Annual report pursuant to Section 13 and 15(d)

Supplemental Disclosure of Non-cash Information

v3.7.0.1
Supplemental Disclosure of Non-cash Information
 12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Cash Flow, Supplemental Disclosures [Text Block]
During the year ended
December
31,
2016
and
2015,
cash paid for income taxes was
$11,250
and
$0,
respectively. During the year ended
December
31,
2016
and
2015,
cash paid for interest was
$15,262
and
$2,344,
respectively.
 
Supplemental disclosure of non-cash activity:
 
As of
December
31,
2016,
we had property and equipment purchases of
$11,059
which were included in accounts payable. As of
December
31,
2015,
we had property and equipment purchases of
$1,109,464
and
$117,509
which were included in accounts payable and accrued expenses, respectively.
 
In connection with our reacquisition and termination of regional developer rights during the year ended
December
31,
2016
and
2015,
we had deferred revenue of
$224,750
and
$914,000,
respectively, representing license fees collected upon the execution of the regional developer agreements.  We netted these amounts against the aggregate purchase price of the acquisitions (Note
6).
 
In connection with our acquisitions of franchises during the year ended
December
31,
2016,
we acquired
$293,014
of property and equipment, intangible assets of
$339,000,
goodwill of
$269,780,
favorable leases of
$140,728
and assumed deferred revenue associated with membership packages paid in advance of
$45,072
in exchange for
$839,000
in cash and notes payable issued to the sellers for an aggregate amount of
$186,000.
Additionally, at the time of these transactions, we carried deferred revenue of
$29,000,
representing franchise fees collected upon the execution of franchise agreements, and deferred costs of
$1,450,
related to our acquisition of undeveloped franchises. We netted these amounts against the aggregate purchase price of the acquisitions (Note
2).
 
In connection with our acquisitions of franchises during the year ended
December
31,
2015,
we acquired
$1,504,169
of property and equipment, intangible assets of
$1,942,180,
goodwill of
$1,830,833,
favorable leases of
$521,825,
assumed unfavorable leases of
$49,077,
deferred revenue associated with membership packages paid in advance of
$106,908,
and a deferred tax liability of
$168,000
in exchange for
$4,925,525
in cash and an aggregate amount of
$800,350
in notes payable to the sellers.  Additionally, at the time of these transactions, we carried deferred revenue of
$1,005,500,
representing franchise fees collected upon the execution of franchise agreements, and deferred costs of
$493,500,
related to our acquisition of undeveloped franchises.  In accordance with ASC-
952
-
605,
we netted these amounts against the aggregate purchase price of the acquisitions (Note
2).
 
Property and equipment
 
$
(53,836
)
Intangible assets
 
$
4,820
 
Favorable leases
 
$
6,250
 
Goodwill
 
$
68,616
 
Unfavorable leases
 
$
(25,850
)
 
During
December
of
2016,
we entered into a settlement agreement, whereby we resolved all pending litigation matters discussed in Note
11.
Under the terms of the settlement agreement, we agreed to a
one
-time settlement amount comprised of cash and
46,948
shares of our common stock. The fair value of the total consideration related to common stock was
$100,000.
The fair value of the common stock was measured using the closing price of our common stock on the settlement date.