What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-04-15 compared with 2020-05-29 · 416 added, 356 removed, 313 unchanged (71% of the section changed)

FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES

OF EQUITY SECURITIES.

FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

in our common stock are currently reported under the symbol “GRIL”

on the NASDAQ market as of May 29, 2020.

on the NASDAQ market as of April 15, 2021.

transfer agent is Computershare, Inc, 462 South 4th Street, Suite 1600, Louisville, KY 40202, and its telephone number is 1-877-373-6374.

of May 29, 2020, there were 652 holders of record of our common stock.

of April 15, 2021, there were 908 holders of record of our common stock.

have never declared or paid any cash dividends on our common stock.

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Compensation Plan Information

following table provides information, as of May 29, 2020 with respect to equity securities authorized for issuance under

following table provides information, as of April 15, 2021 with respect to equity securities authorized for issuance under

compensation plans:

Plan Category

Number of Securities to be

Issued Upon Exercise of Outstanding Options under the Plan (a)

Weighted-Average Exercise

Price of Outstanding Options under the Plan (b)

of Securities to be Issued Upon Exercise of Outstanding Options under the Plan (a)

Weighted-Average

Exercise Price of Outstanding Options under the Plan (b)

of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in Column

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Equity compensation plans

approved by security holders

Equity compensation plans not approved

by security holders

Sales of Equity Securities and Use of Proceeds

Senior Secured Convertible Promissory Notes –

September 2018

September 12, 2018 through December 31, 2018, the Company entered into Securities Purchase Agreements with several accredited

investors (the “September 2018 Investors”) providing for the sale by the Company to the Investors of 15% Senior Secured

Convertible Promissory Notes in the aggregate amount of $2,165,000 (the “15% Notes”), which included $635,000 in debt

converted into Notes (the “September 2018 Offering”).

Further, from January 1, 2019 through May 23, 2019, the Company

received an additional $2,973,000, of which $100,000 was to related parties, in funding from the September 2018 Investors.

total the Company received an aggregate amount of $5,138,000 from the September 2018 Investors.

In addition to the 15% Notes,

the September 2018 Investors also received warrants to purchase common stock of the Company (the “Senior Warrants”)

to acquire an aggregate of 366,997 shares of common stock of the Company.

The Senior Warrants are exercisable for five

years at an exercise price of $8.40.

The September 2018 Investors may exercise the Senior Warrants on a cashless basis and the

number of shares of common stock issuable upon exercise of the Senior Warrants may be adjusted in the event the September 2018

Investors are required to sign a lock up agreement in connection with a public offering.

December 5, 2019, an aggregate of $4,688,000 15% Notes, were amended and converted, into 2,309,500 shares of our common.

pursuant to the Conversion Agreement the related warrants were finalized providing for warrants to acquire 1,154,750 shares of

common stock.

In addition, the noteholders also agreed to enter into a Lock-Up Agreement providing that the shares of common stock

will be locked up for a period of one year.

The Company has provided the noteholders with piggyback registration rights.

in the event the Company did not close on its underwritten public offering (the “Offering”) within ninety (90) days

of the Conversion Agreements, the issuance of the conversion shares shall be null and void and the Conversion Agreements and the

related addendum shall be of no further force or effect and the parties hereto agree to undertake any necessary actions to ensure

that the conversion shares are returned to the Company for cancellation and the convertible notes are delivered to the Holder

upon the Company’s receipt of the certificates representing the conversion shares.The Company closed on the Offering in

February 2020.

holders of the remaining $450,000 in 15% Notes have agreed to refrain from converting the 15% Notes in exchange for the Company’s

agreement to pay such debt no later than February 15, 2020.

In the event the Company does not payoff the remaining 15% Notes,

such notes are convertible at a per share price of 25.0% of the per share offering price paid by investors in the public offering

in conjunction with an uplisting to a national exchange.

However, in the event the holder is required to sign a Lock-Up Agreement

as part of the public offering in conjunction with an uplisting to a national exchange, then the conversion price shall be 17.5%

of the per share offering price paid by investors in the public offering in conjunction with an uplisting to a national exchange.

We are registering 214,285 shares of common stock underlying the warrants held by the holders of the 15% Notes that did not convert.

Secured Convertible Promissory Notes –

April 16, 2019 through September 20, 2019, the Company and its newly formed wholly owned subsidiary, Muscle Maker USA, Inc., a

Texas corporation (“Muscle USA”), entered into Securities Purchase Agreements with several accredited investors (the

“April 2019 Investors”) providing for the sale by the Company to the April 2019 Investors of 12% Secured Convertible

Promissory Notes in the aggregate amount of $3,500,000 (the “12% Notes”).

In addition to the 12% Notes, the April

2019 Investors also received Warrants to Purchase an aggregate of 125,000 share of common stock of the Company (the “April

2019 Warrants”) which equals 50% of the shares of common stock issuable upon conversion of the 12% Notes.

The April 2019

Warrants were exercisable for five years at an exercise price equal to 115% of the April 2019 Conversion Price (as defined below).

December 5, 2019, an aggregate of $3,425,000 12% Notes, were amended and converted, into 1,353,333 shares of our common.

pursuant to the Conversion Agreement the related warrants were finalized providing for warrants to acquire 676,667 shares of common

stock The holders of the remaining $75,000 in 12% Notes have agreed to refrain from converting the 12% Notes in exchange for the

Company’s agreement to pay such debt no later than February 15, 2020.

In the event the Company does not payoff the remaining

12% Notes, such notes are convertible at a per share price of $2.50 per share (the “April 2019 Conversion Price”);

provided, however, in the event the per share price of the Offering multiplied by fifty percent (50%) at the time of the Company

listing on a national exchange (the “Discounted Public Offering Price”) is less than $5.00 then the April 2019 Conversion

Price shall be reset to equal the lesser of (i) Discounted Public Offering Price or (ii) a price per share equal to a $20 million

Month Convertible Promissory Notes

the period from March 17, 2017 to August 15, 2017, the Company issued an aggregate of $1,400,000 10% Convertible Promissory Note,

as amended and extended on or about January 23, 2019, with a stated interest rate of 10% over the original 60-day term to be upon

the earlier of (a) January 24, 2020 or (b) the first day the Company’s stock is publicly traded.

Except for $25,000 in principal

held by one holder of the 10% Convertible Promissory Notes, all interest due and payable on the 10% Convertible Notes converted

into 392,850 shares of common stock.

In addition, pursuant to the Conversion Agreement the related warrants were finalized providing

for warrants to acquire 200,000 shares of common stock.

We are registering 12,500 shares of common stock underlying the warrants

held by the 10% Convertible Promissory Note that did not convert.

April 2019, the Company repaid convertible notes payable in the aggregate principal amount of $150,000, of which $100,000 belong

to related parties.

