Shareholders' Equity

12 Months Ended

Sep. 24, 2024

Shareholders’ Equity [Abstract]

Shareholders' Equity

8. Shareholders’ Equity

Preferred Stock

The Company has the authority to issue 5,000,000 shares of preferred stock. The Board of Directors has the authority to issue such preferred shares in series and determine the rights and preferences of the shares as may be determined by the Board of Directors.

Common Stock

The Company has the authority to issue 50,000,000 shares of common stock with a par value of $.001. The company has issued 12,977,433 shares, and as of September 24, 2024 and September 26, 2023 there were 10,712,367 and 11,446,587 shares outstanding, respectively.

Stock Plans

The Company has traditionally maintained incentive compensation plans that include provision for the issuance of equity-based awards. The Company established the 2008 Omnibus Equity Incentive Compensation Plan in 2008 (the “2008 Plan”) and has outstanding awards that were issued under the 2008 Plan. Subsequently, the 2008 Plan expired in 2018 and the Company established a new plan, the 2018 Omnibus Equity Incentive Plan (the “2018 Plan”) that same year, pursuant to shareholder approval. Future awards will be issued under the 2018 plan.

Stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the grant). The Company recognizes the impact of forfeitures as forfeitures occur.

The Company recorded $134,000 and $131,000 in total stock-based compensation expense during the fiscal years ended September 24, 2024 and September 26, 2023 respectively, that was classified as general and administrative costs.

Stock Options

The Company measures the compensation cost associated with stock option awards by estimating the fair value of the award as of the grant date using the Black-Scholes pricing model. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company’s stock options and stock awards granted during the fiscal years ended September 24, 2024 and September 26, 2023. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the employees who receive equity awards.

During the fiscal year ended September 24, 2024, the Company granted Mr. Zink 20,000 Incentive Stock Options and Mr. Stack 18,000 Incentive Stock Options, both vesting ratably over a five-year period.

During the fiscal year ended September 26, 2023, the Company granted Mr. Zink 20,000 Incentive Stock Options vesting ratably over a five-year period. In addition to the exercise and grant date prices of the stock option awards, certain weighted average assumptions that were used to estimate the fair value of stock option grants are listed in the following table:

Incentive and Non-Statutory Stock Options
	Fiscal 2024	Fiscal 2023
Expected term (years)	6.25	7.5
Expected volatility	62.5%	60.0% - 60.2%
Risk-free interest rate	4.68%	3.33% - 4.21%
Expected dividends	-	-

We estimate expected volatility based on historical weekly price changes of our common stock for a period equal to the current expected term of the options. The risk-free interest rate is based on the United States treasury yields in effect at the time of grant corresponding with the expected term of the options. The expected option term is the number of years we estimate that options will be outstanding prior to exercise considering vesting schedules and our historical exercise patterns.

The following table summarizes stock option activity for the fiscal years ended September 24, 2024 and September 26, 2023 under all plans:

	Fiscal Year Ended
	September 24, 2024							September 26, 2023
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Yrs.)		Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Yrs.)
Outstanding at beginning of year		437,528		$	3.95				470,161		$	3.97
Options granted		38,000		$	2.51				45,000		$	2.81
Options exercised		-		$	-				(2,000	)	$	2.31
Forfeited		(4,312	)	$	2.90				(75,633	)	$	3.49
Expired		-			-				-			-
Outstanding at end of year		471,216		$	3.84		4.04		437,528		$	3.95		4.57
Exercisable at end of year		337,216		$	3.71		3.28		322,607		$	3.65		4.16

As of September 24, 2024 and September 26, 2023, the aggregate intrinsic value of the outstanding and exercisable options was $25,301 and $25,401, respectively. Only options whose exercise price is below the current market price of the underlying stock are included in the intrinsic value calculation.

As of September 24, 2024, the total remaining unrecognized compensation cost related to non-vested stock options was $90,000 and is expected to be recognized over a weighted average period of approximately 3.4 years.

There were no stock options exercised during the fiscal year ended September 24, 2024.

There were 2,000 stock options exercised during the fiscal year ended September 26, 2023, with proceeds of approximately $5,000.

Common Stock Grants

During the fiscal years ended September 24, 2024 and September 26, 2023, the Company did not make any grants of common stock.

Restricted Stock Units

Restricted Stock Units award a holder of a grant the right to receive, at the Company’s option, a specified number of shares of common stock or a cash payment equal to the fair market value (determined as of a specified date) of a specified number of shares of common stock, subject to other conditions or restrictions as may be determined by the Company to be applicable to any given grant.

During the fiscal year ended September 24, 2024, the Company granted 44,000 Restricted Stock Units. There were 25,750 restricted stock units granted during the fiscal year ended September 26, 2023.

A summary of the status of non-vested restricted stock units as of September 24, 2024 and September 26, 2023 is presented below.

	Fiscal Year Ended
	September 24, 2024				September 26, 2023
	Shares		Grant Date Fair Value Per Share		Shares			Grant Date Fair Value Per Share
Non-vested shares at beginning of year		45,250		$2.29 to $4.50		73,336			$1.54 to $4.50
Granted		44,000		$2.52 to $2.54		25,750		$	2.29
Exercised		-		-		(46,336	)	$	1.54
Forfeited		-		-		(7,500	)	$	2.29
Non-vested shares at end of year		89,250		$2.29 to $4.50		45,250			$2.29 to $4.50

As of September 24, 2024, there was $110,000 of total unrecognized compensation cost related to non-vested restricted stock units. This cost is expected to be recognized over a weighted average period of approximately 1.8 years.

Non-controlling Interests

Non-controlling interests are presented as a separate item in the shareholders’ equity section of the consolidated balance sheets. The amount of consolidated net income or loss attributable to non-controlling interests is presented on the face of the consolidated statements of operations. Changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions, while changes in ownership interest that do result in deconsolidation of a subsidiary require gain or loss recognition based on the fair value on the deconsolidation date.

The equity interests of the unrelated limited partners and members are shown on the accompanying consolidated balance sheets in the shareholders’ equity section as a non-controlling interest and is adjusted each period to reflect the limited partners’ and members’ share of the net income or loss as well as any cash contributions or distributions to or from the limited partners and members for the period. The limited partners’ and members’ share of the net income or loss in the subsidiary is shown as income or expense attributable to non-controlling interests in the accompanying consolidated statements of operations. All inter-company accounts and transactions are eliminated.

The following table summarizes the activity in non-controlling interests during the year ended September 24, 2024 and September 26, 2023 (in thousands):

	Fiscal Year Ended
	September 24, 2024			September 26, 2023
Balance at beginning of fiscal year	$	423		$	1,303
Income attributable to non-controlling interests	$	266		$	586
Purchase of non-controlling interests in Bad Daddy’s limited liability companies	$	-		$	(831	)
Contributions from non-controlling partner/members	$	200		$	13
Distributions to non-controlling partner/members	$	(172	)	$	(648	)
Balance at end of fiscal year	$	717		$	423

In January 2023, the Company repurchased the membership interests in five limited liability companies related to five Bad Daddy’s restaurants. Our non-controlling interests currently represent a single limited partner in one limited partnership involving six Good Times restaurants, in which the Company owns a 50.0% interest in the partnership and maintains contractual management control.