Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 09, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | ARC Group, Inc. | |
Entity Central Index Key | 0001452872 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 7,080,771 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 256,404 | $ 345,228 |
Accounts receivable, net | 185,544 | 127,930 |
Ad funds receivable, net | 11,641 | 10,500 |
Other receivables | 570,919 | 556,986 |
Prepaid expenses | 61,937 | 34,582 |
Inventory | 180,088 | 211,025 |
Notes receivable, net | 17,344 | 2,967 |
Other current assets | 10,229 | 8,078 |
Total current assets | 1,294,106 | 1,297,296 |
Deposits | 44,565 | 49,421 |
Notes receivable, net of current portion | 1,273 | 2,553 |
Intangible assets, net | 784,681 | 786,565 |
Property and equipment, net | 1,268,451 | 12,537,502 |
Operating lease right-of-use assets | 3,665,275 | |
Financing lease right-of-use assets, net | 11,041,222 | |
Total assets | 18,099,573 | 14,673,337 |
Liabilities and stockholders' deficit | ||
Accounts payable and accrued expenses | 1,919,674 | 1,478,745 |
Accounts payable and accrued expenses - related party | 270,917 | 231,187 |
Other payables | 551,025 | 544,098 |
Accrued interest | 54,520 | 29,105 |
Settlement agreements payable | 281,859 | 276,269 |
Accrued legal contingency | 167,646 | 163,764 |
Contingent consideration | 55,356 | 55,356 |
Deferred franchise fees | 13,093 | 13,718 |
Operating lease liability | 275,723 | |
Financing lease liability | 191,361 | 175,764 |
Seller payable | 312,000 | 312,000 |
Notes payable - related party, net | 605,238 | 720,178 |
Gift card liabilities | 75,982 | 81,956 |
Total current liabilities | 4,774,394 | 4,082,140 |
Deferred franchise fees, net of current portion | 44,891 | 51,516 |
Operating lease liability, net of current portion | 3,426,660 | |
Financing lease liability net of current portion | 11,110,573 | 11,210,146 |
Total liabilities | 19,356,518 | 15,343,802 |
Stockholders' deficit: | ||
Class A common stock - $0.01 par value: 100,000,000 shares authorized, 7,080,771 and 6,680,065 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 70,808 | 66,801 |
Additional paid-in capital | 4,586,148 | 4,490,338 |
Stock subscriptions payable | 34,960 | 15,453 |
Accumulated deficit | (5,953,357) | (5,247,553) |
Total stockholders' deficit | (1,256,945) | (670,465) |
Total liabilities and stockholders' deficit | 18,099,573 | 14,673,337 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock, value | 4,496 | 4,496 |
Total stockholders' deficit | 4,496 | 4,496 |
Series B Convertible Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock, value | ||
Total stockholders' deficit |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Class A common stock, par value | $ 0.01 | $ 0.01 |
Class A common stock, shares authorized | 100,000,000 | 100,000,000 |
Class A common stock, shares issued | 7,080,771 | 6,680,065 |
Class A common stock, shares outstanding | 7,080,771 | 6,680,065 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | 449,581 | 449,581 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue: | ||||
Total net revenue | $ 4,188,967 | $ 1,114,587 | $ 8,777,788 | $ 2,303,751 |
Operating expenses: | ||||
Cost of sales | 1,346,705 | 278,985 | 3,078,336 | 549,520 |
Labor | 1,418,560 | 343,167 | 2,871,008 | 597,706 |
Occupancy | 160,936 | 52,876 | 315,027 | 113,335 |
Other operating expenses | 839,784 | 170,831 | 1,683,145 | 325,451 |
Professional fees | 132,705 | 118,254 | 391,156 | 247,167 |
Employee compensation expense | 344,929 | 120,207 | 571,936 | 251,412 |
General and administrative expenses | 253,364 | 161,147 | 432,189 | 301,732 |
Total operating expenses | 4,496,983 | 1,245,467 | 9,342,797 | 2,386,323 |
Loss from operations | (308,016) | (130,880) | (1,565,009) | (82,572) |
Other income: | ||||
Interest expense | (201,723) | (5,479) | (404,786) | (10,873) |
Income from insurance proceeds | 181,588 | 181,588 | ||
Other income | 36,590 | 80,828 | 82,403 | 85,528 |
Total other income | 16,455 | 75,349 | (140,795) | 74,655 |
Net loss | $ (291,561) | $ (55,531) | $ (705,804) | $ (7,917) |
Net loss per share - basic and fully diluted | $ (0.04) | $ (0.01) | $ (0.10) | $ 0 |
Weighted average number of shares outstanding - basic and fully diluted | 7,071,985 | 6,901,687 | 7,076,402 | 6,933,500 |
Restaurant Sales [Member] | ||||
Revenue: | ||||
Total net revenue | $ 3,967,890 | $ 839,827 | $ 8,346,681 | $ 1,767,104 |
Franchise and Other Revenue [Member] | ||||
Revenue: | ||||
Total net revenue | 221,077 | 225,650 | 431,107 | 458,909 |
Franchise and Other Revenue Related Party [Member] | ||||
Revenue: | ||||
Total net revenue | $ 49,110 | $ 77,738 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | ||||||
Net loss | $ (291,561) | $ (55,531) | $ (705,804) | $ (7,917) | $ (282,483) | $ (344,740) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
Depreciation expense | 50,438 | 13,648 | 101,979 | 19,207 | ||
Amortization of operating lease right-of-use assets | 167,504 | |||||
Amortization of financing lease right-of-use assets | 143,515 | 285,454 | ||||
Amortization of intangible assets | 1,884 | |||||
Amortization of debt discount | 15,438 | |||||
Stock-based compensation expense | 76,457 | 110,623 | 39,126 | |||
Gain from insurance recoveries on impaired fixed assets | (100,000) | |||||
Changes in operating activities, net of acquisition of Fat Patty's concept: | ||||||
Accounts receivable | (57,614) | 122,624 | ||||
Accounts receivable - related party | 772 | |||||
Ad fund receivable | (1,141) | 26,130 | ||||
Ad fund receivable - related party | 515 | |||||
Other receivables | (13,933) | |||||
Prepaid expenses | (27,355) | |||||
Inventory | 30,937 | (6,864) | ||||
Other current assets | 2,705 | 2,417 | ||||
Accounts payable and accrued liabilities | 456,557 | 31,930 | ||||
Accounts payable and accrued liabilities - related party | 65,145 | (19,093) | ||||
Settlement agreements payable | 5,590 | 5,590 | ||||
Accrued legal settlement | 3,882 | 3,882 | ||||
Deferred franchise fees | (7,250) | (38,014) | ||||
Gift card liabilities | (5,974) | |||||
Other liabilities | 2,999 | |||||
Net cash provided by operating activities | 328,627 | 183,304 | (478,238) | (248,345) | ||
Cash flows from investing activities | ||||||
Issuances of notes receivable | (15,000) | |||||
Repayments of notes receivable | 1,903 | 13,946 | ||||
Insurance recoveries for impaired fixed assets | 100,000 | |||||
Contingent consideration | (143,326) | |||||
Purchases of fixed assets | (160,097) | (137,952) | ||||
Net cash used by investing activities | (73,194) | (267,332) | ||||
Cash flows from financing activities | ||||||
Proceeds from issuance of notes payable - related party | 1,075,893 | 69,551 | ||||
Payments on operating lease liability | (129,903) | |||||
Payments on financing lease liability | (83,976) | |||||
Repayments of notes payable - related party | (1,206,271) | (97,877) | ||||
Net cash used by financing activities | (344,257) | (28,326) | ||||
Net decrease in cash and cash equivalents | (88,824) | (112,354) | ||||
Cash and cash equivalents, beginning of period | 345,228 | 145,346 | 145,346 | |||
Cash and cash equivalents, end of period | $ 256,404 | $ 32,992 | 256,404 | 32,992 | $ 345,228 | $ 145,346 |
Supplemental disclosure of cash flow information | ||||||
Cash paid for interest | 354,462 | |||||
Cash paid for income taxes | ||||||
Schedule of non-cash transactions | ||||||
Preferred stock issued in exchange for common stock | 4,496 | |||||
Property and equipment acquired through accounts payable | 126,000 | |||||
Recognition of operating lease liability and right-of-use assets | 3,832,779 | |||||
Recognition of financing lease liability and right-of-use assets | $ 11,326,676 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [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 primarily on the development of the Dick’s Wings & Grill ® Fat Patty’s ® On August 30, 2018, the Company closed upon an asset purchase agreement for Fat Patty’s. Fat Patty’s is comprised of four company-owned restaurants located at 1442 Winchester Avenue, Ashland, Kentucky 41101, 5156 WV 34, Hurricane, West Virginia 25526, 3401 Rt. 60 East, Barboursville, West Virginia 25504, and 1935 Third Avenue, Huntington, West Virginia 25702 (collectively, the “Fat Patty’s Restaurants”). A description of the Company’s acquisition of Fat Patty’s is set forth herein under Note 4. – Acquisition of Fat Patty’s. On October 30, 2018, the Company entered into an agreement to acquire the Tilted Kilt Eatery and Pub ® Note 5. Agreement to Acquire Tilted Kilt On November 7, 2018, the Company became a franchisee of a Tilted Kilt restaurant located in Gonzales, Louisiana. At June 30, 2019, the Company had 20 Dick’s Wings restaurants and three Dick’s Wings concession stands. Of the 20 restaurants, 16 were located in Florida and four were located in Georgia. The Company’s concession stands were also located in Florida. Four of the Company’s restaurants were owned by the Company, and the remaining 16 restaurants were owned and operated by franchisees. The Company’s concession stands were also owned by the Company. In addition, the Company had four Fat Patty’s restaurants at June 30, 2019. Of the four restaurants, three were located in West Virginia and one was located in Kentucky. All four of the restaurants were owned by the Company. The Company also had its Tilted Kilt restaurant in Louisiana for which it serves as a franchisee. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Note 2. Basis of Presentation and Significant Accounting Policies Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions were eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Certain information and footnotes disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations. Notwithstanding this, the Company believes that the disclosures herein are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K. Information presented as of December 31, 2018 is derived from the audited consolidated financial statements. The results of operations for the three- and six-month periods ended June 30, 2019 are not necessarily indicative of the results that the Company will have for any subsequent quarter or full fiscal year. 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. Estimates The preparation of condensed consolidated 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 condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Restatement The Company has restated its previously issued condensed consolidated statement of operations for the three- and six-month periods ended June 30, 2018. The impact of the restatement is more specifically described herein under Note 20. Restatement of Previously Issued Condensed Consolidated Financial Statements Going Concern The company concluded that facts existed that 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 during the year ended December 31, 2017. While the Company had a working capital deficit of $2,784,844 at December 31, 2018 and a net loss of $282,483 during the year ended December 31, 2018, it generated cash flows from operations of $478,238 during the year ended December 31, 2018. The improvement in cash flows during the year ended December 31, 2017 was due primarily to the Company’s acquisition of two Company-owned Dick’s Wings restaurants in December 2016. The improvement in cash flows during the year ended December 31, 2018 was due primarily to the Company’s acquisition of Fat Patty’s in August 2018. While the Company generated a net loss of $705,804 during the six-month period ended June 30, 2019 and had a working capital deficit of $3,480,288 at June 30, 2019, the Company generated cash flow from operating activities of $328,627 during the six-month period ended June 30, 2019 and received continued financial support from related parties during the six-month period ended June 30, 2019 and the years ended December 31, 2018 and 2017. As a result of these factors, the Company concluded that the substantial doubt about its ability to continue as a going concern had been alleviated as of June 30, 2019. Segment Disclosure The Company has both Company-owned restaurants and franchised restaurants Segment Reporting Other Receivables Other receivables was comprised primarily of receipts from credit card sales by Company-owned Fat Patty’s restaurants that occurred after the Company completed the acquisition of Fat Patty’s that were held by the former owner of Fat Patty’s, all of which are expected to be collected in full by the Company during the next 12 months. Intangible Assets, Net The Company acquired various intangible assets in connection with the acquisition of Fat Patty’s. The intangible assets were comprised of a tradename and a non-compete agreement. The Company amortizes the non-compete agreement on a straight-line basis over the expected period of benefit, which is five years. The tradename has an indefinite life and is not subject to amortization but tested for impairment on an annual basis. The Company recognized $942 and $1,884 of amortization expense for the non-compete agreement during the three- and six-month periods ended June 30, 2019. Other Payables Other payables was comprised primarily of accounts payable owed to the former owner of Fat Patty’s for alcohol and other items purchased by him in connection with the operation of the concept. Revenue Recognition The Company generates revenue from two primary sources: (a) retail sales at company-operated restaurants; and (b) franchise revenue, which consists of royalties based on a percentage of sales reported by franchised restaurants, funds contributed by franchisees to the Company’s general advertising fund, and initial and renewal franchise license fees. Revenue From Company-Owned Restaurants Revenue from company-owned restaurants is primarily recognized as customers pay for products at the point of sale. The Company reports Company-owned restaurant revenues net of sales and use taxes collected from customers and remitted to governmental taxing authorities. Revenue From Franchised Restaurants The Company grants individual restaurant franchises to operators in exchange for initial franchise license fees and continuing royalty payments. Initial and renewal franchise license fees are payable by the franchisee upon a new restaurant opening or renewal of an existing franchise agreement. Under franchise agreements, the Company provides franchisees with: (a) a franchise license, which includes a non-exclusive license to our intellectual property for the duration of the franchise agreement and where the Company manages a marketing or co-op advertising fund, advertising and promotion management; (b) pre-opening services, such as training and inspections; and (c) ongoing services, such as development of training materials and menu items and restaurant monitoring and inspections. The services that the Company provides are highly interrelated and dependent on the franchise license so the Company does not consider the services to be individually distinct and therefore accounts for them as a single performance obligation. The performance obligation is satisfied by providing a right to use the Company’s intellectual property over the term of each franchise agreement. Accordingly, initial and renewal franchise fees are recognized as revenue on a straight-line basis over the term of the respective agreement. The Company’s performance obligation under area development agreements generally consists of an obligation to grant exclusive development rights for a particular geographic region over a stated term. These development rights are not distinct from franchise agreements and are creditable towards the initial franchise license fee, so upfront fees paid by franchisees for exclusive development rights are deferred and allocated to the appropriate franchise restaurant when the franchise agreement is executed. Franchise royalty revenues represents sales-based royalties that are related entirely to the Company’s performance obligation under the franchise agreement. Continuing franchise royalty revenues are based on a percentage of monthly sales and are recognized on the accrual basis as franchise sales occur. In certain circumstances, the Company may reduce or waive franchise license fees and/or the franchise royalty percentage for a period of time. Franchises contributions to the Company’s general advertising funds are calculated as a percentage of monthly sales. Contributions to the fund generally represent sales-based or fixed monthly fee amounts that are related entirely to the Company’s performance obligation under the franchise agreement and are recognized as franchise sales occur. ASC Topic 606 On January 1, 2018, the Company adopted the provisions of ASC Topic 606, Revenue From Contracts With Customers Franchise Fees ASC 606 impacted the timing of recognition of franchise fees. Under previous guidance, these fees were typically recognized upon the opening of restaurants. Under ASC 606, the fees are deferred and recognized as revenue over the term of the individual franchise agreements. 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 recognized $3,625 and $7,250 of deferred franchise fees as income during the three- and six-month periods ended June 30, 2019, and recognized $7,125 and $12,750 of deferred franchise fees as income during the three- and six-month periods ended June 30, 2018, respectively. The carrying value of the Company’s deferred franchised fees was $57,984 at June 30, 2019. Advertising Funds ASC 606 also impacted the accounting for transactions related to the Company’s general advertising fund. Under previous guidance, franchisee contributions to and expenditures by the fund were not included in the Company’s condensed consolidated financial statements. Under ASC 606, the Company records contributions to and expenditures by the fund as revenue and expenses within the Company’s condensed consolidated financial statements. The Company recognized contributions to and expenditures by the fund of $31,645 and $63,868 during the three- and six-month periods ended June 30, 2019, and recognized contributions to and expenditures by the fund of $45,029 and $98,260 during the three- and six-month periods ended June 30, 2018, respectively. Gift Card Funds Additionally, ASC 606 impacted the accounting for transactions related to the Company’s gift card program. Under previous guidance, estimated breakage income on gift cards was deferred until it was deemed remote that the unused gift card balance would be redeemed. Under ASC 606, breakage income on gift cards is recognized as gift cards are utilized. The effect of this change on the Company’s condensed consolidated financial statements was negligible. Disaggregation of Revenue The following table disaggregate revenue by primary geographical market and source: Three Months Ended Three Months Ended Six Months Ended Six Months Ended Primary Geographic Markets Florida $ 1,335,909 $ 1,065,922 $ 2,652,463 $ 2,204,792 Georgia 267,966 48,665 567,010 98,959 Kentucky 651,565 — 1,291,376 — Louisiana 227,067 — 529,343 — West Virginia 1,706,460 — 3,737,596 — Total revenue $ 4,188,967 $ 1,114,587 $ 8,777,788 $ 2,303,751 Sources of Revenue Restaurant sales $ 3,967,890 $ 839,827 $ 8,346,681 $ 1,767,104 Royalties 180,356 194,448 354,538 394,479 Franchise fees 3,625 29,389 7,250 38,014 Advertising fund fees 31,645 45,029 63,868 98,260 Other revenue 5,451 5,894 5,451 5,894 Total revenue $ 4,188,967 $ 1,114,587 $ 8,777,788 $ 2,303,751 Deferred Revenue Deferred revenue consists of contract liabilities resulting from initial and renewal franchise license fees paid by franchisees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement, as well as upfront development fees paid by franchisees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement once it is executed or if the development agreement is terminated. The following table presents changes in deferred franchise fees as of and for the six-month period ended June 30, 2019: Total Liabilities Deferred franchise fees at December 31, 2018 $ 65,234 Revenue recognized during the period (7,250 ) New deferrals due to cash received — Deferred franchise fees at June 30, 2019 $ 57,984 Anticipated Future Recognition of Deferred Franchise Fees The following table presents the estimated franchise fees to be recognized in the future related to performance obligations that were unsatisfied at June 30, 2019: Year Franchise 2019 (remaining six months) $ 6,468 2020 12,000 2021 10,926 2022 9,000 2023 6,637 Thereafter 12,953 Total $ 57,984 Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases Leases Leases ASC Topic 842 modifies the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less are accounted for in the same manner as operating leases under ASC Topic 840. The Company adopted ASC Topic 842 effective January 1, 2019 applying the modified retrospective transition approach. Under this approach, results for reporting periods beginning after January 1, 2019, are presented under Topic 842, while prior periods are not adjusted and continue to be reported under the accounting standards in effect for those periods. The Company recognized $3,832,779 and $3,832,286 of additional assets and liabilities, respectively, in connection with its operating leases upon the adoption of ASC Topic 842 on January 1, 2019. The Company did not recognize any additional assets or liabilities in connection with its The Company determines whether a contract is or contains a lease at inception of the contract based on whether an identified asset exists and whether the Company has the right to obtain substantially all of the benefit of the assets and to control its use over the full term of the agreement. