if Mr. Akam was continuously employed by the Company through January 1st of the applicable year. The number of shares of common stock that the Company would issue to Mr. Akam for each applicable year would be calculated based on the average of the last sales price of shares of the Company’s common stock as reported on the OTCQB for the month of January of the applicable year. Notwithstanding the above, and in connection therewith, Mr. Akam agreed that the number of shares that may be earned by him under his employment agreement in connection with any particular grant would be equal to the lesser of: (i) 71,429 shares of common stock, or (ii) the number of shares of common stock calculated by dividing $50,000 by the closing price of the Company’s common stock on the day immediately preceding the date the Company’s obligation to issue the shares to him fully accrues. Mr. Akam also agreed that in the event the Company was unable to fulfill its obligation to issue all of the shares earned by him with respect to any particular grant because it did not have enough shares of common stock authorized and available for issuance, (i) Mr. Akam would not require the Company to issue more shares of common stock than are then authorized and available for issuance by the Company, and (i) the Company would be permitted to settle any liability to Mr. Akam created as a result thereof in cash. In the event the Company terminates Mr. Akam’s employment without “cause” (as such term is defined in the employment agreement), Mr. Akam will be entitled to receive the following severance compensation from the Company: (i) if the Company terminates Mr. Akam’s employment during the first year of his employment with the Company, that amount of compensation equal to the salary payable to Mr. Akam during that year, (ii) if the Company terminates Mr. Akam’s employment during the second year of his employment with the Company, that amount of compensation equal to nine months of the salary payable to Mr. Akam during that year, (iii) if the Company terminates Mr. Akam’s employment during the third year of his employment with the Company, that amount of compensation equal to six months of the salary payable to Mr. Akam during that year, and (iv) if the Company terminates Mr. Akam’s employment after the third year of his employment with the Company, that amount of compensation equal to three months of the salary payable to Mr. Akam during the year that such termination occurs. Mr. Akam will not be entitled to receive any severance compensation from the Company if the Company terminates his employment for “cause” or as a result of his disability, or if Mr. Akam resigns from his employment with the Company. The employment agreement also contains customary provisions that provide that, during the term of Mr. Akam’s employment with the Company and for a period of one year thereafter, Mr. Akam is prohibited from disclosing confidential information of the Company, soliciting Company employees and certain other persons, and competing with the Company. On July 31, 2013, the Company appointed Richard Akam as its Chief Executive Officer, Chief Financial Officer and Secretary. The Company and Mr. Akam did not amend the employment agreement in connection with the above appointments, and Mr. Akam did not receive any additional compensation in connection with the above appointments. On August 19, 2013, the Company appointed Daniel Slone as the Company’s Chief Financial Officer. In connection therewith, Richard Akam resigned as the Company’s Chief Financial Officer on August 19, 2013. Mr. Akam retained his positions as the Company’s Chief Executive Officer, Chief Operating Officer and Secretary. On January 1, 2016, Mr. Akam earned 71,429 shares of common stock under the terms of his employment agreement with the Company. On January 31, 2017, the Company and Richard W. Akam entered into an amendment to the employment agreement. Under the terms of the amendment, the parties confirmed the appointment of Mr. Akam as the Company’s Chief Operating Officer on January 22, 2013 and as the Company’s Chief Executive Officer on July 31, 2013, clarified that Mr. Akam’s monthly base salary after the initial term of the employment agreement may be adjusted from time to time by the Company with Mr. Akam’s consent, removed the provision relating to the grant of shares of the Company’s common stock to Mr. Akam on January 1 st st Daniel Slone On August 19, 2013, the Company appointed Daniel Slone as the Company’s Chief Financial Officer. The Company agreed to pay Mr. Slone an annual base salary of $1.00 in connection with his appointment. The Company did not enter into an employment agreement with Mr. Slone. On January 17, 2017, Daniel Slone resigned as the Company’s Chief Financial Officer. Seenu G. Kasturi On January 18, 2017, the Company appointed Seenu G. Kasturi as its President, Chief Financial Officer and Chairman of the board of directors. In connection therewith, on January 18, 2017, the Company entered into an employment agreement with Mr. Kasturi to serve as the President and Chief Financial Officer of the Company. The employment agreement is for an initial term of three years with automatic one-year renewals thereafter unless earlier terminated or not renewed as provided therein. Under the terms of the employment agreement, Mr. Kasturi will be paid annual compensation in the amount of $80,000 per year, consisting of: (i) an initial annual base salary of $26,000, and (ii) equity awards equal in value to $54,000 per year. Mr. Kasturi will be eligible to receive increases in salary on January 1 st Operating Leases Company Headquarters In January 2015, the Company entered into a lease with Crescent Hill Office Park for its corporate headquarters located at 6327-4 Argyle Forest Boulevard, Jacksonville, Florida pursuant to which the Company leases approximately Nocatee Restaurant In October 2013, On April 1, 2017, DWG Acquisitions, Seediv and NTC-REG entered into an assignment and assumption & first modification to lease agreement for the Nocatee Restaurant. Under the agreement, DWG Acquisitions assigned all of its right, title, interest and claim in and to the Nocatee Lease, and Seediv assumed the payment and performance of all obligations, liabilities and covenants of DWG Acquisitions under the lease for the Nocatee Restaurant. In addition, the parties amended certain terms of the lease to state that the lease covers approximately 3,400 square feet of space, to extend the term of the lease for a 60-month period commencing on April 1, 2018 and expiring March 31, 2023, and to change the rent payments to an initial monthly rent payment of $6,830 without an additional annual rent payment. Youngerman Circle Restaurant In May 2014, On December 20, 2016, Seediv entered into a new triple net lease with Raceland QSR for the Youngerman Circle Restaurant. The lease provides for rent payments to be made by the Company for each of 13 rent periods per year, with each rent period comprised of four weeks. The lease provides for an initial base rent payment equal to the greater of: (i) $10,000 per rent period, or (ii) 7.5% of the Youngerman Circle Restaurant’s net sales for the applicable rent period. Commencing on the fifth (5 th Rent expense was $262,350 and $29,554 during the years ended December 31, 2017 and 2016, respectively, and was comprised of the following: December 31, December 31, Straight-lined minimum rent $ 194,770 $ 29,554 Contingent rent 67,580 -0- Total $ 262,350 $ 29,554 Future minimum annual payments under the leases as of December 31, 2017 are as follows: Year Lease Payment 2018 $ 215,610 2019 216,314 2020 218,892 2021 221,565 2022 224,442 Thereafter 1,840,127 Total $ 2,936,950 Sponsorship Agreements In July 2013, the Company entered into a three-year sponsorship agreement with the Jacksonville Jaguars, LLC (the “Jacksonville Jaguars”) and, in connection therewith, in August 2013, entered into a subcontractor concession agreement with Levy Premium Foodservice Limited Partnership (“Levy”) for a concession stand to be located at TIAA Bank Field in Jacksonville, Florida. The Company concurrently assigned all of its rights and obligations under the concession agreement to DWG Acquisitions in return for a fee of $2,000 per month for each full or partial month during which the concession agreement is in effect. In July 2015, the Company extended its sponsorship agreement with the Jaguars by an additional two years and entered into a subcontractor concession agreement with Ovations Food Services, L.P. (“Ovations”) for a second concession stand at TIAA Bank Field. The Company concurrently assigned all of its rights and obligations under the second concession agreement to DWG Acquisitions in return for an additional fee of $3,000 per month for each full or partial month during which the concession agreement is in effect. In September 2016, the Company terminated its subcontractor concession agreements with Levy and Ovations and the related assignment agreements with DWG Acquisitions, and entered into a sub-concession agreement with Jacksonville Sportservice, Inc. (“Jacksonville Sportservice”) and DWG Acquisitions with respect to the two concession stands previously covered by the Levy and Ovations subcontractor concession agreements. The Company concurrently assigned all of its rights and obligations under the sub-concession agreement to DWG Acquisitions in return for a fee equal to the income generated by the concession stands less all expenses incurred by the concession stands for each full or partial month during which the concession agreement is in effect. In October 2017, the Company entered into a termination agreement with DWG Acquisitions whereby the Company terminated the assignment to DWG Acquisitions. In November 2017, the Company entered into a new five-year sponsorship agreement with the Jacksonville Jaguars. Under the terms of the sponsorship agreement, during each preseason and regular season football game played by the Jacksonville Jaguars and at certain other events held at the football-based stadium in Jacksonville, Florida currently named “Everbank Field”: (i) the Company has the right to display its branding on one fixed concession stand in the Bud Light Party Zone at Everbank Field and a second concession stand located on the concourse at Everbank Field, (ii) the Company has the right to have its food products sold or otherwise distributed from the stands and/or certain general concession areas at Everbank Field, and (iii) the Company has the right to receive a variety of stadium signage at Everbank Field, radio broadcasting on the Jacksonville Jaguars’ radio programming, and digital advertising on the Jacksonville Jaguars’ website and certain of its social media sites. The term of the sponsorship agreement commences on April 1, 2018 and expires on the later of: (i) the conclusion of the 2022/23 NFL season, and (ii) February 28, 2023. The Company is required to pay the Jacksonville Jaguars annual fees in the amount of $200,000 during the first year of the agreement increasing to $216,490 during the last year of the agreement. In addition, the Company is required to provide the Jacksonville Jaguars with food, beverages and serving products equal in value to $35,000 during the first year of the agreement increasing to $37,890 during the last year of the agreement. In the event the Jacksonville Jaguars play in any post-season playoff games, the Company will pay the Jacksonville Jaguars an additional amount per playoff game equal to a pro-rated portion of the annual fee applicable during the then-current year of the agreement. Future minimum annual payments under the sponsorship agreement as of December 31, 2017 are as follows: Year Annual Payment 2018 $ 200,000 2019 204,000 2020 208,080 2021 212,240 2022 216,490 Thereafter -0- Total $ 1,040,810 Accounts Payable As of December 31, 2017, the Company had accounts payable outstanding in the amount of $709,621. Of this amount, $251,238 of the accounts payable had been outstanding for more than five years. The statute of limitations applicable to these payables expired during the year ended December 31, 2017 and the Company had not received any communications from any of the applicable vendors during the past five years. In accordance with ASC 450, the Company determined that the possibility that any vendor would contact the Company seeking payment for any of such accounts payable and recover a judgment for such payment was remote. Accordingly, the Company concluded that the $251,238 of accounts payable should be written off as of December 31, 2017. The Company recorded the write-off within other income / (expense) in its Consolidated Statements of Operations. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Note 15. Related-Party Transactions Employment Agreements In January 2013, the Company entered into an employment agreement with Richard W. Akam in connection with his appointment as the Company’s Chief Operating Officer. Mr. Akam currently serves as the Company’s Chief Executive Officer, Chief Operating Officer and Secretary. A description of the employment agreement is set forth herein under Note 14. Commitments and Contingencies – Employment Agreements In January 2017, the Company appointed Seenu G. Kasturi as its President, Chief Financial Officer and Chairman of the board of directors and, in connection therewith, entered into an employment agreement with Mr. Kasturi. A description of the employment agreement is set forth herein under Note 14. Commitments and Contingencies – Employment Agreements Sponsorship Agreements Between July 2013 and November 2017, the Company entered into a series of sponsorship agreement with the Jacksonville Jaguars and, in connection therewith, entered into a series of subcontractor concession agreements. The Company assigned all of its rights and obligations under each of the concession agreements to DWG Acquisitions in return for various forms of compensation. In October 2017, the Company entered into a termination agreement with DWG Acquisitions whereby the Company terminated the then current assignment to DWG Acquisitions. A description of the sponsorship agreements, concession agreements and assignments is set forth herein under Note 14. Commitments and Contingencies – Sponsorship Agreements. Seenu G. Kasturi was appointed President, Chief Financial Officer and Chairman of the board of directors of the Company in January 2017 and owned approximately 49.2% of the Company’s common stock at December 31, 2017. He owned all of the outstanding membership interests in DWG Acquisitions at December 31, 2017. He also served as the President, Treasurer and Secretary of DWG Acquisitions during the years ended December 31, 2017 and 2016. The Company generated revenue of $35,000 from DWG Acquisitions under the assignment agreements related to the Levy and Ovations subcontractor concession agreements during the year ended December 31, 2016. The Company incurred net expenses of $2,842 and $496 from DWG Acquisitions under the assignment agreement related to the Jacksonville Sportservice sub-concession agreement during the years ended December 31, 2017 and 2016, respectively. The fees were credited against the Company’s ad fund liability. Financing Transactions In September 2013, During the year ended December 31, 2016, the Company borrowed $840,353 under the credit facility, of which $824,250 was repaid by the Company during the year ended December 31, 2016. Accordingly, the amount of principal outstanding under the credit facility was $16,103 at December 31, 2016. During the year ended December 31, 2017, the Company borrowed $61,721 under the credit facility and repaid $77,824 to Blue Victory under the credit facility. Accordingly, there was no principal outstanding under the credit facility at December 31, 2017. A description of the credit facility is set forth herein under Note 10. Debt Obligations During the year ended December 31, 2017, the Company borrowed $372,049 from Blue Victory and repaid $341,546 to Blue Victory under a separate loan. The loan accrued interest at a rate of 6% per annum and was payable on demand The Company repaid the loan in full subsequent to December 31, 2017. A description of this loan from Blue Victory is set forth herein under Note 10. Debt Obligations Leases In May 2014, A description of the leases is set forth herein under Note 14. Commitments and Contingencies Franchise Agreements In October 2013, DWG Acquisitions became the franchisee of the Nocatee Restaurant. Note 5. Acquisition of Seediv In May 2014, DWG Acquisitions became the franchisee of the Youngerman Circle Restaurant. Note 5. Acquisition of Seediv In December 2014, DWG Acquisitions became the franchisee of the Dick’s Wings restaurant located on Gornto Road in Valdosta, Georgia. In March 2015, DWG Acquisitions became the franchisee of the Dick’s Wings restaurant located in Tifton, Georgia. In June 2015, DWG Acquisitions became the franchisee of the Dick’s Wings restaurant located in Fleming Island, Florida. In September 2015, DWG Acquisitions became the franchisee of the Dick’s Wings restaurant located in Panama City Beach, Florida. In March 2016, DWG Acquisitions became the franchisee of the Dick’s Wings restaurant located in Pensacola, Florida. In March 2016, DWG Acquisitions became the franchisee of the Dick’s Wings restaurant located in Kingsland, Georgia. Seenu G. Kasturi was appointed President, Chief Financial Officer and Chairman of the board of directors of the Company in January 2017 and owned approximately 49.2% of the Company’s common stock at December 31, 2017. He owned all of the outstanding membership interests in DWG Acquisitions at December 31, 2017. He also served as the President, Treasurer and Secretary of DWG Acquisitions during the years ended December 31, 2017 and 2016. The Company generated a total of $156,705 and $478,796 in royalties and franchise fees through its franchise agreements with DWG Acquisitions during the years ended December 31, 2017 and 2016, respectively. The Company had a total of $1,505 and $14,568 of accounts receivable outstanding from DWG Acquisitions at December 31, 2017 and 2016, respectively, and had a total of $2,280 of ad funds receivable outstanding from DWG Acquisitions at December 31, 2017. The Company did not have any ad funds receivable outstanding from DWG Acquisitions at December 31, 2016. Loans During the year ended December 31, 2015, the Company loaned a total of $121,638 to Raceland QSR. The Company loaned an additional $419,849 to Raceland QSR during the year ended December 31, 2016. The loan was paid off in full by the Company during the year ended December 31, 2016 of the loan is set forth herein under Note 9. Notes Receivable Acquisition of Seediv On December 19, 2016, the Company acquired all of the outstanding membership interests of Seediv from Seenu G. Kasturi. In connection therewith, the Company assumed debt owed by Seediv to Blue Victory pursuant to the terms of a promissory note issued by Seediv in favor of Blue Victory in the amount of $216,469. year ended December 31, 2017 Note 5. Acquisition of Seediv A description of the promissory note is set forth herein under Note 10. Debt Obligations. Sale of Ownership Interest in Paradise on Wings On September 30, 2017, the Company sold its 50% ownership interest in Paradise on Wings to Seenu G. Kasturi for $24,000. Seenu G. Kasturi was appointed President, Chief Financial Officer and Chairman of the board of directors of the Company in January 2017 and owned approximately 49.2% of the Company’s common stock at December 31, 2017. A description of the transaction is set forth herein under Note 4. Investment in Paradise on Wings. Real Estate Transactions On October 4, 2017, Seediv entered into an Agreement for Purchase and Sale of Real Estate (the “RE Purchase Agreement”) with Raceland QSR pursuant to which Seediv agreed to purchase the real property located at 6055 Youngerman Circle in Argyle Circle, Jacksonville, Florida 32244 (the “Property”) from Raceland QSR. The purchase price for the Property was to be the lesser of: (i) $2 million, or (ii) the appraised value of the Property determined by the appraisal completed by the financing source proposed to be utilized by Seediv to finance the acquisition of the Property. The agreement provided for the payment by Seediv of a deposit of $10,000 within 10 days of the date of the agreement to an escrow agent to be selected by the parties with the remainder of the purchase price to be paid by Seediv at closing. Seediv had the right to terminate the transaction in the event that certain feasibility studies, the title commitment or the appraisal was unsatisfactory to Seediv, or if Raceland QSR breached any of its representations, warranties, covenants, agreements or obligations under the agreement, in which case the deposit would be returned to Seediv. The closing of the transaction was to occur on December 3, 2017. On November 30, 2017, Seediv Seediv description of the termination agreement is set forth herein under Note 18. Subsequent Events. Seenu G. Kasturi was appointed President, Chief Financial Officer and Chairman of the board of directors of the Company in January 2017 and owned approximately 49.2% of the Company’s common stock at December 31, 2017. He served as the President, Treasurer and Secretary of Raceland QSR during the year ended December 31, 2017 and owned all of the outstanding membership interests in Raceland QSR at December 31, 2017. |
Judgments in Legal Proceedings
Judgments in Legal Proceedings | 12 Months Ended |
Dec. 31, 2017 | |
Judgment In Legal Proceedings [Abstract] | |
Judgments in Legal Proceedings | Note 16. Judgments in Legal Proceedings In October 2009, the Company initiated a legal proceeding entitled American Restaurant Concepts, Inc. vs. Cala, et al Cala v. Rosenberger et al. In August 2016, the Company entered into a full and final settlement and release agreement with Cala. Under the terms of the agreement, the Company and Cala agreed to release each other from all claims related to the ARC & Cala Proceedings, any and all other lawsuits that may have been filed by one party against the other, the 2010 Settlement Agreement, and any other matters, causes of action or claims either party may have had against the other. In consideration for the releases, the Company agreed to pay $15,000 to Cala and issue 35,000 shares of its common stock to Cala. The Company recognized a non-cash gain on settlement of liabilities of $175,449 in connection therewith during the year ended December 31, 2016. The remaining balance of $210,000 outstanding under the 2010 Settlement Agreement was debited to settlement agreements payable. On February 25, 2011, a legal proceeding entitled Duval Station Investment, LLC vs. Hot Wing Concepts, Inc. d/b/a Dick’s Wings and Grill, and American Restaurant Concepts, Inc. In January 2015, Santander Bank filed a complaint against the Company in the Circuit Court, Fourth Judicial Circuit in and for Duval County, Florida, seeking damages of $194,181 plus interest, costs and attorney’s fees for breach of a guaranty of certain obligations of Ritz Aviation, LLC (“Ritz Aviation”) under a promissory note executed by Ritz Aviation in July 2005. During the Company’s fourth fiscal quarter of 2016, Santander Bank informed the Company that certain assets of Ritz Aviation had been sold for $82,642 and that the proceeds from the sale were applied towards the balance of the damages being sought, resulting in an outstanding balance of damages sought of $111,539. A total of $33,809 and $25,980 of accrued interest, and $10,586 of other expenses, were outstanding at December 31, 2017 and 2016, respectively, resulting in an aggregate potential loss of $155,935 and $148,105 at December 31, 2017 and 2016, respectively. The potential losses of $155,935 and $148,105 were reflected in accrued legal settlement at December 31, 2017 and 2016, respectively. This case is currently pending. |