In addition, the company issued 15,952 of the company’s common stock as payment for the interest incurred

on the convertible notes payable repaid in the aggregate amount of $111,666.

July 2019, the Company entered into a Consulting Agreement, effective as of July 1, 2019, with an advisory group to provide strategic

business services in connection with a future offering.

The term of the agreement is for one year.

Pursuant to the terms of the

agreement, the Company issued 41,426 restricted shares of common stock and agreed to pay a cash fee of $75,000 upon signing the

August 5, 2019 the Company authorized the issuances of an aggregate of 17,005 shares of common stock, valued at a $7.00 per share,

to the members of the board of directors.

October 19, 2019 the Company authorized the issuances of an aggregate of 3,748 share of common stock to the members of the board

of directors.

As of December 31, 2019 the Company accrued a total of $59,864 related to board compensation.

December 5, 2019, an aggregate of $4,343,000 SPA Notes, were amended and converted, into 2,171,500 shares of our common with an

amended conversion price of $2.00.

In addition, per the amendments the Company modified the Original Warrants issued of 303,071

with an exercise price of $8.40 to warrants to acquire an aggregate of 1,085,750 shares of common stock of the Company with an

exercise price of $2.40.

December 5, 2019, a $345,000 SPA Notes, was amended and converted, into 138,000 shares of our common stock with an amended conversion

price of $2.50.

In addition, per the amendments the Company modified the Original Warrants issued of 24,643 with an exercise price

of $8.40 to warrants to acquire an aggregate of 69,000 shares of common stock of the Company with an exercise price of $3.00.

December 5, 2019, an aggregate of $3,175,000 April 2019 Notes, were amended and converted, into 1,270,000 shares of our common

stock with an amended conversion price of $2.50.

In addition, per the amendments the Company modified the original warrants issued

of 113,393 with an exercise price of $16.10 to warrants to acquire an aggregate of 635,000 shares of common stock of the Company

with an exercise price of $2.88.

December 5, 2019, a $250,000 April 2019 Notes, was amended and converted, into 83,333 shares of our common stock with an amended

conversion price of $3.00.

In addition, per the amendment the Company modified the original warrants issued of 8,929 with an exercise

price of $16.10 to warrants to acquire an aggregate of 41,667 shares of common stock of the Company with an exercise price of

December 5, 2019, an aggregate of $1,375,000 of our original other coverable notes, were amended and converted, into 392,850 shares

of our common stock with an amended conversion price of $3.50.

In addition, per the amendments the Company modified the original

warrants issued of 10,713 with an exercise price of $65.31 to warrants to acquire an aggregate of 200,000 shares of common stock

of the Company with an exercise price of $3.50.

of December 31, 2019, the Company issued 500 shares to the consultant pursuant to the agreement.

of December 31, 2019, the company issued an aggregate of 55,714 shares of common stock pursuant to a consulting agreement and

paid $280,000 in cash pursuant to the terms of the agreement.

the year ended December 31, 2018, the Company sold 180,000 shares of common stock of the company to various investors at a purchase

price of $1.00 per share providing $180,000 of proceeds to the Company.

offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities

Company rescinded the issuance of 100,000 warrants and 300,000 shares of the Company’s common stock in July 2020 that were

issued in the first quarter of 2020, pursuant to a consulting agreement.

Although the shares were duly authorized and validity

issued, the Company rescinded the stock and warrants as it did not have the required amount of equity authorized under its 2019

Incentive Stock Plan.

Following the rescission of the warrants and shares of common stock, the consultant threatened to commence

legal proceedings against the Company and demanded the Company to re-issue the 300,000 shares of common stock and 100,000 warrants

and to provide the Consultant registration rights.

In order to settle and avoid the time commitment and expense associated with

potential litigation, the Company and the Consultant entered into a Settlement Agreement (“Settlement Agreement”)

on August 11, 2020 whereby the Company agreed to issue 300,000 shares of common stock within 5 five days of entering into the

Settlement Agreement.

These shares will not be issued subject to any equity plan.

The Company agreed to register the shares of

common stock in consideration of a release by the Consultant.

In addition, as part of the Settlement Agreement the Company will

issue 100,000 stock options upon the approval of the 2020 Equity Incentive Plan.

February 24, 2020, the Company entered into a Consulting Agreement with consultants with experience in the area of corporate finance,

investor communication and financial and investor public relations.

The term of the agreement is for two months from the effective

date on February 27, 2020 and expires on April 27, 2020.

Pursuant to the terms of the agreement, the Company agreed to pay $107,500

in cash per month and to issue 10,000 shares of the Company’s common stock.

In the event the Company elects to not extend

the term of the Agreement, it is to notify the consultants within five days of the conclusion of the 60-day term.

February 17, 2020 the Company authorized the issuance of an aggregate of 25,616 share of common stock to the members of the board

of directors as compensation earned through the end of the fourth quarter of 2019.

February 18, 2020, the Company issued an aggregate of 216,783 shares of common stock of the Company to the executive team pursuant

to their employment agreements as part of completing the initial public offering.

On August 11, 2020, the shares were returned

to the Company for cancellation.

March 31, 2020, the Company issued 75,000 shares of common stock of the Company to a consultant that assisted the Company in area

of investor relations and capital introduction.

April 21, 2020 the Company authorized the issuance of an aggregate of 25,616 share of common stock to the members of the board

of directors as compensation earned through the end of the fourth quarter of 2019.

April 21, 2020, the Company issued an aggregate of 51,105 shares of common stock in exchange for accrued interest earned on convertible

debt with an aggregate fair value of $357,735.

June 1, 2020, the Company issued 5,000 shares of common stock of the Company to a consultant.

June 5, 2020, the Company issued 15,000 shares of common stock of the Company to a digital marketing consultant in exchange for

certain services with an aggregate fair value of $46,050.

June 24, 2020 the Company authorized the issuance of an aggregate of 4,340 shares of common stock to the members of the board

of directors as compensation earned through the end of the first quarter of 2020.

August 21, 2020, the Company issued an aggregate of 53,571 shares of common stock of the Company to various consultants with an

aggregate fair value of $200,705.

November 5, 2020, the Company issued 53,763 shares of common stock of the Company to a consultant with a fair value of $100,000.

November 30, 2020, the Company issued 82,500 shares of common stock of the Company to a consultant with a fair value of $176,138.

The offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities

Act in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not

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person and had adequate access, through employment, business or other relationships, to information about us.

February 3, 2021, the Company issued an aggregate of 20,000 shares of common stock of the Company to a digital marketing consultant

with an aggregate fair value of $42,600.

February 3, 2021, the Company issued an aggregate of 16,126 shares of common stock of the Company to the members of the board

of directors as compensation earned through the end of the fourth quarter of 2020.