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, none of our leases provide a readily determinable implicit rate. Therefore, the Company estimated its incremental borrowing rate considering both the revolving credit rates and a credit notching approach to discount the lease payments based on information available at lease commencement. There are no material residual value guarantees and no restrictions or covenants included in the Company’s lease agreements. Certain of the Company’s leases include provisions for variable payments. These variable payments are typically determined based on a measure of throughput or actual days or another measure of usage and are not included in the calculation of lease liabilities and right-of-use assets. The Company elected the package of practical expedients available for implementation, which allows for the following: ● An entity need not reassess whether any expired or existing contracts are or contain leases; ● An entity need not reassess the lease classification for any expired or existing leases; and ● An entity need not reassess initial indirect costs for any existing leases. Furthermore, the Company elected the optional transition method to make January 1, 2019 the initial application date of the standard. This package of practical expedients allows entities to account for their existing leases for the remainder of their respective lease terms following the previous accounting guidance. The Company also elected to adopt the optional transition practical expedient provided in ASU 2018-01 to not evaluate under ASC Topic 842 for existing or expired land easements prior to the application date to determine if they meet the definition of a lease. The impact of ASC Topic 842 is more specifically described herein under Note 12. Leases 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 condensed consolidated financial statements as a result of future adoption. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Note 3. Net Loss Per Share The Company calculates basic and diluted net loss per share in accordance with ASC Topic 260, Earnings per Share All of the shares of common stock underlying exercisable or convertible securities that were outstanding at June 30, 2019 and 2018 were excluded from the computation of diluted net loss per share for the three- and six-month periods ended June 30, 2019 and 2018, respectively, because they were anti-dilutive. As a result, basic net loss per share was equal to diluted net loss per share for the three- and six-month periods ended June 30, 2019 and 2018, respectively. |
Acquisition of Fat Patty's
Acquisition of Fat Patty's | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisition of Fat Patty's | Note 4. Acquisition of Fat Patty’s On August 3, 2018, the Company entered into an asset purchase agreement with CSA, Inc., a West Virginia corporation (“CSA”), CSA Investments, LLC, a West Virginia limited liability company (“CSA Investments”), CSA of Teays Valley, Inc., a West Virginia corporation (“CSA Teays Valley”), CSA, Inc. of Ashland, a Kentucky corporation (“CSA Ashland”), Fat Patty’s, LLC, a West Virginia limited liability company (“FPLLC”), and Clint Artrip, an individual (“Artrip”; together with CSA, CSA Investments, CSA Teays Valley, and CSA Ashland, FPLLC, the “Sellers”), pursuant to which the Company agreed to acquire all of the assets associated with Fat Patty’s (the “Fat Patty’s Acquisition”). The Company agreed to pay the Sellers $12,352,000 for the assets, of which $12,000,000 was to be paid to the Sellers at closing, $40,000 was to be paid to the Sellers within 10 days after the closing and the remaining $312,000 will be paid to the Sellers on the first anniversary of the closing. The closing of the Fat Patty’s Acquisition occurred on August 30, 2018, however, as discussed below, the Company entered into a separate related agreement with a third party that resulted in a direct transfer of the Properties (as defined below) from the Sellers to the third party. Accordingly, in substance, the Company only acquired the net assets detailed below for a purchase price of $852,000. In connection with the Fat Patty’s Acquisition, the Company entered into a secured convertible promissory note with Seenu G. Kasturi on August 30, 2018 pursuant to which the Company borrowed $622,929 from Mr. Kasturi to help finance the Fat Patty’s Acquisition. All principal and accrued but unpaid interest is due and payable by the Company in full on the earlier of (i) the fifth (5 th Also on August 3, 2018, the Company entered into a purchase and sale agreement with Store Capital Acquisitions, LLC, a Delaware limited liability company (“Store Capital”), pursuant to which the Company agreed to sell all of the real property acquired in the Fat Patty’s Acquisition to Store Capital (the “Property Acquisition”). The real property consists of the four properties upon which the restaurants acquired in the Asset Acquisition are located (collectively, the “Properties”). Store Capital agreed to pay the Company $11,500,000 for the Properties at closing. Title to the Properties was transferred directly from the applicable Sellers to Store Capital, and the purchase price for the Properties was paid by Store Capital directly to Sellers. Accordingly, the Company never took title to, or ownership of, the Properties. As a result, the ultimate purchase price paid by the Company was $852,000, which was the difference between the $12,352,000 purchase price for the assets that the Company agreed to pay to the Sellers and the $11,500,000 purchase price for the Properties that was paid by Store Capital. The closing of the Property Acquisition occurred on August 30, 2018. In connection with the Property Acquisition, the Company entered into a master lease agreement (the “Master Lease”) with Store Capital on August 30, 2018 pursuant to which the Company leased each of the Properties from Store Capital. The initial term of the lease expires on August 31, 2038. The Company has the option to extend the term of the lease for four additional successive periods of five years each. The aggregate base annual rent is $876,875 and is subject to annual increases commencing September 1, 2019 in an amount equal to the lesser of: (i) 1.75%, or (ii) 1.25 times the change in the Consumer Price Index. The Company is responsible for all costs and obligations relating to the Properties. The acquisition of Fat Patty’s was accounted for as a business combination using the acquisition method of accounting in accordance with Accounting Standard Codification (“ASC”) Topic 805, Business Combinations For purposes of measuring the estimated fair value, where applicable, of the assets acquired and the liabilities assumed as reflected in the Company’s condensed consolidated financial statements, the guidance in ASC Topic 820, Fair Value Measurements and Disclosures The assets acquired and liabilities assumed were comprised of the following: Cash $ 7,100 Inventory 91,424 Intangible assets 788,840 Equipment 614,295 Total assets acquired 1,501,659 Gift card liabilities (24,707 ) Total liabilities assumed (24,707 ) Gain on bargain purchase (624,952 ) Net assets acquired with note payable and deferred compensation liability $ 852,000 The estimates of fair values recorded are Level 3 inputs that have been determined by management based upon various market and income analyses and recent asset appraisals. The Company made certain adjustments to the amounts initially allocated to intangible assets and gift card liabilities after evaluating additional information that was present on the date the acquisition was completed. The fair value of the identifiable assets acquired and liabilities assumed of $1,476,952 exceeded the purchase price of Fat Patty’s by $624,952. Consequently, the Company reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed and concluded that the valuation procedures and resulting measures were appropriate. As a result, the Company recognized a gain of $624,952 during the year ended December 31, 2018 in connection with the acquisition. The Sellers of Fat Patty’s received cash without any earnouts or indemnification holdbacks, which was the primary motivation for the sale of Fat Patty’s. This was the primary reason the acquisition resulted in a bargain purchase. The gain was recorded in the other income in the Company’s condensed consolidated statements of operations. The following table summarizes certain financial information for the three- and six-month periods ended June 30, 2019 contained in the Company’s condensed three- and six-month periods ended June 30, 2018 Three Months Three Months Six Months Six Months Ended Revenue $ 4,188,967 $ 3,868,152 $ 8,777,788 $ 8,059,247 Income (loss) from continuing operations (308,016 ) 393,701 (565,009 ) 1,118,135 Net income / (loss) (291,561 ) 472,419 (705,804 ) 1,196,159 Net income / (loss) per share – basic $ (0.04 ) $ 0.07 $ (0.10 ) $ 0.17 Net income / (loss) per share – fully diluted $ (0.04 ) $ 0.07 $ (0.10 ) $ 0.17 The results of operations for Fat Patty’s were included in the Company’s results of operations beginning August 30, 2018. The actual amounts of revenue and net income for Fat Patty’s that were included in the Company’s condensed consolidated statements of operations for the three-month period ended June 30, 2019 were $1,959,728 and $475,452, respectively, and the actual amounts of revenue and net income for Fat Patty’s that were included in the Company’s condensed consolidated statements of operations for the six-month period ended June 30, 2019 were $4,630,375 and $610,488, respectively. 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, 2018 or of the future results of the combined entities |
Agreement to Acquire Tilted Kil
Agreement to Acquire Tilted Kilt | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Agreement to Acquire Tilted Kilt | Note 5. Agreement to Acquire Tilted Kilt On October 30, 2018, the Company entered into a Membership Interest Purchase Agreement with SDA Holdings, LLC, a Louisiana limited liability company (“SDA Holdings”), and Fred D. Alexander pursuant to which the Company agreed to acquire all of the issued and outstanding membership interests in SDA Holdings for $10. SDA Holdings is the owner of the Tilted Kilt Pub & Eatery ® The closing of the transaction is conditioned upon SDA Holdings, Trustee Services Group (the “Custodian”), Seenu G. Kasturi, who served as the Company’s President and Chief Financial Officer and the Chairman of its board of directors as of December 31, 2018, Let’s Eat Incorporated (“Let’s Eat”), the Reilly Group, LLC (the “Reilly Group”) and John Reynauld entering into an amendment to that certain Custodian Agreement, dated June 7, 2018, by an among the parties to add SDA Holdings as a party to the agreement and remove Mr. Kasturi as a party to the agreement, in which event SDA Holdings will be required to deliver 718,563 shares of the Company’s common stock to the Custodian. The closing of the transaction is also conditioned upon the Company raising gross proceeds of at least $2,000,000 through the sale of debt or equity securities, as well as other customary closing conditions. Upon closing of this acquisition, the Company will issue 666,667 shares of common stock to Mr. Kasturi, place 718,563 shares of common stock into escrow to replace a like number of shares placed in escrow by Mr. Kasturi, and through a wholly-owned subsidiary, be the obligor under a demand promissory note in favor of Mr. Kasturi in the principal amount of up to $2,500,000. As of June 30, 2019, the conditions to closing had not yet been satisfied or waived by the parties. There is no set closing date for the transaction. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 6. Inventory Inventory was comprised of the following at June 30, 2019 and December 31, 2018, respectively: June 30, 2019 December 31, 2018 Food $ 123,280 $ 120,426 Beverages 56,808 90,599 Total $ 180,088 $ 211,025 |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Note 7. Property and Equipment, Net Property and equipment was comprised of the following at June 30, 2019 and December 31, 2018, respectively: June 30, 2019 December 31, 2018 Land, buildings and improvements $ -0- $ 11,500,000 Leasehold improvements 332,500 323,500 Furniture, fixtures and equipment 1,159,198 1,021,735 Subtotal 1,491,698 12,845,235 Less: accumulated depreciation (223,247 ) (307,733 ) Total $ 1,268,451 $ 12,537,502 The land, buildings and improvements of $11,500,000 included within property and equipment at December 31, 2018 consisted of gross assets acquired on the capital lease. On January 1, 2019, in connection with the adoption of ASC Topic 842, the Company determined that the lease was a financing lease and recorded a right-of-use asset and lease liability for the lease, reversing the capital lease asset and capital lease obligation previously recognized. Depreciation expense was $50,438 and $101,979 during the three- and six-month periods ended June 30, 2019 , respectively, and was |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 8. Intangible Assets The Company acquired various intangible assets in connection with the acquisition of Fat Patty’s. Intangible assets include a tradename valued at $770,000 and a non-compete agreement valued at $18,840 for a total of $788,840 on August 30, 2018, which is the date the acquisition of Fat Patty’s was completed. The Company amortizes the non-compete agreement on a straight-line basis over the expected period of benefit, which is five years. The tradename has an indefinite life and is not subject to amortization but tested for impairment on an annual basis. The Company recognized $2,275 of amortization expense on the non-compete agreement during the year ended December 31, 2018. Accordingly, the Company had total intangible assets of $786,565 at December 31, 2018. The Company recognized $942 and $1,884 of amortization expense on the non-compete agreement during the three- and six-month periods ended June 30, 2019. Accordingly, the Company had total intangible assets of $784,681 at June 30, 2019. The following table presents the future amortization expense to be recognized from the Company’s intangible assets at June 30, 2019: Year Amortization Expense to be 2019 (remaining six months) $ 1,884 2020 3,768 2021 3,768 2022 3,768 2023 1,493 Thereafter — Total $ 14,681 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 9. Fair Value Measurements On December 19, 2016, the Company acquired all of the issued and outstanding membership interests of Seediv, LLC, a Louisiana limited liability company (“Seediv”), from Seenu G. Kasturi 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 (the “Nocatee Restaurant”) and the Dick’s Wings & Grill restaurant located at 6055 Youngerman Circle in Argyle Village in Jacksonville, Florida (the “Youngerman Circle Restaurant”; together with the Nocatee Restaurant, the “Nocatee and Youngerman Circle Restaurants”). 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 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. 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 during the year ended December 31, 2017 in connection with the earnout payment and the liability for the contingent consideration was increased by $178,785 to $199,682 at December 31, 2017. The Company made payments in the amount of $144,326 to Mr. Kasturi with respect to the earnout payment during the year ended December 31, 2018. The Company did not make any payments to Mr. Kasturi during the six-month period ended June 30, 2019. Accordingly, the outstanding balance of contingent consideration was $55,356 at June 30, 2019 and December 31, 2018, respectively. 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 June 30, 2019 and December 31, 2018, respectively: Level 1 Level 2 Level 3 June 30, 2019 $ — $ 55,356 $ — December 31, 2018 $ — $ 55,356 $ — The earnout payment was to be calculated based on the earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the Nocatee and Youngerman Circle Restaurants during the year ended December 31, 2017. As of December 31, 2017, the EBITDA for the Nocatee and Youngerman Circle Restaurants was utilized to compute the ending contingent consideration liability. As a result, the fair value measurement of the contingent consideration represented a Level 2 fair value measurement at June 30, 2019 and December 31, 2018 because it was based on other significant observable inputs. The Company’s other financial instruments consist of cash and cash equivalents, accounts and ad fund receivables, notes receivable, operating and financing lease right-of-use assets and liabilities, accounts payable, accrued expenses and notes payable. The estimated fair values of the cash and cash equivalents, accounts and ad fund receivables, notes receivable, accounts payable, accrued expenses and notes payable (and the related beneficial conversion feature associated with the notes payable) approximate their respective carrying amounts due to the short-term maturities of these instruments. The estimated fair value of the financing and operating lease right-of-use assets and liabilities approximated their respective carrying amounts as the interest rate used in calculating the right-of-use-assets and liabilities approximated the interest rate on the outstanding debt. |
Notes Receivable
Notes Receivable | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
Notes Receivable | Note 10. Notes Receivable 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 $414 was outstanding under the loan at December 31, 2018. The loan was repaid in full during the six-month period ended June 30, 2019. Interest in the aggregate amount of $2 accrued and was paid in full under the loans during the three- and six-month periods ended June 30, 2018. Interest in the aggregate amount of $219 and $517 accrued and was paid in full under the loans during the three- and six-month periods ended June 30, 2018, respectively. No accrued interest was outstanding under the loans at June 30, 2019 and December 31, 2018. 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. A total of $3,617 and $5,106 of principal was outstanding under the loan at June 30, 2019 and December 31, 2018, respectively. In June 2019, the Company made a loan to one of its franchisees in the aggregate original principal amount of $15,000. The loan is due and payable in monthly installments with an initial payment of $2,000 due July 1, 2019, followed by six monthly payments of $2,000 due on the 27 th th The carrying value of the Company’s outstanding notes receivable was $18,617 and $5,520 at June 30, 2019 and December 31, 2018, respectively, all of which was due from unrelated third parties. Of these amounts, $17,344 and $1,273 were classified as short-term and long-term notes receivable, respectively, at June 30, 2019, and $2,967 and $2,553 were classified as short-term and long-term notes receivable, respectively, at December 31, 2018. The Company generated interest income of $2 during the three- and six-month periods ended June 30, 2019, and generate interest income of $219 and $517 during the three- and six-month periods ended June 30, 2018, respectively. The Company did not have any interest receivable outstanding at June 30, 2019 and December 31, 2018. |
Debt Obligations
