PART I. FINANCIAL INFORMATION Presents unaudited consolidated financial statements, MD&A, market risk disclosures, and internal controls and procedures Item 1. Consolidated Financial Statements (Unaudited) Presents unaudited consolidated financial statements for FAT Brands Inc. as of March 28, 2021, detailing financial position, performance, and cash flows, with explanatory notes Consolidated Balance Sheets As of March 28, 2021, total liabilities exceeded total assets, resulting in a $45.6 million stockholders' deficit, a deterioration from fiscal 2020 Consolidated Balance Sheet Summary (in thousands) | Balance Sheet Item | March 28, 2021 | December 27, 2020 | | :--- | :--- | :--- | | Total Current Assets | $21,730 | $24,423 | | Total Assets | $118,093 | $121,144 | | Total Current Liabilities | $75,899 | $73,177 | | Total Liabilities | $163,669 | $163,027 | | Total Stockholders' Deficit | ($45,576) | ($41,883) | Consolidated Statements of Operations Q1 2021 total revenue increased 50.3% to $6.6 million due to acquisition, with net loss remaining $2.4 million due to higher expenses Q1 2021 vs Q1 2020 Statement of Operations (in thousands, except per share data) | Metric | Q1 2021 (13 weeks ended Mar 28) | Q1 2020 (13 weeks ended Mar 29) | Change (YoY) | | :--- | :--- | :--- | :--- | | Total Revenue | $6,649 | $4,423 | +50.3% | | Income (loss) from operations | $104 | ($578) | Improved | | Net Loss | ($2,432) | ($2,370) | +2.6% | | Basic and diluted loss per common share | ($0.20) | ($0.20) | No Change | - The significant increase in revenue was primarily due to the inclusion of results from the Johnny Rockets acquisition, which was completed in September 2020207 Consolidated Statements of Cash Flows Q1 2021 net cash used in operating activities improved to $1.2 million, with total cash and restricted cash decreasing by $2.3 million Q1 2021 vs Q1 2020 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2021 (13 weeks ended Mar 28) | Q1 2020 (13 weeks ended Mar 29) | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,246) | ($3,371) | | Net cash used in investing activities | ($573) | ($3,413) | | Net cash (used in) provided by financing activities | ($477) | $12,473 | | Net (decrease) increase in cash and restricted cash | ($2,296) | $5,689 | Notes to Consolidated Financial Statements Details significant corporate events, accounting policies, debt structure, and subsequent events like the new securitization and PPP loan forgiveness - In December 2020, the company merged with its parent, Fog Cutter Capital Group Inc. (FCCG), to simplify its corporate structure and gain direct access to FCCG's net operating loss carryforwards (NOLs)606164 - The company acquired Johnny Rockets in September 2020 for approximately $24.7 million, funded by an increase in its securitization facility, adding $2.26 million in Q1 2021 revenue7173 - Subsequent to quarter end, in April 2021, a new securitization offering raised approximately $144.5 million, with $57 million net proceeds used to repay debt, alleviating going concern doubts31184187 - In April 2021, the company received confirmation that the entire balance of its Paycheck Protection Program (PPP) loans, plus accrued interest, had been forgiven191 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2021 revenue growth from the Johnny Rockets acquisition, stable net loss due to higher G&A, and improved post-quarter liquidity from a new securitization Q1 2021 vs Q1 2020 Results Summary (in thousands) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Total Revenues | $6,649 | $4,423 | | General and administrative expenses | $4,926 | $3,531 | | Income (loss) from operations | $104 | ($578) | | Net Loss | ($2,432) | ($2,370) | - The $2.2 million increase in revenue reflects the inclusion of revenues from the Johnny Rockets acquisition, completed in September 2020207 - General and administrative expenses increased by $1.4 million, primarily due to a $587,000 increase in compensation expense and $489,000 in higher legal fees209 - A new securitization offering in April 2021 resulted in net proceeds of approximately $57 million, used to repay debt and alleviate going concern doubts217218 Quantitative and Qualitative Disclosures About Market Risk The company has indicated that this section is not required for smaller reporting companies - As a smaller reporting company, FAT Brands is not required to provide these disclosures260 Controls and Procedures Management concluded disclosure controls and procedures were ineffective as of March 28, 2021, due to deficiencies, and is implementing remediation steps - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 28, 2021262 - Identified deficiencies relate to the segregation of duties and the financial close process262 - The company is reviewing controls and implementing additional procedures, including identifying additional financial staff and consultants, to remedy the weaknesses263 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered equity sales, other information, and exhibits Legal Proceedings The company is involved in two notable legal cases, including environmental contamination and an indemnification claim, with $5.68 million accrued for legal matters - In the Stratford Holding LLC case, property owners seek damages of $12 million to $22 million for alleged environmental contamination, with trial scheduled for November 2021267 - In the SBN FCCG LLC case, the company has an unpaid settlement balance of $480,000268 - The company has accrued a total of $5.68 million for these specific matters and other ordinary course legal proceedings as of March 28, 2021269 Risk Factors No material changes to risk factors have occurred since the company's most recent Annual Report on Form 10-K - The company states there have been no material changes in risk factors from its most recent Annual Report270 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None reported for the period271 Other Information Subsequent to quarter end, the 2020 Series B Offering Warrants exercise price was adjusted downward due to a cash dividend - On May 3, 2021, the exercise price of the 2020 Series B Offering Warrants was reduced from $5.00 to $4.8867 per share due to a cash dividend on common stock274 Exhibits Lists exhibits filed with Form 10-Q, including new securitization agreements and CEO/CFO certifications Signatures This section contains the required signatures for the Form 10-Q filing
FAT Brands(FATBB) - 2021 Q1 - Quarterly Report