Previously Restated Financial I
Previously Restated Financial Information | 12 Months Ended |
Dec. 31, 2017 | |
Previously Restated Financial Information [Abstract] | |
Previously Restated Financial Information | Note. 17. Previously Restated Financial Information On November 14, 2017, the Company filed an amended Annual Report on Form 10-K/A for the year ended December 31, 2016 with the SEC to restate its audited financial statements for the year ended December 31, 2016 that were included within the Annual Report on Form 10-K for the year ended December 31, 2016 that was originally filed with the SEC on June 27, 2017. The sole purpose of the restatement was to reduce stock compensation expense and stock subscriptions payable by $49,863 in connection with the grant of a stock award to the Company’s Chief Executive Officer that was subsequently terminated. The error had no impact on the Company’s cash, total assets, total stockholders’ deficit or total cash flows for that year. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 18. Subsequent Events On January 1, 2018, Seenu G. Kasturi earned 9,337 shares of the Company’s common stock pursuant to the terms of his employment agreement with the Company. The Company issued these shares to Mr. Kasturi in January 2018 along with 8,177 shares earned by Mr. Kasturi on October 1, 2017 pursuant to the terms of his employment agreement but not yet issued by the Company. On February 1, 2018, Seediv On January 23, 2018, the Company issued 5,625 shares of the Company’s common stock to certain of its franchisees as incentive compensation. On January 30, 2018, the Company entered into a new lease with Crescent Hill Office Park for its corporate headquarters located at 6327-4 Argyle Forest Boulevard, Jacksonville, Florida pursuant to which the Company leases approximately |
Significant Accounting Polici25
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s financial statements have been prepared using GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. All intercompany accounts and transactions were eliminated in consolidation. |
Going Concern | Going Concern The Company incurred net losses of $813,713 for the year ended December 31, 2016 and experienced negative cash flows from operations for that year. The Company also had an accumulated deficit of $5,113,332 and a working capital deficit of $1,259,231 at December 31, 2016. Those facts created an uncertainty about the Company’s ability to continue as a going concern as of December 31, 2016. The Company generated net income of $344,740 and cash flows from operations of $248,345 for the year ended December 31, 2017. The improvement was due primarily to its acquisition of two Company-owned restaurants in December 2016. In addition, the Company has received continued financial support from related parties. As a result of these factors, the Company believes that the substantial doubt about its ability to continue as a going concern had been alleviated as of December 31, 2017. |
Estimates | Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain amounts in the Company’s financial statements for the 2016 fiscal year have been reclassified to conform to the 2017 fiscal year presentation. These reclassifications did not result in any change to the previously reported total assets, net loss or stockholders’ deficit. |
Segment Disclosure | Segment Disclosure The Company has a single brand, all of the restaurants of which operate in the full-service casual dining industry in the United States. Pursuant to the standards of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting |
Franchise Operations | Franchise Operations The Company enters into franchise agreements with each of its franchisees to build and operate restaurants using the Dicks Wings brand within a defined geographic area. The agreements have a 10-year term and can be renewed for one additional 10-year term. The Company provides the use of its Dick’s Wings trademarks and Dick’s Wings system, which includes uniform operating procedures, standards for consistency and quality of products, technical knowledge, and procedures for accounting, inventory control and management, in return for the royalty payments, franchise fees and area development fees. Franchisees are required to operate their restaurants in compliance with their franchise agreements, which includes adherence to operating and quality control procedures established by the Company. The Company is not required to provide loans, leases, or guarantees to franchisees or the franchisees’ employees and vendors. If a franchisee becomes financially distressed, the Company is not required to provide financial assistance. If financial distress leads to insolvency of the franchisee or the filing of a petition by or against the franchisee under bankruptcy laws, the Company has the right, but not the obligation, to acquire the franchise at fair value as determined by an independent appraiser selected by the Company. Franchisees generally remit royalty payments weekly for the prior week’s sales. Franchise and area development fees are paid upon the signing of the related franchise agreements. |
Cash Equivalents | Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less on the date of purchase to be cash equivalents in accordance with ASC Topic 305, Cash and Cash Equivalents |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded in accordance with ASC Topic 310, Receivables The accounts receivable balance at December 31, 2017 was comprised primarily of credit card sales by Company-owned restaurants, royalties due from the Company’s franchisees, and sales proceeds due from the concessionaire of the Company’s concessions stands, all of which the Company collected in full in January 2018. Accordingly, the allowance for doubtful accounts was zero at December 31, 2017. The accounts receivable balance at December 31, 2016 was comprised primarily of credit card sales by Company-owned restaurants and unpaid royalties due from one of the Company’s franchisees that was behind in its payments, all of which the Company collected in full in early 2017. Accordingly, the allowance for doubtful accounts was zero at December 31, 2016. |
Inventory | Inventory Inventory consists primarily of food and beverage products and is accounted for at the lower of cost or net realizable value using the first in, first out method of inventory valuation in accordance with ASC Topic 330, Inventory |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost, less accumulated depreciation and amortization, in accordance with ASC Topic 360, Property, Plant and Equipment The Company reviews property and equipment for impairment at least quarterly and whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable in accordance with ASC 360. Recoverability is measured by comparison of the carrying amount of the assets to the future undiscounted net cash flows that the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets for impairment at least quarterly or whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable in accordance with ASC 360. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the individual restaurant level. The Company evaluates the recoverability of a restaurant’s long-lived assets, including buildings, intangibles, leasehold improvements, furniture, fixtures, and equipment over the remaining life of the primary asset in the asset group, after considering the potential impact of planned operational improvements, marketing programs, and anticipated changes in the trade area. In determining future cash flows, significant estimates are made by management with respect to future operating results for each restaurant over the remaining life of the primary asset in the asset group. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset carrying amount exceeds its fair value based on the Company’s estimate of discounted future cash flows. The Company accounts for exit or disposal activities, including restaurant closures, in accordance with ASC Topic 420, Exit or Disposal Cost Obligations |
Financial Instruments | Financial Instruments The Company accounts for its financial instruments in accordance with ASC Topic 825, Financial Instruments |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in the Company’s principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In accordance with ASC Topic 820, Fair Value Measurements and Disclosures The levels of fair value hierarchy are: Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date; Level 2: Observable inputs other than quoted prices included in Level 1, such as: (i) quoted prices for similar assets and liabilities in active markets, (ii) quoted prices for identical or similar assets and liabilities in markets that are not active, and (iii) other inputs that are observable or can be corroborated by observable market data; and Level 3: Unobservable inputs for which there is little or no market data available. A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. In contrast, the Company considers unobservable data to be data that reflects the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. |
Investment in Paradise on Wings | Investment in Paradise on Wings On January 20, 2014, the Company purchased a 50% ownership interest in Paradise on Wings Franchise Group, LLC, a Utah limited liability company that is the franchisor of the Wing Nutz ® Note 4. Investment in Paradise on Wings The Company accounted for its investment in Paradise on Wings under the equity method of accounting in accordance with ASC Topic 323, Investments – Equity Method and Joint Ventures The Company reviews its investment in Paradise on Wings for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable in accordance with ASC 323. The standard for determining whether an impairment must be recorded under ASC 323 is whether an “other-than-temporary” decline in value of the investment has occurred. The evaluation and measurement of impairments under ASC 323 involves quantitative and qualitative factors and circumstances surrounding the investment, such as recurring operating losses, credit defaults and subsequent rounds of financing. If an unrealized loss on the investment is considered to be other-than-temporary, the loss is recognized in the period the determination is made and the value of the investment is reduced by the amount of the loss. |