Debt Obligations | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Note 11. Debt Obligations In September 2013, the Company entered into a loan agreement with Blue Victory Holdings, Inc., a Nevada corporation (“Blue Victory”), The Company did not borrow any funds under the credit facility during the six-month period ended June 30, 2019 and the year ended December 31, 2018, and there was no principal outstanding under the credit facility at June 30, 2019 and December 31, 2018. The Company entered into an unsecured loan with Blue Victory during the year ended December 31, 2017. The amount of principal outstanding under the loan was $30,503 at December 31, 2017. The Company borrowed $277,707 and repaid $71,877 under the loan during the year ended December 31, 2018. Accordingly, the amount of principal outstanding under the loan was $236,333 at December 31, 2018. The Company borrowed $1,075,893 and repaid $1,206,271 under the loan during the six-month period ended June 30, 2019. Accordingly, the amount of principal outstanding under the loan was $105,955 at June 30, 2019. The Company recognized $3,080 and $6,984 of interest expense under the loan during the three- and six-month periods ended June 30, 2019, and recognized $877 and $1,650 of interest expense under the loan during the three- and six-month periods ended June 30, 2018. On August 30, 2018, the Company entered into a secured convertible promissory note with Seenu G. Kasturi pursuant to which the Company borrowed $622,929 to help finance the Fat Patty’s Acquisition. A description of the note is set forth herein under Note 4. Acquisition of Fat Patty’s. The carrying value of the Company’s outstanding promissory notes, net of unamortized discount of $123,646 and $139,084 at June 30, 2019 and December 31, 2018, respectively, and excluding financing and operating lease liabilities, was $605,238 and $720,178 at June 30, 2019 and December 31, 2018, respectively. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Note 12. Leases The Company leases certain office space, land, buildings and equipment. The Company’s lease agreements for equipment are immaterial in amount, both individually and collectively. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants, and none of the Company’s lease agreements include options to purchase the leased property. The Company does not have any significant leases that have not yet commenced that create significant rights and obligations for the Company. The Company elected the practical expedient under ASC 842 to not separate lease and non-lease components. A description of the Company’s operating and financing leases is set forth herein under Note 16. Commitments and Contingencies – Operating Leases Financing Leases. Most of the Company’s lease agreements have fixed rental payments. Certain of the Company’s lease agreements include fixed rental payments that are adjusted periodically based on rate or are based in part on a percentage of sales. Payments based on a percentage of sales is not considered in the determination of lease payments for purposes of measuring the related lease liability. Most of the Company’s real estate leases include one or more options to renew, with renewal terms that can extend the lease term from three to five years or more. The exercise of lease renewal options is at the Company’s sole discretion. If the Company is reasonably certain that it will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of the Company’s right-of-use assets and liabilities. The Company determines discount rates based on the rates of its outstanding debt. The following table sets forth information about the Company’s operating and financing lease assets and liabilities included in its condensed consolidated balance sheet as of June 30, 2019: Classification on the Condensed June 30, 2019 Assets Operating lease right-of-use assets Right-of-use assets $ 3,665,275 Financing lease right-of-use assets Right-of-use assets 11,041,222 Total right of use assets $ 14,706,497 Liabilities Current liabilities: Operating lease liability Current operating lease liabilities $ 275,723 Financing lease liability Current portion of other long-term liabilities 191,361 Non-current liabilities: Operating lease liabilities, net of Operating lease liabilities 3,426,660 Financing lease liabilities, net of Other long-term liabilities 11,110,573 Total lease liabilities $ 15,004,317 The following table sets forth the supplemental cash flow information related to the Company’s leases for the three- and six-month periods ended June 30, 2019: Three Months Ended Six Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 128,036 $ 249,441 Operating cash flows from financing leases 176,904 354,462 Financing cash flows from financing leases 143,515 285,453 The following table sets forth the components of lease costs related to the Company’s leases for the three- and six-month periods ended June 30, 2019: Three Months Six Months Operating lease costs 143,274 $ 286,549 Financing lease costs: Amortization of right-of-use assets $ 143,515 $ 285,454 Interest on lease liabilities 176,904 354,461 Total financing lease costs 320,419 639,915 The following table shows certain information related to the weighted-average remaining lease terms and the weighted-average discount rates for our operating and financing leases: Weighted Average Remaining Weighted (in years) (annual) Operating leases 11.78 7.39 % Financing leases 19.67 8.00 % The following table sets forth the maturity of our operating and financing leases liabilities as of June 30, 2019: Operating Leases Financing Leases Year Ended December 31, 2019 (remaining six months) $ 262,740 $ 443,553 2020 544,759 897,425 2021 570,765 913,130 2022 583,392 929,110 2023 472,444 945,369 Thereafter 3,206,389 15,924,033 Total lease payments 5,640,489 20,052,620 Less: imputed interest (1,938,106 ) (8,750,686 ) Total $ 3,702,383 $ 11,301,934 |
Capital Stock
Capital Stock | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | Note 13. 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 June 30, 2019 and December 31, 2018, respectively, of which 7,080,771 and 6,680,065 shares of common stock were outstanding at June 30, 2019 and December 31, 2018, respectively, 1,000,000 shares of Series A convertible preferred stock, par value $0.01 per share, at June 30, 2019 and December 31, 2018, of which 449,581 shares were outstanding at June 30, 2019 and December 31, 2018, and 2,500,000 shares of Series B Convertible Preferred Stock, $0.01 par value per share, none of which was outstanding at June 30, 2019 and December 31, 2018. In May 2018, the Company issued a stock option to an employee that is exercisable into 30,000 shares of common stock. The shares were valued on the date of grant by using the Black-Scholes pricing model. The Company recognized $10,002 of stock compensation expense during the year ended December 31, 2018 in connection with the vesting of the option. In February 2019, the stock option terminated in its entirety upon the termination of the employee’s employment with the Company. In connection therewith, the stock compensation previously recognized by the Company during the year ended December 31, 2018 was reversed during the six-month period ended June 30, 2019. In May 2018, the Company provided an employee with the right to receive $33,000 in cash or 20,000 shares of shares of the Company’s common stock on May 15, 2021. The shares were valued at a price per share equal to the closing price of the Company’s common stock on the OTCQB on the date of grant and remeasured as of December 31, 2018. In accordance with ASC 718, as the employee is able to settle the right in either cash or common stock, the Company recognized $8,701 of stock compensation expense in connection therewith during the year ended December 31, 2018 and recorded a corresponding liability which has been recorded in accounts payable and accrued expenses within the Company’s consolidated balance sheet . In February 2019, the right terminated . In August 2018, the Company entered into an agreement with a firm to provide investor relations services to the Company. Under the terms of the agreement, the Company agreed to pay the firm $12,250 and issue 3,500 shares of common stock to the firm upon the execution of the agreement as compensation for services to be performed during the months of August and September 2018. The Company agreed to pay the firm $7,000 and issue 1,500 shares of common stock each month thereafter during the remainder of the term of the agreement. The Company recognized $5,775 and $11,145 of stock compensation expense under the agreement during the three- and six-month periods ended June 30, 2019 . The Company recognized $147 of stock compensation expense during the six-month period ended June 30, 2019 in connection with the vesting of 10,706 shares of common stock earned by Mr. Kasturi on January 1, 2019 under the employment agreement that he was then a party to with the Company. In January 2019, the Company issued a restricted stock award to Mr. Kasturi pursuant to the terms of a new employment agreement that the Company entered into with him. The Company recognized $48,967 and $96,319 of stock compensation expense in connection therewith during the three- and six-month periods ended June 30, 2019. A description of the new employment agreement and restricted stock award is set forth herein under Note. 16 – Commitments and Contingencies – Employment Agreements – Seenu G. Kasturi In January 2019, the Company commenced a private offering of up to 5,000,000 units, each unit comprised of one share of common stock and one warrant to purchase one share of common stock, at a purchase price of $1.40 per unit (the “Offering”). Each warrant is exercisable for a term of five years at an exercise price of $1.55 per share, subject to adjustment. The units are being offered without registration under the Securities Act of 1933, as amended (“Securities Act”), solely to persons who qualify as accredited investors, as that term is defined in Rule 501 of Regulation D under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated thereunder. The Company retained Maxim Group, LLC (“Maxim”) to serve as its placement agent for the Offering. The Company agreed to pay the placement agent a placement fee equal to 7% of the aggregate gross proceeds raised in the Offering and warrants exercisable for a term of five years to purchase 4% of the number of shares of common stock included in the units sold in the Offering at an exercise price of $1.55 per share. The Offering may be increased by up to an additional $1,000,000 at the mutual discretion of the Company and the placement agent. The initial closing of the Offering is conditioned, among other things, on the Company’s acceptance of subscriptions for at least $500,000 of units and the closing of the Company’s agreement to purchase all of the membership interests in SDA Holdings. Net proceeds, if any, from the Offering will be used to fund the deferred portion of the purchase price for the Company’s acquisition of Fat Patty’s, future payments to the persons that owned Tilted Kilt prior to SDA Holdings, and the repayment of the loan made by Seenu G. Kasturi to help fund the acquisitions of Fat Patty’s and Tilted Kilt, and the balance for general corporate purposes. The Offering was originally contemplated to terminate on March 31, 2019, unless extended by the Company and the placement agent to a date not later than May 31, 2019. On March 31, 2019, the Company extended the offering until May 31, 2019. No securities were sold in the offering during the three- and six-month periods ended June 30, 2019. On April 8, 2019, the Company granted a restricted stock award to an employee for a total of 225,000 shares of the Company’s common stock. The shares vest in three equal annual installments commencing on April 30, 2020. The Company recognized $21,715 of stock compensation expense in connection therewith during the three- and six-month periods ended June 30, 2019. On April 17, 2019, the Company revised the terms of the Offering. As revised, the Offering covers the sale of up to 1,785,715 units, each unit comprised of one share of Series B convertible preferred stock (the “Shares”) and one warrant to purchase one share of common stock at a purchase price of $1.40 per unit, for an aggregate offering price of $2,500,000. Each warrant is exercisable for a term of five years at an exercise price equal to the lesser of: (i) $1.70 per share, and the greater of: (ii) one hundred twenty percent (120%) of the conversion price of the Shares and $0.28 per share, subject to adjustment. The units are being offered without registration under the Securities Act solely to persons who qualify as accredited investors, as that term is defined in Rule 501 of Regulation D under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated thereunder. The Company retained Maxim and Joseph Gunnar & Co., LLC to serve as its placement agents for the Offering. The Company agreed to pay the placement agents an aggregate placement fee equal to 7% of the aggregate gross proceeds raised in the Offering and warrants exercisable for a term of five years to purchase that number of shares of common stock equal to 7% of the number of Shares issued in the Offering and 7% of the number of shares of common stock underlying the warrants issued in the Offering at an exercise price of $1.70 per share. The Offering may be increased by up to an additional $1,000,000 at the mutual discretion of the Company and Maxim. The Offering was set to terminate on April 30, 2019, unless extended by the Company and Maxim to a date not later than May 31, 2019. On April 30, 2019, the Company extended the Offering to May 31, 2019. The initial closing of the Offering is conditioned, among other things, on the Company’s acceptance of subscriptions for at least $500,000 of Units and the closing of the Company’s agreement to purchase all of the membership interests in SDA Holdings, the sole owner of the entities which own Tilted Kilt. The net proceeds, if any, from the Offering will be used to fund the partial repayment of the loan made by Seenu G. Kasturi, who is the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of its board of directors, to SDA Holdings to help fund SDA Holding’s acquisition of Tilted Kilt. In connection therewith, on April 17, 2019, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series B Convertible Preferred Stock with the Secretary of State of Nevada designating 2,500,000 shares of the Company’s authorized but unissued shares of preferred stock, $0.01 par value per share, as Series B Convertible Preferred Stock (the “Series B Preferred Stock”). The Series B convertible preferred stock has a stated value of $1.40 per share. In the event that the Company is liquidated, dissolved, effects certain mergers or consolidations, transfers all or substantially all of its assets, or completes certain other significant transactions, holders of the Series B convertible preferred stock are entitled to receive, in preference to holders of the Company’s common stock and the Company’s Series A convertible preferred stock, an amount per share equal to the greater of (i) $1.40 plus any declared and unpaid dividends thereon, and (ii) the amount per share such holder would receive if such holder converted such shares of Series B convertible preferred stock into shares of common stock at a conversion price of $1.40, subject to adjustment. Upon the completion of a firm commitment underwritten public offering (a “Qualified Public Offering”) of the Company’s common stock and concurrent listing of the Company’s common stock on the Nasdaq Stock Market, NYSE or NYSE MKT within 12 months after the final closing of the Offering, each share of Series B convertible preferred stock will automatically convert into the securities issued by the Company in the Qualified Public Offering (the “Conversion Securities”) at a conversion price equal to the lesser of: (a) $1.40 per share, and (b) the greater of: (i) 70% of the public offering price of the Conversion Securities, and (ii) $0.28 per share (the “Conversion Price”), subject to adjustment. The Conversion Price is subject to adjustment for stock splits, stock dividends, or the reclassification of the common stock. In the event that the Company does not complete a Qualified Public Offering within 12 months after the final closing of the Offering or does not file with the SEC the audited financial statements and other financial information required to be filed in connection with the Company’s acquisition of the Fat Patty’s restaurant concept on August 30, 2018 or in connection with the Company’s proposed acquisition of the Tilted Kilt within four months after the final closing of the Offering, the Company will be required to repurchase all Shares issued in the Offering for a purchase price of $1.75 per share. The Series B convertible preferred stock participates, on an as-converted to common stock basis, in any dividends declared or paid on common stock and votes together with holders of common stock, on an as-converted to common stock basis, on all matters presented to holders of common stock. The Company cannot undertake certain corporate actions without approval of the holders of a majority of the issued and outstanding shares of Series B convertible preferred stock. No securities were sold in the offering during the three- and six-month periods ended June 30, 2019. The Company recognized a total of $76,457 and $110,623 for stock compensation expense during the three- and six-month periods ended June 30, 2019, respectively. The Company had a total of $34,960 and $15,453 of stock subscription payable outstanding at June 30, 2019 and December 31, 2018, respectively. The following table sets forth the changes in stockholders’ equity as of June 30, 2019: Common Stock Series A Series B Shares Par Shares Par Shares Par Additional Stock Accumulated Total Balance at December 31, 2018 6,680,065 $ 66,801 449,581 $ 4,496 — — $ 4,490,338 $ 15,453 $ (5,247,553 ) $ (670,465 ) Common stock issued for services 400,706 4,007 — — — — 105,812 19,507 — 129,326 Cancellation of stock option issued for services — — — — — — (10,002 ) — — (10,002 ) Net loss — — — — — — — — (705,804 ) (705,804 ) Balance at June 30, 2019 7,080,771 $ 70,808 449,581 $ 4,496 — — $ 4,586,148 $ 34,960 $ (5,953,357 ) $ (1,256,945 ) The following table sets forth the changes in stockholders’ equity as of June 30, 2018: Common Stock Series A Convertible Preferred Stock Shares Par Value Shares Par Value Additional Paid-in Capital Stock Subscriptions Payable Accumulated Deficit Total Balance at December 31, 2017 6,950,869 $ 69,509 — $ — $ 3,995,306 $ 26,853 $ (4,768,592 ) $ (676,924 ) Common stock issued for services 23,139 231 — — 37,645 (1 ) — 37,875 Deferred franchise fees — — — — — — (196,478 ) (196,478 ) Common stock exchanged for preferred stock (449,581 ) (4,496 ) 449,581 4,496 — — — — Net loss — — — — — — (7,917 ) (7,917 ) Balance at June 30, 2018 6,524,427 $ 65,244 449,581 $ 4,496 $ 4,032,951 $ 26,852 $ (4,972,987 ) $ (843,444 ) |
Stock Options and Warrants
Stock Options and Warrants | 6 Months Ended |
Jun. 30, 2019 | |
Stock Options and Warrants [Abstract] | |
Stock Options and Warrants | Note 14. Stock Options and Warrants The Company issued one stock option during the year ended December 31, 2018. The stock option was exercisable into 30,000 shares of common stock at an exercise price of $1.49 and vested in three equal annual installments commencing on the first anniversary of the date of issuance. The shares were valued on the date of grant by using the Black-Scholes pricing model in accordance with the provisions of ASC Topic 718. This stock option was the only stock option outstanding at December 31, 2018. In February 2019, the stock option terminated in its entirety. The Company did not issue any stock options or warrants exercisable into shares of the Company’s common stock during the three- and six-month periods ended June 30, 2019 and 2018, and no stock options or warrants were exercised during the three- and six-month periods ended June 30, 2019 and 2018. There were no stock options or warrants outstanding at June 30, 2019. |
Stock Compensation Plans
