Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v3.5.0.2
Acquisitions
 9 Months Ended
Sep. 30, 2016
Business Combinations [Abstract]  
Acquisitions

3. ACQUISITIONS

 

2016 Acquisition

 

The Company completed one acquisition during the nine months ended September 30, 2016, which was the acquisition of a restaurant location in the Harris YMCA in Charlotte, N.C. to expand our Just Fresh business. The Company allocated the purchase price as of the date of acquisition based on the estimated fair value of the acquired assets and assumed liabilities. In consideration of the purchased assets, the Company paid a purchase price totaling $72,215 in cash, of which $1,611 was allocated to acquired inventory and $70,604 to goodwill. The equipment and other assets used in the operation of the business are property of the YMCA and no other tangible or identifiable intangible assets other than inventory were acquired, with the balance being allocated to goodwill.

 

No proforma information was included as the proforma impact of the acquisition is not material.

 

2015 Acquisitions

 

During the year ended December 31, 2015, the Company acquired three businesses to complement and expand its current operations in the Better Burger fast casual restaurant category. In connection with these acquisitions, the Company acquired strategic opportunities to expand its scale and presence in the Better Burger category.

 

Acquisition of BGR: The Burger Joint

 

The Company completed the acquisition of BGR: The Burger Joint effective March 15, 2015. The Company allocated the purchase price as of the date of acquisition based on appraisals and estimated the fair value of the acquired assets and assumed liabilities. In consideration of the purchased assets, the Company paid a purchase price consisting of $4,000,000 in cash, 500,000 shares of the Company’s common stock valued at $1.0 million, and a contractual working capital adjustment of $276,429. The fair value of the shares was the closing stock market price on the date the deal acquisition was consummated. No warrants were issued in connection with the acquisition.

 

Acquisition of BT’s Burger Joint

 

On July 1, 2015, the Company completed the acquisition with BT’s Burgerjoint Management, LLC, a limited liability company organized under the laws of North Carolina (“BT’s”), including the ownership interests of four operating restaurant subsidiaries engaged in the fast casual hamburger restaurant business under the name “BT’s Burger Joint”. In consideration of the purchased assets, the Company paid a purchase price consisting of $1.4 million in cash and 424,080 shares of the Company’s common stock valued at $1.0 million. The fair value of the shares was the closing stock market price on, the date the deal acquisition was consummated. No warrants were issued in connection with the acquisition.

 

Acquisition of Little Big Burger

 

On September 30, 2015, the Company completed the acquisition of various entities operating eight Little Big Burger restaurants in Oregon. In consideration of the purchased assets, the Company paid a purchase price consisting of $3,600,000 in cash and 1,874,063 shares of the Company’s common stock valued at $2.1 million. The fair value of the shares was the closing stock market price on the date the deal acquisition was consummated. No warrants were issued in connection with the acquisition.

 

The acquisitions were accounted for using the purchase method of accounting in accordance with ASC 805 “Business Combinations” and, accordingly, the condensed consolidated statements of operations include the results of these operations from the dates of acquisition. The assets acquired and the liabilities assumed were recorded at estimated fair values based on information currently available and based on certain assumptions as to future operations as follows:

 

    2015 Acquisitions  
    BGR:
The Burger
Joint 		    BT’s
Burger
Joint 		    Little Big
Burger 		    Total  
Consideration paid:                                
Common stock   $ 1,000,000     $ 1,000,848     $ 2,061,469     $ 4,062,317  
Cash     4,276,429       1,400,000       3,600,000       9,276,429  
Total consideration paid   $ 5,276,429     $ 2,400,848     $ 5,661,469     $ 13,338,746  
                                 
Cash acquired     11,000       8,000       234,638       253,638  
Property and equipment     2,164,023       1,511,270       1,711,990       5,387,283  
Goodwill     663,037       1,040,542       2,938,279       4,641,858  
Trademark/trade name/franchise fee     2,750,000       -       1,550,000       4,300,000  
Inventory, deposits and other assets     296,104       103,451       73,780       473,334  
Accounts held in escrow to satisfy acquired liabilities     -       -       675,000       675,000  
Total assets acquired, less cash     5,884,164       2,663,263       7,183,686       15,731,113  
Liabilities assumed     (607,735 )     (262,415 )     (949,857 )     (1,820,007 )
Deferred tax liabilities     -       -       (572,360 )     (572,360 )
Total consideration paid   $ 5,276,429     $ 2,400,848     $ 5,661,470     $ 13,338,746