Acquisition of Seediv | Acquisition of Seediv On December 19, 2016, the Company acquired all of the issued and outstanding membership interests of Seediv. A description of the Company’s acquisition of Seediv is set forth herein under Note 5. Acquisition of Seediv. The Company determined that the acquisition of Seediv constituted a business combination as defined by ASC Topic 805, Business Combinations Note 5. Acquisition of Seediv Fair Value Measurements and Disclosures |
General Advertising Fund | General Advertising Fund The Company has established a general advertising fund that it uses to pay for advertising costs, sales promotions, market research and other support functions intended to maximize general public recognition and acceptance of the Dick’s Wings brand. Company-owned and franchised restaurants are required to contribute at least 1%, but not more than 2%, of their gross revenue to the Company’s general advertising fund. Contributions made by franchisees to the general advertising fund and marketing and advertising expenses paid by the general advertising fund are not recognized as revenues and expenses. They instead constitute agency transactions. These contributions are recorded as a liability against which specific costs are charged. The Company accounts for the cash and cash equivalents held by the general advertising fund as restricted cash on its accompanying consolidated balance sheets. The restricted cash of this fund is classified as current as it is expected to be utilized to fund short-term obligations of the general advertising fund. The Company did not have any restricted cash at December 31, 2017 and 2016. |
Revenue Recognition | Revenue Recognition The Company’s revenue consists primarily of proceeds from the sale of food and beverage products at its Company-owned restaurants and concession stands, and royalty payments, franchise fees and area development fees that it receives from its franchisees. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery or performance has occurred, the sales price is fixed and determinable, and collectability is reasonably assured in accordance with ASC Topic 605, Revenue Recognition The Company records gift cards under a Dick’s Wings system-wide program. Gift cards sold are recorded as a gift card liability. When redeemed, the gift card liability account is offset by recording the transaction as revenue. Breakage income represents the value associated with the portion of gift cards sold that will most likely never be redeemed. Based on the Company’s historical gift card redemption patterns and the fact that the Company’s gift cards have no expiration dates or dormancy fees, the Company can reasonably estimate the amount of gift card balances for which redemption is remote and record breakage income based on this estimate. The Company updates its estimate of the breakage rate periodically and, if necessary, adjusts the gift card liability balance accordingly. Revenue from restaurant sales was $3,612,951 for the year ended December 31, 2017 and was comprised of $3,502,080 in sales generated by the Company’s two Company-owned restaurants and $110,871 in sales generated by the Company’s two concession stands. Revenue from restaurants sales was $130,861 for the year ended December 31, 2016 and was comprised entirely of sales generated by the Company’s two Company-owned restaurants. Franchise and other revenue was $832,712 for the year ended December 31, 2017 and was comprised of $829,069 in royalties and $3,643 in sales of merchandise. Franchisee and other revenue was $1,144,587 for the year ended December 31, 2016 and was comprised of $1,004,587 in royalties, $105,000 in franchise fees and $35,000 in licensing fees associated with its concession stands. |
Payments Received From Vendors | Payments Received From Vendors Vendor allowances include allowances and other funds that the Company receives from vendors. Certain of these funds are determined based on various quantitative contract terms. The Company also receives vendor allowances from certain manufacturers and distributors calculated based upon purchases made by franchisees. Vendor allowances are not recognized as revenue. Instead, they are recognized as a reduction in costs. The Company generally receives payment from vendors approximately 30 days from the end of a month for that month’s purchases. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the fair value recognition provisions of ASC Topic 718, Compensation – Stock Compensation The Company accounts for non-employee stock-based compensation in accordance with ASC 718 and ASC Topic 505, Equity The Company uses the Black-Scholes pricing model to determine the fair value of the stock-based compensation that it grants to employees and non-employees. The Black-Scholes pricing model takes into consideration such factors as the estimated term of the securities, the conversion or exercise price of the securities, the volatility of the price of the Company’s common stock, interest rates, and the probability that the securities will be converted or exercised to determine the fair value of the securities. The selection of these criteria requires management’s judgment and may impact the Company’s net income or loss. The computation of volatility is intended to produce a volatility value that is representative of the Company’s expectations about the future volatility of the price of its common stock over an expected term. The Company used its share price history to determine volatility and cannot predict what the price of its shares of common stock will be in the future. As a result, the volatility value that the Company calculated may differ from the actual volatility of the price of its shares of common stock in the future. |
Operating Leases | Operating Leases Rent expense for leases that contain scheduled rent increases is recognized on a straight-line basis over the lease term, including cancelable option periods where failure to exercise such options would result in an economic penalty such that the renewal appears reasonably assured. The straight-line rent calculation and rent expense includes the rent holiday period, which is the period of time between taking control of a leased site and the rent commencement date. The amount by which straight-line rent exceeds actual lease payment requirements in the early years of the lease is accrued as deferred rent liability and reduced in later years when the actual cash payment requirements exceed the straight-line expense. Contingent rents are generally amounts due as a result of sales in excess of amounts stipulated in certain restaurant leases and are included in rent expense as they are incurred. Landlord contributions are recorded when received as a deferred rent liability and amortized as a reduction of rent expense on a straight-line basis over the lease term. |
Marketing and Advertising | Marketing and Advertising Contributions to the national advertising fund related to Company-owned restaurants are expensed as contributed and local advertising costs for Company-owned restaurants are expensed as incurred. All other marketing and advertising costs are expenses as incurred. The Company incurred $90,120 and $46,545 for marketing and advertising costs during the years ended December 31, 2017 and 2016, respectively. |
Start-Up Costs | Start-Up Costs Start-up costs consists of costs associated with the opening of new Company-owned restaurants and varies based on the number of new locations opening and under construction. These costs are expensed as incurred in accordance with ASC Topic 720, Other Expenses |
Sales Taxes | Sales Taxes Sales taxes collected from customers are excluded from revenue. Sales taxes payable are included in accrued expenses until the taxes are remitted to the appropriate taxing authorities in accordance with ASC 450, Contingencies |
Income Taxes | Income Taxes The Company uses the liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes In determining whether a valuation allowance is required, the Company takes into account all evidence with regard to the utilization of a deferred tax asset including past earnings history, expected future earnings, the character and jurisdiction of such earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of a deferred tax asset, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. The Company has evaluated the available evidence about future taxable income and other possible sources of realization of deferred tax assets and has established a valuation allowance of $465,018 and $965,216 at December 31, 2017 and 2016, respectively. Net deferred tax assets were comprised of the following at December 31, 2017 and 2016, respectively: December 31, December 31, Deferred tax assets: Net operating loss carryforwards $ 465,018 $ 965,216 Deferred tax liabilities -0- -0- Valuation allowance (465,018 ) (965,216 ) Net deferred tax assets $ -0- $ -0- The Company had net operating loss carry-forwards of approximately $1,860,071 and $2,533,376 at December 31, 2017 and 2016, respectively, that may be offset against future taxable income. No tax benefit has been reported in the financial statements for the Company’s 2017 and 2016 fiscal years because the potential tax benefit is offset by a valuation allowance of the same amount. The Company had no uncertain tax positions at December 31, 2017 and 2016. Effective January 1, 2018, the federal corporate income tax rate was decreased from 34% to 21%. The effect of this change on deferred taxes and the valuation allowance at December 31, 2017 was $244,147. The valuation allowance as of December 31, 2017 includes $105,629 of net operating loss carry forwards that relate to stock compensation expense for income tax reporting purposes that upon realization, would be recorded as additional paid-in capital. There were no such net operating loss carry forwards as of December 31, 2016. The valuation allowance reduces deferred tax assets to an amount that management believes will more likely than not be realized. A reconciliation of the difference between the provision for income taxes and income taxes at the statutory U.S. federal income tax rate for the years ended December 31, 2017 and 2016 is as follows: December 31, December 31, Income tax provision at statutory rate $ 123,612 $ 861,348 State income taxes 14,906 103,868 Stock compensation expense 105,629 -0- Effect of change in federal tax rate 244,147 -0- Other 11,904 -0- Change in valuation allowance (500,198 ) (965,216 ) Net tax provision $ -0- $ -0- Utilization of net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations contained in the Internal Revenue Code of 1986, as amended, as well as similar state and foreign provisions. These ownership changes may limit the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income and tax, respectively. On November 2, 2012, William D. Leopold purchased 2,218,572 shares of the Company’s common stock, which represented approximately 41.2% of the outstanding shares of the Company’s common stock on that date, from Michael Rosenberger, who was then serving as the Company’s Chief Executive Officer, Chief Financial Officer, Secretary and sole member of the Company’s board of directors. This transaction could be deemed to have resulted in a change in ownership of the Company. On July 31, 2017, Seenu G. Kasturi, the Company’s President, Chief Financial Officer and Chairman of the Board of Directors, purchased 2,647,144 shares of the Company’s common stock, which represented approximately 38.4% of the outstanding shares of the Company’s common stock on that date, from William D. Leopold. This transaction could be deemed to have resulted in a change in ownership of the Company. Subsequent ownership changes could further affect the limitation in future years. These annual limitation provisions may result in the expiration of certain net operating losses and credits before utilization. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue From Contracts With Customers Revenue From Contracts With Customers – Deferral of the Effective Date The Company determined that the new revenue guidance will impact the timing of recognition of franchise fees. Under existing guidance, these fees are typically recognized upon the opening of restaurants. Under the new guidance, the fees will have to be deferred and recognized as revenue over the term of the individual franchise agreements. However, the effect of the required deferral of fees received in a given year will be mitigated by the recognition of revenue from fees retrospectively deferred from prior years. The Company presently expects to use the modified retrospective method of adoption when the new guidance is adopted in the first fiscal quarter of 2018. Upon adoption, the Company will recognize a deferral in revenue from franchise fees on its balance sheet of approximately $196,478 and an increase in the Company’s accumulated deficit by the same amount. The Company also determined that the new revenue guidance will impact the accounting for transactions related to the Company’s general advertising fund. Currently, franchisee contributions to and expenditures by the fund are not included in the Company’s Consolidated Statements of Operations. Under the new guidance, the Company will include contributions to and expenditures by the fund within the Company’s Consolidated Statements of Operations. While this change will materially impact the gross amount of reported franchise revenue and expenses, the impact will be an increase to both revenue and expense that, for the most part, will offset such that the impact on gross profit and net income, if any, will not be material. Additionally, the Company determined that the new revenue guidance will impact the accounting for transactions related to the Company’s gift card program. Estimated breakage income on gift cards will be recognized as gift cards are utilized instead of the Company’s current policy of deferring the breakage income until it is deemed remote that the unused gift card balance will be redeemed. The Company determined that this change will not have a material impact on its consolidated financial statements. The table below presents the expected effects these changes would have had on the Company’s consolidated financial statements in 2017 and 2016 had this guidance been adopted by the Company on January 1, 2016: Fiscal Year 2017 Fiscal Year 2016 As Effects of Upon As Effects of Upon Franchise and other revenue $ 832,712 $ 34,500 $ 867,212 $ 1,144,587 $ (73,622 ) $ 1,070,965 Advertising fund fees -0- 294,888 294,888 -0- 367,153 367,153 Advertising expenses -0- (294,888 ) (294,888 ) -0- (367,153 ) (367,153 ) Net income / (loss) $ 344,740 $ 34,500 $ 379,240 $ (813,713 ) $ (73,622 ) $ (887,335 ) Net income / (loss) per share – basic and fully diluted $ 0.05 $ 0.01 $ 0.06 $ (0.12 ) $ (0.01 ) $ (0.13 ) In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern Note 2. Significant Accounting Policies – Going Concern These facts created an uncertainty about the Company’s ability to continue as a going concern as of December 31, 2016. However, In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory In February 2016, the FASB issued ASU 2016-02, Leases In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business The Company reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to the Company’s operations or that no material effect is expected on the Company’s financial statements as a result of future adoption. |
Significant Accounting Polici26
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of net deferred tax assets | December 31, December 31, Deferred tax assets: Net operating loss carryforwards $ 465,018 $ 965,216 Deferred tax liabilities -0- -0- Valuation allowance (465,018 ) (965,216 ) Net deferred tax assets $ -0- $ -0- |
Schedule of difference between the provision for income taxes | December 31, December 31, Income tax provision at statutory rate $ 123,612 $ 861,348 State income taxes 14,906 103,868 Stock compensation expense 105,629 -0- Effect of change in federal tax rate 244,147 -0- Other 11,904 -0- Change in valuation allowance (500,198 ) (965,216 ) Net tax provision $ -0- $ -0- |
Schedule of expected effects on consolidated financial statements | Fiscal Year 2017 Fiscal Year 2016 As Effects of Upon As Effects of Upon Franchise and other revenue $ 832,712 $ 34,500 $ 867,212 $ 1,144,587 $ (73,622 ) $ 1,070,965 Advertising fund fees -0- 294,888 294,888 -0- 367,153 367,153 Advertising expenses -0- (294,888 ) (294,888 ) -0- (367,153 ) (367,153 ) Net income / (loss) $ 344,740 $ 34,500 $ 379,240 $ (813,713 ) $ (73,622 ) $ (887,335 ) Net income / (loss) per share – basic and fully diluted $ 0.05 $ 0.01 $ 0.06 $ (0.12 ) $ (0.01 ) $ (0.13 ) |
Investment in Paradise on Win27
Investment in Paradise on Wings (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of summary of the unaudited income statement of Paradise on Wings | Statement of Operations Year Year Revenue $ 226,273 $ 384,653 Operating expenses (484,436 ) (830,023 ) Loss from operations (258,163 ) (445,370 ) Other expense (182,398 ) — Net loss $ (440,561 ) $ (445,370 ) Company’s share of net loss $ (220,281 ) $ (247,717 ) |
Schedule of summary of the unaudited balance sheet of Paradise on Wings | Balance Sheet December 31, Current assets $ 3,549 Equity investment 141,168 Total assets $ 144,717 Total liabilities $ 110,596 Equity 34,121 Total liabilities and equity $ 144,717 |
Acquisition of Seediv (Tables)
Acquisition of Seediv (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of assets acquired and liabilities assumed based on their fair values at the time of the acquisition | Cash and cash equivalents $ 18,089 Inventory 40,574 Other current assets 6,538 Leasehold improvements, net 46,541 Furniture and equipment, net 33,701 Total assets acquired 145,443 Accounts payable – related party (1,026 ) Accrued expenses (126,878 ) Notes payable – related party (234,286 ) Total liabilities assumed (362,190 ) Seediv compensation expense 251,309 Net consideration paid $ 34,562 |
Schedule of certain unaudited pro forma financial information | Year Ended December 31, Year Ended December 31, Revenue $ 4,445,663 $ 4,643,904 Loss from continuing operations (84,614 ) (845,508 ) Net income / (loss) 344,740 (1,467,086 ) Net income / (loss) per share – basic and fully diluted $ 0.05 $ (0.22 ) |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | December 31, December 31, Food $ 23,987 $ 25,942 Beverages 21,430 19,308 Total $ 45,417 $ 45,250 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | December 31, December 31, Leasehold improvements $ 69,472 $ 62,125 Furniture, fixtures and equipment 78,621 50,140 Subtotal 148,093 112,265 Less: accumulated depreciation (48,979 ) (31,317 ) Total $ 99,114 $ 80,948 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of contingent consideration recorded by the Company in connection with the acquisition of Seediv | Level 1 Level 2 Level 3 December 31, 2017 $ -0- $ 199,682 $ -0- December 31, 2016 $ -0- $ -0- $ 20,897 |
Schedule of assets and liabilities measured at fair value under the Level 3 valuation hierarchy | Total Liabilities Balance at December 31, 2015 $ -0- Contingent consideration related to acquisition of Seediv 20,897 Balance at December 31, 2016 $ 20,897 Transfer of contingent consideration to Level 2 (20,897 ) Balance at December 31, 2017 $ -0- |
Debt Obligations (Tables)
Debt Obligations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding promissory notes, net of unamortized discount | December 31, December 31, 2017 2016 Notes payable – related party $ 30,503 $ 232,572 Notes payable – in default -0- 7,000 Total notes payable, net $ 30,503 $ 239,572 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Rent Expense | December 31, December 31, Straight-lined minimum rent $ 194,770 $ 29,554 Contingent rent 67,580 -0- Total $ 262,350 $ 29,554 |
Schedule of future minimum annual payments | Year Lease Payment 2018 $ 215,610 2019 216,314 2020 218,892 2021 221,565 2022 224,442 Thereafter 1,840,127 Total $ 2,936,950 |
Schedule of future minimum annual payments under the sponsorship agreement | Year Annual Payment 2018 $ 200,000 2019 204,000 2020 208,080 2021 212,240 2022 216,490 Thereafter -0- Total $ 1,040,810 |
Description of Business (Detail
Description of Business (Detail Textuals) | 1 Months Ended |
Dec. 19, 2016USD ($) | |
Acquisition of Seediv | |
Business Acquisition [Line Items] | |
Payment agreed for membership interests | $ 600,000 |
Description of Business (Deta35
Description of Business (Detail Textuals 1) | Dec. 31, 2017RestaurantConcession_stand | Dec. 31, 2016Restaurant |
Franchiser Disclosure [Line Items] | ||
Number of restaurants | 22 | |
Florida | ||
Franchiser Disclosure [Line Items] | ||
Number of restaurants | 17 | |
Georgia | ||
Franchiser Disclosure [Line Items] | ||
Number of restaurants | 5 | |
Franchised Units | ||
Franchiser Disclosure [Line Items] | ||
Number of restaurants | 20 | 4 |
Reduction in number of franchised restaurants | 2 | |
Number of restaurant closed | 1 | |
Franchised Units | Florida | ||
Franchiser Disclosure [Line Items] | ||
Number of restaurants | Concession_stand | 2 | |
Entity Operated Units | ||
Franchiser Disclosure [Line Items] | ||
Number of restaurants | 2 | |
Increased number of Company-owned restaurants | 2 |
Significant Accounting Polici36
Significant Accounting Policies - Summary of net deferred tax assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 465,018 | $ 965,216 |
Deferred tax liabilities | 0 | 0 |
Valuation allowance | (465,018) | (965,216) |
Net deferred tax assets | $ 0 | $ 0 |
Significant Accounting Polici37
Significant Accounting Policies - Summary of reconciliation of the difference between provision for income taxes and income taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Income tax provision at statutory rate | $ 123,612 | $ 861,348 |
State income taxes | 14,906 | 103,868 |
Stock compensation expense | 105,629 | 0 |
Effect of change in federal tax rate | 244,147 | 0 |
Other | 11,904 | 0 |
Change in valuation allowance | (500,198) | (965,216) |
Net tax provision | $ 0 | $ 0 |
Significant Accounting Polici38
Significant Accounting Policies - Summary of financial statements guidance been adopted (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Franchise and other revenue | $ 676,007 | $ 630,791 |
Net income / (loss) | $ 344,740 | $ (813,713) |
Net income / (loss) per share - basic and fully diluted (in dollars per share) | $ 0.05 | $ (0.12) |
As Reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Franchise and other revenue | $ 832,712 | $ 1,144,587 |
Advertising fund fees | 0 | 0 |
Advertising expenses | 0 | 0 |
Net income / (loss) | $ 344,740 | $ (813,713) |
Net income / (loss) per share - basic and fully diluted (in dollars per share) | $ 0.05 | $ (0.12) |
Effects of Adoption | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Franchise and other revenue | $ 34,500 | $ (73,622) |