Stock Compensation Plans | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Compensation Plans | Note 15. 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 June 30, 2019, 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 June 30, 2019, 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 | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 16. Commitments and Contingencies Employment Agreements Seenu G. Kasturi On January 18, 2017, the Company appointed Seenu G. Kasturi as its President, Chief Financial Officer and Chairman of its 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 was 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 was 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 was eligible to receive increases in salary on January 1 st On January 2, 2019, the Company appointed Seenu G. Kasturi as its Chief Executive Officer. As a result of the appointment, Mr. Kasturi then served as the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the its board of directors. In connection therewith, on January 2, 2019, Mr. Kasturi resigned as the Company’s President and Richard W. Akam resigned as the Company’s Chief Executive Officer. Mr. Akam continues to serve as the Company’s Chief Operating Officer and Secretary. On January 2, 2019, the Company entered into an amended and restated employment agreement with Mr. Kasturi to serve as the Chief Executive Officer and Chief Financial Officer of the Company. The 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 agreement, Mr. Kasturi will be paid an initial annual base salary in the amount of $350,000. Mr. Kasturi will be eligible to receive increases in salary on January 1 st Pursuant to the terms of the new employment agreement, the Company entered into a restricted stock award agreement with Mr. Kasturi pursuant to which the Company granted 390,000 shares of the Company’s common stock to Mr. Kasturi. The shares vest in accordance with the following schedule: (i) 130,000 shares on March 31, 2019; (ii) 130,000 shares on March 31, 2020; and (iii) 130,000 shares on March 31, 2021. In the event the Company terminates the employment of Mr. Kasturi without “cause”, as such term is defined in the employment agreement, his restricted stock award will vest in full immediately. In the event Mr. Kasturi’s employment with the Company terminates by reason of death or “disability”, as such term is defined in the employment agreement, or if the Company terminates Mr. Kasturi’s employment for “cause”, as such term is defined in the employment agreement, or if Mr. Kasturi terminates his own employment with the Company, then any shares that have not yet vested shall be forfeited to the Company. In the event of certain “changes in control” as such term is defined in the Company’s 2014 Stock Incentive Plan adopted by the Company’s board of directors on June 16, 2014, all restrictions and conditions on any of the shares then outstanding shall automatically be deemed terminated or satisfied in full, as applicable, immediately prior to the consummation of the change in control event. 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, Richard Akam resigned as the Company’s Chief Financial Officer. Mr. Akam retained his positions as the Company’s Chief Executive Officer, Chief Operating Officer and Secretary. 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 On January 2, 2019, the Company entered into a Second Amendment to Employment Agreement with Richard W. Akam pursuant to which Mr. Akam resigned as the Company Chief Executive Officer but retained his positions as the Company’s Chief Operating Officer and Secretary. 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 In January 2018, the Company entered into a new, month-to-month lease with Crescent Hill Office Park for its corporate headquarters located at 6327-4 Argyle Forest Boulevard, Jacksonville, Florida On November 15, 2018, the Company entered into a triple net lease with the Kasturi Children’s Trust (the “Trust”) for its new corporate headquarters located at 1409 Kingsley Ave., Ste. 2, Orange Park, Florida. The lease is for a term of 60 months and provides the Company with an option to extend the lease by three additional five-year periods. The lease provides for rent payments in the amount of $4,000 per month. The Trust is an irrevocable trust for which the children of Seenu G. Kasturi are the beneficiaries. The trustee of the Trust is an unrelated third party. Nocatee Restaurant In October 2013, DWG Acquisitions, LLC, a Louisiana limited liability company (“DWG Acquisitions”), entered into a triple net shopping center lease with NTC-REG, LLC (“NTC-REG) for the Nocatee Restaurant. The lease provides for an initial monthly rent payment of $1,100 and an additional annual rent payment equal to the amount by which 6% of the restaurant’s annual gross sales exceeds the aggregate monthly rent payments accrued during the applicable year. The lease has an initial term of 53 months and provides DWG Acquisitions with an option to extend the lease by an additional term of 60 months. The lease was assumed by Seediv when Seediv acquired all of the assets and liabilities associated with the Nocatee and Youngerman Circle Restaurants from DWG Acquisitions pursuant to the terms of that certain asset purchase agreement, dated December 1, 2016, by and between Seediv and DWG Acquisitions (the “Seediv Purchase Agreement”). 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 $7,035 without an additional annual rent payment. Youngerman Circle Restaurant In May 2014, DWG Acquisitions entered into a triple net lease with Raceland QSR, LLC, a Louisiana limited liability company (“Raceland QSR”), which is a related party, for the Youngerman Circle Restaurant. The lease provides for a monthly rent payment equal to 7% of the restaurant’s monthly net sales. The lease has an initial term of 10 years and renews automatically for additional one-year terms unless prior written notice is provided by either party. The lease was assumed by Seediv when Seediv acquired all of the assets and liabilities associated with the Nocatee and Youngerman Circle Restaurants from DWG Acquisitions pursuant to the terms of the Seediv Purchase Agreement. 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 Valdosta Dick’s Wings Restaurant On December 31, 2017, DWAG Valdosta, LLC, a Georgia limited liability company that is a wholly-owned subsidiary of the Company (“DWAG Valdosta”), entered into a triple net lease with PLD, L.L.L.P., a Georgia limited liability company, for the Dick’s Wings and Grill restaurant located at 153 Baytree Road, Valdosta, Georgia. The lease provides for monthly rent payments of $3,333 for the first two years and $5,000 for the following three years, plus an additional annual rent payment equal to the amount by which 6% of the restaurant’s annual gross sales exceeds $1,000,000. The lease has an initial term of five years and provides the Company with an option to extend the lease for two additional five-year periods. Panama City Beach Dick’s Wings Restaurant On July 1, 2015, DWG Acquisitions entered into a lease Arquette Development Corporation, a Florida corporation (“Arquette Development”), for the Dick’s Wings and Grill restaurant located at 1136 Thomas Drive, Panama City Beach, Florida (the “Panama City Lease”). The lease provided for rent payments of $5,000 plus an additional annual rent payment equal to the amount by which 6% of the restaurant’s annual gross sales exceeds $1,200,000. The lease had an initial term of three years and provided DWG Acquisitions with an option to extend the lease for three additional three-year periods. The lease expired on June 30, 2018 and was not renewed by DWG Acquisitions. Upon the expiration of the lease, DWG Acquisitions entered into a month-to-month tenancy with Arquette Development pursuant to which DWAG PCB, LLC, a Florida limited liability company that is a wholly-owned subsidiary of the Company (“DWAG PCB”), makes monthly rent payments of $3,000 to Arquette Development on behalf of DWG Acquisitions. Tallahassee Dick’s Wings Restaurant On May 1, 2018, DWAG Tallahassee, LLC, a Florida limited liability company that is a wholly-owned subsidiary of the Company (“DWAG Tallahassee”), entered into a triple net lease with Bannerman Crossings III, LLC, a Florida limited liability company, for a Dick’s Wings and Grill restaurant to be located at 3427 Bannerman Rd., Suite 104, Tallahassee, Florida. The lease provides for no rent during the first year of the lease, followed by monthly rent payments equal to 6% of the restaurant’s monthly gross sales for each month remaining under the lease. The lease has an initial term of 10 years and provides the Company with an option to extend the lease for two additional five-year periods. Bannerman Crossings agreed to loan DWAG Tallahassee $250,000 to be used for tenant improvements to the property. DWAG has the right to terminate the lease at the end of the 42 nd th th Gonzalez Tilted Kilt Restaurant On September 25, 2018, TK Gonzales LA, LLC, a Louisiana limited liability company that is a wholly-owned subsidiary of the Company (“TK Gonzales”), entered into a triple net lease with Acadiana Development of Gonzales, LLC, a Louisiana limited liability company, for the Tilted Kilt restaurant located at 2838 Outfitter’s Drive, Gonzales, Louisiana. The lease provides for initial monthly rent payments of $12,000 that increase to $17,600 during the term of the lease. The lease has an initial term of 10 years and provides the Company with an option to extend the lease for two additional five-year periods. Financing Leases On August 30, 2018, the Company entered into the Master Lease. The initial term of the lease expires on August 31, 2038. The Company has the option to extend the term of the lease for four additional successive periods of five years each. The aggregate base annual rent is $876,875 and is subject to annual increases commencing September 1, 2019 in an amount equal to the lesser of: (i) 1.75%, or (ii) 1.25 times the change in the Consumer Price Index. The Company is responsible for all costs and obligations relating to the Properties. 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. The following table presents the future minimum annual payments under the sponsorship agreement as of June 30, 2019: Year Minimum 2019 (remaining six months) $ 102,000 2020 208,080 2021 212,240 2022 216,490 2023 — Thereafter — Total $ 738,810 Teay’s Valley Fire On March 25, 2019, the Company experienced a fire at its Fat Patty’s restaurant located at 5156 State Route 34 in Hurricane, West Virginia. As a result, the restaurant was closed for repair. The company has an insurance policy in place on the property and received insurance proceeds in the amount of $579,885 under the policy for such items as lost income and damaged equipment during the three- and six-month periods ended June 30, 2019. The Company recorded $398,297 of the insurance proceeds under “revenue – restaurant sales” on its condensed consolidated statements of operations as that portion of the insurance proceeds was paid for lost income from business interruption, and recorded the remaining $181,588 of the insurance proceeds under “income from insurance proceeds” on its condensed consolidated statements of operations as that portion of the insurance proceeds was for equipment and other assets that were destroyed in the fire. The restaurant is expected to reopen in early October 2019. |
Related-Party Transactions
Related-Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Note 17. Related-Party Transactions Except as otherwise set forth below, all of the following transactions are with Seenu G. Kasturi or an entity affiliated with Mr. Kasturi. On January 18, 2017, Mr. Kasturi was appointed as the Company’s President, Chief Financial Officer and Chairman of the Company’s board of directors. As of June 30, 2019, Mr. Kasturi was the beneficial owner of 30.3% of the Company’s common stock and 100% of the Company’s Series A convertible preferred stock, collectively representing 89.4% of the voting power of the Company’s capital stock. Seenu G. Kasturi has served as Vice President and Controller of TKFO since June 2018. He has owned all of the outstanding membership interests in DWG Acquisitions and Raceland QSR and has served as the President, Treasurer and Secretary of DWG Acquisitions and Raceland QSR, since their formation in 2013 and 2012, respectively. Mr. Kasturi has owned 90% of the equity interests in Blue Victory and has served as its President, Treasurer, Secretary and sole member of its board of directors since its formation in 2009. He also owned all of the outstanding membership interests in Seediv, and served as its President, Treasurer and Secretary, from its formation in July 2016 to December 19, 2016, the date the Company acquired Seediv. 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. In January 2019, the Company appointed Mr. Kasturi as its Chief Executive Officer and entered into a new employment agreement with him. As of June 30, 2019, Mr. Kasturi served as the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the its board of directors. A description of the employment agreement is set forth herein under Note 16. Commitments and Contingencies – Employment Agreements – Seenu G. Kasturi 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. As of June 30, 2019, Mr. Akam served as the Company’s Chief Operating Officer and Secretary. A description of the employment agreement is set forth herein under Note 16. Commitments and Contingencies – Employment Agreements – Richard W. Akam Financing Transactions The Company is a party to a credit facility with Blue Victory. A description of the credit facility is set forth herein under Note 11. Debt Obligations The Company borrowed funds from, and repaid funds to, Blue Victory under a separate loan that it had entered into with Blue Victory during the year ended December 31, 2017. Note 11. Debt Obligations Leases In October 2013, DWG Acquisitions entered into a triple net shopping center lease with NTC-REG, LLC (“NTC-REG) for the Nocatee Restaurant. A description of the lease is set forth herein under Note 16. Commitments and Contingencies – Operating Leases. Note 16. Commitments and Contingencies – Operating Leases. In May 2014, DWG Acquisitions entered into a triple net lease with Raceland QSR for the Youngerman Circle Restaurant. A description of the lease is set forth herein under Note 16. Commitments and Contingencies – Operating Leases. Note 16. Commitments and Contingencies – Operating Leases. On November 15, 2018, the Company entered into a triple net lease with the Kasturi Children’s Trust (the “Trust”) for its new corporate headquarters. A description of the lease is set forth herein under Note 16. Commitments and Contingencies – Operating Leases. Upon the expiration of the Panama City Lease on June 30, 2018, DWG Acquisitions entered into a month-to-month tenancy with Arquette Development pursuant to which DWAG PCB makes monthly rent payments of $3,000 to Arquette Development on behalf of DWG Acquisitions. A description of the Panama City Lease and DWG Acquisitions’ month-to-month tenancy with Arquette Development is set forth herein under Note 16. Commitments and Contingencies – Operating Leases Franchise Agreements Prior to December 31, 2018, the Company has been a party to several franchise agreements with DWG Acquisitions pursuant to which DWG Acquisitions owned and operated Dick’s Wings restaurants. The terms of these franchise agreements were identical to the terms of the franchise agreements that the Company enters into with unrelated franchisees, except that the Company did not require DWG Acquisitions to pay a franchise fee to the Company under the franchise agreements for the Nocatee and Youngerman Circle Restaurants In September 2018, the Company became a franchisee of a Tilted Kilt restaurant located in Gonzales, Louisiana. Richard W. Akam, who serves as the Company’s Chief Operating Officer and Secretary, has served as President of TKFO since June 2018, and Ketan Pandya, who serves as a member of the Company’s board of directors, has served as Vice President of Franchise Relations of TKFO since June 2018. Fred D. Alexander, who serves as a member of the Company’s board of directors, is the owner of SDA Holdings. The Company paid ad fund fees of $3,408 and $7,979 to Tilted Kilt during the three- and six-month periods ended June 30, 2019. The Company is not required to pay any royalties or franchise fees to Tilted Kilt under its franchise agreement with Tilted Kilt. Series A Convertible Preferred Stock In June 2018, the Company entered into a securities purchase agreement with Seenu G. Kasturi pursuant to which the Company issued Mr. Kasturi 449,581 shares of Series A convertible preferred stock in exchange for 449,581 shares of common stock then held by Mr. Kasturi. A description of this transaction is set forth herein under Note 13. Capital Stock. Acquisitions and Dispositions On December 19, 2016, the Company acquired all of the outstanding membership interests of Seediv from Seenu G. Kasturi for a purchase price of $600,000 and an earnout payment. The earn-out payment was determined to be $199,682, of which $144,326 had been paid as of December 31, 2018. As part of the transaction, the Company assumed debt owed by Seediv to Blue Victory in the amount of $216,469 which the Company repaid in full during the year ended December 31, 2017. A description of the debt is set forth herein under Note 11. Debt Obligations On October 4, 2017, Seediv entered into an agreement for purchase and sale of real estate with Raceland QSR pursuant to which Seediv agreed to purchase the real property located at 6055 Youngerman Circle in Argyle Circle, Jacksonville, Florida from Raceland QSR. The purchase price for the property was to be the lesser of: (i) $2,000,000, 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 On August 30, 2018, the Company closed upon the asset purchase agreement for Fat Patty’s. In connection therewith, the Company issued a secured convertible promissory note to Seenu G. Kasturi pursuant to which the Company borrowed $622,929 to help finance this acquisition. A description of the promissory note is set forth herein under Note 11. Debt Obligations On October 30, 2018, the Company entered into a membership interest purchase agreement with SDA Holdings and Fred D. Alexander pursuant to which the Company agreed to acquire all of the issued and outstanding membership interests in SDA Holdings. A description of this transaction is set forth herein under Note 5. Agreement to Acquire Tilted Kilt. Other Related-Party Arrangements. Certain part-time employees of the Company are also employed on a part-time basis by various entities affiliated with Seenu G. Kasturi. In addition, the Company had a total of $270,917 and $231,187 of accounts payable and accrued expenses outstanding at June 30, 2019 and December 31, 2018, respectively, that were owed to employees and other affiliates of the Company primarily for salaries and other payroll liabilities. |
Judgments in Legal Proceedings
Judgments in Legal Proceedings | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Judgments in Legal Proceedings | Note 18. Judgments in Legal Proceedings 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. The outstanding balance of damages sought was reflected in accrued legal contingency at June 30, 2019 and December 31, 2018. Interest expense in the amount of $1,930 and $3,882 accrued on the outstanding balance of the accrued legal contingency during the three- and six-month period ended June 30, 2019. The interest expense was credited to accrued legal contingency. A total of $45,521 and $41,638 of accrued interest, and $10,586 of other expenses (excluding legal fees), were outstanding at June 30, 2019 and December 31, 2018, respectively, resulting in an aggregate potential loss of $167,646 and $163,764 at June 30, 2019 and December 31, 2018, respectively. This case is currently pending. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 19. Segment Reporting The Company has two reportable segments, which are Company-owned restaurants and franchise operations. Company-Owned Restaurants Company-owned restaurants consist of several brands that are aggregated into one reportable segment because of the nature of the products and services, the production processes, the customers, the methods used to distribute the products and services, the nature of the regulatory environment, and store level profit margin for each of the brands are similar. The brands are Dick’s Wings and Grill, Fat Patty’s and Tilted Kilt Eatery and Pub. All Company-owned restaurants are casual dining restaurants. There were a total of nine company-owned restaurants at June 30, 2019 and December 31, 2018, respectively. Franchise Operations The Company only offers franchises for the Dick’s Wings brand. All franchised restaurants are casual dining restaurants. Franchises are sold in markets where expansion is deemed advantageous to the development of the Dick’s Wings brand and system of restaurants. The Company In exchange for royalty payments, advertising funds, franchise fees and area development fees, the Company provides the franchisees with 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. The Company also provides franchisees with assistance with site selection, prototypical architectural plans, interior and exterior design and layout, training, marketing and sales techniques, and restaurant openings. Franchisees are required to operate their restaurants in compliance with their franchise agreements, which includes adherence to operating and quality control standards, procedures and specifications established by the Company. Franchisees are evaluated regularly by the Company for compliance with their franchise agreements through the use of periodic, unannounced, on-site inspections and standard evaluation reports. 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. There were a total of 16 and 17 franchised restaurants at June 30, 2019 and December 31, 2018, respectively. Segment Financial Information Information on segments and a reconciliation of income from operations to net loss is as follows: Three Months Three Months Six Months Six Months Revenue Company-owned restaurants $ 3,967,890 $ 839,827 $ 8,346,681 $ 1,767,104 Franchise operations 221,077 274,760 431,107 536,647 Total revenue $ 4,188,967 $ 1,114,587 $ 8,777,788 $ 2,303,751 Net Loss Company-owned restaurants $ 201,905 $ (6,032 ) $ 399,165 $ 181,092 Franchise operations 66,165 262,795 199,542 457,195 Total income from operations 268,070 256,763 598,707 638,287 Corporate and unallocated expenses (559,631 ) (312,294 ) (1,304,511 ) (646,204 ) Net loss $ (291,561 ) $ (55,531 ) $ (705,804 ) $ (7,917 ) Depreciation and Amortization Company-owned restaurants $ 287,275 $ 13,567 $ 569,526 $ 19,064 Franchise operations — — — — Corporate 1,374 81 2,733 143 Total $ 288,649 $ 13,648 $ 572,259 $ 19,207 Capital Expenditures Company-owned restaurants $ 127,823 $ 112,332 $ 151,097 $ 135,118 Franchise operations — — — — Corporate — 1,648 9,000 2,834 Total $ 127,823 $ 113,980 $ 160,097 $ 137,952 |
