19. SUBSEQUENT EVENTS

Convertible Debt

In January 2015, a convertible debt holder agreed to convert $250,000 principal plus accrued interest into 168,713 shares of the Company’s common stock.

In January, 2015, pursuant to a private offering, we sold a total of 20 units, a unit consisting of convertible debt and warrants to accredited investors resulting in net proceeds of $1,000,000 to the Company and the issuance of 250,000 warrants to these investors. Each unit consists of an 8% convertible promissory Note with the principal face value of $50,000 and a warrant to purchase 12,500 shares of the Company’s common stock. The notes have a term of 3 years, pay interest quarterly at 8% per annum and contain an option by the holder to demand full repayment of the outstanding principal amount of the note, plus all accrued and unpaid interest, at any time after the one-year anniversary of the issuance of the note. The note may be voluntarily converted by the holder into shares of common stock during the period commencing 180 days after the issuance of the notes at an exercise price equal to the lesser of $2.00 per share and a 15% discount to the average of the lowest 3 trading prices for the Company’s common stock during the 10 trading day period ending on the last complete trading day prior to the conversion date of the note, provided however that the conversion price shall not be less than $1.00 per share. The Warrants have an exercise price of $2.50 per share and a term of five years. In conjunction with the sale of the units, the Company also entered into a registration rights agreement pursuant to which the Company agreed to register the shares of common stock underlying the notes and warrants.

In January 2015, the Company received $150,000 from the issuance of convertible debt to two investors. The Company issued 8% convertible notes and 37,500 warrants to purchase our common stock at a price of $2.50 with a five year term.

In February 2015, a convertible debt holder agreed to convert $500,000 principal plus accrued interest into 373,333 shares of the Company’s common stock.

In February 2015, a note holder agreed to convert $100,000 principal plus accrued interest into 100,000 shares of the Company’s common stock.

On March 13, 2015, the Company issued a convertible note with an aggregate principal amount of $1 million and a warrant with a five year term to purchase 320,000 shares of common stock at an exercise price of $2.50 per share. This note is secured as follows: (i) a first priority security interest in and to the assets located at the Company’s Townsville and Just Fresh #7 restaurant locations (the “Collateral Assets”); (ii) a second priority security interest in the existing assets, operations and locations the four locations owned by the Company in Australia, operating under Hoot Parramatta Pty. Ltd., Hoot Penrith Pty Ltd., Hoot Campbelltown Pty. Ltd. and Hoot Surfers Paradise Pty. Ltd. and the gaming and management contracts relating thereto; and (iii) a third priority security interest in and to all assets of the Company subordinated to the Company’s current senior bank loan and mezzanine debt.

Upon the full payment of this note (a) the investor will be paid an amount, in perpetuity equal to fifty (50%) percent of the monthly net income that the Company receives from its sixty (60%) percent ownership interest in Townsville and Just Fresh #7 stores (collectively, the “Collateral Assets”); provided however that such monthly payment shall not be less than the amount of the average of the prior 12 month period of the actual net income of the Collateral Assets. The investor will also receive fifty (50%) percent of the sale proceeds received by the Company in the event that Townsville and/or Just Fresh #7 stores are sold; provided however should the Company close or liquidate the business or affairs of Townsville and/or Just Fresh #7 stores within a five (5) year period commencing on the Subsequent Closing date, the Company shall pay the investor a monthly amount equal to the average net income generated by the Collateral Assets from their opening until their closing or liquidation; and provided further that the Company shall pay the investor such amount in thirty-six (36) equal installments.

Rights Offering

On March 16, 2015, the Company completed a rights offering, receiving subscriptions (including both basic and oversubscriptions) for 3,899,742 shares of its common stock for gross proceeds of $7,799,484. The rights offering was made pursuant to a Registration Statement on Form S-1 that was filed with the SEC and became effective on February 17, 2015, and by means of the prospectus that was filed with the SEC on February 18, 2015 and supplemented on February 20, 2015 and March 16, 2015.

The shares of the Company’s common stock subscribed for in the rights offering will be issued to shareholders as promptly as practicable. Under the terms of the rights offering, the Company had the right to reduce subscriptions in order to preserve certain of the Company’s tax attributes, such as the utilization of net operating loss carry forwards. On the basis of the Company’s analysis of tax attributes, the Company did not reduce the subscriptions of any shareholder in the rights offering.

Acquisition of BGR The Burger Joint

Effective March 15, 2015, the Company closed the purchase of BGR Holdings, LLC (“BGR”). A wholly-owned subsidiary of the Company acquired substantially all of the assets of BGR, including the ownership interests of a franchising subsidiary, an operating subsidiary and various restaurant locations engaged in the fast casual hamburger restaurant business under the name “BGR The Burger Joint.”

In consideration of the purchased assets, the Company paid a purchase price consisting of $4,000,000 in cash and 500,000 shares of the Company’s common stock, subject to a contractual working capital adjustment. Management expects the working capital adjustment to increase cash consideration by approximately $200,000 to $250,000.

A final valuation of the assets and liabilities and purchase price allocation has not been completed as of this reporting period. These amounts are subject to the completion of formal studies and valuations which is expected to occur in early 2015.

Acquisition of BT’s Burger Joint

On March 31, 2015, the Company entered into an Asset Purchase Agreement with BT’s Burgerjoint Management, LLC (“BT’s”), for the purchase of BT’s by a wholly-owned subsidiary of the Company. The closing of the purchase is scheduled to occur on or before June 1, 2015 and is dependent on various closing conditions.

Pursuant to the terms of the Asset Purchase Agreement, a subsidiary of the Company acquired substantially all of the assets of BT’s, including the ownership interests of a franchising subsidiary, an operating subsidiary and various restaurant locations engaged in the fast casual hamburger restaurant business under the name “BT’s Burger Joint.” In consideration of the purchased assets, the Company has agreed to pay a purchase price consisting of one million four hundred thousand dollars in cash and shares of the Company’s common stock, $0.0001 par value per share, equal to one million dollars in the aggregate, subject to a contractual working capital adjustment.