Advertising fund fees | 294,888 | 367,153 |
Advertising expenses | (294,888) | (367,153) |
Net income / (loss) | $ 34,500 | $ (73,622) |
Net income / (loss) per share - basic and fully diluted (in dollars per share) | $ 0.01 | $ (0.01) |
Upon Adoption | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Franchise and other revenue | $ 867,212 | $ 1,070,965 |
Advertising fund fees | 294,888 | 367,153 |
Advertising expenses | (294,888) | (367,153) |
Net income / (loss) | $ 379,240 | $ (887,335) |
Net income / (loss) per share - basic and fully diluted (in dollars per share) | $ 0.06 | $ (0.13) |
Significant Accounting Polici39
Significant Accounting Policies (Detail Textuals) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Line Items] | ||
Net losses | $ 344,740 | $ (813,713) |
Accumulated deficit | (4,768,592) | (5,113,332) |
Working capital deficit | (1,259,231) | |
Net cash used by operating activities | $ 248,345 | (10,087) |
Term of franchise agreement | 10 years | |
Renewal of additional term of franchise agreement | 10 years | |
Compensation expense acquisition of Seediv | $ 251,309 | |
Other transaction costs related to Seediv | $ 502,856 | |
Method used for fair value estimation of options | Black-Scholes pricing model | |
Stock-based compensation expense | $ 247,240 | 41,337 |
Restaurant sales | 3,612,951 | 130,861 |
Franchise and other revenue | 676,007 | 630,791 |
Deferred tax assets valuation allowance | 465,018 | 965,216 |
Marketing and advertising cost | 90,120 | 46,545 |
Net operating loss carry forwards | $ 1,860,071 | 2,533,376 |
US corporate income tax rate | 34.00% | |
Corporate income tax rate effective in 2018 | 21.00% | |
Income tax expense due to change on deferred taxes | $ 244,147 | |
Stock compensation expense for income tax reporting purposes | 105,629 | 0 |
As Reported | ||
Accounting Policies [Line Items] | ||
Net losses | 344,740 | (813,713) |
Franchise and other revenue | 832,712 | 1,144,587 |
Royalties | As Reported | ||
Accounting Policies [Line Items] | ||
Franchise and other revenue | 829,069 | 1,004,587 |
Merchandise | As Reported | ||
Accounting Policies [Line Items] | ||
Franchise and other revenue | 3,643 | |
Two Company-owned restaurants | ||
Accounting Policies [Line Items] | ||
Restaurant sales | 3,502,080 | |
Two concession stands | ||
Accounting Policies [Line Items] | ||
Restaurant sales | $ 110,871 | |
Franchise Fees | As Reported | ||
Accounting Policies [Line Items] | ||
Franchise and other revenue | 105,000 | |
Licensing Fees | As Reported | ||
Accounting Policies [Line Items] | ||
Franchise and other revenue | $ 35,000 |
Significant Accounting Polici40
Significant Accounting Policies (Detail Textuals 1) - USD ($) | Nov. 02, 2012 | Jul. 31, 2017 | Dec. 31, 2017 | Jan. 20, 2014 |
Upon Adoption | ||||
Accounting Policies [Line Items] | ||||
Amount recognize deferral in revenue from franchise fees | $ 196,478 | |||
Minimum | ||||
Accounting Policies [Line Items] | ||||
Percentage required to contribute by company-owned and franchised restaurants | 1.00% | |||
Maximum | ||||
Accounting Policies [Line Items] | ||||
Percentage required to contribute by company-owned and franchised restaurants | 2.00% | |||
Paradise on Wings Franchise Group, LLC | ||||
Accounting Policies [Line Items] | ||||
Percentage of ownership interest | 50.00% | 50.00% | ||
William D Leopold | ||||
Accounting Policies [Line Items] | ||||
Common stock issued for settlement of litigation (in shares) | 2,218,572 | |||
Percentage of common stock outstanding shares | 41.20% | |||
Seenu G. Kasturi | ||||
Accounting Policies [Line Items] | ||||
Common stock issued for settlement of litigation (in shares) | 2,647,144 | |||
Percentage of common stock outstanding shares | 38.40% |
Investment in Paradise on Win41
Investment in Paradise on Wings - Summary of the unaudited income statement of Paradise on Wings (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | |||
Company's share of net loss | $ 24,000 | ||
Paradise on Wings Franchise Group, LLC | |||
Schedule of Equity Method Investments [Line Items] | |||
Revenue | 226,273 | $ 384,653 | |
Operating expenses | (484,436) | (830,023) | |
Loss from operations | (258,163) | (445,370) | |
Other expense | (182,398) | 0 | |
Net loss | $ 440,561 | (440,561) | (445,370) |
Company's share of net loss | $ (220,281) | $ (247,717) |
Investment in Paradise on Win42
Investment in Paradise on Wings - Summary of the unaudited balance sheet of Paradise on Wings (Details 1) - Paradise on Wings Franchise Group, LLC | Dec. 31, 2016USD ($) |
Schedule of Equity Method Investments [Line Items] | |
Current assets | $ 3,549 |
Equity investment | 141,168 |
Total assets | 144,717 |
Total liabilities | 110,596 |
Equity | 34,121 |
Total liabilities and equity | $ 144,717 |
Investment in Paradise on Win43
Investment in Paradise on Wings (Detail Textuals) | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($) | Jan. 20, 2014USD ($)UnitManager$ / sharesshares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||||
Loss on impairment of investment in Paradise on Wings | $ 348,143 | |||
Purchase price | $ 24,000 | |||
Paradise on Wings Franchise Group, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Percentage of ownership interest | 50.00% | 50.00% | ||
Paradise on Wings Franchise Group, LLC | Seenu G Kasturi | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Percentage of ownership interest | 50.00% | |||
Purchase price | $ 24,000 | |||
Paradise on Wings Franchise Group, LLC | Contribution agreement | Class A Membership Interests | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Membership interest acquired | Unit | 117.65 | |||
Percentage of ownership interest | 50.00% | |||
Threshold limit for appointment of manager | Manager | 2 | |||
Percentage of vote for all managers | 50.00% | |||
Percentage of vote for use of contributed capital for permitted purpose | 60.00% | |||
Percentage of preferred right to distributions related to income, gain, losses, deductions and expenses | 50.00% | |||
Paradise on Wings Franchise Group, LLC | Contribution agreement | Class B Membership Interests | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Membership interest acquired | Unit | 117.65 | |||
Percentage of ownership interest | 50.00% | |||
Agreed payment in cash as per terms of contribution agreement | $ 400,000 | |||
Consideration paid prior to closing of agreement | 350,000 | |||
Amount due upon closing of agreement | 50,000 | |||
Consideration paid in shares for capital contribution | $ 400,000 | |||
Bid price per share on morning of closing date | $ / shares | $ 1.70 | |||
Number of shares issued on closing date | shares | 235,295 | |||
Threshold limit for appointment of manager | Manager | 1 | |||
Percentage of vote for all managers | 50.00% | |||
Percentage of vote for use of contributed capital for permitted purpose | 60.00% | |||
Percentage of preferred right to distributions related to income, gain, losses, deductions and expenses | 50.00% |
Acquisition of Seediv - Assets
Acquisition of Seediv - Assets acquired and liabilities assumed (Details) - Acquisition of Seediv | Dec. 19, 2016USD ($) |
Business Acquisition [Line Items] | |
Cash and cash equivalents | $ 18,089 |
Inventory | 40,574 |
Other current assets | 6,538 |
Leasehold improvements, net | 46,541 |
Furniture and equipment, net | 33,701 |
Total assets acquired | 145,443 |
Accounts payable - related party | (1,026) |
Accrued expenses | (126,878) |
Notes payable - related party | (234,286) |
Total liabilities assumed | (362,190) |
Seediv compensation expense | 251,309 |
Net consideration paid | $ 34,562 |
Acquisition of Seediv - Pro for
Acquisition of Seediv - Pro forma financial information (Details 1) - Acquisition of Seediv - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Business Acquisition [Line Items] | ||
Revenue | $ 4,445,663 | $ 4,643,904 |
Loss from continuing operations | (84,614) | (845,508) |
Net income / (loss) | $ 344,740 | $ (1,467,086) |
Net income / (loss) per share - basic and fully diluted (in dollars per share) | $ 0.05 | $ (0.22) |
Acquisition of Seediv (Detail T
Acquisition of Seediv (Detail Textuals) | 1 Months Ended | 12 Months Ended | |
Dec. 19, 2016USD ($)Restaurant | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Business Acquisition [Line Items] | |||
Number of franchised restaurants | Restaurant | 22 | ||
Revenue | $ 4,445,663 | $ 1,275,448 | |
Net income (loss) | 344,740 | (813,713) | |
Contingent consideration | $ 20,897 | 199,682 | 20,897 |
General and administrative expense | |||
Business Acquisition [Line Items] | |||
Acquisition related costs | 50,000 | ||
DWG acquisitions LLC | |||
Business Acquisition [Line Items] | |||
Number of franchised restaurants | Restaurant | 6 | ||
Blue Victory Holdings Inc | |||
Business Acquisition [Line Items] | |||
Proceeds from related party debt | 840,353 | ||
Seenu G Kasturi | |||
Business Acquisition [Line Items] | |||
Percentage of ownership interest | 14.80% | ||
Seenu G Kasturi | Blue Victory Holdings Inc | |||
Business Acquisition [Line Items] | |||
Percentage of ownership interest | 90.00% | ||
Acquisition of Seediv | |||
Business Acquisition [Line Items] | |||
Payment agreed for membership interests | $ 600,000 | ||
Cash payment | $ 13,665 | ||
Multiplier for earn out payment | 5.5 | ||
Revenue | 3,504,833 | 130,861 | |
Net income (loss) | 127,733 | $ 13,210 | |
Contingent consideration | $ 20,897 | ||
Earnout payment | 199,682 | ||
Additional Seediv compensation expense | $ 178,785 | ||
Acquisition of Seediv | DWG acquisitions LLC | |||
Business Acquisition [Line Items] | |||
Cancellation and termination of accounts receivable | 259,123 | ||
Acquisition of Seediv | Racing QSR, LLC | |||
Business Acquisition [Line Items] | |||
Cancellation and termination of debt | $ 327,212 |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory [Line Items] | ||
Total | $ 45,417 | $ 45,250 |
Food | ||
Inventory [Line Items] | ||
Total | 23,987 | 25,942 |
Beverages | ||
Inventory [Line Items] | ||
Total | $ 21,430 | $ 19,308 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 148,093 | $ 112,265 |
Less: accumulated depreciation | (48,979) | (31,317) |
Total | 99,114 | 80,948 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 69,472 | 62,125 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 78,621 | $ 50,140 |
Property and Equipment, Net (49
Property and Equipment, Net (Detail Textuals) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 17,180 | $ 507 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of equity investment within fair value hierarchy utilized to measure fair value on recurring basis (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 19, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration | $ 199,682 | $ 20,897 | $ 20,897 |
Recurring basis | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration | 0 | 0 | |
Recurring basis | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration | 199,682 | 0 | |
Recurring basis | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration | $ 0 | $ 20,897 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial assets and liabilities measured at fair value under Level 3 (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation | ||
Beginning balance | $ 20,897 | $ 0 |
Contingent consideration related to acquisition of Seediv | 20,897 | |
Transfer of contingent consideration to Level 2 | (20,897) | |
Ending balance | $ 0 | $ 20,897 |
Fair Value Measurements (Detail
