Annual report pursuant to Section 13 and 15(d)

Nonconsolidated variable interest entities

v3.7.0.1
Nonconsolidated variable interest entities
 12 Months Ended
Dec. 31, 2016
Equity Method Investments and Joint Ventures [Abstract]  
Nonconsolidated variable interest entities
Nonconsolidated variable interest entities:
Accounting principles generally accepted in the United States of America provide a framework for identifying variable interest entities (VIEs) and determining when a company should include the assets, liabilities, noncontrolling interests, and results of activities of a VIE in its consolidated financial statements. In general, a VIE is a corporation, partnership, limited-liability corporation, trust, or any other legal structure used to conduct activities or hold assets that (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to direct the activities of the entity that most significantly impact its economic performance, or (3) has a group of equity owners that do not have the obligation to absorb losses of the entity or the right to receive returns of the entity. A VIE should be consolidated if a party with an ownership, contractual, or other financial interest in the VIE that is considered a variable interest (a variable interest holder) has the power to direct the VIE’s most significant activities and the obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and noncontrolling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. At December 31, 2016 and 2015, the Company held the following investments in VIE's which are all accounted for under the equity method as the Company concluded that it is not the primary beneficiary but is able to exercise significant influence over these entities:
 
 
At December 31,
 
2016
 
2015
Bagatelle NY LA Investors, LLC (“Bagatelle Investors”)
$
6,569

 
$
7,364

Bagatelle Little West 12th, LLC ( “Bagatelle NY”)
2,552,687

 
2,357,927

Bagatelle La Cienega, LLC (“Bagatelle LA”)
—

 
—

One 29 Park, LLC
506,301

 
545,071

Totals
$
3,065,557

 
$
2,910,362

 
 
 
 
Equity in income of investee companies
$
674,289

 
$
1,038,854


 
Bagatelle Investors is a holding company that has interests in two operating restaurant companies, Bagatelle NY and Bagatelle LA. All three entities were formed in 2011. The Company holds interests in all three entities. The Company holds a 31.24% ownership over Bagatelle Investors as of December 31, 2016 and 2015. The Company holds a 5.23% direct ownership over Bagatelle NY and has indirect ownership through Bagatelle Investors as well as one of its subsidiaries of 45.90% for a total effective ownership of 51.13% as of December 31, 2016 and 2015. The Company holds a 5.23% direct ownership over Bagatelle LA and has indirect ownership through Bagatelle Investors as well as one of its subsidiaries of 38.10% for a total effective ownership of 43.33% as of December 31, 2016 and 2015. The Company holds a 10% direct ownership in One 29 Park as of December 31, 2016 and 2015.
 
During the years ended December 31, 2016 and 2015, the Company provided no explicit or implicit financial or other support to these entities that were not previously contractually required.
 
In addition to the amounts presented above, receivables included in due from related parties, net in the balance sheet of $467,702, as of December 31, 2016 represent maximum exposure to loss.

The summarized financial data at December 31, 2016 and 2015, of these investments is presented below:


 
 
Bagatelle Investors
 
Bagatelle NY
 
Bagatelle LA
 
One 29 Park, LLC
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
Current assets
 
$
160,858

 
$
2,743,161

 
$
18,249

 
$
2,551,585

Non-current assets
 
$
328,745

 
$
1,831,906

 
$
393,934

 
$
1,366,194

Current liabilities
 
$
57,143

 
$
1,088,766

 
$
2,024,841

 
$
1,379,743

Non-current liabilities
 
$
—

 
$
188,032

 
$
7,418

 
$
—

 
 
 
 
 
 
 
 
 
Revenues
 
$
—

 
$
13,569,513

 
$
1,080,249

 
$
8,418,929

Gross profit
 
$
—

 
$
10,147,373

 
$
815,404

 
$
6,729,996

Income (loss) from continuing operations
 
$
208,705

 
$
1,506,948

 
$
(502,366
)
 
$
(384,412
)
Net income (loss)
 
$
208,745

 
$
1,506,948

 
$
(502,366
)
 
$
(387,705
)
 
 
 
 
 
 
 
 
 
December 31, 2015
 
 
 
 
 
 
 
 
 
Current assets
 
$
150,527

 
$
1,804,376

 
$
128,009

 
$
2,594,270

Non-current assets
 
$
352,376

 
$
2,022,934

 
$
434,567

 
$
1,242,770

Current liabilities
 
$
67,867

 
$
808,599

 
$
1,661,077

 
$
911,236

Non-current liabilities
 
$
—

 
$
199,807

 
$
19,209

 
$
—

 
 
 
 
 
 
 
 
 
Revenues
 
$
—

 
$
13,521,968

 
$
2,277,738

 
$
9,254,962

Gross profit
 
$
—

 
$
10,061,406

 
$
1,806,393

 
$
7,486,609

Income from continuing operations
 
$
346,420

 
$
1,994,781

 
$
(310,393
)
 
$
95,082

Net income
 
$
346,420

 
$
1,994,781

 
$
(310,393
)
 
$
91,251