Restatement of Previously Issue
Restatement of Previously Issued Condensed Consolidated Financial Statements | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement of Previously Issued Condensed Consolidated Financial Statements | Note 20. Restatement of Previously Issued Condensed Consolidated Financial Statements The Company is restating its condensed consolidated financial statements for the three- and six-month periods ended June 30, 2018 to correct an error related to the manner by which it recorded $54,242 and $111,740, respectively, of food discounts provided to customers and complimentary meals provided to employees. The Company recorded each of these items as an increase to restaurant operating costs – other operating expenses rather than as a reduction to restaurant sales on its condensed consolidated statements of operations. As a result, restaurant sales and restaurant operating costs – other operating expenses were each overstated by $54,242 and $111,740 during the three-and six-month periods ended June 30, 2018, respectively. The Company has restated its condensed consolidated financial statements for the three- and six-month periods ended June 30, 2018 for the sole purpose of reducing restaurant sales and restaurant operating costs – other operating expenses by $54,242 and $111,740, respectively. The impact of the restatement on the Company’s condensed consolidated statement of operations for the three- and six-month periods is presented below. The restatement did not have any impact on the Company’s condensed consolidated balance sheet as of June 30, 2018 or the Company’s statement of cash flows for the six-month period ended June 30, 2018. For the Three Months Ended June 30, 2018 As Previously Reported Adjustments As Condensed Consolidated Statement of Operations: Restaurant sales $ 894,069 $ (54,242 ) $ 839,827 Revenue 1,168,829 (54,242 ) 1,114,587 Restaurant operating costs – other operating expenses (225,073 ) 54,242 (170,831 ) Total operating expenses (1,299,709 ) 54,242 (1,245,467 ) For the Six Months Ended June 30, 2018 As Previously Reported Adjustments As Condensed Consolidated Statement of Operations: Restaurant sales $ 1,878,844 $ (111,740 ) $ 1,767,104 Revenue 2,415,491 (111,740 ) 2,303,751 Restaurant operating costs – other operating expenses (437,191 ) 111,740 (325,451 ) Total operating expenses (2,498,063 ) 111,740 (2,386,323 ) |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 21. Subsequent Events On July 9, 2019, the Company entered into a First Amendment to Sponsorship Agreement (the “Amendment”), with the Jacksonville Jaguars, LLC Under the terms of the Amendment, during each preseason and regular season football game played by the National Football League’s Jacksonville Jaguars and at certain other events held at the football-based stadium in Jacksonville, Florida currently named “TIAA Bank Field”: (i) the Company has the right to display its branding on two fixed concession stands in the stadium located in the Bud Light Party Zone at Everbank Field, five fixed concession stands on the stadium concourse, and two fixed concession stands on the upper club level of the stadium, and up to four portable concession stands on the north end zone deck, (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 TIAA Bank Field, (iii) the Company has the right to receive a variety of advertising and stadium signage at TIAA Bank Field, radio broadcasting on the Jacksonville Jaguars’ radio programming, and digital advertising on the Jacksonville Jaguars’ website and certain of its social media sites, and (iv) the Company will be identified as the “Official Watch Party Restaurant / Bar for Jaguars away games, including social media spots, radio spots and banner ads. The Amendment is for a term of 10 NFL football seasons and expires on the later of: (i) the conclusion of the 2028/29 NFL season, and (ii) February 2029. The Company is required to pay the Jaguars annual fees in the amount of $500,000 during the 2019/20 NFL season and $794,444 for each of the next nine NFL seasons. In addition, the Company the Company On July 15, 2019, the Company appointed Alex Andre as its Chief Financial Officer. In connection therewith, on July 15, 2019, Seenu G. Kasturi resigned as the Company’s Chief Financial Officer. Mr. Kasturi will continue to serve as the Company’s Chief Executive Officer and Chairman of the Company’s board of directors. On July 15, 2019, the Company entered into an employment agreement with Mr. Andre to serve as the Chief Financial Officer of the Company and, upon the completion of all applicable registration and licensing requirements, to serve as the General Counsel 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 agreement, Mr. Andre will be paid an initial annual base salary in the amount of $175,000. On May 1, 2020, Mr. Andre’s salary will increase to $200,000 for the remainder of the employment term. Mr. Andre will be eligible to receive increases in salary on January 1 st st This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenue and costs, and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” or “believes” or the negative thereof or any variation thereon or similar terminology or expressions. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions that may cause our actual results to differ materially from results proposed in such statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to: ● our ability to fund our future growth and implement our business strategy; ● market acceptance of our restaurants and products; ● food safety issues and other health concerns; ● the cost of food and other commodities; ● labor shortages and changes in employee compensation costs; ● shortages or interruptions in the availability and delivery of food and other supplies; ● our ability to maintain and increase the value of our Dick’s Wings Fat Patty’s ● changes in consumer preferences; ● our ability to identify, attract and retain qualified franchisees; ● our limited control over the activities of our franchisees; ● the ability of us and our franchisees to identify suitable restaurant sites, open new restaurants and operate them in a profitable manner; ● our ability to successfully operate our company-owned restaurants; ● our ability to identify, acquire and integrate new restaurant brands and businesses; ● the loss of key members of our management team; ● the impact of any failure of our information technology system or any breach of our network security; ● the impact of security breaches of confidential customer information in connection with the electronic processing of credit/debit card transactions by us and our franchisees; ● the ability of us and our franchisees to comply with applicable federal, state and local laws and regulations; ● our ability to protect our trademarks and other intellectual property; ● competition and consolidation in the restaurant industry; ● the effects of litigation on our business; ● our ability to obtain debt, equity or other financing on favorable terms, or at all; ● the impact of any decision to record asset impairment charges in the future; ● the condition of the securities and capital markets generally; ● economic conditions in the jurisdictions in which we operate and nationally; and statements of assumption underlying any of the foregoing, as well as any other factors set forth herein under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 1A. Risk Factors |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Interim Financial Information | Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions were eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Certain information and footnotes disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations. Notwithstanding this, the Company believes that the disclosures herein are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K. Information presented as of December 31, 2018 is derived from the audited consolidated financial statements. The results of operations for the three- and six-month periods ended June 30, 2019 are not necessarily indicative of the results that the Company will have for any subsequent quarter or full fiscal year. 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. |
Estimates | Estimates The preparation of condensed consolidated 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 condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Restatement | Restatement The Company has restated its previously issued condensed consolidated statement of operations for the three- and six-month periods ended June 30, 2018. The impact of the restatement is more specifically described herein under Note 20. Restatement of Previously Issued Condensed Consolidated Financial Statements |
Going Concern | Going Concern The company concluded that facts existed that 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 during the year ended December 31, 2017. While the Company had a working capital deficit of $2,784,844 at December 31, 2018 and a net loss of $282,483 during the year ended December 31, 2018, it generated cash flows from operations of $478,238 during the year ended December 31, 2018. The improvement in cash flows during the year ended December 31, 2017 was due primarily to the Company’s acquisition of two Company-owned Dick’s Wings restaurants in December 2016. The improvement in cash flows during the year ended December 31, 2018 was due primarily to the Company’s acquisition of Fat Patty’s in August 2018. While the Company generated a net loss of $705,804 during the six-month period ended June 30, 2019 and had a working capital deficit of $3,480,288 at June 30, 2019, the Company generated cash flow from operating activities of $328,627 during the six-month period ended June 30, 2019 and received continued financial support from related parties during the six-month period ended June 30, 2019 and the years ended December 31, 2018 and 2017. As a result of these factors, the Company concluded that the substantial doubt about its ability to continue as a going concern had been alleviated as of June 30, 2019. |
Segment Disclosure | Segment Disclosure The Company has both Company-owned restaurants and franchised restaurants Segment Reporting |
Other Receivables | Other Receivables Other receivables was comprised primarily of receipts from credit card sales by Company-owned Fat Patty’s restaurants that occurred after the Company completed the acquisition of Fat Patty’s that were held by the former owner of Fat Patty’s, all of which are expected to be collected in full by the Company during the next 12 months. |
Intangible Assets, Net | Intangible Assets, Net The Company acquired various intangible assets in connection with the acquisition of Fat Patty’s. The intangible assets were comprised of a tradename and a non-compete agreement. The Company amortizes the non-compete agreement on a straight-line basis over the expected period of benefit, which is five years. The tradename has an indefinite life and is not subject to amortization but tested for impairment on an annual basis. The Company recognized $942 and $1,884 of amortization expense for the non-compete agreement during the three- and six-month periods ended June 30, 2019. |
Other Payables | Other Payables Other payables was comprised primarily of accounts payable owed to the former owner of Fat Patty’s for alcohol and other items purchased by him in connection with the operation of the concept. |
Revenue Recognition | Revenue Recognition The Company generates revenue from two primary sources: (a) retail sales at company-operated restaurants; and (b) franchise revenue, which consists of royalties based on a percentage of sales reported by franchised restaurants, funds contributed by franchisees to the Company’s general advertising fund, and initial and renewal franchise license fees. Revenue From Company-Owned Restaurants Revenue from company-owned restaurants is primarily recognized as customers pay for products at the point of sale. The Company reports Company-owned restaurant revenues net of sales and use taxes collected from customers and remitted to governmental taxing authorities. Revenue From Franchised Restaurants The Company grants individual restaurant franchises to operators in exchange for initial franchise license fees and continuing royalty payments. Initial and renewal franchise license fees are payable by the franchisee upon a new restaurant opening or renewal of an existing franchise agreement. Under franchise agreements, the Company provides franchisees with: (a) a franchise license, which includes a non-exclusive license to our intellectual property for the duration of the franchise agreement and where the Company manages a marketing or co-op advertising fund, advertising and promotion management; (b) pre-opening services, such as training and inspections; and (c) ongoing services, such as development of training materials and menu items and restaurant monitoring and inspections. The services that the Company provides are highly interrelated and dependent on the franchise license so the Company does not consider the services to be individually distinct and therefore accounts for them as a single performance obligation. The performance obligation is satisfied by providing a right to use the Company’s intellectual property over the term of each franchise agreement. Accordingly, initial and renewal franchise fees are recognized as revenue on a straight-line basis over the term of the respective agreement. The Company’s performance obligation under area development agreements generally consists of an obligation to grant exclusive development rights for a particular geographic region over a stated term. These development rights are not distinct from franchise agreements and are creditable towards the initial franchise license fee, so upfront fees paid by franchisees for exclusive development rights are deferred and allocated to the appropriate franchise restaurant when the franchise agreement is executed. Franchise royalty revenues represents sales-based royalties that are related entirely to the Company’s performance obligation under the franchise agreement. Continuing franchise royalty revenues are based on a percentage of monthly sales and are recognized on the accrual basis as franchise sales occur. In certain circumstances, the Company may reduce or waive franchise license fees and/or the franchise royalty percentage for a period of time. Franchises contributions to the Company’s general advertising funds are calculated as a percentage of monthly sales. Contributions to the fund generally represent sales-based or fixed monthly fee amounts that are related entirely to the Company’s performance obligation under the franchise agreement and are recognized as franchise sales occur. ASC Topic 606 On January 1, 2018, the Company adopted the provisions of ASC Topic 606, Revenue From Contracts With Customers Franchise Fees ASC 606 impacted the timing of recognition of franchise fees. Under previous guidance, these fees were typically recognized upon the opening of restaurants. Under ASC 606, the fees are deferred and recognized as revenue over the term of the individual franchise agreements. 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 recognized $3,625 and $7,250 of deferred franchise fees as income during the three- and six-month periods ended June 30, 2019, and recognized $7,125 and $12,750 of deferred franchise fees as income during the three- and six-month periods ended June 30, 2018, respectively. The carrying value of the Company’s deferred franchised fees was $57,984 at June 30, 2019. Advertising Funds ASC 606 also impacted the accounting for transactions related to the Company’s general advertising fund. Under previous guidance, franchisee contributions to and expenditures by the fund were not included in the Company’s condensed consolidated financial statements. Under ASC 606, the Company records contributions to and expenditures by the fund as revenue and expenses within the Company’s condensed consolidated financial statements. The Company recognized contributions to and expenditures by the fund of $31,645 and $63,868 during the three- and six-month periods ended June 30, 2019, and recognized contributions to and expenditures by the fund of $45,029 and $98,260 during the three- and six-month periods ended June 30, 2018, respectively. Gift Card Funds Additionally, ASC 606 impacted the accounting for transactions related to the Company’s gift card program. Under previous guidance, estimated breakage income on gift cards was deferred until it was deemed remote that the unused gift card balance would be redeemed. Under ASC 606, breakage income on gift cards is recognized as gift cards are utilized. The effect of this change on the Company’s condensed consolidated financial statements was negligible. Disaggregation of Revenue The following table disaggregate revenue by primary geographical market and source: Three Months Ended Three Months Ended Six Months Ended Six Months Ended Primary Geographic Markets Florida $ 1,335,909 $ 1,065,922 $ 2,652,463 $ 2,204,792 Georgia 267,966 48,665 567,010 98,959 Kentucky 651,565 — 1,291,376 — Louisiana 227,067 — 529,343 — West Virginia 1,706,460 — 3,737,596 — Total revenue $ 4,188,967 $ 1,114,587 $ 8,777,788 $ 2,303,751 Sources of Revenue Restaurant sales $ 3,967,890 $ 839,827 $ 8,346,681 $ 1,767,104 Royalties 180,356 194,448 354,538 394,479 Franchise fees 3,625 29,389 7,250 38,014 Advertising fund fees 31,645 45,029 63,868 98,260 Other revenue 5,451 5,894 5,451 5,894 Total revenue $ 4,188,967 $ 1,114,587 $ 8,777,788 $ 2,303,751 Deferred Revenue Deferred revenue consists of contract liabilities resulting from initial and renewal franchise license fees paid by franchisees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement, as well as upfront development fees paid by franchisees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement once it is executed or if the development agreement is terminated. The following table presents changes in deferred franchise fees as of and for the six-month period ended June 30, 2019: Total Liabilities Deferred franchise fees at December 31, 2018 $ 65,234 Revenue recognized during the period (7,250 ) New deferrals due to cash received — Deferred franchise fees at June 30, 2019 $ 57,984 Anticipated Future Recognition of Deferred Franchise Fees The following table presents the estimated franchise fees to be recognized in the future related to performance obligations that were unsatisfied at June 30, 2019: Year Franchise 2019 (remaining six months) $ 6,468 2020 12,000 2021 10,926 2022 9,000 2023 6,637 Thereafter 12,953 Total $ 57,984 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases Leases Leases ASC Topic 842 modifies the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less are accounted for in the same manner as operating leases under ASC Topic 840. The Company adopted ASC Topic 842 effective January 1, 2019 applying the modified retrospective transition approach. Under this approach, results for reporting periods beginning after January 1, 2019, are presented under Topic 842, while prior periods are not adjusted and continue to be reported under the accounting standards in effect for those periods. The Company recognized $3,832,779 and $3,832,286 of additional assets and liabilities, respectively, in connection with its operating leases upon the adoption of ASC Topic 842 on January 1, 2019. The Company did not recognize any additional assets or liabilities in connection with its The Company determines whether a contract is or contains a lease at inception of the contract based on whether an identified asset exists and whether the Company has the right to obtain substantially all of the benefit of the assets and to control its use over the full term of the agreement. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, none of our leases provide a readily determinable implicit rate. Therefore, the Company estimated its incremental borrowing rate considering both the revolving credit rates and a credit notching approach to discount the lease payments based on information available at lease commencement. There are no material residual value guarantees and no restrictions or covenants included in the Company’s lease agreements. Certain of the Company’s leases include provisions for variable payments. These variable payments are typically determined based on a measure of throughput or actual days or another measure of usage and are not included in the calculation of lease liabilities and right-of-use assets. The Company elected the package of practical expedients available for implementation, which allows for the following: ● An entity need not reassess whether any expired or existing contracts are or contain leases; ● An entity need not reassess the lease classification for any expired or existing leases; and ● An entity need not reassess initial indirect costs for any existing leases. Furthermore, the Company elected the optional transition method to make January 1, 2019 the initial application date of the standard. This package of practical expedients allows entities to account for their existing leases for the remainder of their respective lease terms following the previous accounting guidance. The Company also elected to adopt the optional transition practical expedient provided in ASU 2018-01 to not evaluate under ASC Topic 842 for existing or expired land easements prior to the application date to determine if they meet the definition of a lease. The impact of ASC Topic 842 is more specifically described herein under Note 12. Leases 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 condensed consolidated financial statements as a result of future adoption. |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Revenue | Disaggregation of Revenue The following table disaggregate revenue by primary geographical market and source: Three Months Ended Three Months Ended Six Months Ended Six Months Ended Primary Geographic Markets Florida $ 1,335,909 $ 1,065,922 $ 2,652,463 $ 2,204,792 Georgia 267,966 48,665 567,010 98,959 Kentucky 651,565 — 1,291,376 — Louisiana 227,067 — 529,343 — West Virginia 1,706,460 — 3,737,596 — Total revenue $ 4,188,967 $ 1,114,587 $ 8,777,788 $ 2,303,751 Sources of Revenue Restaurant sales $ 3,967,890 $ 839,827 $ 8,346,681 $ 1,767,104 Royalties 180,356 194,448 354,538 394,479 Franchise fees 3,625 29,389 7,250 38,014 Advertising fund fees 31,645 45,029 63,868 98,260 Other revenue 5,451 5,894 5,451 5,894 Total revenue $ 4,188,967 $ 1,114,587 $ 8,777,788 $ 2,303,751 |
Schedule of Deferred Franchise Fees Under Contract Balances | The following table presents changes in deferred franchise fees as of and for the six-month period ended June 30, 2019: Total Liabilities Deferred franchise fees at December 31, 2018 $ 65,234 Revenue recognized during the period (7,250 ) New deferrals due to cash received — Deferred franchise fees at June 30, 2019 $ 57,984 |
Schedule of Estimated Franchise Fees to be Recognized in the Future Related to Performance Obligations | The following table presents the estimated franchise fees to be recognized in the future related to performance obligations that were unsatisfied at June 30, 2019: Year Franchise 2019 (remaining six months) $ 6,468 2020 12,000 2021 10,926 2022 9,000 2023 6,637 Thereafter 12,953 Total $ 57,984 |
Acquisition of Fat Patty's (Tab
Acquisition of Fat Patty's (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | The assets acquired and liabilities assumed were comprised of the following: Cash $ 7,100 Inventory 91,424 Intangible assets 788,840 Equipment 614,295 Total assets acquired 1,501,659 Gift card liabilities (24,707 ) Total liabilities assumed (24,707 ) Gain on bargain purchase (624,952 ) Net assets acquired with note payable and deferred compensation liability $ 852,000 |
Schedule of Pro Forma Financial Information | The following table summarizes certain financial information for the three- and six-month periods ended June 30, 2019 contained in the Company’s condensed three- and six-month periods ended June 30, 2018 Three Months Three Months Six Months Six Months Ended Revenue $ 4,188,967 $ 3,868,152 $ 8,777,788 $ 8,059,247 Income (loss) from continuing operations (308,016 ) 393,701 (565,009 ) 1,118,135 Net income / (loss) (291,561 ) 472,419 (705,804 ) 1,196,159 Net income / (loss) per share – basic $ (0.04 ) $ 0.07 $ (0.10 ) $ 0.17 Net income / (loss) per share – fully diluted $ (0.04 ) $ 0.07 $ (0.10 ) $ 0.17 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory was comprised of the following at June 30, 2019 and December 31, 2018, respectively: June 30, 2019 December 31, 2018 Food $ 123,280 $ 120,426 Beverages 56,808 90,599 Total $ 180,088 $ 211,025 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property and equipment was comprised of the following at June 30, 2019 and December 31, 2018, respectively: June 30, 2019 December 31, 2018 Land, buildings and improvements $ -0- $ 11,500,000 Leasehold improvements 332,500 323,500 Furniture, fixtures and equipment 1,159,198 1,021,735 Subtotal 1,491,698 12,845,235 Less: accumulated depreciation (223,247 ) (307,733 ) Total $ 1,268,451 $ 12,537,502 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Future Amortization Expense Recognized from Intangible Assets | The following table presents the future amortization expense to be recognized from the Company’s intangible assets at June 30, 2019: Year Amortization Expense to be 2019 (remaining six months) $ 1,884 2020 3,768 2021 3,768 2022 3,768 2023 1,493 Thereafter — Total $ 14,681 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Equity Investment in Seediv Within the Fair Value Hierarchy Utilized to Measure Fair Value on a Recurring Basis | 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 June 30, 2019 and December 31, 2018, respectively: Level 1 Level 2 Level 3 June 30, 2019 $ — $ 55,356 $ — December 31, 2018 $ — $ 55,356 $ — |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of Operating and Financing Lease Assets and Liabilities | The following table sets forth information about the Company’s operating and financing lease assets and liabilities included in its condensed consolidated balance sheet as of June 30, 2019: Classification on the Condensed June 30, 2019 Assets Operating lease right-of-use assets Right-of-use assets $ 3,665,275 Financing lease right-of-use assets Right-of-use assets 11,041,222 Total right of use assets $ 14,706,497 Liabilities Current liabilities: Operating lease liability Current operating lease liabilities $ 275,723 Financing lease liability Current portion of other long-term liabilities 191,361 Non-current liabilities: Operating lease liabilities, net of Operating lease liabilities 3,426,660 Financing lease liabilities, net of Other long-term liabilities 11,110,573 Total lease liabilities $ 15,004,317 |
Schedule of Supplemental Cash Flow Information Related to Leases | The following table sets forth the supplemental cash flow information related to the Company’s leases for the three- and six-month periods ended June 30, 2019: Three Months Ended Six Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 128,036 $ 249,441 Operating cash flows from financing leases 176,904 354,462 Financing cash flows from financing leases 143,515 285,453 |
Schedule of Components Lease Cost Related | The following table sets forth the components of lease costs related to the Company’s leases for the three- and six-month periods ended June 30, 2019: Three Months Six Months Operating lease costs 143,274 $ 286,549 Financing lease costs: Amortization of right-of-use assets $ 143,515 $ 285,454 Interest on lease liabilities 176,904 354,461 Total financing lease costs 320,419 639,915 |
Schedule of Weighted Average Lease Term and Discount Rates for Operating and Financing Leases | The following table shows certain information related to the weighted-average remaining lease terms and the weighted-average discount rates for our operating and financing leases: Weighted Average Remaining Weighted (in years) (annual) Operating leases 11.78 7.39 % Financing leases 19.67 8.00 % |
Schedule of Maturity of Operating and Financing Lease Liabilities | The following table sets forth the maturity of our operating and financing leases liabilities as of June 30, 2019: Operating Leases Financing Leases Year Ended December 31, 2019 (remaining six months) $ 262,740 $ 443,553 2020 544,759 897,425 2021 570,765 913,130 2022 583,392 929,110 2023 472,444 945,369 Thereafter 3,206,389 15,924,033 Total lease payments 5,640,489 20,052,620 Less: imputed interest (1,938,106 ) (8,750,686 ) Total $ 3,702,383 $ 11,301,934 |
Capital Stock (Tables)
Capital Stock (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Changes in Stockholders' Equity | The following table sets forth the changes in stockholders’ equity as of June 30, 2019: Common Stock Series A Series B Shares Par Shares Par Shares Par Additional Stock Accumulated Total Balance at December 31, 2018 6,680,065 $ 66,801 449,581 $ 4,496 — — $ 4,490,338 $ 15,453 $ (5,247,553 ) $ (670,465 ) Common stock issued for services 400,706 4,007 — — — — 105,812 19,507 — 129,326 Cancellation of stock option issued for services — — — — — — (10,002 ) — — (10,002 ) Net loss — — — — — — — — (705,804 ) (705,804 ) Balance at June 30, 2019 7,080,771 $ 70,808 449,581 $ 4,496 — — $ 4,586,148 $ 34,960 $ (5,953,357 ) $ (1,256,945 ) The following table sets forth the changes in stockholders’ equity as of June 30, 2018: Common Stock Series A Convertible Preferred Stock Shares Par Value Shares Par Value Additional Paid-in Capital Stock Subscriptions Payable Accumulated Deficit Total Balance at December 31, 2017 6,950,869 $ 69,509 — $ — $ 3,995,306 $ 26,853 $ (4,768,592 ) $ (676,924 ) Common stock issued for services 23,139 231 — — 37,645 (1 ) — 37,875 Deferred franchise fees — — — — — — (196,478 ) (196,478 ) Common stock exchanged for preferred stock (449,581 ) (4,496 ) 449,581 4,496 — — — — Net loss — — — — — — (7,917 ) (7,917 ) Balance at June 30, 2018 6,524,427 $ 65,244 449,581 $ 4,496 $ 4,032,951 $ 26,852 $ (4,972,987 ) $ (843,444 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Annual Payments Under the Sponsorship Agreement | The following table presents the future minimum annual payments under the sponsorship agreement as of June 30, 2019: Year Minimum 2019 (remaining six months) $ 102,000 2020 208,080 2021 212,240 2022 216,490 2023 — Thereafter — Total $ 738,810 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Financial Information | Information on segments and a reconciliation of income from operations to net loss is as follows: Three Months Three Months Six Months Six Months Revenue Company-owned restaurants $ 3,967,890 $ 839,827 $ 8,346,681 $ 1,767,104 Franchise operations 221,077 274,760 431,107 536,647 Total revenue $ 4,188,967 $ 1,114,587 $ 8,777,788 $ 2,303,751 Net Loss Company-owned restaurants $ 201,905 $ (6,032 ) $ 399,165 $ 181,092 Franchise operations 66,165 262,795 199,542 457,195 Total income from operations 268,070 256,763 598,707 638,287 Corporate and unallocated expenses (559,631 ) (312,294 ) (1,304,511 ) (646,204 ) Net loss $ (291,561 ) $ (55,531 ) $ (705,804 ) $ (7,917 ) Depreciation and Amortization Company-owned restaurants $ 287,275 $ 13,567 $ 569,526 $ 19,064 Franchise operations — — — — Corporate 1,374 81 2,733 143 Total $ 288,649 $ 13,648 $ 572,259 $ 19,207 Capital Expenditures Company-owned restaurants $ 127,823 $ 112,332 $ 151,097 $ 135,118 Franchise operations — — — — Corporate — 1,648 9,000 2,834 Total $ 127,823 $ 113,980 $ 160,097 $ 137,952 |
Restatement of Previously Iss_2
Restatement of Previously Issued Condensed Consolidated Financial Statements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of Consolidated Statement of Operation | The restatement did not have any impact on the Company’s condensed consolidated balance sheet as of June 30, 2018 or the Company’s statement of cash flows for the six-month period ended June 30, 2018. For the Three Months Ended June 30, 2018 As Previously Reported Adjustments As Condensed Consolidated Statement of Operations: Restaurant sales $ 894,069 $ (54,242 ) $ 839,827 Revenue 1,168,829 (54,242 ) 1,114,587 Restaurant operating costs – other operating expenses (225,073 ) 54,242 (170,831 ) Total operating expenses (1,299,709 ) 54,242 (1,245,467 ) For the Six Months Ended June 30, 2018 As Previously Reported Adjustments As Condensed Consolidated Statement of Operations: Restaurant sales $ 1,878,844 $ (111,740 ) $ 1,767,104 Revenue 2,415,491 (111,740 ) 2,303,751 Restaurant operating costs – other operating expenses (437,191 ) 111,740 (325,451 ) Total operating expenses (2,498,063 ) 111,740 (2,386,323 ) |
Description of Business (Detail
Description of Business (Details Narrative) - Restaurants | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Number of restaurants | 16 | 17 | |
Franchisees [Member] | |||
Number of restaurants | 16 | ||
Florida [Member] | |||
Number of restaurants | 16 | ||
Georgia [Member] | |||
Number of restaurants | 4 | ||
Tilted Kilt Eatery and Pub [Member] | |||
Number of restaurants | 28 | ||
Dick's Wings [Member] | |||
Number of restaurants | 20 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)Segment | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 02, 2019USD ($) | |
Net income loss | $ (291,561) | $ (55,531) | $ (705,804) | $ (7,917) | $ (282,483) | $ (344,740) | |
Cash flows from operations | 328,627 | 183,304 | (478,238) | $ (248,345) | |||
Working capital deficit | 3,480,288 | $ 3,480,288 | (2,784,844) | ||||
Number of segment for reporting | Segment | 2 | ||||||
Intangible assets, amortization term | The Company amortizes the non-compete agreement on a straight-line basis over the expected period of benefit, which is five years. | ||||||
Non-compete agreement, expected period | 5 years | ||||||
Amortization of intangible assets | $ 1,884 | ||||||
Recognized total income | 7,250 | ||||||
Deferred franchise fees | 57,984 | 57,984 | 65,234 | ||||
Advertising fund fees | 31,645 | 45,029 | 63,868 | 98,260 | |||
ASC Topic 842 [Member] | |||||||
Recognized assets | $ 3,832,779 | ||||||
Recognized liabilities | $ 3,832,286 | ||||||
Deferred Franchised Fees [Member] | |||||||
Recognized total income | 3,625 | $ 7,125 | 7,250 | $ 12,750 | |||
Non-compete Agreement [Member] | |||||||
Amortization of intangible assets | $ 942 | $ 1,884 | $ 2,275 |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Total revenue | $ 4,188,967 | $ 1,114,587 | $ 8,777,788 | $ 2,303,751 |
Restaurant Sales [Member] | ||||
Total revenue | 3,967,890 | 839,827 | 8,346,681 | 1,767,104 |
Royalties [Member] | ||||
Total revenue | 180,356 | 194,448 | 354,538 | 394,479 |
Franchise Fees [Member] | ||||
Total revenue | 3,625 | 29,389 | 7,250 | 38,014 |
Advertising Fund Fees [Member] | ||||
Total revenue | 31,645 | 45,029 | 63,868 | 98,260 |
Other Revenue [Member] | ||||
Total revenue | 5,451 | 5,894 | 5,451 | 5,894 |
Florida [Member] | ||||
Total revenue | 1,335,909 | 1,065,922 | 2,652,463 | 2,204,792 |
Georgia [Member] | ||||
Total revenue | 267,966 | 48,665 | 567,010 | 98,959 |
Kentucky [Member] | ||||
Total revenue | 651,565 | 1,291,376 | ||
Louisiana [Member] | ||||
Total revenue | 227,067 | 529,343 | ||
West Virginia [Member] | ||||
Total revenue | $ 1,706,460 | $ 33,737,596 |
Basis of Presentation and Sig_6
Basis of Presentation and Significant Accounting Policies - Schedule of Deferred Franchise Fees Under Contract Balances (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Accounting Policies [Abstract] | |
Deferred franchise fees at December 31, 2018 | $ 65,234 |
Revenue recognized during the period | (7,250) |
New deferrals due to cash received | |
Deferred franchise fees at June 30, 2019 | $ 57,984 |
Basis of Presentation and Sig_7
Basis of Presentation and Significant Accounting Policies - Schedule of Estimated Franchise Fees to be Recognized in the Future Related to Performance Obligations (Details) | Jun. 30, 2019USD ($) |
Accounting Policies [Abstract] | |
2019 (remaining six months) | $ 6,468 |
2020 | 12,000 |
2021 | 10,926 |
2022 | 9,000 |
2023 | 6,637 |
Thereafter | 12,953 |
Total | $ 57,984 |
Acquisition of Fat Patty's (Det
Acquisition of Fat Patty's (Details Narrative) - USD ($) | Aug. 30, 2018 | Aug. 03, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||||||
Net assets acquired by entity | $ 852,000 | |||||||
Proceeds from related party debt | 1,075,893 | $ 69,551 | ||||||
Fair value of the identifiable assets acquired and liabilities assumed | $ (24,707) | (24,707) | ||||||
Gain on bargain purchase option | 624,952 | |||||||
Revenue | 4,188,967 | $ 1,114,587 | 8,777,788 | 2,303,751 | ||||
Net income loss | (291,561) | $ (55,531) | (705,804) | $ (7,917) | $ (282,483) | $ (344,740) | ||
Fat Patty [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Payments to sellers for assets | $ 12,352,000 | |||||||
Amount paid to sellers at closing of acquisition | 12,000,000 | |||||||
Additional amount paid within 10 days after asset acquisition closing date to seller | 40,000 | |||||||
Remaining amount to be paid to seller on first anniversary of closing of acquisition | 312,000 | |||||||
Net assets acquired by entity | 852,000 | |||||||
Acquisition - related transaction costs | 82,929 | 82,929 | 82,929 | |||||
Fair value of the identifiable assets acquired and liabilities assumed | 1,476,952 | 1,476,952 | ||||||
Increase in purchase price of business | 624,952 | |||||||
Gain on bargain purchase option | $ 624,952 | |||||||
Revenue | 1,959,728 | 4,630,375 | ||||||
Net income loss | $ 475,452 | $ 610,488 | ||||||
Fat Patty [Member] | Seenu G Kasturi [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Proceeds from related party debt | $ 622,929 | |||||||
Interest rate per annum | 6.00% | |||||||
Common stock at a conversion rate | $ 1.36 | |||||||
Store Capital Acquisitions, LLC [Member] | Purchase And Sale Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Proceeds from sale of real properties upon which restaurants acquired | 11,500,000 | |||||||
Ultimate purchase price of assets and properties | $ 852,000 | |||||||
Purchase description | Accordingly, the Company never took title to, or ownership of, the Properties. As a result, the ultimate purchase price paid by the Company was $852,000, which was the difference between the $12,352,000 purchase price for the assets that the Company agreed to pay to the Sellers and the $11,500,000 purchase price for the Properties that was paid by Store Capital. The closing of the Property Acquisition occurred on August 30, 2018. | |||||||
Store Capital Acquisitions, LLC [Member] | Master Lease Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Lease expires date | Aug. 31, 2038 | |||||||
Additional successive term of lease | 5 years | |||||||
Aggregate base annual rent | $ 876,875 | |||||||
Percentage of increase in additional rent | 1.75% |
Acquisition of Fat Patty's - Sc
Acquisition of Fat Patty's - Schedule of Assets Acquired and Liabilities Assumed (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Business Combinations [Abstract] | |
Cash | $ 7,100 |
Inventory | 91,424 |
Intangible assets | 788,840 |
Equipment | 614,295 |
Total assets acquired | 1,501,659 |
Gift card liabilities | (24,707) |
Total liabilities assumed | (24,707) |
Gain on bargain purchase | (624,952) |
Net assets acquired with note payable and deferred compensation liability | $ 852,000 |
Acquisition of Fat Patty's - _2