February 7, 2021, the Company entered into a Consulting Agreement with consultants as a strategy business consultant to provide

the Company with business and marketing advice as needed.

The term of the agreement is for five months from the effective date

on February 7, 2021.

Pursuant to the terms of the agreement the Company agreed to pay the consultant a total of 100,000 shares

of the Company’s common stock.

The Company issued 60,000 shares of common stock upon the effective date of the agreement

with the remaining 40,000 to be issued upon the successful completion of the agreement.

February 11, 2021, the Company issued an aggregate of 221,783 shares of common stock the Company to various executives and an

employee pursuant to the approval of the compensation committee under the 2020 Plan.

March 8, 2021, the Company entered into a Consulting Agreement with consultants as a strategy business consultant to provide the

Company with financial and business.

The term of the agreement is for five months from the effective date on March 8, 2021.

to the terms of the agreement the Company agreed to pay the consultant a total of 100,000 shares of the Company’s common

The Company issued 70,000 shares of common stock upon the effective date of the agreement with the remaining 30,000 to

be issued upon the successful completion of the agreement.

March 22, 2021, the Company entered into a Consulting Agreement with consultants with experience in the area of investor relations

and capital introductions.

The term of the agreement is for six months from the effective date on March 22, 2021.

the terms of the agreement the Company agreed to pay $250,000 in cash for ancillary marketing, to be paid out at the Company’s

In addition, the Company issued 150,000 shares of the Company’s common stock as a commencement incentive which

is fully earned by entering into the agreement.

March 25, 2021, the Company entered into an asset purchase agreement with Superfit Foods, LLC a Florida limited liability company

and Superfit Foods LLC, a Nevada limited liability company (the “Superfit Acquisition”).

The purchase price of the

assets and rights was $1,150,000.

The purchase price is payable as follows:

$475,000 that was paid at closing and the remaining

$625,000 paid in 268,240 shares of common stock to be held for six months before being registered.

March 31, 2021, the Company authorized the issuance of an aggregate of 12,711 shares of common stock to the members of the board

of directors as compensation earned during the first quarter of 2021.

April 7, 2021, the Company entered into a Securities Purchase Agreement with an accredited investor (the “Securities Purchase

Agreement”) for a private placement (the “Private Placement”) pursuant to which the investor agreed to purchase

from the Company for an aggregate purchase price of approximately $10,000,000 (i) 1,250,000 shares of common stock of the Company

(ii) a common stock purchase warrant to purchase up to 4,115,227 shares of Common Stock (the “Common Warrant”) and

(iii) a pre-funded common stock purchase warrant to purchase up to 2,865,227 shares of Common Stock (the “Pre-Funded Warrant”).

Each share and accompanying Common Warrant is being sold together at a combined offering price of $2.43 per share and Common Warrant,

and each Pre-Funded Warrant and accompanying Common Warrant is being sold together at a combined offering price of $2.42 per Pre-Funded

Warrant and accompanying Common Warrant.

The Pre-Funded Warrant is immediately exercisable, at a nominal exercise price of $0.01

per share, and may be exercised at any time until the Pre-Funded Warrant is fully exercised.

The Common Warrant will have an exercise

price of $2.43 per share, are immediately exercisable and will expire five and one-half (5.5) years from the date of issuance.

The Private Placement closed on April 9, 2021.

Purchases of Equity Securities

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operate under the name Muscle Maker Grill as a franchisor and owner-operator of Muscle Maker Grill and Healthy Joe’s restaurants.

As of December 31, 2019, our restaurant system included ten company-owned restaurants and twenty-eight franchised restaurants.

In addition to these restaurants, the Company also operates with the following brand names under our ghost kitchen model:

Plan AF, Muscle Maker Burger Bar, Bowls Deep, Burger Joe’s, Wrap It Up, Salad Vibes and Gourmet Sandwich.

Our direct mail

to consumer meal prep/plan program operates under the musclemakerprep.com website.

As of December 31, 2020, our restaurant system

included sixteen company-owned restaurants and sixteen franchised restaurants.

In addition, the Company built four new location

on university campuses but due to Covid-19 restrictions have not yet open these locations but incurred expenses during the twelve

months ended December 31, 2021.

Maker Grill is a fast-casual restaurant concept that specializes in preparing healthy-inspired, high-quality, fresh, made-to-order

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restaurant concepts such as Muscle Maker Grill.

believe our healthier restaurant concept delivers a highly differentiated customer experience by combining the quality and hospitality

that customers commonly associate with our full service and fast casual restaurant competitors with the convenience and value

customers generally expect from traditional fast food restaurants.

The foundation of our brand is based on our core values of

quality, empowerment, respect, service and value.

believe our healthy-inspired restaurant concept delivers a highly differentiated customer experience by combining the quality

and hospitality that customers commonly associate with our full service and fast casual restaurant competitors with the convenience

and value customers generally expect from traditional fast food restaurants.

The foundation of our brand is based on our core

values of quality, empowerment, respect, service and value.

of December 31, 2020, we had an accumulated deficit of $63,193,707 and expect to continue to incur substantial operating

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Financial Statements for additional information describing the circumstances that led to the inclusion of this explanatory paragraph.

February 26, 2020, the Company entered into a Kitchen Services Agreement with a major delivery-only kitchen concept.

Services Agreement provides for ten locations in total with four initial locations starting in the Chicago market, two locations

in the Philadelphia market, one location in the Providence market, two locations in the Miami market and one location in the New

In addition, the Company has placed deposits for an additional five locations to be determined.

The Kitchen Services

Agreement provides the Company with access to the delivery-only locations for a one-year term with an automatic one-year renewal

unless terminated by either party.

The delivery-only locations are set up for third party delivery and provide that the Company

must pay monthly license fees, processing service fees and storage service fees.

The monthly license fees for the locations range

from $3,000 to $6,000.

The monthly license fees become due 14 days after the Company is granted access to the location.

the date of filing this report the Company has opened seven of the ten locations have been opened with the Miami and New York

locations anticipated to be opened in 2021.

company continued its expansion into non-traditional locations within the military.

The company opened a military location

in May 2020 at the Marine base Camp Elmore.

part of the non-traditional location growth strategy, the Company entered into an agreement and announced on June 1, 2020, its

expansion with the Northern Virginial Community College system to open 4 locations on various campus locations.

These locations

were built in 2020 with the anticipation of opening in the fall semester of 2020.

However, due to covid-19 restrictions, these

locations were temporarily closed and plan to re-open in summer of 2021 as students are allowed back on campus.

These locations

are based on a variable lease determined on monthly sales thus limiting the ongoing costs associated with these locations.

Company also has a lease agreement to build out a location on the Texas Tech Medical Center Campus in El Paso Texas.

We anticipate

building this location in 2021.

