Related Party Transactions |
12 Months Ended |
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Jan. 01, 2024 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions The Company is affiliated with various entities through common control and ownership.
The accompanying consolidated balance sheets reflect amounts related to periodic advances between the Company and these entities for working capital and other needs as due from related companies or due to related companies, as appropriate. During 2023, these amounts due were settled as a result of the John Rosatti settlement agreement disclosed in Note 7, “Commitments and Contingencies,”. These advances were unsecured and non-interest bearing. The fair value of consideration paid in the John Rosatti settlement was $0.9 million and included $0.5 million in cash and the issuance of 200,000 shares of Company common stock valued at $0.4 million. The fair value of net liabilities assumed in the transaction was $0.1 million which included lease liabilities and operating assets and liabilities including property and equipment of two stores, net of pre-existing liabilities accrued. There was no amount due from related companies as of January 1, 2024; there was $0.3 million of amounts due from related companies as of January 2, 2023 in other assets on the Company’s consolidated balance sheets.
For the year ended January 2, 2023, the Company received royalty revenue from the two operating stores that were transferred on January 23, 2023 as a result of the settlement with the significant stockholder totaling approximately $0.1 million.
The Company leased building space for its former corporate office from an entity under common ownership with a significant stockholder. This lease had a 36 month term, effective January 1, 2020. In January 2022, the Company exercised its right to terminate this lease effective as of July 2022. There was no rent expense the year ended January 1, 2024; for the year ended January 2, 2023, rent expense was approximately $0.1 million.
The Company leases building space for its corporate office from an entity controlled by the Company’s Executive Chairman of the Board (the “Executive Chairman”). In February 2022, the Company amended this lease agreement to, among other things, (1) extend the term to 10 years beginning March 1, 2022 and expiring in 2032, and (2) expand its square footage from approximately 16,500 square feet to approximately 18,500 square feet. For the years ended January 1, 2024 and January 2, 2023, rent expense was approximately $0.7 million and $0.5 million, respectively.
The Company had independent contractor agreement with a corporation (the “Consultant”) for which the Chief Operating Officer (the “Consultant Principal”) of Lionheart Capital, LLC, an entity controlled by the Company’s Executive Chairman, serves as President. Pursuant to the terms of the agreements, the Consultant provided certain strategic advisory services to the Company in exchange for total annual cash compensation and expense reimbursements of $0.1 million, payable monthly. Cash compensation for the Consultant Principal was $0.1 million for each of the years ended January 1, 2024 and January 2, 2023. The engagement ended in September of 2023.
On January 3, 2023 the Company awarded the Consultant Principal a $0.1 million bonus in connection with the Company’s amendment and extension of its Credit Facility and granted the Consultant Principal 38,000 unrestricted shares of common stock of the Company. On January 3, 2022, the Company granted the Consultant Principal approximately 38,000 unrestricted shares of common stock of the Company. The Company recorded share-based compensation of $0.2 million for the year ended January 1, 2024, and $0.4 million for the year ended January 2, 2023.
On February 24, 2023, the Company entered into a note payable with an affiliate of a significant stockholder for $5.1 million in debt proceeds, and $10.0 million in assumption of existing term loan amounts. See Note 9, “Debt”, for further information.
On June 3, 2023, the Company entered into a stock purchase agreement with an investing entity for the sale of 2,868,853 shares of Company common stock at an issuance price of $1.22 per share for total proceeds of $3.4 million. Upon the execution of this agreement, the investing entity became a holder of approximately 11% of the Company’s outstanding common stock. During the year ended January 1, 2024, the Company entered into four franchise agreements with an affiliate of this entity. The Company received royalty revenue from such franchises related to a significant stockholder totaling approximately $0.1 million for the year ended January 1, 2024.
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