Registration of securities issued in business combination transactions

Intangible Assets, Net

v3.19.3
Intangible Assets, Net
 9 Months Ended 12 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]    
Intangible Assets, Net

6. INTANGIBLE ASSETS, NET

 

GOODWILL

 

Goodwill consist of the following:

 

    September 30,
2019		     December 31, 2018  
Hooters Full Service   $ 3,049,783     $ 3,335,862  
Better Burgers Fast Casual     7,448,848       7,448,848  
Just Fresh Fast Casual     -       495,755  
    $ 10,498,631     $ 11,280,465  

 

The changes in the carrying amount of goodwill are summarized as follows:

 

    September 30,
2019		     December 31, 2018  
Beginning Balance   $ 11,280,465     $ 12,647,806  
Impairment     (495,755 )     (1,191,111 )
Reclassification to held for sale     (209,794 )     -  
Foreign currency translation gain (loss)     (76,285 )     (176,230 )
Ending Balance   $ 10,498,631     $ 11,280,465  

 

During the third quarter of 2019, the Company recorded an impairment to the goodwill balance for Just Fresh based on the sale of 100% of the membership interest of JF Restaurants, LLC for $500,000 in November 2019. See additional discussion in the Note 14.

 

OTHER INTANGIBLE ASSETS

 

Franchise and trademark/tradename intangible assets consist of the following:

 

        September 30, 2019     December 31, 2018  
Trademark, Tradenames:                    
Just Fresh   10 years   $ 868,345     $ 1,010,000  
American Roadside Burger   10 years     1,786,930       1,786,930  
BGR: The Burger Joint   Indefinite     1,430,000       1,430,000  
Little Big Burger   Indefinite     1,550,000       1,550,000  
          5,635,275       5,776,930  
Acquired Franchise Rights                    
BGR: The Burger Joint   7 years     827,757       827,757  
                     
Franchise License Fees:                    
Hooters South Africa*   20 years     -       234,242  
Hooters Pacific NW   20 years     74,507       89,507  
Hooters UK   5 years     11,976       12,422  
          86,483       336,171  
Total Intangible assets at cost         6,549,515       6,940,858  
Accumulated amortization         (2,069,610 )     (1,817,699 )
Intangible assets, net       $ 4,479,905     $ 5,123,159  

 

        Nine Months Ended  
        September 30,
2019		     September 30,
2018		  
Amortization expense       $ 353,974     $ 404,054  
                     

 

*Amounts are included in assets held for sale as of September 30, 2019.

6. INTANGIBLE ASSETS, NET

 

GOODWILL

 

Goodwill consist of the following at December 31, 2018 and 2017:

 

    December 31, 2018     December 31, 2017  
Hooters Full Service   $ 3,335,862     $ 4,703,203  
Better Burgers Fast Casual     7,448,848       7,448,848  
Just Fresh Fast Casual     495,755       495,755  
    $ 11,280,465     $ 12,647,806  

 

The changes in the carrying amount of goodwill are summarized as follows:

 

    December 31, 2018     December 31, 2017  
Beginning Balance   $ 12,647,806     $ 12,405,770  
Impairment     (1,191,111 )     -  
Foreign currency translation gain (loss)     (176,230 )     242,036  
Ending Balance   $ 11,280,465     $ 12,647,806  

 

The Company entered into letters of intent for the sale of its Hooters Nottingham and Hooters Tacoma locations in the first quarter of 2018 and the assets of those operations were reclassified to Assets Held for Sale on the consolidated balance sheet with impairment charges recognized totaling $1.5 million for the year ended December 31, 2018. The impairment charges primarily consisted of impairment of goodwill, net of a reversal of approximately $887,000 of foreign exchange losses previously classified in Other Comprehensive Loss.

 

The letters of intent for Hooters Nottingham and Hooters Tacoma have expired. Management is continuing to explore potential to sell both locations; however, there is not a specific program underway currently to locate a buyer or that would otherwise indicate that a disposal is imminent. Accordingly, as of September 30, 2018, management determined that it was appropriate to reclassify those locations from held for sale to operating assets. As of December 31, 2018, management believes that the carrying amount of the assets, following the $1.5 million impairment charge, continues to reflect the net realizable value of the properties and that no additional impairment adjustment is warranted at this time.

 

An evaluation was completed effective December 31, 2018 at which time the Company determined that no additional impairment was necessary for any of the Company’s reporting units.

 

OTHER INTANGIBLE ASSETS

 

Franchise and trademark/tradename intangible assets consist of the following at December 31, 2018 and December 31, 2017:

 

    Estimated Useful Life   December 31, 2018     December 31, 2017  
Trademark, Tradenames:                    
Just Fresh   10 years   $ 1,010,000     $ 1,010,000  
American Roadside Burger   10 years     1,786,930       1,786,930  
BGR: The Burger Joint   Indefinite     1,430,000       1,430,000  
Little Big Burger   Indefinite     1,550,000       1,550,000  
          5,776,930       5,776,930  
Acquired Franchise Rights                    
BGR: The Burger Joint   7 years     827,757       1,056,000  
                     
Franchise License Fees:                    
Hooters South Africa   20 years     234,242       273,194  
Hooters Pacific NW   20 years     89,507       74,507  
Hooters UK   5 years     12,422       13,158  
          336,171       360,859  
Total Intangibles at cost         6,940,858       7,193,789  
Accumulated amortization         (1,817,699 )     (1,297,057 )
Intangible assets, net       $ 5,123,159     $ 5,896,732  

 

    Periods Ended  
    December 31, 2018     December 31, 2017  
Amortization expense   $ 520,642     $ 302,879