November 11, 2020, the company announced an agreement with Happy Meal Prep to offer Muscle Maker meal prep/plans to consumers

via direct- to-consumer shipments of over 40 meal prep/plan options.

This program allows shipments of up to a 250-mile

radius around participating locations increasing the total number of potential consumers who can enjoy Muscle Maker Grill meals.

The company plans on making a greater push in the direct-to-consumer market meal prep/plan strategy in 2021 as an alternate, non-traditional

approach to delivering or products to consumers.

company purchased two franchise locations in 2020.

One location was in Philadelphia and one location was in the Chelsea area of

company will continue to expand ghost kitchen options within existing Muscle Maker Grill restaurants to better leverage

labor, equipment, ingredients, etc.

This expansion allows greater consumer options and relies strictly on third-party delivery

This approach is distinctly different than the stand along ghost kitchen model in that these ghost kitchens are ran through

an existing Muscle Maker Grill location versus opening a stand along ghost kitchen.

Company rescinded the issuance of 100,000 warrants and 300,000 shares of the Company’s common stock in July 2020 that were

issued in the first quarter of 2020, pursuant to a consulting agreement.

Although the shares were duly authorized and validly

issued, the Company rescinded the stock and warrants as it did not have the required amount of equity authorized under its 2019

Incentive Stock Plan.

Following the rescission of the warrants and shares of common stock, the consultant threatened to commence

legal proceedings against the Company and demanded the Company to re-issue the 300,000 shares of common stock and 100,000 warrants

and to provide the Consultant registration rights.

In order to settle and avoid the time commitment and expense associated with

potential litigation, the Company and the Consultant entered into a Settlement Agreement (“Settlement Agreement”)

on August 11, 2020 whereby the Company agreed to issue 300,000 shares of common stock within 5 five days of entering into the

Settlement Agreement.

These shares will not be issued subject to any equity plan.

The Company agreed to register the shares of

common stock in consideration of a release by the Consultant.

In addition, as part of the Settlement Agreement the Company issued

100,000 stock options upon the approval of the 2020 Equity Incentive.

Financial Definitions

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in nature, change with sales volume, are affected by menu mix and are subject to fluctuations in commodity costs.

management team has begun implementing multiple operational changes to lower food and paper costs.

labor costs, including preopening labor, consists of company-operated restaurant-level management and hourly labor costs, including

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legislation, mandated health care costs and operational productivity established by the management team.

The current management

team has begun implementing operational changes to lower restaurant level labor costs overall.

rent, including preopening rental charges, consist of company-operated restaurant-level rental or lease payments applicable to

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corporate costs.

We expect to incur incremental general and administrative expenses as a result of the 2020 IPO and as a public

A certain portion of these expenses are related to the preparation of an initial stock offering and should be considered

one-time expenses.

We expect to incur incremental general and administrative expenses as a result of the 2020 IPO, the secondary

offering and the added cost associated with being a public company.

A certain portion of these expenses are related to the preparation

of an initial and second stock offering and should be considered one-time expenses.

(Expense) Income

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2019, respectively:

For the Years Ended

Company restaurant sales, net of discounts

Franchise royalties and fees

Franchise advertising fund contributions

Other revenues

Total Revenues

Operating Costs and Expenses:

the Years Ended

restaurant sales, net of discounts

Franchise royalties

advertising fund contributions

Operating Costs and

Restaurant operating

Food and beverage

restaurant operating expenses

Food and beverage costs

Other restaurant operating expenses

Total restaurant operating expenses

Costs of other revenues

Depreciation and amortization

Other expenses incurred for closed locations

Franchise advertising fund expenses

General and administrative expenses

Total Costs and Expenses

Loss from Operations

Other (Expense) Income:

Interest expense, net

Loss on sale of CTI

Total restaurant

operating expenses

Depreciation and

Impairment of intangible

Franchise advertising

fund expenses

Preopening expenses

and administrative expenses

Costs and Expenses

from Operations

Other Expenses:

Interest expense,

Change in fair value

of accrued compensation

Inducement expense

related to convertible notes

(15,102,206 )

Warrant modification expense

Amortization of debt discount

Total Other Expense, net

Warrant modification

of debt discounts

Other Expenses, net

(24,731,039 )

Net Loss Before Income Tax

Net Loss Before Income

(10,099,105 )

Income tax provision

(28,385,044 )

Net loss attributable to the non-controlling interest

Net Loss Attributable to Controlling Interest

tax provision

$ (10,099,105 )

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revenues totaled $4,473,447 for the year ended December 31, 2020 compared to $4,959,005 for the year ended December 31, 2019.

The 17.66% decrease was primarily attributable a decrease in franchise royalties and fees due to fewer franchisee stores and lower

sales and a decrease in company restaurant sales in the current period due to a combination of fewer stores in the early part

of the year and lower sales.

The $485,558.66 decrease is attributed to a decrease in franchise royalties and fees, partially offset by an increase in restaurant

generated company restaurant sales, net of discounts, of $3,672,944 for the year ended December 31, 2020 compared to $3,466,553,

for the year ended December 31, 2019.

This represented a decrease of $403,205, or 10.4%, which resulted primarily from the eight

cost-cutting store closures throughout 2018 partially offset by opening of 2 new stores and the acquisition of 2 existing franchised

stores during 2019.

This represented an increase of $206,391, or 6.0%, which is attributable to restaurants

sales from additional stores that were open during the current year ended compared to the prior year, partially offset by a decrease

in restaurant sales which resulted from the temporary and permanent closure of two corporate owned stores during the current year

as compared to the prior year due to Covid-19.

royalties and fees for the year ended December 31, 2020 and December 31, 2019 totaled $739,450 compared to $1,352,944, respectively.

The $555,334 decrease is primarily attributable to a decrease in initial franchise fees of $314,394 as we opened fewer franchise

locations due to pausing the franchise program until Q4 2019 and a decrease in royalty income of $206,012 due to fewer franchisee

locations and lower sales volumes.

revenues decreased to $0 for the year ended December 31, 2019 from $244,633 for the year ended December 31, 2018, representing

a decrease of $244,633 or 100%.

The decrease is attributed to the sale of CTI in May 2018.

The $613,494 decrease is primarily attributable to a decrease in initial franchise fees of $113,351 as there were fewer franchisee

agreement terminations in the current year as compared to the prior year, a decrease in royalty income of $356,614 and a decrease

in vendor rebates of vendor rebates of $143,529 due to fewer franchisee locations, primarily as a result of the impact of Covid-19

which resulted in lower sales and temporary and permanent closures of franchised locations current year compared to the prior

advertising fund contributions for the years ended December 31, 2020 and 2019 totaled $61,053 compared to $139,508, respectively.