Fair Value Measurements (Detail Textuals) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 19, 2016 | Jan. 20, 2014 | |
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | ||||||
Loss on impairment of investment | $ (348,143) | |||||
Contingent consideration | $ 199,682 | 20,897 | $ 20,897 | |||
Sale of investment in Paradise on Wings | 24,000 | |||||
Acquisition of Seediv | ||||||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | ||||||
Contingent consideration | $ 20,897 | |||||
Additional compensation expense | $ 178,785 | |||||
Paradise on Wings Franchise Group, LLC | ||||||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | ||||||
Percentage of ownership interest | 50.00% | 50.00% | ||||
Net loss | $ 440,561 | $ (440,561) | $ (445,370) | |||
Paradise on Wings Franchise Group, LLC | Seenu G Kasturi | ||||||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | ||||||
Percentage of ownership interest | 50.00% | 50.00% | ||||
Sale of investment in Paradise on Wings | $ 24,000 |
Notes Receivable (Detail Textua
Notes Receivable (Detail Textuals) - USD ($) | 1 Months Ended | 2 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2016 | Jul. 31, 2016 | Sep. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 31, 2017 | Jun. 30, 2016 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Payments to acquire notes receivable | $ 419,849 | $ 121,638 | |||||||
Accrued interest rate per year | 6.00% | 6.00% | |||||||
Outstanding accrued interest | $ 838 | ||||||||
Interest income | $ 2,340 | 896 | |||||||
Repayments of notes payable - related party | 635,840 | 824,250 | |||||||
Cash paid for interest | 0 | 0 | |||||||
Allowance for uncollectible notes receivable | 271,590 | ||||||||
Notes receivable | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Principal outstanding under loan current | 28,522 | 63,742 | |||||||
Principle outstanding loan under non current | 5,106 | 29,379 | |||||||
Outstanding accrued interest | 838 | ||||||||
Interest income - related party | 2,340 | 896 | |||||||
Principal outstanding loan receivable | 33,628 | 93,121 | |||||||
Notes receivable | One of franchisees | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Aggregate original principal amount | $ 13,869 | $ 6,329 | $ 7,659 | ||||||
Term of notes receivable | 3 years | ||||||||
Principal outstanding under loan current | 25 | 1,783 | |||||||
Accrued interest rate per year | 5.00% | ||||||||
Principal of accrued interest outstanding | 13,318 | ||||||||
Notes receivable | One of franchisees | Promissory notes | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Term of notes receivable | 2 years | ||||||||
Accrued interest rate per year | 5.00% | ||||||||
Outstanding accrued interest | 838 | ||||||||
Outstanding amount under line of credit | $ 25,000 | $ 25,000 | |||||||
Principal of accrued interest outstanding | $ 25,944 | $ 78,020 | |||||||
Notes receivable | One of franchisees | Line of credit | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Aggregate original principal amount | $ 28,136 | ||||||||
Term of notes receivable | 2 years | ||||||||
Notes receivable | Certain franchisees | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Aggregate original principal amount | $ 40,507 | ||||||||
Notes receivable | Certain franchisees | Minimum | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Term of notes receivable | 1 year | ||||||||
Notes receivable | Certain franchisees | Maximum | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Term of notes receivable | 3 years |
Debt Obligations - Summary of c
Debt Obligations - Summary of carrying value of outstanding promissory notes, net of unamortized discount (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Notes payable - related party | $ 30,503 | $ 232,572 |
Notes payable - in default | 0 | 7,000 |
Total notes payable, net | $ 30,503 | $ 239,572 |
Debt Obligations (Detail Textua
Debt Obligations (Detail Textuals) | 1 Months Ended | ||||
Dec. 28, 2008USD ($)Investor | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 19, 2016USD ($) | Apr. 30, 2015USD ($) | |
Debt Instrument [Line Items] | |||||
Notes payable - in default | $ 0 | $ 7,000 | |||
Blue Victory Holdings, Inc | |||||
Debt Instrument [Line Items] | |||||
Interest rate per annum on notes | 6.00% | ||||
Promissory notes | Blue Victory Holdings, Inc | Seediv, LLC | |||||
Debt Instrument [Line Items] | |||||
Aggregate original principal amount | $ 216,469 | ||||
Interest rate per annum on notes | 6.00% | ||||
Promissory notes | Investors | |||||
Debt Instrument [Line Items] | |||||
Promissory notes issued, number of investors | Investor | 4 | ||||
Aggregate original principal amount | $ 11,000 | $ 4,000 | |||
Proceeds from issuance of notes payable | $ 11,000 | ||||
Interest rate per annum on notes | 6.00% | ||||
Maturity period of promissory notes | 3 years | ||||
Percentage of principal amount of notes for the payment of a penalty | 10.00% |
Debt Obligations (Detail Text56
Debt Obligations (Detail Textuals 1) - Blue Victory Holdings, Inc - USD ($) | Dec. 31, 2017 | Mar. 24, 2017 | Sep. 13, 2013 |
Debt Instrument [Line Items] | |||
Accrued interest | 6.00% | ||
Loan agreement | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 50,000 | $ 1,000,000 | |
Loan agreement | Revolving line of credit facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 50,000 | 1,000,000 | |
Maximum amount of debt not to be exceeded every month | $ 150,000 | ||
Accrued interest | 6.00% |
Debt Obligations (Detail Text57
Debt Obligations (Detail Textuals 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 13, 2013 | |
Debt Instrument [Line Items] | |||
Outstanding promissory notes, net of unamortized discount | $ 30,503 | $ 239,572 | |
Repayments of notes payable - related party | 635,840 | 824,250 | |
Blue Victory Holdings | |||
Debt Instrument [Line Items] | |||
Credit facility, principal and accrued interest outstanding | 30,503 | ||
Outstanding promissory notes, net of unamortized discount | 30,503 | ||
Proceeds from related party debt | 372,049 | ||
Repayments of notes payable - related party | $ 341,546 | ||
Interest rate per annum on notes | 6.00% | ||
Revolving line of credit facility | |||
Debt Instrument [Line Items] | |||
Credit facility, principal and accrued interest outstanding | 16,103 | ||
Proceeds from related party debt | $ 61,721 | 840,353 | |
Repayments of notes payable - related party | $ 77,824 | $ 824,250 | |
Revolving line of credit facility | Blue Victory Holdings | Loan agreement | |||
Debt Instrument [Line Items] | |||
Interest rate per annum on notes | 6.00% |
Capital Stock (Detail Textuals)
Capital Stock (Detail Textuals) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Capital Stock [Line Items] | ||
Class A common stock, shares authorized | 100,000,000 | 100,000,000 |
Class A common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Class A common stock, shares outstanding | 6,950,869 | 6,647,464 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Capital Stock (Detail Textuals
Capital Stock (Detail Textuals 1) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||||
Aug. 31, 2017 | May 31, 2017 | Jan. 18, 2017 | Nov. 30, 2016 | Aug. 31, 2016 | Jan. 31, 2016 | Jul. 22, 2013 | Jan. 31, 2013 | Jan. 22, 2013 | Sep. 27, 2011 | Dec. 31, 2017 | Dec. 31, 2016 | |
Capital Stock [Line Items] | ||||||||||||
Stock issued for settlement of litigation | $ 0 | $ 19,551 | ||||||||||
Stock-based compensation expense | 247,240 | 41,337 | ||||||||||
Stock subscriptions payable | 26,853 | 150,000 | ||||||||||
Write-off of stock subscriptions payable | 150,000 | |||||||||||
Common Stock | One of franchisees | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Common stock issued as incentive compensation (in shares) | 13,000 | |||||||||||
Allocated share-based compensation expense | 11,050 | |||||||||||
Non-executive employees | Common Stock | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Common stock issued as incentive compensation (in shares) | 2,750 | |||||||||||
Allocated share-based compensation expense | 2,338 | |||||||||||
Maxim Group LLC | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Amount of common stock connection with employee agreement | $ 5,000 | |||||||||||
Number of common stock issued in connection with employment agreement | 225,000 | |||||||||||
Allocated share-based compensation expense | 180,000 | |||||||||||
Employment agreement | Richard W Akam | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Amount of common stock connection with employee agreement | $ 50,000 | $ 50,000 | $ 50,000 | |||||||||
Number of common stock issued in connection with employment agreement | 71,429 | 71,429 | ||||||||||
Amount of additional shares of common stock to be issued | $ 50,000 | |||||||||||
Allocated share-based compensation expense | 137 | |||||||||||
Employment agreement | Seenu G Kasturi | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Amount of annual compensation paid | $ 80,000 | |||||||||||
Amount of annual base salary | 26,000 | |||||||||||
Amount of equity award per year | $ 54,000 | |||||||||||
Employment agreement | Seenu G Kasturi | Vesting on October 1, 2017 | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Allocated share-based compensation expense | 40,500 | |||||||||||
Employment agreement | Seenu G Kasturi | Vesting on April 1, 2017 | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Allocated share-based compensation expense | 40,500 | |||||||||||
Employment agreement | Seenu G Kasturi | Vesting on July 1, 2017 | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Allocated share-based compensation expense | 40,500 | |||||||||||
Employment agreement | Seenu G Kasturi | Vesting on January 1, 2018 | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Allocated share-based compensation expense | 13,353 | |||||||||||
Employment agreement | Non-executive employees | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Number of common stock issued in connection with employment agreement | 20,000 | |||||||||||
Allocated share-based compensation expense | 41,200 | |||||||||||
Settlement and Release Agreement | Guiseppe Cala | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Litigation settlement amount | $ 15,000 | |||||||||||
Stock issued for settlement of litigation | $ 35,000 | |||||||||||
Consultancy agreement | Common Stock | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock agreed to issue as payment for services | $ 30,000 | $ 150,000 | ||||||||||
Stock agreed to issue as payment for services (in shares) | 35,295 | 142,857 | ||||||||||
Stock subscriptions payable | $ 150,000 | $ 150,000 |
Stock Compensation Plans (Detai
Stock Compensation Plans (Detail Textuals) - shares | Dec. 31, 2017 | Jun. 30, 2014 | Aug. 31, 2011 | Aug. 18, 2011 |
2011 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of common stock granted to employees, officers and directors of, and consultants and advisors | 1,214,286 | |||
Number of common stock available for issuance | 142,858 | 1,214,286 | ||
2014 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of common stock granted to employees, officers and directors of, and consultants and advisors | 1,000,000 | |||
Number of common stock available for issuance | 1,000,000 |
Commitments and Contingencies61
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Straight-lined minimum rent | $ 194,770 | $ 29,554 |
Contingent rent | 67,580 | 0 |
Total | $ 262,350 | $ 29,554 |
Commitments and Contingencies -