Acquisition of Fat Patty's - Schedule of Pro Forma Financial Information (Details) - Fat Patty [Member] - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Business Acquisition [Line Items] | ||||
Revenue | $ 4,188,967 | $ 3,868,152 | $ 8,777,788 | $ 8,059,247 |
Income (loss) from continuing operations | (308,016) | 393,701 | (565,009) | 1,118,135 |
Net income / (loss) | $ (291,561) | $ 472,419 | $ (705,804) | $ 1,196,159 |
Net income / (loss) per share - basic | $ (0.04) | $ 0.07 | $ (0.10) | $ 0.17 |
Net income / (loss) per share - fully diluted | $ (0.04) | $ 0.07 | $ (0.10) | $ 0.17 |
Agreement to Acquire Tilted K_2
Agreement to Acquire Tilted Kilt (Details Narrative) - Membership Interest Purchase Agreement [Member] - SDA Holdings, LLC [Member] - USD ($) | Oct. 30, 2018 | Jun. 30, 2019 |
Business Acquisition [Line Items] | ||
Acquire of issued and outstanding interest amount | $ 10 | |
Seenu G Kasturi [Member] | ||
Business Acquisition [Line Items] | ||
Number of common stock for transaction | 718,563 | |
Proceeds from sale of debt or equity securities | $ 2,000,000 | |
Stock issued during period, shares | 666,667 | |
Number of common stock replace | 718,563 | |
Debt instrument principal amount | $ 2,500,000 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Inventory [Line Items] | ||
Total | $ 180,088 | $ 211,025 |
Food [Member] | ||
Inventory [Line Items] | ||
Total | 123,280 | 120,426 |
Beverages [Member] | ||
Inventory [Line Items] | ||
Total | $ 56,808 | $ 90,599 |
Property and Equipment, Net (De
Property and Equipment, Net (Detail Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | $ 1,491,698 | $ 1,491,698 | $ 12,845,235 | ||
Depreciation expense | 50,438 | $ 13,648 | 101,979 | $ 19,207 | |
Land, Buildings and Improvements [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | $ 0 | $ 0 | $ 11,500,000 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property, Plant and Equipment (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 1,491,698 | $ 12,845,235 |
Less: accumulated depreciation | (223,247) | (307,733) |
Total | 1,268,451 | 12,537,502 |
Land, Buildings and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 0 | 11,500,000 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 332,500 | 323,500 |
Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 1,159,198 | $ 1,021,735 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Aug. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Amount of Intangible assets | $ 784,681 | $ 784,681 | $ 786,565 | ||
Non-compete agreement, amortization method | The Company amortizes the non-compete agreement on a straight-line basis over the expected period of benefit, which is five years. | ||||
Non-compete agreement, expected period | 5 years | ||||
Amortization recognized | $ 1,884 | ||||
Non-compete Agreement [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization recognized | $ 942 | $ 1,884 | $ 2,275 | ||
Fat Patty [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amount of Intangible assets | $ 788,840 | ||||
Fat Patty [Member] | Non-compete Agreement [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amount of Intangible assets | 18,840 | ||||
Trade Names [Member] | Fat Patty [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amount of Intangible assets | $ 770,000 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Future Amortization Expense Recognized from Intangible Assets (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Total | $ 784,681 | $ 786,565 |
Intangible Assets [Member] | ||
2019 (remaining six months) | 1,884 | |
2020 | 3,768 | |
2021 | 3,768 | |
2022 | 3,768 | |
2023 | 1,493 | |
Thereafter | ||
Total | $ 14,681 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Narrative) - USD ($) | Dec. 19, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent consideration | $ 55,356 | $ 55,356 | ||
Membership Interest Purchase Agreement [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Earnout payment | $ 199,682 | |||
Acquisition of Seediv [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent consideration | $ 20,897 | |||
Additional compensation expense | 178,785 | |||
Increase in contingent consideration | $ 199,682 | |||
Seenu G Kasturi [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Earnout payment | 600,000 | 144,326 | ||
Seenu G Kasturi [Member] | Acquisition of Seediv [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Earnout payment | $ 199,682 | $ 144,326 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Equity Investment in Seediv Within the Fair Value Hierarchy Utilized to Measure Fair Value on a Recurring Basis (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 55,356 | $ 55,356 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | ||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | 55,356 | 55,356 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration |
Notes Receivable (Details Narra
Notes Receivable (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Oct. 31, 2017 | Sep. 30, 2016 | Jul. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Interest aggregate amount | $ 2 | $ 219 | $ 2 | $ 517 | |||||
Interest accrued | 281,859 | 281,859 | $ 276,269 | ||||||
Short term notes receivable | 17,344 | 17,344 | 2,967 | ||||||
Long term notes receivable | 1,273 | 1,273 | 2,553 | ||||||
Interest receivable | |||||||||
Promissory Notes [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Debt instrument term | 2 years | 2 years | 2 years | ||||||
Debt instrument interest rate | 5.00% | 5.00% | |||||||
Principal outstanding under loan current | $ 25,000 | $ 28,136 | 414 | ||||||
Franchisees [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Aggregate original principal amount | $ 7,659 | ||||||||
Principal outstanding under loan current | 3,617 | 3,617 | 5,106 | ||||||
Debt instrument maturity date | Dec. 1, 2020 | ||||||||
Franchisees [Member] | Line of Credit Agreement [Member] | Maximum [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Aggregate original principal amount | $ 28,136 | ||||||||
Franchisees [Member] | Second Line of Credit Agreement [Member] | Maximum [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Aggregate original principal amount | $ 25,000 | ||||||||
Franchisees [Member] | Promissory Notes [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Aggregate original principal amount | $ 25,000 | ||||||||
Franchisees [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Aggregate original principal amount | 15,000 | $ 15,000 | |||||||
Debt instrument maturity date | Jul. 1, 2019 | ||||||||
Monthly installment payments | $ 2,000 | ||||||||
Franchisees [Member] | Six Month Payments [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Monthly installment payments | $ 2,000 | ||||||||
Franchisees [Member] | Final Payments [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Debt instrument maturity date | Jan. 27, 2020 | ||||||||
Monthly installment payments | $ 1,000 | ||||||||
Unrelated Third Parties [Member] | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Notes receivable | $ 18,617 | $ 18,617 | $ 5,520 |
Debt Obligations (Details Narra
Debt Obligations (Details Narrative) - USD ($) | Aug. 30, 2018 | Mar. 31, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2013 |
Debt Instrument [Line Items] | |||||||||
Proceeds from related party debt | $ 1,075,893 | $ 69,551 | |||||||
Repayments of debt from related party | 1,206,271 | 97,877 | |||||||
Debt instrument discount | $ 499,283 | 499,283 | |||||||
Amortization of of discount | 15,438 | ||||||||
Secured Convertible Promissory Note [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest expense | 9,216 | 18,432 | |||||||
Debt instrument discount | $ 155,732 | 123,646 | 123,646 | $ 139,084 | |||||
Amortization of of discount | 7,762 | 15,438 | 16,648 | ||||||
Secured Convertible Promissory Note [Member] | Seenu G Kasturi [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Proceeds from related party debt | $ 622,929 | ||||||||
Promissory Note [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument discount | 123,646 | 123,646 | 139,084 | ||||||
Financing and operating lease liabilities | 605,238 | 605,238 | 720,178 | ||||||
Blue Victory Holdings, Inc [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument face amount | 105,955 | 105,955 | 236,333 | $ 30,503 | |||||
Proceeds from related party debt | 1,075,893 | 277,707 | |||||||
Repayments of debt from related party | 1,206,271 | $ 71,877 | |||||||
Interest expense | $ 3,080 | $ 877 | $ 6,984 | $ 1,650 | |||||
Loan Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit facility interest rate | 6.00% | ||||||||
Loan Agreement [Member] | Blue Victory Holdings, Inc [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 50,000 | $ 1,000,000 |
Leases (Details Narrative)
Leases (Details Narrative) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lease term description | The Company's real estate leases include one or more options to renew, with renewal terms that can extend the lease term from three to five years or more. |
Leases - Schedule of Operating
Leases - Schedule of Operating and Financing Lease Assets and Liabilities (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 3,665,275 | |
Financing lease right-of-use assets | 11,041,222 | |
Total right of use assets | 14,706,497 | |
Operating lease liability, current operating lease liabilities | 275,723 | |
Financing lease liability, current portion of other long-term liabilities | 191,361 | 175,764 |
Operating lease liabilities, net of current portion | 3,426,660 | |
Financing lease liabilities, net of current portion | 11,110,573 | $ 11,210,146 |
Total lease liabilities | $ 15,004,317 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 128,036 | $ 249,441 |
Operating cash flows from financing leases | 176,904 | 354,462 |
Financing cash flows from financing leases | $ 143,515 | $ 285,453 |
Leases - Schedule of Components
Leases - Schedule of Components Lease Cost Related (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Leases [Abstract] | |||
Operating lease costs | $ 143,274 | $ 286,549 | |
Financing lease costs: Amortization of right-of-use assets | 143,515 | 285,454 | |
Financing lease costs: Interest on lease liabilities | 176,904 | 354,461 | |
Total financing lease costs | $ 320,419 | $ 639,915 |
Leases - Schedule of Weighted A
Leases - Schedule of Weighted Average Lease Term and Discount Rates for Operating and Financing Leases (Details) | Jun. 30, 2019 |
Leases [Abstract] | |
Operating Leases, Weighted Average Remaining Lease Terms (years) | 11 years 9 months 11 days |
Operating Leases, Weighted Average Discount Rate | 7.39% |
Finance Leases, Weighted Average Remaining Lease Terms (years) | 19 years 8 months 2 days |
Finance Leases, Weighted Average Discount Rate | 8.00% |
Leases - Schedule of Maturity o
Leases - Schedule of Maturity of Operating and Financing Lease Liabilities (Details) | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
2019 (remaining six months) | $ 262,740 |
2020 | 544,759 |
2021 | 570,765 |
2022 | 583,392 |
2023 | 472,444 |
Thereafter | 3,206,389 |
Total lease payments | 5,640,489 |
Less: imputed interest | (1,938,106) |
Total | 3,702,383 |
2019 (remaining six months) | 443,553 |
2020 | 897,425 |
2021 | 913,130 |
2022 | 929,110 |
2023 | 945,369 |
Thereafter | 15,924,033 |
Total lease payments | 20,052,620 |
Less: imputed interest | (8,750,686) |
Total | $ 11,301,934 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | Apr. 17, 2019 | Apr. 08, 2019 | Mar. 31, 2019 | Jan. 31, 2019 | Aug. 31, 2018 | Jun. 30, 2018 | May 31, 2018 | Sep. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Capital Stock [Line Items] | ||||||||||||
Class A common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | |||||||||
Class A common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||
Class A common stock, shares outstanding | 7,080,771 | 7,080,771 | 6,680,065 | |||||||||
Number of stock option exercisable | 30,000 | 30,000 | ||||||||||
Stock based compensation | $ 76,457 | $ 110,623 | $ 39,126 | |||||||||
Number of shares issued for services, value | 129,326 | 37,875 | ||||||||||
Subscripton amount | $ 34,960 | 34,960 | $ 15,453 | |||||||||
Debt conversion description | The Company's common stock on the Nasdaq Stock Market, NYSE or NYSE MKT within 12 months after the final closing of the Offering, each share of Series B convertible preferred stock will automatically convert into the securities issued by the Company in the Qualified Public Offering (the "Conversion Securities") at a conversion price equal to the lesser of: (a) $1.40 per share, and (b) the greater of: (i) 70% of the public offering price of the Conversion Securities, and (ii) $0.28 per share (the "Conversion Price"), subject to adjustment. The Conversion Price is subject to adjustment for stock splits, stock dividends, or the reclassification of the common stock. In the event that the Company does not complete a Qualified Public Offering within 12 months after the final closing of the Offering or does not file with the SEC the audited financial statements and other financial information required to be filed in connection with the Company's acquisition of the Fat Patty's restaurant concept on August 30, 2018 or in connection with the Company's proposed acquisition of the Tilted Kilt within four months after the final closing of the Offering, the Company will be required to repurchase all Shares issued in the Offering for a purchase price of $1.75 per share. | |||||||||||
Stock subscriptions payable | $ 34,960 | $ 15,453 | ||||||||||
Series A Convertible Preferred Stock [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Series A convertible preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | |||||||||
Series A convertible preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||
Series A convertible preferred stock, shares outstanding | 449,581 | 449,581 | 449,581 | |||||||||
Number of shares issued for services, value | ||||||||||||
Number of shares issued for services | ||||||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Series A convertible preferred stock, shares authorized | 2,500,000 | 2,500,000 | 2,500,000 | |||||||||
Series A convertible preferred stock, par value | $ 1.40 | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||
Series A convertible preferred stock, shares outstanding | 0 | 0 | 0 | |||||||||
Number of shares issued for services, value | ||||||||||||
Number of shares issued for services | ||||||||||||
Warrant exercisable term | 5 years | |||||||||||
Warrant exercise price per share | $ 1.40 | |||||||||||
Description on private placement | As revised, the Offering covers the sale of up to 1,785,715 units, each unit comprised of one share of Series B convertible preferred stock (the "Shares") and one warrant to purchase one share of common stock at a purchase price of $1.40 per unit, for an aggregate offering price of $2,500,000. | |||||||||||
Additional offering increased in value | $ 2,500,000 | |||||||||||
Warrant description | (i) $1.70 per share, and the greater of: (ii) one hundred twenty percent (120%) of the conversion price of the Shares and $0.28 per share, subject to adjustment. The units are being offered without registration under the Securities Act solely to persons who qualify as accredited investors, as that term is defined in Rule 501 of Regulation D under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated thereunder. | |||||||||||
Designating shares authorized | 2,500,000 | |||||||||||
Unissued shares of preferred stock | $ 0.01 | |||||||||||
Debt conversion description | The greater of (i) $1.40 plus any declared and unpaid dividends thereon, and (ii) the amount per share such holder would receive if such holder converted such shares of Series B convertible preferred stock into shares of common stock at a conversion price of $1.40, subject to adjustment. | |||||||||||
Series B Convertible Preferred Stock [Member] | Maximum [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Number of units sold | 1,785,715 | |||||||||||
Private Offering [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Warrant purchase price | $ 1.40 | |||||||||||
Warrant exercisable term | 5 years | |||||||||||
Warrant exercise price per share | $ 1.55 | |||||||||||
Description on private placement | The Company agreed to pay the placement agent a placement fee equal to 7% of the aggregate gross proceeds raised in the Offering and warrants exercisable for a term of five years to purchase 4% of the number of shares of common stock included in the units sold in the Offering at an exercise price of $1.55 per share. | |||||||||||
Debt instrument, terminate date | Mar. 31, 2019 | |||||||||||
Debt instrument, extended date | May 31, 2019 | |||||||||||
Subscripton amount | $ 500,000 | |||||||||||
Private Offering [Member] | Maximum [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Number of private offering shares | 5,000,000 | |||||||||||
Additional offering increased in value | $ 1,000,000 | |||||||||||
Membership Interest Purchase Agreement [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Subscripton amount | $ 500,000 | |||||||||||
Firm [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | $ 5,775 | $ 11,145 | ||||||||||
Number of shares issued for services, value | $ 7,000 | $ 12,250 | ||||||||||
Number of shares issued for services | 1,500 | 3,500 | ||||||||||
Maxim and Joseph Gunnar & Co., LLC [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Warrant exercisable term | 5 years | |||||||||||
Warrant exercise price per share | $ 1.70 | |||||||||||
Debt instrument, terminate date | Apr. 30, 2019 | |||||||||||
Debt instrument, extended date | May 31, 2019 | |||||||||||
Percenatge of placement fee | 7.00% | |||||||||||
Number of shares of common stock purchase percentage | 7.00% | |||||||||||
Maxim and Joseph Gunnar & Co., LLC [Member] | Maximum [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Additional offering increased in value | $ 1,000,000 | |||||||||||
Employee [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Number of stock option exercisable | 30,000 | |||||||||||
Stock based compensation | $ 8,701 | 21,715 | 21,715 | $ 10,002 | ||||||||
Number of restricted stock award granted | 225,000 | |||||||||||
Employee [Member] | May 15, 2021 [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Number of shares issued, values | $ 33,000 | |||||||||||
Stock issued during period, shares | 20,000 | |||||||||||
Seenu G Kasturi [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | $ 147 | |||||||||||
Number of shares vested | 10,706 | |||||||||||
Seenu G Kasturi [Member] | Series A Convertible Preferred Stock [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock issued during period, shares | 449,581 | |||||||||||
Seenu G Kasturi [Member] | Employment Agreement [Member] | ||||||||||||
Capital Stock [Line Items] | ||||||||||||
Stock based compensation | $ 48,967 | $ 96,319 | ||||||||||
Number of shares vested | 130,000 | 130,000 |
Capital Stock - Schedule of Cha
Capital Stock - Schedule of Changes in Stockholders' Equity (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Balance | $ (670,465) | $ (676,924) | $ (676,924) | |||
Common stock issued for services | 129,326 | 37,875 | ||||
Cancellation of stock option issued for services | (10,002) | |||||
Deferred franchise fees | (196,478) | |||||
Common stock exchanged for preferred stock | ||||||
Net loss | $ (291,561) | $ (55,531) | (705,804) | (7,917) | (282,483) | $ (344,740) |
Balance | (1,256,945) | (843,444) | (1,256,945) | (843,444) | (670,465) | (676,924) |
Series A Convertible Preferred Stock [Member] | ||||||
Balance | $ 4,496 | |||||
Balance, shares | 449,581 | |||||
Common stock issued for services | ||||||
Common stock issued for services, shares | ||||||
Cancellation of stock option issued for services | ||||||
Cancellation of stock option issued for services, shares | ||||||
Deferred franchise fees | ||||||
Common stock exchanged for preferred stock | $ 4,496 | |||||
Common stock exchanged for preferred stock, shares | 449,581 | |||||
Net loss | ||||||
Balance | $ 4,496 | $ 4,496 | $ 4,496 | $ 4,496 | $ 4,496 | |
Balance, shares | 449,581 | 449,581 | 449,581 | 449,581 | 449,581 | |
Series B Convertible Preferred Stock [Member] | ||||||
Balance | ||||||
Balance, shares | ||||||
Common stock issued for services | ||||||
Common stock issued for services, shares | ||||||
Cancellation of stock option issued for services | ||||||
Cancellation of stock option issued for services, shares | ||||||
Net loss | ||||||
Balance | ||||||
Balance, shares | ||||||
Common Stock [Member] | ||||||
Balance | $ 66,801 | $ 69,509 | $ 69,509 | |||
Balance, shares | 6,680,065 | 6,950,869 | 6,950,869 | |||