Costs and Expenses

costs and expenses consist of restaurant food and beverage costs, restaurant labor expense, restaurant rent expense, other restaurant

operating expenses, cost of other revenues, depreciation and amortization expenses, impairment losses and general and administrative

costs and expenses primarily consist of restaurant food and beverage costs, restaurant labor expense, restaurant rent expense,

other restaurant operating expenses, depreciation and amortization expenses and general and administrative expenses.

food and beverage costs for the year ended December 31, 2020 and December 31, 2019 totaled $1,467,799 or 40.00% as a percentage

of company restaurant net sales, and $1,275,894 or 36.81%, as a percentage of company restaurant net sales, respectively.

$156,759 decrease resulted primarily from the eight store closures throughout 2018, partially offset by opening and acquisition

of new corporate stores in 2019.

The percentage decrease is attributable to menu mix, retail price increases and operational changes

offset by rising food costs and lower rebate amounts.

The management team implemented multiple operational changes, new suppliers

and menu items to offset these rising food costs.

The management team will continue to implement operational changes to further

reduce or maintain food costs.

$191,905 increase resulted from higher store count during the current year as compared to the prior year resulting in higher sales

and a slight increase in restaurant and food beverage cost as a percentage of sales.

The percentage increase is attributable to

rising food costs, lower rebates and operational inefficiencies attributed to opening or acquiring new locations as it takes time

to establish operational efficiencies.

In addition, food waste increased as sales decreased due to the impact of Covid-19 on overall

restaurants sales.

labor for the year ended December 31, 2020 and December 31, 2019 totaled $1,955,088, or 53.20%, as a percentage of company restaurant

net sales, and $1,587,889, or 45.81%, as a percentage of company restaurant net sales, respectively.

The $58,375 decrease results

primarily from eight store closures throughout 2018, partially offset by opening of 2 new stores and the acquisition of 2 existing

franchised stores during 2019.

The management team is consistently monitoring restaurant labor cost and implement new operational

measures, when possible, to lower these costs as a percentage of corporate restaurant net sales in 2019.

The $367,199 increase resulted

primarily due a higher store count during the current year as compared to the prior year as the Company opened and acquired more

stores as compared to the prior period.

In addition, the increase in labor as a percentage of sales is a direct result of inefficiencies

that is typically attributed to opening or acquiring new locations as it takes time to establish operational efficiencies.

rent expense for the year ended December 31, 2020 and December 31, 2019 totaled $691,986, or 18.8% as a percentage of restaurant

sales, and $449,384, or 12.96%, as a percentage of restaurant sales, respectively.

The $231,792 decrease is primarily from the

settlement on leases for the eight store closures throughout 2018.

The decrease as a percentage of sales is primarily attributable

to the impact of the eight store closures partially offset by opening of new corporate stores with lower rent.

Our current strategy

focuses on new company-owned, non-traditional locations such as military bases with variable rent structures no greater than 10%

of corporate restaurant revenue net sales, which would represent a significantly lower number than what was reported in 2018 and

restaurant operating expenses for the year ended December 31, 2019 and December 31, 2018 totaled $634,532, or 18.30%

as a percentage of restaurant sales, and $853,197, or 22.05% as a percentage of restaurant sales, respectively.

total decrease is primarily attributed to eight store closures throughout 2018 offset by the opening of new corporate store

locations during 2019.

The management team continues to address all costs associated with operating corporate restaurants and

has reduced these costs as a percentage of sales.

We will continue to evaluate all expenses and implement changes.

of other revenues for the years ended December 31, 2019 and December 31, 2018 totaled $0 and $114,388, respectively, 0.0% or 46.8%,

as a percentage of other revenue.

Which resulted from the sale of CTI during May 2018.

Expenses incurred for closed locations for the year ended December 31, 2018 totaled $321,821.

This consisted predominantly of

rent expense of approximately $258,000 incurred for closed locations while the remaining expense of approximately $64,000 consisted

of expenses that would typically be consider as other restaurant operating expenses if the locations where not closed but we were

still obligated to pay.

Depreciation and amortization

expense for the year ended December 31, 2019 and December 31, 2018 totaled $280,955 and $200,885, respectively.

increase is primarily attributable to depreciation expense of property and equipment due to the addition of additional fixed

assets throughout the year as compared to prior year.

General and administrative

expenses for the year ended December 31, 2019 and December 31, 2018 totaled $4,244,848, or 85.60% of total revenue, and $4,358,131,

or 72.36% of total revenue, respectively.

The $113,283 decrease is primarily attributable to reduced expenses incurred in connection

with the sale of CTI of approximately $138,000, approximately $283,000 in stock-based compensation incurred in connection

with employees and consultants, approximately $85,000 in rent expense as the company settled with the landlord in their previous

corporate office and a decrease of approximately $133,000 paid in salary in wages in the current period as compared to the prior

The decreases are partially offset by increases in third party accounting and legal fees of approximately $364,000 as we

used more temporary accounting services, legal service and audit related fees to facilitate the SEC registrations statements in

preparation for our public offering and approximately $35,000 in health insurance expenses to the Company.

Additionally, there

was an increase of approximately $263,000 in consulting expenses incurred due to various agreements with consultants related to

our business development and public offering.

The increase of $242,602 is directly attributed

to the acquisition of the two franchise locations and the opening of four cloud kitchen in the current year as compared to the

In addition, rent as a percentage of sales increased due to the temporary closure of restaurants due to Covid-19 while

rent payments were still made as per various leases.

restaurant operating expenses for the year ended December 31, 2020 and December 31, 2019 totaled $1,099,831, or 29.90% as a percentage

of restaurant sales, and $634,532, or 18.30% as a percentage of restaurant sales, respectively.

The $465,299 increase is due to

higher third-party merchant fees resulting from an increase in delivery orders and a higher sore count during the year as compared

to the prior year resulting in an increase in utility fees and insurance expenses.

and amortization expense for the year ended December 31, 2020 and December 31, 2019 totaled $422,546 and $280,955, respectively.

The $141,591 increase is attributable to depreciation expense related to additional property and equipment acquired for new store

build outs and the remodeling of an existing and acquired company owned restaurant compared to the prior year.

of intangible assets for the year ended December 31, 2020 totaled $100,000.

The impairment of the franchisee agreement

was attributed due to the acquisition of franchised stores, initially included in the valuation of the franchisee agreement

intangible, to be Company owned stores which reduces future discounted cash flows.

In addition, the permanent closures

of store included in the original valuation of the intangible asset due to the impact of COVID-19 attributed to the impairment

being recognized.

expense for the years ended December 31, 2020, totaled $56,362 resulted from expense incurred prior to the opening of our new

Company owned store that opened during the year ended December 31, 2020.

and administrative expenses for the year ended December 31, 2020 and December 31, 2019 totaled $8,576,231, or 191.70%

of total revenue, and $4,244,848, or 85.60% of total revenue, respectively.

