Capital Stock

9 Months Ended

Sep. 28, 2014

Stockholders Equity Note [Abstract]

Capital Stock

Note 9.  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 September 28, 2014 and December 29, 2013, respectively, of which 6,312,464 and 5,659,418 shares of common stock were outstanding at September 28, 2014 and December 29, 2013, respectively.

Reverse Stock Split

On October 24, 2013, the Company filed articles of amendment to its articles of incorporation, as amended, to implement a one-for-seven reverse stock split of its shares of Class A common stock.  The ratio for the reverse stock split was determined by the Company’s board of directors pursuant to the approval of the Company’s stockholders at a special meeting of stockholders that was held on October 21, 2013.  At that meeting, the Company’s stockholders approved a proposal to amend the Company’s articles of incorporation, as amended, to complete a reverse stock split of the Company’s common stock at any whole number ratio of between 1-for-5 and 1-for-50, with the final decision of whether to proceed with the reverse stock split and the exact ratio and timing of the reverse stock split to be determined by the Company’s board of directors, in its discretion, following stockholder approval, but not later than December 31, 2014.  The reverse stock split was completed on November 4, 2013, on which date the Company’s common stock began trading on the OTCQB market tier of the “pink sheets” maintained by the OTC Markets Group, Inc. on a post-split basis.

As a result of the reverse stock split, every seven shares of the Company’s issued and outstanding common stock were automatically combined and converted into one issued and outstanding share of common stock without any further action on the part of the Company’s stockholders.   The number of shares authorized for issuance and the par value of the shares did not change.  Any fractional shares resulting from the reverse stock split were rounded up to the nearest whole share.  The reverse stock split did not affect any stockholder’s percentage ownership interest or proportionate voting power or other rights in the Company’s common stock, except to the extent that any stockholder received whole shares in lieu of fractional shares.

Stock Issuances

On January 1, 2014, Richard W. Akam, the Company’s Chief Executive Officer, Chief Operating Officer and Secretary, earned 28,433 shares of common stock under the terms of his employment agreement with the Company.  The Company recognized $920 of stock compensation expense in connection therewith during the nine-month period ended September 28, 2014.  A description of the employment agreement is set forth herein under Note 6. Commitments and Contingencies – Employment Agreements.

On January 20, 2014, the Company purchased a 50% ownership interest in Paradise on Wings in exchange for $400,000 in cash and 235,295 shares of common stock.  A description of the investment in Paradise on Wings is set forth herein under Note 4. Investment in Paradise on Wings.

On January 21, 2014, the Company issued a total of 326,017 shares of common stock to a limited number of accredited investors upon Blue Victory’s conversion of $570,529 of principal and accrued but unpaid interest outstanding under the credit facility entered into between the Company and Blue Victory in September 2013.  A description of the credit facility is set forth herein under Note 8. Debt Obligations.

On February 27, 2014, the Company entered into a securities purchase agreement with Seenu G. Kasturi pursuant to which Mr. Kasturi agreed to purchase 206,061 shares of the Company’s common stock for $340,000.  The price per share of common stock paid by Mr. Kasturi was equal to the closing price of the Company’s common stock on the OTCQB on the day immediately preceding the date the transaction was completed.  Mr. Kasturi paid for the shares through the issuance of a promissory note in favor of the Company in the amount of $340,000.  The promissory note is unsecured, accrues interest at a rate of 6% per annum, and has a maturity date of March 31, 2015.  The principal and interest are payable in four equal quarterly installments of $85,000 beginning June 30, 2014.  The investment was reflected in stock subscriptions receivable at September 28, 2014.  As of September 28, 2014, Mr. Kasturi had paid $170,000 to the Company under the promissory note.