Common stock issued for services | $ 4,007 | $ 231 | ||||
Common stock issued for services, shares | 400,706 | 23,139 | ||||
Cancellation of stock option issued for services | ||||||
Cancellation of stock option issued for services, shares | ||||||
Deferred franchise fees | ||||||
Common stock exchanged for preferred stock | $ (4,496) | |||||
Common stock exchanged for preferred stock, shares | (449,581) | |||||
Net loss | ||||||
Balance | $ 70,808 | $ 65,244 | $ 70,808 | $ 65,244 | $ 66,801 | $ 69,509 |
Balance, shares | 7,080,771 | 6,524,427 | 7,080,771 | 6,524,427 | 6,680,065 | 6,950,869 |
Additional Paid-in Capital [Member] | ||||||
Balance | $ 4,490,338 | $ 3,995,306 | $ 3,995,306 | |||
Common stock issued for services | 105,812 | 37,645 | ||||
Cancellation of stock option issued for services | (10,002) | |||||
Deferred franchise fees | ||||||
Common stock exchanged for preferred stock | ||||||
Net loss | ||||||
Balance | $ 4,586,148 | $ 4,032,951 | 4,586,148 | 4,032,951 | 4,490,338 | $ 3,995,306 |
Stock Subscriptions Payable [Member] | ||||||
Balance | 15,453 | 26,853 | 26,853 | |||
Common stock issued for services | 19,507 | (1) | ||||
Cancellation of stock option issued for services | ||||||
Deferred franchise fees | ||||||
Common stock exchanged for preferred stock | ||||||
Net loss | ||||||
Balance | 34,960 | 26,852 | 34,960 | 26,852 | 15,453 | 26,853 |
Accumulated Deficit [Member] | ||||||
Balance | (5,247,553) | (4,768,592) | (4,768,592) | |||
Common stock issued for services | ||||||
Cancellation of stock option issued for services | ||||||
Deferred franchise fees | (196,478) | |||||
Common stock exchanged for preferred stock | ||||||
Net loss | (705,804) | (7,917) | ||||
Balance | $ (5,953,357) | $ (4,972,987) | $ (5,953,357) | $ (4,972,987) | $ (5,247,553) | $ (4,768,592) |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock Options and Warrants [Abstract] | |||
Number of stock option shares issued | 1 | ||
Number of stock option exercisable | 30,000 | ||
Stock option exercise price | $ 1.49 | ||
Number of stock option oustanding | |||
Number of warrants exercisable | |||
Number of warrants outstanding |
Stock Compensation Plans (Detai
Stock Compensation Plans (Details Narrative) - shares | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2014 | Aug. 31, 2011 | Dec. 31, 2018 | Jun. 30, 2019 | Aug. 18, 2011 | |
Number of common stock granted to employees, officers and directors of, and consultants and advisors | 1 | ||||
Stock Incentive Plan 2011 [Member] | |||||
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 | |||
Termination of plan | The plan terminates in August 2021. | ||||
Stock Incentive Plan 2014 [Member] | |||||
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 | ||||
Termination of plan | The plan terminates in June 2024. |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Mar. 31, 2021shares | Mar. 31, 2020shares | Mar. 31, 2019shares | Jan. 02, 2019USD ($) | Nov. 15, 2018USD ($) | Sep. 25, 2018USD ($) | Aug. 30, 2018USD ($) | May 01, 2018USD ($) | Dec. 31, 2017USD ($) | Apr. 01, 2017USD ($)ft² | Jan. 18, 2017USD ($)shares | Dec. 20, 2016USD ($)RentPeriod | Jul. 01, 2015USD ($) | Jan. 22, 2013USD ($)shares | Jan. 22, 2013USD ($) | Jan. 31, 2018USD ($) | Nov. 30, 2017USD ($) | Jul. 31, 2015USD ($) | Jan. 31, 2015USD ($) | May 31, 2014 | Oct. 31, 2013USD ($) | Jul. 31, 2013USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)shares | Jun. 30, 2018USD ($) | Dec. 31, 2018shares |
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Equity awards value | $ 1,418,560 | $ 343,167 | $ 2,871,008 | $ 597,706 | |||||||||||||||||||||||
Number of shares granted | shares | 1 | ||||||||||||||||||||||||||
Lease arrangement, description | The Company's real estate leases include one or more options to renew, with renewal terms that can extend the lease term from three to five years or more. | ||||||||||||||||||||||||||
Restaurant sales | 4,188,967 | 1,114,587 | $ 8,777,788 | 2,303,751 | |||||||||||||||||||||||
Income from insurance proceeds | 181,588 | 181,588 | |||||||||||||||||||||||||
Dwg Acquisitions LLC [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Fixed monthly rent payment | $ 1,100 | ||||||||||||||||||||||||||
Percentage increase in additional annual rent payment | 6.00% | ||||||||||||||||||||||||||
Initial term of lease | 53 months | ||||||||||||||||||||||||||
Additional term of lease | 60 months | ||||||||||||||||||||||||||
DWAG Valdosta, LLC [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Percentage increase in additional annual rent payment | 6.00% | ||||||||||||||||||||||||||
Annual gross sales on restaurant | $ 1,000,000 | ||||||||||||||||||||||||||
Panama City Beach Dick's Wings Restaurant [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Fixed monthly rent payment | $ 3,000 | ||||||||||||||||||||||||||
Fat Patty's Restaurant [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Proceeds from insurance received | 579,885 | 579,885 | |||||||||||||||||||||||||
Restaurant sales | 398,297 | ||||||||||||||||||||||||||
Income from insurance proceeds | $ 181,588 | ||||||||||||||||||||||||||
Corporate Headquarters [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Fixed monthly rent payment | $ 2,063 | $ 1,806 | |||||||||||||||||||||||||
Lease expire date | Dec. 31, 2018 | Dec. 31, 2017 | |||||||||||||||||||||||||
New Corporate Headquarters [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Fixed monthly rent payment | $ 4,000 | ||||||||||||||||||||||||||
Master Lease [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Fixed monthly rent payment | $ 876,875 | ||||||||||||||||||||||||||
Lease expire date | Aug. 31, 2038 | ||||||||||||||||||||||||||
Lease arrangement, description | (i) 1.75%, or (ii) 1.25 times the change in the Consumer Price Index. | ||||||||||||||||||||||||||
Seenu G Kasturi [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of shares vested | shares | 10,706 | ||||||||||||||||||||||||||
Seenu G Kasturi [Member] | Scenario, Plan [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of shares vested | shares | 130,000 | ||||||||||||||||||||||||||
Employment Agreement [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Amount of common stock connection with employee agreement | $ 50,000 | ||||||||||||||||||||||||||
Employment Agreement [Member] | Seenu G Kasturi [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Annual compensation | $ 80,000 | ||||||||||||||||||||||||||
Initial annual base salary | $ 350,000 | 26,000 | |||||||||||||||||||||||||
Equity awards value | $ 54,000 | ||||||||||||||||||||||||||
Term of agreement | 3 years | ||||||||||||||||||||||||||
Number of shares granted | shares | 390,000 | ||||||||||||||||||||||||||
Number of shares vested | shares | 130,000 | 130,000 | |||||||||||||||||||||||||
Employment Agreement [Member] | Seenu G Kasturi [Member] | Scenario, Plan [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of shares vested | shares | 130,000 | ||||||||||||||||||||||||||
Employment Agreement [Member] | Richard W. Akam [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Annual compensation | $ 150,000 | ||||||||||||||||||||||||||
Term of agreement | 1 year | ||||||||||||||||||||||||||
Amount of common stock connection with employee agreement | $ 50,000 | ||||||||||||||||||||||||||
Amount of additional shares of common stock to be issued | $ 50,000 | ||||||||||||||||||||||||||
Number of common stock issued in connection with employment agreement | shares | 71,429 | ||||||||||||||||||||||||||
Additional renewal term of agreement | 1 year | ||||||||||||||||||||||||||
Lease Agreement [Member] | Dwg Acquisitions LLC [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Fixed monthly rent payment | $ 7,035 | ||||||||||||||||||||||||||
Lease expire date | Mar. 31, 2023 | ||||||||||||||||||||||||||
Additional term of lease | 60 months | ||||||||||||||||||||||||||
Area of square feet | ft² | 3,400 | ||||||||||||||||||||||||||
Lease Agreement [Member] | Youngerman Circle Restaurant [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
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 | RentPeriod | 13 | ||||||||||||||||||||||||||
Lease arrangement, description | 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 (5th) anniversary and continuing every five years thereafter, the base rent will be equal to the sum of: (i) the average base rent previously in effect for the preceding five-year period, and (ii) the product of such previous average base rent multiplied by 7.5%. The lease has an initial term of 20 years and provides the Company with an option to extend the lease for two additional five-year periods. | ||||||||||||||||||||||||||
Lease Agreement [Member] | DWAG Valdosta, LLC [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Initial term of lease | 5 years | ||||||||||||||||||||||||||
Additional term of lease | 5 years | ||||||||||||||||||||||||||
Monthly rent payments for two year | $ 3,333 | ||||||||||||||||||||||||||
Monthly rent payments for three year | $ 5,000 | ||||||||||||||||||||||||||
Lease Agreement [Member] | Panama City Beach Dick's Wings Restaurant [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Fixed monthly rent payment | $ 5,000 | ||||||||||||||||||||||||||
Lease expire date | Jun. 30, 2018 | ||||||||||||||||||||||||||
Percentage increase in additional annual rent payment | 6.00% | ||||||||||||||||||||||||||
Initial term of lease | 3 years | ||||||||||||||||||||||||||
Additional term of lease | 3 years | ||||||||||||||||||||||||||
Annual gross sales on restaurant | $ 1,200,000 | ||||||||||||||||||||||||||
Lease Agreement [Member] | Tallahassee Dick's Wings Restaurant [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Percentage increase in additional annual rent payment | 6.00% | ||||||||||||||||||||||||||
Initial term of lease | 10 years | ||||||||||||||||||||||||||
Additional term of lease | 5 years | ||||||||||||||||||||||||||
Lease arrangement, description | DWAG has the right to terminate the lease at the end of the 42nd month of the initial term in the event if gross sales during the period commencing on the first day of the 25th month of the initial term and ending on the last day of the 36th month of the initial term are less than $1,400,000 | ||||||||||||||||||||||||||
Annual gross sales on restaurant | $ 1,400,000 | ||||||||||||||||||||||||||
Monthly rent payments for one year | |||||||||||||||||||||||||||
Tenant improvement | $ 250,000 | ||||||||||||||||||||||||||
Lease Agreement [Member] | Gonzalez Tilted Kilt Restaurant [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Fixed monthly rent payment | $ 12,000 | ||||||||||||||||||||||||||
Initial term of lease | 10 years | ||||||||||||||||||||||||||
Additional term of lease | 5 years | ||||||||||||||||||||||||||
Increase to term lease | $ 17,600 | ||||||||||||||||||||||||||
Sponsorship Agreement [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Monthly rent payments for two year | 208,080 | $ 208,080 | |||||||||||||||||||||||||
Monthly rent payments for three year | 212,240 | 212,240 | |||||||||||||||||||||||||
Monthly rent payments for one year | $ 102,000 | $ 102,000 | |||||||||||||||||||||||||
Sponsorship Agreement [Member] | Jacksonville Jaguars, LLC [Member] | |||||||||||||||||||||||||||
Commitments And Contingencies [Line Items] | |||||||||||||||||||||||||||
Lease expire date | Feb. 28, 2023 | ||||||||||||||||||||||||||
Initial term of lease | 5 years | 3 years | |||||||||||||||||||||||||
Additional term of lease | 2 years | ||||||||||||||||||||||||||
Annual fees | $ 3,000 | $ 2,000 | |||||||||||||||||||||||||
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 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Annual Payments Under the Sponsorship Agreement (Details) - Sponsorship Agreement [Member] | Jun. 30, 2019USD ($) |
Loss Contingencies [Line Items] | |
2019 (remaining six months) | $ 102,000 |
2020 | 208,080 |
2021 | 212,240 |
2022 | 216,490 |
2023 | |
Thereafter | |
Total | $ 738,810 |
Related-Party Transactions (Det
Related-Party Transactions (Details Narrative) - USD ($) | Jun. 30, 2018 | Oct. 04, 2017 | Dec. 19, 2016 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Aug. 30, 2018 | Dec. 31, 2017 |
Related Party Transaction [Line Items] | |||||||||||
Revenue | $ 4,188,967 | $ 1,114,587 | $ 8,777,788 | $ 2,303,751 | |||||||
Purchase price for the property | 614,295 | 614,295 | |||||||||
Tilted Kilt [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Payment of fund fees | 3,408 | 7,979 | |||||||||
Blue Victory Holdings, Inc [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Aggregate original principal amount | $ 105,955 | $ 105,955 | $ 236,333 | $ 30,503 | |||||||
Dwg Acquisitions LLC [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Rent payments | $ 3,000 | ||||||||||
Accounts payable and accrued expenses | 41,512 | ||||||||||
Dwg Acquisitions LLC [Member] | Franchise Agreement [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Revenue | $ 49,110 | $ 77,738 | |||||||||
Seediv, LLC [Member] | Blue Victory Holdings, Inc | Promissory Notes [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Aggregate original principal amount | $ 216,469 | ||||||||||
Seediv, LLC [Member] | Racing Qsr Llc [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Purchase price for the property | $ 2,000,000 | ||||||||||
Amount of deposit required with in ten days of agreement | $ 10,000 | ||||||||||
Seediv, LLC [Member] | Asset Purchase Agreement [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Maximum borrowing capacity | $ 622,929 | ||||||||||
Seenu G Kasturi [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Equity interest rate | 89.40% | 89.40% | |||||||||
Acquired outstanding purchase price | $ 600,000 | ||||||||||
Earnout payment | 600,000 | 144,326 | |||||||||
Seenu G Kasturi [Member] | Acquisition of Seediv [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Earnout payment | $ 199,682 | 144,326 | |||||||||
Seenu G Kasturi [Member] | Blue Victory Holdings, Inc [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Equity interest rate | 90.00% | 90.00% | |||||||||
Seenu G Kasturi [Member] | Series A Convertible Preferred Stock [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Equity interest rate | 100.00% | 100.00% | |||||||||
Stock issued during period, shares | 449,581 | ||||||||||
Exchange shares of common stock | 449,581 | ||||||||||
Seenu G Kasturi [Member] | Common Stock [Member] | Mr. Kasturi [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Ownership percentage in common stock of company | 30.30% | 30.30% | |||||||||
Employees and Other Affiliates [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Accounts payable and accrued expenses | $ 270,917 | $ 270,917 | $ 231,187 |
Judgments in Legal Proceedings
Judgments in Legal Proceedings (Details Narrative) - USD ($) | Nov. 11, 2011 | Oct. 04, 2011 | Jan. 31, 2015 | Dec. 25, 2011 | Jun. 30, 2019 | Dec. 31, 2016 | Jun. 30, 2019 | Dec. 31, 2018 |
Loss Contingencies [Line Items] | ||||||||
Interest expense | $ 1,930 | $ 3,882 | ||||||
Accrued interest outstanding | 281,859 | 281,859 | $ 276,269 | |||||
Legal fees | 194,747 | 194,747 | ||||||
Potential loss | 167,646 | 167,646 | 163,764 | |||||
Pending Litigation [Member] | Breach of Guaranty of Certain Obligations of Ritz Aviation Llc [Member] | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss from legal proceedings | $ 82,642 | |||||||
Accrued interest outstanding | 45,521 | 45,521 | 41,638 | |||||
Loss contingency damages sought | $ 194,181 | $ 111,539 | ||||||
Other expense excluding legal fees | 10,586 | 10,586 | ||||||
Breach Of Guarantee [Member] | ||||||||
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 | 2,810 | 5,590 | ||||||
Accrued interest outstanding | $ 87,112 | $ 87,112 | $ 81,522 |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) | 6 Months Ended | |
Jun. 30, 2019RestaurantsSegment | Dec. 31, 2018Restaurants | |
Segment Reporting [Abstract] | ||
Number of reportable segments | Segment | 2 | |
Agreement term, description | The agreements have a 10-year term and can be renewed for one additional 10-year term. | |
Number of franchised restaurants | Restaurants | 16 | 17 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Financial Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | $ 4,188,967 | $ 1,114,587 | $ 8,777,788 | $ 2,303,751 | ||
Total income from operations | 268,070 | 256,763 | 598,707 | 638,287 | ||
Corporate and unallocated expenses | (559,631) | (344,180) | (1,304,511) | (646,204) | ||
Net loss | (291,561) | (55,531) | (705,804) | (7,917) | $ (282,483) | $ (344,740) |
Depreciation and amortization, total | 288,649 | 13,648 | 572,259 | 19,207 | ||
Capital expenditures, total | 127,823 | 113,980 | 160,097 | 137,952 | ||
Company-Owned Restaurants [Member] | ||||||
Revenue | 3,967,890 | 839,827 | 8,346,681 | 1,767,104 | ||
Total income from operations | 201,905 | (6,032) | 399,165 | 181,092 | ||
Depreciation and amortization, total | 287,275 | 13,527 | 569,526 | 19,064 | ||
Capital expenditures, total | 127,823 | 112,332 | 151,097 | 135,118 | ||
Franchise Operations [Member] | ||||||
Revenue | 221,077 | 274,760 | 431,107 | 536,647 | ||
Total income from operations | 66,165 | 262,795 | 199,542 | 457,195 | ||
Depreciation and amortization, total | ||||||
Capital expenditures, total | ||||||
Corporate [Member] | ||||||
Depreciation and amortization, total | 1,374 | 81 | 2,733 | 143 | ||
Capital expenditures, total | $ 1,648 | $ 9,000 | $ 2,834 |
Restatement of Previously Iss_3
Restatement of Previously Issued Condensed Consolidated Financial Statements (Detail Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Discount amount | $ 15,438 | |||
Restaurant sales | $ 4,188,967 | $ 1,114,587 | 8,777,788 | 2,303,751 |
Restaurant operating costs - other operating expenses | $ (839,784) | (170,831) | $ (1,683,145) | (325,451) |
Restatement Adjustments [Member] | ||||
Discount amount | 54,242 | 111,740 | ||
Restaurant sales | 54,242 | 111,740 | ||
Restaurant operating costs - other operating expenses | 54,242 | 111,740 | ||
Reducing restaurant sales and restaurant operating costs - other operating expenses | $ 54,242 | $ 111,740 |
Restatement of Previously Iss_4
Restatement of Previously Issued Condensed Consolidated Financial Statements - Schedule of Consolidated Statement of Operation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 4,188,967 | $ 1,114,587 | $ 8,777,788 | $ 2,303,751 |
Restaurant operating costs - other operating expenses | (839,784) | (170,831) | (1,683,145) | (325,451) |
Total operating expenses | (4,496,983) | (1,245,467) | (9,342,797) | (2,386,323) |
Restaurant Sales [Member] | ||||
Revenue | $ 3,967,890 | 839,827 | $ 8,346,681 | 1,767,104 |
Previously Reported [Member] | ||||
Revenue | 1,168,829 | 2,415,491 | ||
Restaurant operating costs - other operating expenses | (225,073) | (437,191) | ||
Total operating expenses | (1,299,709) | (2,498,063) | ||
Previously Reported [Member] | Restaurant Sales [Member] | ||||
Revenue | 894,069 | 1,878,844 | ||
Restatement Adjustments [Member] | ||||
Revenue | (54,242) | (111,740) | ||
Restaurant operating costs - other operating expenses | 54,242 | 111,740 | ||
Total operating expenses | 54,242 | 111,740 | ||
Restatement Adjustments [Member] | Restaurant Sales [Member] | ||||
Revenue | $ (54,242) | $ (111,740) |
Subsequent Events (Detail Narra
Subsequent Events (Detail Narrative) - USD ($) | May 01, 2020 | Nov. 01, 2019 | Jul. 15, 2019 | Jul. 09, 2019 |
Forecast [Member] | ||||
Subsequent Event [Line Items] | ||||
Eligible to receive bonus percentage | 10.00% | |||
Employment Agreement [Member] | Mr Andre [Member] | Scenario, Plan [Member] | Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Base salary | $ 200,000 | |||
Subsequent Event [Member] | Sponsorship Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Sports season payment description | The Amendment is for a term of 10 NFL football seasons and expires on the later of: (i) the conclusion of the 2028/29 NFL season, and (ii) February 2029. The Company is required to pay the Jaguars annual fees in the amount of $500,000 during the 2019/20 NFL season and $794,444 for each of the next nine NFL seasons. In addition, the Company is required to provide the Jaguars with food, beverages and serving products equal in value to $35,700 during the 2019/20 NFL season increasing to $40,000 for each of the last six NFL seasons. In the event the Jaguars play in any post-season playoff games, the Company will pay the 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. | |||
Subsequent Event [Member] | Employment Agreement [Member] | Mr Andre [Member] | ||||
Subsequent Event [Line Items] | ||||
Base salary | $ 175,000 |