The $4,331,383 increase is attributable

to an increase in salaries and wages of approximately $822,000 which is due to cash bonus earned by employees of approximately

$295,000, an increase in consulting expense of approximately $2,196,000 which is mainly attributed to stock-based compensation

expense for stock issued to various consultants for services, an increase in advertising expense of approximately $141,000 to

promote our new and existing locations, $41,480 in write offs of property and equipment for a closed location, an increase in

insurance expenses related to being a public company listed on a national exchange of approximately $289,000 and an increase in

one-time professional fees of approximately $982,000 mainly due to fees incurred in connection with the Company’s offerings.

Partially offset by a decrease in various other expenses incurred during the current year as compared to the prior year.

from Operations

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total revenues and $3,654,005, or 73.68% of total revenue, respectively.

This resulted in an increase of $68,159 in loss

from operations which is primarily attributable to a decrease in total cost of expenses of approximately $995,505 offset

by a decrease in total revenues of approximately $1,064,000.

(Expense) Income

The increase of $6,303,444 in loss from operations

is primarily attributable to an increase in total costs and expenses of approximately $5,818,000, partially offset by the

increase in total revenues of approximately $486,000.

The increase in total costs and expenses of approximately $5,818,000

is primarily due to one-time expenses incurred in connection with our offerings in March and September of 2020, of which approximately

$2,196,000 of the expenses consisted of non-cash expenses in the form of stock-based compensation.

See details above for more

information related to the changes included within total cost and expenses and total revenues.

expense for the year ended December 31, 2020 and December 31, 2019 totaled $141,656 and $24,731,039, respectively.

The $24,589,383

increase in expense was primarily attributable to an increase in inducement expense related to the convertible notes payables

of approximately $15,102,000 that was incurred by the Company in order to induce various note holders to convert approximately

$9.5 million dollars of debt on our books into our common stock.

In addition, the company incurred warrant modification expense

of approximately $ 5,406,000 as part of the amendments to induce the note holders to convert their notes into our common stock.

The remainder of the increase is attributed to an increase in interest expenses and amortization of debt discount incurred in

connection with the convertible notes payable.

Our net loss for the year

ended December 31, 2019 increased by $21,180,504 to $28,385,044 as compared to $7,204,540 for the year ended December

31, 2018, resulting primarily from a significant increase in other (expense) income as discussed above.

Our net loss attributable

to the controlling interest was $28,385,044 and $7,202,469 for the year ended December 31, 2019 and December 31, 2018,

respectively.

decrease in expense was primarily to a decrease in inducement expense related to the convertible notes payables of approximately

$15,102,000 that was incurred by the Company in order to induce various note holders to convert approximately $9.5 million dollars

of debt on our books into our common stock in the prior year as compared to the current period.

In addition, due to a decrease

in warrant modification expense of approximately $ 5,406,000 as part of the amendments to induce the note holders to convert their

notes into our common stock in the prior year as compared to the current period.

The remaining decrease in expense is attributed

to a decrease in amortization of debt discount of $2,608,437, a decrease of $1,460,666 in interest expense, net as the majority

of the convertible notes were converted during the prior year therefore no further interest expense is being incurred in the current

net loss for the year ended December 31, 2020 decreased by $18,285,939 to $10,099,105 as compared to $28,385,044

for the year ended December 31, 2019, resulting from an increase in our loss from operations offset by a decrease in other expense

as discussed above.

and Capital Resources

measure our liquidity in a number of ways, including the following:

December 31, 2019

December 31, 2018

Working Capital Deficiency

Convertible notes payable, including related parties and Former Parent, net of debt discount of $38,918 and $1,582,378, respectively

Other notes payable, including related parties

Working Capital Surplus (Deficiency)

$ (3,707,541 )

Convertible notes payable, including

related parties and Former Parent, net of debt discount of $0 and $38,918, respectively

Other notes payable, including related

of Additional Funds and Going Concern

upon our working capital deficiency and accumulated deficit of $3,707,541 and $53,094,602, respectively, as of December

31, 2019, plus our use of $4,504,226 of cash in operating activities during the year ended December 31, 2019.

we have a working capital surplus of $1,383,568, we presently have an accumulated deficit of $63,193,707, as of

December 31, 2020, and we utilized $7,785,873 of cash in operating activities during the year ended December 31, 2020.

These conditions

raise substantial doubt about our ability to continue as a going concern for at least one year from the date of this filing.

February 12, 2020, we priced our initial public offering of 1,540,000 shares of common stock at a price of $5.00 per shares and

started trading on the Nasdaq Capital Market on February 13, 2020 under the ticker symbol “GRIL”.

We closed on the

offering on February 18, 2020, yielding net proceeds of $6,780,000.

We believe our existing capital resources will be sufficient

to support our current and projected funding requirements through the fourth quarter of 2020 at which time additional funding

will be required.

of December 31, 2019, our gross outstanding debt of $1,415,265, together with interest at rates ranging between 10% - 15% per

annum, was due on various dates through October 10, 2024.

As of December 31, 2019, our outstanding debt was as follows:

Maturity Date

principal source of liquidity to date has been provided by loans and convertible loans from related and unrelated third parties,

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In the United States, individuals are

being encouraged to practice social distancing, restricted from gathering in groups and in some areas, placed on complete restriction

from non-essential movements outside of their homes.

As a result, disruption and volatility in the global capital markets, which

increases the cost of capital and adversely impacts access to capital.

On May 9, 2020, the Company entered into Paycheck Protection Program

Promissory Note and Agreement with Greater Nevada Credit Union, pursuant to which the Company received loan proceeds of $866,300

(the “PPP Loan”).

The PPP Loan was made under, and is subject to the terms and conditions of, the PPP which was established

under the CARES Act and is administered by the U.S.

Small Business Administration.

The term of the PPP Loan is two years

with a maturity date of May 9, 2022 and contains a favorable fixed annual interest rate of 1.00%.

Payments of principal and interest

on the PPP Loan will be deferred for the first six months of the term of the PPP Loan until November 9, 2020.

Principal and interest

are payable monthly and may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

Under the terms

of the CARES Act, recipients can apply for and receive forgiveness for all or a portion of loans granted under the PPP.

Such forgiveness

will be determined, subject to limitations, based on the use of loan proceeds for certain permissible purposes as set forth in

the PPP, including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively,

being encouraged to practice social distancing, restricted from gathering in groups and in some areas during the first quarter

of 2020 continuing through the fourth quarter of 2020.

As a result of the disruption and volatility in the global capital markets,

we have seen an increase in the cost of capital which adversely impacts access to capital.

