Revenue Performance - Total revenues for the three months ended June 30, 2020, were $834,686, a 39% decrease from $1,383,416 in the same period of 2019, primarily due to a decline in franchise royalties and temporary closures of corporate stores due to Covid-19 [154]. - Total revenues for the six months ended June 30, 2020, were $2,269,740, a decrease of 11.61% from $2,567,790 in the same period of 2019 [172]. - Restaurant sales, net of discounts, increased by $280,766, or 17.4%, to $1,897,366 for the six months ended June 30, 2020, compared to $1,616,600 in 2019 [173]. - Retail store revenues for the six months ended June 30, 2020 were $1,897,366, compared to $1,616,600 in 2019, indicating a growth of approximately 17.4% [207]. Franchise Performance - Franchise royalties and fees decreased to $142,293 for the three months ended June 30, 2020, from $529,085 in 2019, a decline of $386,792 attributed to fewer franchisee locations and lower sales volumes [156]. - Franchise royalties and fees decreased by $555,473 to $318,324 for the six months ended June 30, 2020, primarily due to fewer franchisee locations and lower sales [174]. - Franchise revenue from royalties for the six months ended June 30, 2020 was $173,779, down from $398,360 in 2019, representing a decline of approximately 56.3% [209]. - Franchise fee revenues for the six months ended June 30, 2020 were $89,630, compared to $326,517 in 2019, reflecting a decrease of approximately 72.6% [210]. - Contributions from franchisees to the advertising fund for the six months ended June 30, 2020 were $54,050, down from $77,393 in 2019, a decline of approximately 30.2% [214]. Operating Costs and Expenses - Total operating costs and expenses increased to $9,020,229 for the six months ended June 30, 2020, from $3,942,088 in 2019, resulting in a loss from operations of $6,750,489 [184]. - General and administrative expenses rose to $1,213,851, or 145.4% of total revenues, for the three months ended June 30, 2020, compared to $966,539, or 69.9% in 2019, an increase of $247,312 [166]. - General and administrative expenses surged to $6,343,254, or 279.5% of total revenues, compared to $2,070,575, or 80.6% of total revenues in 2019 [183]. Profitability and Losses - Loss from operations for the three months ended June 30, 2020, was $1,393,936, or 167% of total revenues, compared to a loss of $561,102, or 40.6% in 2019, reflecting an increase of $832,834 [167]. - Net loss for the three months ended June 30, 2020, was $1,501,425, a decrease of $41,181 from $1,542,606 in the same period of 2019, primarily due to a decrease in other expenses [169]. - Net loss for the six months ended June 30, 2020, increased by $3,967,603 to $6,993,688, compared to a net loss of $3,026,085 in 2019 [186]. Cash Flow and Financing - Cash balance as of June 30, 2020, was $3,161,195, up from $478,854 at the end of 2019 [187]. - The company utilized $3,834,131 of cash in operating activities during the six months ended June 30, 2020, indicating a need for additional financing [188]. - Net cash used in operating activities for the six months ended June 30, 2020 was $3,834,131, compared to $2,013,398 for the same period in 2019, reflecting a net loss of $6,993,688 [196]. - Net cash provided by financing activities for the six months ended June 30, 2020 was $6,680,057, an increase from $5,354,000 in 2019, primarily due to $6,780,000 from an offering [198]. - The company received a Paycheck Protection Program loan of $866,300 on May 9, 2020, with a fixed annual interest rate of 1.00% [191]. Financial Condition - The company had an accumulated deficit of $60,088,290 as of June 30, 2020, and expects to continue incurring operating and net losses for the foreseeable future [139]. - The company has an accumulated deficit of $60,088,290 as of June 30, 2020, raising substantial doubt about its ability to continue as a going concern [188]. - The adoption of Topic 606 resulted in an adjustment of $875,902 in accumulated deficit and deferred revenues [206]. - The company has no off-balance sheet arrangements that materially affect its financial condition [221].
Sadot (SDOT) - 2020 Q2 - Quarterly Report