Annual report pursuant to Section 13 and 15(d)

Acquisitions (Tables)

v2.4.1.9
Acquisitions (Tables)
 12 Months Ended
Dec. 31, 2014
Business Combinations [Abstract]  
Schedule of Acquisitions Valuation Assumptions

The contractual terms of the agreement does not provide for and the Company does not expect to declare dividends in the near future. Key assumptions used to apply this pricing model as of the date of issuance and December 31, 2014 are presented in the table below:

 

    August 2, 2013     March 19, 2014     November 19, 2014     December 16, 2014  
Common stock closing price   $ 4.15     $ 3.87     $ 1.70     $ 1.53  
Conversion per share price   $ 3.73     $ 3.29     $ 1.45     $ 1.30  
Conversion shares     804,764       151,999       172,672       77,061  
Expected life (in years)     3.0       1.0       3.0       3.0  
Expected volatility     109.55 %     62.03 %     74.28 %     74.28 %
Call option value   $ 2.82     $ 1.19     $ 0.90     $ 0.81  
Risk-free interest rate     0.59 %     0.15 %     1.10 %     1.10 %
Dividends     0.00 %     0.00 %     0.00 %     0.00 %

 

    December 31, 2014     December 31, 2014     December 31, 2014     December 31, 2014  
Common stock closing price   $ 1.73     $ 1.73     $ 1.73     $ 1.73  
Conversion per share price   $ 1.49     $ 1.47     $ 1.26     $ 1.26  
Conversion shares     2,008,032       340,020       199,177       77,061  
Expected life (in years)     1.6       0.2       2.9       3.0  
Expected volatility     63.72 %     65.63 %     74.28 %     74.28 %
Call option value   $ 0.64     $ 0.35     $ 0.77     $ 0.78  
Risk-free interest rate     0.67 %     0.40 %     1.10 %     1.10 %
Dividends     0.00 %     0.00 %     0.00 %     0.00 %

Schedule of Assets Acquired and Liabilities Assumed Recorded At Estimated Fair Values

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:

 

    2013 Acquisitions  
                         
    ARB     WEW     JF     Total  
Consideration paid:                                
Common stock   $ 3,611,126     $ -     $ -     $ 3,611,126  
Warrants     1,710,077       -       -       1,710,077  
Cash     -       3,150,000       590,000       3,740,000  
Total consideration paid     5,321,203       3,150,000       590,000       9,061,203  
                                 
Current assets, excluding cash     281,574       151,546       42,206       475,326  
Property and equipment     3,000,122       20,493       242,531       3,263,146  
Goodwill     2,550,611       3,159,500       425,151       6,135,262  
Trademark/trade name/franchise fee     1,784,443       -       1,010,000       2,794,443  
Deposits and other assets     98,035       -       -       98,035  
Total assets acquired, less cash     7,714,785       3,331,539       1,719,888       12,766,212  
Liabilities assumed     (1,490,288 )     (372,824 )     (282,317 )     (2,145,429 )
Deferred tax liabilities     (956,000 )     -       (384,000 )     (1,340,000 )
Non-controlling interest     -       -       (463,571 )     (463,571 )
Common stock and warrants issued     (5,321,203 )     -       -       (5,321,203 )
Cash paid     -       (3,150,000 )     (590,000 )     (3,740,000 )
Cash received in excess of cash paid   $ 52,706     $ 191,285     $ -     $ 243,991  

 

    2014 Acquisitions  
    Hooters           Hooters Australia     The        
    Pacific NW     Spoon     April 1, 2014     July 1, 2014     Burger Co.     Total  
Consideration paid:                                                
Common stock   $ 2,891,156     $ 828,750     $ -     $ -     $ 300,000     $ 4,019,906  
Warrants     978,000       280,400       -       123,333       -       1,381,733  
Assumption of debt     -       -       -       5,000,000       -       5,000,000  
Cash     -       -       100,000       -       250,000       350,000  
Total consideration paid     3,869,156       1,109,150       100,000       5,123,333       550,000       10,751,639  
                                                 
Current assets, excluding cash     112,078       89,817       377,296       47,777       9,926       636,894  
Property and equipment     2,731,031       391,462       2,934,307       1,603,557       284,795       7,945,152  
Goodwill     1,951,909       698,583       -       8,487,138       256,379       11,394,009  
Trademark/trade name/franchise fee     60,937       -       277,867       220,500       -       559,304  
Deposits and other assets     20,275       5,193       90,371       20,186       -       136,025  
Total assets acquired, less cash     4,876,230       1,185,055       3,679,841       10,379,158       551,100       20,671,384  
Liabilities assumed     (1,009,348 )     (97,541 )     (1,560,710 )     (1,496,536 )     (1,100 )     (4,165,235 )
Non-controlling interest     -       -       (993,999 )     (3,759,289 )     -       (4,753,288 )
Chanticleer equity     -       -       (1,028,749 )     -       -       (1,028,749 )
Common stock and warrants issued     (3,869,156 )     (1,109,150 )     -       (123,333 )     (300,000 )     (5,401,639 )
Assumption of debt     -       -       -       (5,000,000 )     -       (5,000,000 )
Cash paid     -       -       (100,000 )     -       (250,000 )     (350,000 )
Cash received in excess of cash paid   $ 2,274     $ 21,636     $ 3,617     $ -     $ -     $ 27,527  

Schedule of Business Combination Pro Forma Information

The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated, or which may result in the future.

 

    Years Ended  
    December 31,  
    2014     2013  
             
Total revenues   $ 34,531,238     $ 31,949,925  
Loss from continuing operations     (5,845,064 )     (6,276,055 )
Loss from discontinued operations     (920,960 )     (25,215 )
Loss attributable to non-controlling interest     (247,705 )     (264,022 )
Net loss   $ (6,092,769 )   $ (6,540,077 )
Net loss per share, basic and diluted   $ (0.96 )   $ (1.50 )
Net loss per share, discontinued operations   $ (0.15 )   $ (0.01 )

Schedule of Business Combination Operating Income Loss

The following table includes information from the Company’s 2013 acquisitions for the year ended December 31, 2013:

 

    2013 Acquistions  
    ARC     Just Fresh     WEW     Total  
                         
                         
Revenues   $ 701,742     $ 182,091     $ 560,614     $ 1,444,447  
                                 
Cost of sales     282,454       53,964       197,169       533,587  
Other expenses     787,757       179,109       274,021       1,240,887  
                                 
Operating income (loss)   $ (368,469 )   $ (50,982 )   $ 89,424     $ (330,027 )

 

The following table includes information from the Company’s 2014 acquisitions for the year ended December 31, 2014:

 

    2014 Acquistions  
    Hooters Pacific NW     Spoon     Hooters Australia     The Burger Co.     Total  
                               
                               
Revenues   $ 4,382,492     $ 1,207,688     $ 5,613,381     $ 81,539     $ 11,285,100  
                                         
Cost of sales     1,239,726       529,974       1,564,198       33,305       3,367,203  
Other expenses     3,340,963       915,661       4,330,224       30,847       8,617,695  
                                         
Operating income (loss)   $ (198,197 )   $ (237,947 )   $ (281,041 )   $ 17,387     $ (699,798 )