February 12, 2020, the Company priced its initial public offering of 1,540,000 shares of common stock at a price of $5.00 per

The Company started trading on the Nasdaq Capital Market on February 13, 2020 under the ticker symbol “GRIL”.

The Company closed on the offering on February 18, 2020, yielding proceeds of $6,780,000, net of underwriters and other fees of

Upon closing of the offering the Company issued 123,200 warrants to the underwriters as part of their agreement.

September 10, 2020, the Company priced its public offering (“September Offering”) of 3,294,118 shares of common stock

at a price of $1.70 per share.

The Company closed on the September Offering on September 15, 2020, yielding net proceeds of $4,940,001,

net of underwriters and other fees of $660,000.

Upon closing of the September Offering the Company issued 263,529 warrants to

the underwriters as part of their agreement.

Pursuant to the underwriting agreement for the September Offering the Company granted

the underwriters an option to exercise for 45 days, to purchase up to an additional 494,177 shares of common stock to cover the

over-allotment.

On October 27, 2020, the Company closed on the over-allotment yielding proceeds of $764,399, net of underwrites

and other fees of $75,600 and the Company issued the 494,177 shares of common stock.

May 9, 2020, the Company entered into Paycheck Protection Program Promissory Note and Agreement with Greater Nevada Credit Union,

pursuant to which the Company received loan proceeds of $866,300 (the “PPP Loan”).

The PPP Loan was made under, and

is subject to the terms and conditions of, the PPP which was established under the CARES Act and is administered by the U.S.

Business Administration.

The term of the PPP Loan is two years with a maturity date of May 9, 2022 and contains a favorable fixed

annual interest rate of 1.00%.

Payments of principal and interest on the PPP Loan will be deferred for the first ten months of

the term of the PPP Loan if the Company did not apply for forgiveness on the PPP Loan.

Principal and interest are payable monthly

and may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

Under the terms of the CARES Act,

recipients can apply for and receive forgiveness for all or a portion of loans granted under the PPP.

Such forgiveness will be

determined, subject to limitations, based on the use of loan proceeds for certain permissible purposes as set forth in the PPP,

including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively,

“Qualifying Expenses”), and on the maintenance of employee and compensation levels during the eight-week period following

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The Company intends to use the proceeds of the PPP Loan, when received, for Qualifying Expenses.

no assurance is provided that the Company will be able to obtain forgiveness of the PPP Loan in whole or in part.

expect to have ongoing needs for working capital in order to fund operations and expand operations by opening additional corporate-owned

To that end, we intend to raise additional capital in 2020 and 2021 to raise additional funds through equity or debt

The amount required will be dependent on current operations, future investment and the execution of our business plan.

We estimate our cash needs for 2020 is approximately $7.2 million which will allow us to open 14 company owned and operated locations

in 2020 and execute on our franchise sales program.

However, there can be no assurance that we will be successful in securing

additional capital.

If we are unsuccessful, we may need to initiate cost reductions, forego business development opportunities,

seek extensions of time to fund our liabilities, or seek protection from creditors.

However, no assurance is provided that the Company will be able to obtain forgiveness of the PPP Loan in whole or in part.

company has filed for loan forgiveness but as of the date of this filing has not received a response.

The expenses to qualify

for the PPP loans are recorded in the 2020 financials as the company made efforts to employ personnel as per the PPP program intentions.

The corresponding loan amount of $866,300 was not recognized as other income until the PPP loans are deemed forgivable.

expect to have ongoing needs for working capital in order to (a) fund operations;

plus (b) expand operations by opening additional

corporate-owned restaurants.

To that end, we may be required to raise additional funds through equity or debt financing.

there can be no assurance that we will be successful in securing additional capital.

If we are unsuccessful, we may need to (a)

initiate cost reductions;

(b) forego business development opportunities;

or (d) seek protection from creditors.

addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may

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to our shareholders or that result in our shareholders losing all of their investment in our Company.

we are able to raise additional capital, we do not know what the terms of any such capital raising would be.

In addition, any

future sale of our equity securities would dilute the ownership and control of shares sold in this offering and could be at prices

substantially below prices at which our shares currently trade.

Our inability to raise capital could require us to significantly

curtail or terminate our operations.

are able to raise additional capital, we do not know what the terms of any such capital raising would be.

In addition, any future

sale of our equity securities would dilute the ownership and control of your shares and could be at prices substantially below

prices at which our shares currently trade.

Our inability to raise capital could require us to significantly curtail or terminate

our operations.

We may seek to increase our cash reserves through the sale of additional equity or debt securities.

The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial

dilution to our shareholders.

The incurrence of indebtedness would result in increased debt service obligations and could result

in operating and financing covenants that would restrict our operations and liquidity.

In addition, our ability to obtain additional

capital on acceptable terms is subject to a variety of uncertainties.

convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to

our shareholders.

The incurrence of indebtedness would result in increased debt service obligations and could result in operating

and financing covenants that would restrict our operations and liquidity.

In addition, our ability to obtain additional capital

on acceptable terms is subject to a variety of uncertainties.

audited consolidated financial statements included elsewhere in this 10K document have been prepared in conformity with accounting

10 unchanged sentences

for the year ended December 31, 2020 was primarily attributable to our net loss of $10,099,105, adjusted for net non-cash

income in the aggregate amount of $24,474,439, partially offset by $349,674 of net cash provided by changes in the levels of operating

assets and liabilities.

Our cash used for the year ended December 31, 2018 was primarily attributable to our net loss of $7,204,540,

adjusted for net non-cash income in the aggregate amount of $4,542,867, partially offset by $65,064 of net cash provided by changes

in the levels of operating assets and liabilities.

income in the aggregate amount of $3,556,516, partially offset by $1,243,284 of net cash provided by changes in

the levels of operating assets and liabilities.

Our cash used for the year ended December 31, 2019 was primarily attributable

to our net loss of $28,385,044, adjusted for net non-cash income in the aggregate amount of $24,270,492, partially offset by $389,674

of net cash provided by changes in the levels of operating assets and liabilities.

the year ended December 31, 2020, cash used in investing activities was $850,334, of which $781,041 was used to purchase property

and equipment, $60,186 which was used for the issuances of loans receivables, $335,116 used in connection with the acquisition

of two new company stores from former franchisees and $36,358 was collected from loans to franchisees and related parties net

of loan issuances.

During the year ended December 31, 2018, cash used in investing activities was $188,221, of which $252,645

was used to purchase property and equipment, and $64,424 was used to issue loans to franchisees and related parties net of repayments.

cash provided by financing activities for the year ended December 31, 2019 was $6,145,807 of which $100,000 proceeds were from

convertible notes from other related parties, $6,373,000 proceeds from convertible notes to various parties, $300,000 proceeds

from other notes payable, offset by $718,193 repayments of convertible notes payable and other note payable.