Commitments and Contingencies - Summary of future minimum annual payments (Details 1) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 215,610 |
2,019 | 216,314 |
2,020 | 218,892 |
2,021 | 221,565 |
2,022 | 224,442 |
Thereafter | 1,840,127 |
Total | $ 2,936,950 |
Commitments and Contingencies63
Commitments and Contingencies - Summary of future minimum annual payments under the sponsorship agreement (Details 2) | Dec. 31, 2017USD ($) |
Loss Contingencies [Line Items] | |
2,018 | $ 215,610 |
2,019 | 216,314 |
2,020 | 218,892 |
2,021 | 221,565 |
2,022 | 224,442 |
Thereafter | 1,840,127 |
Total | 2,936,950 |
Sponsorship agreement | |
Loss Contingencies [Line Items] | |
2,018 | 200,000 |
2,019 | 204,000 |
2,020 | 208,080 |
2,021 | 212,240 |
2,022 | 216,490 |
Thereafter | 0 |
Total | $ 1,040,810 |
Commitments and Contingencies64
Commitments and Contingencies (Detail Textuals) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Jan. 18, 2017 | Jan. 31, 2016 | Aug. 19, 2013 | Jul. 22, 2013 | Jan. 31, 2013 | Jan. 22, 2013 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments And Contingencies [Line Items] | ||||||||
Term of agreement | 10 years | |||||||
Labor | $ 1,159,026 | $ 32,258 | ||||||
Daniel Slone | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Annual compensation | $ 1 | |||||||
Employment Agreement | Richard W Akam | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Term of agreement | 1 year | |||||||
Annual compensation | $ 150,000 | |||||||
Additional renewal term of agreement | 1 year | |||||||
Number of common stock issued in connection with employment agreement | 71,429 | 71,429 | ||||||
Amount of common stock connection with employee agreement | $ 50,000 | $ 50,000 | $ 50,000 | |||||
Amount of additional shares of common stock to be issued | $ 50,000 | |||||||
Employment Agreement | Seenu G. Kasturi | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Term of agreement | 3 years | |||||||
Annual compensation | $ 26,000 | |||||||
Additional renewal term of agreement | 1 year | |||||||
Initial annual base salary | $ 80,000 | |||||||
Labor | $ 54,000 |
Commitments and Contingencies65
Commitments and Contingencies (Detail Textuals 1) | Apr. 01, 2017USD ($)ft² | Dec. 20, 2016USD ($)Rent_Period | Jan. 31, 2015USD ($)ft² | May 31, 2014ft² | Oct. 31, 2013USD ($)ft² | Jul. 31, 2013USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Commitments And Contingencies [Line Items] | ||||||||
Fixed monthly rent payment | $ 262,350 | $ 29,554 | ||||||
Subcontractor concession agreement | DWG | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Fixed monthly rent payment | $ 2,000 | |||||||
Initial term of lease | 3 years | |||||||
Additional term of lease | 2 years | |||||||
Additional fee | $ 3,000 | |||||||
Corporate Headquarters | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Area of land leased | ft² | 2,000 | |||||||
Fixed monthly rent payment | $ 1,806 | |||||||
Lease expires date | Dec. 31, 2017 | |||||||
Nocatee Restaurant | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Area of land leased | ft² | 3,400 | 2,900 | ||||||
Fixed monthly rent payment | $ 6,830 | $ 1,100 | ||||||
Lease expires date | Mar. 31, 2023 | |||||||
Percentage increase in additional annual rent payment | 6.00% | |||||||
Initial term of lease | 60 months | 53 months | ||||||
Additional term of lease | 60 months | |||||||
Youngerman Circle Restaurant | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Area of land leased | ft² | 6,500 | |||||||
Fixed monthly rent payment | $ 10,000 | |||||||
Initial term of lease | 20 years | 10 years | ||||||
Additional term of lease | 5 years | 1 year | ||||||
Initial base rent payment percentage of net sales | 7.50% | 7.00% | ||||||
Number of rent period per year | Rent_Period | 13 |
Commitments and Contingencies66
Commitments and Contingencies (Detail Textuals 2) - USD ($) | 1 Months Ended | 12 Months Ended |
Nov. 30, 2017 | Dec. 31, 2017 | |
Commitments And Contingencies [Line Items] | ||
Accounts payable outstanding | $ 709,621 | |
Gain loss on write off of accounts payable | $ 251,238 | |
Sponsorship agreement | ||
Commitments And Contingencies [Line Items] | ||
Initial term of lease | 5 years | |
Annual fees during first year agreement | $ 200,000 | |
Annual fees increases from first year to last year agreement | 216,490 | |
Services fees during first year agreement | 35,000 | |
Services fees increases from first year to last year agreement | $ 37,890 |
Related-Party Transactions (Det
Related-Party Transactions (Detail Textuals) | Oct. 04, 2017USD ($) | Oct. 30, 2017 | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Mar. 31, 2017 | Mar. 24, 2017USD ($) | Dec. 19, 2016USD ($) | May 31, 2014ft² | Sep. 13, 2013USD ($) |
Related Party Transaction [Line Items] | |||||||||||
Term of agreement | 10 years | ||||||||||
Revenue from related parties | $ 156,705 | $ 513,796 | |||||||||
Repayments of notes payable - related party | 635,840 | 824,250 | |||||||||
Payments to acquire notes receivable | 419,849 | $ 121,638 | |||||||||
Purchase price | $ 24,000 | ||||||||||
Youngerman Circle Restaurant | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Ownership percentage in common stock of company | 49.20% | ||||||||||
Area of land leased | ft² | 6,500 | ||||||||||
Blue Victory Holdings | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Interest rate per annum | 6.00% | ||||||||||
Proceeds from related party debt | $ 372,049 | ||||||||||
Repayments of notes payable - related party | 341,546 | ||||||||||
Outstanding principal amount of credit facility | 30,503 | ||||||||||
Revolving line of credit facility | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Proceeds from related party debt | 61,721 | 840,353 | |||||||||
Repayments of notes payable - related party | 77,824 | 824,250 | |||||||||
Outstanding principal amount of credit facility | $ 16,103 | ||||||||||
Seenu G Kasturi | Raceland QSR | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Ownership percentage in common stock of company | 8.70% | ||||||||||
DWG acquisitions LLC | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Accounts receivable | 1,505 | $ 14,568 | |||||||||
Fund receivable from acquisitions | $ 2,280 | 0 | |||||||||
Seediv, LLC | Raceland QSR | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Maximum purchase price of property | $ 2,000,000 | ||||||||||
Amount of deposit required with in ten days of agreement | $ 10,000 | ||||||||||
Number of extended calendar days | 60 days | ||||||||||
Seediv, LLC | Seenu G Kasturi | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Ownership percentage in common stock of company | 49.20% | ||||||||||
Paradise on Wings Franchise Group, LLC | Seenu G Kasturi | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Ownership percentage in common stock of company | 50.00% | 49.20% | |||||||||
Purchase price | $ 24,000 | ||||||||||
Loan agreement | Blue Victory Holdings | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Maximum borrowing capacity | $ 50,000 | $ 1,000,000 | |||||||||
Loan agreement | Revolving line of credit facility | Blue Victory Holdings | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Interest rate per annum | 6.00% | ||||||||||
Maximum borrowing capacity | $ 50,000 | $ 1,000,000 | |||||||||
Loan agreement | Seenu G Kasturi | Blue Victory Holdings | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Equity interest held | 90.00% | ||||||||||
Ownership percentage in common stock of company | 49.20% | ||||||||||
Subcontractor concession agreement | DWG acquisitions LLC | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Revenue from related parties | 35,000 | ||||||||||
Subcontractor concession agreement | DWG acquisitions LLC | Jacksonville Jaguars, LLC | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Fee generated under concession agreement | $ 2,842 | 496 | |||||||||
Franchise agreement | DWG acquisitions LLC | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Ownership percentage in common stock of company | 49.20% | ||||||||||
Royalty revenue | $ 156,705 | 478,796 | |||||||||
Sponsorship agreement | Seenu G Kasturi | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Ownership percentage in common stock of company | 49.20% | ||||||||||
Notes receivable | Raceland QSR | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Payments to acquire notes receivable | $ 419,849 | $ 121,638 | |||||||||
Promissory notes | Seediv, LLC | Blue Victory Holdings | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Interest rate per annum | 6.00% | ||||||||||
Ownership percentage in common stock of company | 14.80% | ||||||||||
Aggregate original principal amount | $ 216,469 |
Judgments in Legal Proceedings
Judgments in Legal Proceedings (Detail Textuals) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Jan. 31, 2010 | Dec. 31, 2016 | Oct. 31, 2009 | |
Loss Contingencies [Line Items] | ||||
Gain on settlement of liabilities | $ 175,449 | |||
Settlement Agreement | ||||
Loss Contingencies [Line Items] | ||||
Litigation settlement amount | $ 250,000 | |||
Payments for legal settlement | $ 40,000 | |||
Amount payable of legal settlement | $ 210,000 | |||
Settlement and Release Agreement | Guiseppe Cala | ||||
Loss Contingencies [Line Items] | ||||
Litigation settlement amount | $ 15,000 | |||
Amount payable of legal settlement | $ 210,000 | |||
Stock issued during period for litigation settlements | 35,000 |
Judgments in Legal Proceeding69
Judgments in Legal Proceedings (Detail Textuals 1) - USD ($) | Nov. 11, 2011 | Oct. 04, 2011 | Dec. 25, 2011 | Dec. 31, 2017 | Dec. 31, 2016 |
Loss Contingencies [Line Items] | |||||
Loss from legal proceedings | $ 82,642 | ||||
Breach of guarantee | |||||
Loss Contingencies [Line Items] | |||||
Litigation settlement amount | $ 161,747 | ||||
Litigation settlement expense | $ 33,000 | ||||
Accrued interest of litigation settlement | $ 2,369 | ||||
Loss from legal proceedings | $ 197,116 | ||||
Interest expense | $ 11,272 | $ 11,303 |
Judgments in Legal Proceeding70
Judgments in Legal Proceedings (Detail Textuals 2) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Judgment In Legal Proceedings [Abstract] | |||
Loss contingency damages sought | $ 194,181 | $ 111,539 | |
Gain on settlement of litigation | 82,642 | ||
Accrued interest outstanding | $ 33,809 | 25,980 | |
Other expenses outstanding | 10,586 | 10,586 | |
Accrued legal settlement | $ 155,935 | $ 148,105 |
Previously Restated Financial71
Previously Restated Financial Information (Detail Textuals) | Nov. 14, 2017USD ($) |
Restated | |
Previously Restated Financial Information [Line Items] | |
Reduce stock compensation expense and stock subscriptions payable | $ 49,863 |
Subsequent Events (Detail Textu
Subsequent Events (Detail Textuals) | Jan. 01, 2018shares | Jan. 30, 2018USD ($)ft² | Jan. 23, 2018shares | Jan. 31, 2016shares | Jul. 22, 2013shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Subsequent Event [Line Items] | |||||||
Rent payment | $ | $ 262,350 | $ 29,554 | |||||
Richard W Akam | Employment Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Number of common shares issued | 71,429 | 71,429 | |||||
Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Common stock issued as incentive compensation (in shares) | 5,625 | ||||||
Lease area | ft² | 2,000 | ||||||
Rent payment | $ | $ 2,063 | ||||||
Subsequent Event | Seenu G Kasturi | Employment Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Number of common shares issued | 9,337 | ||||||
Equity securities to be issued | 8,177 |