Net cash provided

by financing activities for the year ended December 31, 2018 was $3,194,117 of which $650,000 proceeds from convertible notes

from other related parties, $2,051,000 proceeds from convertible notes to various parties, $460,000 proceeds from other notes

payable, $85,576 net proceeds from initial public offering and $180,000 proceeds from the sale of restricted common stock, offset

by $100,000 repayments of convertible notes payable and other note payable and $132,459 net repayments of advances to Former Parent.

and equipment, $75,000 used in connection with the acquisition of a new company stores from former franchisees and $5,707 was

collected from loans to franchisees and related parties net of loan issuances.

During the year ended December 31, 2019, cash used

in investing activities was $1,520,569, of which $1,161,625 was used to purchase property and equipment, $60,186 which was used

for the issuances of loans receivables, $335,116 used in connection with the acquisition of two new company stores from former

franchisees and $36,358 was collected from loans to franchisees and related parties net of loan issuances.

cash provided by financing activities for the year ended December 31, 2020 was $11,720,001 proceeds from the offerings, net of

underwriter’s discount and offering costs, $764,399 proceeds from the over-allotment, net of underwriter’s discount

and offering costs, $150,000 proceeds from other note payable, $866,300 proceeds from the PPP loan, partially offset by repayments

of various convertible notes of $550,000 and $597,415 of repayments of other notes payables, including a related party.

provided by financing activities for the year ended December 31, 2019 was $6,145,807 of which $100,000 proceeds were from convertible

notes from other related parties, $6,373,000 proceeds from convertible notes to various parties, $300,000 proceeds from other

notes payable, offset by $718,193 repayments of convertible notes payable and other note payable.

Accounting Policies

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Significant estimates include:

fair value of assets acquired and liabilities assumed in a business combination;

assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets;

34 unchanged sentences

franchise agreements, as well as unearned vendor rebates

the first quarter 2019, we adopted Topic 606 “Revenue from Contracts with Customers”

for revenue recognition related

to contracts with customers and applied the guidance modified retrospectively.

Under the new guidance, revenue is recognized in

accordance with a five-step revenue model, as follows:

the first quarter of 2019, the Company adopted Topic 606 “Revenue from Contracts with Customers”

for revenue recognition

related to contracts with customers and applied the guidance modified retrospectively.

Under the new guidance, revenue is recognized

in accordance with a five-step revenue model, as follows:

(1) identifying the contract with the customer;

(2) identifying the performance

obligations in the contract;

(2) identifying the

performance obligations in the contract;

(3) determining the transaction price;

(4) allocating the transaction price to the performance obligations;

(4) allocating the transaction price to the performance

and (5) recognizing revenue when (or as) the entity satisfies a performance obligation.

In applying this five-step model, we have

made significant judgments in identifying the promised goods or services in our contracts with franchisees that are distinct,

and which represent separate performance obligations.

In applying this five-step

model, we have made significant judgments in identifying the promised goods or services in our contracts with franchisees that

are distinct, and which represent separate performance obligations.

The change between Topic 605 and Topic 606, primarily impacted

the way the Company recognized franchise fees.

Under Topic 605 franchise fees were recognized upon opening of a restaurant or

granting of a new franchise term at a point in time while under Topic 606 franchise fees are recognized on a straight-line basis

over the life of the related franchise agreements and any exercised renewal periods.

The impact of the adoption of Topic 606 resulted

in an adjustment of $875,902 in accumulated deficit and deferred revenues.

store revenue at Company operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discount

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Company sells gift cards which do not have an expiration date, and it does not deduct dormancy fees from outstanding gift card

The Company recognize revenues form gift cards as restaurant revenues once the Company performs obligation to provide

food and beverage to the customer simultaneously with the redemption of the gift card.

The Company recognizes revenues from gift cards as restaurant revenues once the Company performs its obligation to provide

food and beverage to the customer simultaneously with the redemption of the gift card or through gift card breakage, as discussed

in Other Revenues below.

Royalties and Fees

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which the related food and beverage purchases are made.

its subsidiary CTI which was sold in May 2018, the Company derived revenue from the sale of POS computer systems, cash registers

and camera systems, and from the provision of related consulting and support services, which generally include implementation,

installation and training services.

The Company recognized revenue when persuasive evidence of an arrangement existed, delivery

of the product or service has occurred, the fee was fixed or determinable and collectability was reasonably assured.

recorded $0 and $244,633, respectively, of revenues from these technology sales and services during the years ended December 31,

2019 and 2018, respectively.

revenue primarily includes initial franchise fees received by us, which are being amortized over the life of our franchise agreements,

as well as unearned vendor.

card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines

there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction.

The determination of the

gift card breakage rate is based upon the Company’s specific historical redemption patterns.

The Company recognizes gift

card breakage by applying its estimate of the rate of gift card breakage on a pro rata basis over the period of estimated redemption.

Gift card liability is recorded in other current liabilities on the consolidated balance sheet.

For the years ended December 31,

2020 and 2019, the Company determined that no gift card breakage is necessary based on current redemption rates.

revenue primarily includes initial franchise fees received by the Company, which are being amortized over the life of the Company’s

franchise agreements, as well as unearned vendor rebates.

Deferred revenue is recognized in income over the life of the franchise

agreements and vendor rebates are recognized in income as performance obligations are satisfied.

Advertising Fund Contributions

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In accordance with Topic 606, the Company recognizes

these sales-based advertising contributions from franchisees as franchise revenue when the Company incurs the corresponding

advertising expense.

The Company records the related advertising expenses as incurred under general and administrative expenses.

When an advertising contribution fund is over-spent at year end, advertising expenses will be reported on the consolidated statement

of operations in an amount that is greater than the revenue recorded for advertising contributions.

Conversely, when an advertising

contribution fund is under-spent at a period end, the Company will accrue advertising costs up to advertising contributions recorded

The Company recorded contributions from franchisees of $139,508 and $0, respectively, during the years ended December

31, 2019 and 2018, which is included in franchise advertising fund contributions on the accompanying consolidated statements of

these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs

the corresponding advertising expense.

The Company records the related advertising expenses as incurred under general and administrative

When an advertising contribution fund is over-spent at year end, advertising expenses will be reported on the consolidated

statement of operations in an amount that is greater than the revenue recorded for advertising contributions.

Conversely, when

an advertising contribution fund is under-spent at a period end, the Company will accrue advertising costs up to advertising contributions

recorded in revenue.

The Company recorded contributions from franchisees of $61,053 and $139,508, respectively, during the years

ended December 31, 2020 and 2019, which are included in franchise advertising fund contributions on the accompanying consolidated

statements of operations.

account for income taxes under Accounting Standards Codification (“ASC”) 740 Income Taxes (“ASC 740”).

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity