Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 21, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Amergent Hospitality Group, Inc | |
Entity Central Index Key | 0001805024 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,656,736 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated and Comb
Condensed Consolidated and Combined Balance Sheets - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 2,356,382 | $ 678,468 |
Restricted cash | 850,000 | 1,250,336 |
Investments | 416,974 | 413,268 |
Accounts and other receivables | 92,632 | 314,043 |
Inventories | 169,407 | 172,695 |
Prepaid expenses and other current assets | 131,743 | 290,227 |
TOTAL CURRENT ASSETS | 4,017,138 | 3,119,037 |
Property and equipment, net | 3,172,010 | 3,702,894 |
Operating lease asset | 8,598,374 | 9,529,443 |
Intangible assets, net | 2,625,783 | 3,043,885 |
Goodwill | 8,597,918 | 8,591,149 |
Investments | 365,001 | 365,001 |
Deposits and other assets | 273,577 | 295,930 |
TOTAL ASSETS | 27,649,801 | 28,647,339 |
Current liabilities: | ||
Accounts payable and accrued expenses | 8,999,966 | 8,667,268 |
Current maturities of long-term debt and notes payable | 2,648,736 | 2,338,978 |
Current operating lease liabilities | 5,054,829 | 4,209,389 |
Derivative liabilities | 184,800 | |
TOTAL CURRENT LIABILITIES | 16,703,531 | 15,400,435 |
Long-term operating lease liabilities | 9,407,194 | 10,677,862 |
Contract liabilities | 777,133 | 794,989 |
Deferred tax liabilities | 108,809 | 108,809 |
Long-term debt and notes payable, net of current maturities | 2,186,808 | 539,734 |
Convertible debt, net of debt discount of $178,945 and $223,681 at March 31, 2021 and December 31, 2020, respectively | 3,858,944 | 3,814,208 |
TOTAL LIABILITIES | 33,042,419 | 31,336,037 |
Commitments and contingencies (see Note 10) | ||
Preferred Stock Value | ||
Stockholders' Deficit: | ||
Common stock: $0.0001 par value; authorized 50,000,000 shares; 14,532,736 and 14,282,736 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 1,453 | 1,428 |
Additional paid-in-capital | 92,506,319 | 92,433,344 |
Accumulated deficit | (97,135,909) | (94,587,482) |
Accumulated other comprehensive loss | (17,124) | (25,916) |
Total Amergent Hospitality Group, Inc., Stockholders' Deficit | (4,645,261) | (2,178,626) |
Non-controlling interests | (1,133,965) | (969,680) |
TOTAL STOCKHOLDERS' DEFICIT | (5,779,226) | (3,148,306) |
TOTAL LIABILITIES, REDEEMABLE SHARES AND STOCKHOLDERS' DEFICIT | 27,649,801 | 28,647,339 |
Convertible Preferred Stock: Series 2 [Member] | ||
Current liabilities: | ||
Preferred Stock Value | $ 386,608 | $ 459,608 |
Condensed Consolidated and Co_2
Condensed Consolidated and Combined Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | |
Debt discount | [1] | $ 178,945 | $ 223,681 |
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized | 50,000,000 | 50,000,000 | |
Common stock, shares issued | 14,532,736 | 14,282,736 | |
Common stock, shares outstanding | 14,532,736 | 14,282,736 | |
Convertible Preferred Stock: Series 2 [Member] | |||
Preferred stock, par value | $ 1,000 | $ 1,000 | |
Preferred stock, shares authorized | 1,500 | 1,500 | |
Preferred stock, shares issued | 662 | 787 | |
Preferred stock, shares outstanding | 662 | 787 | |
[1] | On April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% non-convertible debentures previously outstanding, the Company issued a 10% secured convertible debenture to Oz Rey in exchange for the 8% non-convertible debentures. The principal amount of the 10% secured convertible debenture is $4,037,889, payable in full on April 1, 2022, subject to extension by the holders in two-year intervals for up to 10 years from the issuance date upon Amergent meeting certain conditions. Interest is payable quarterly in cash. Prior to August 17, 2020, the 10% secured convertible debenture was convertible at any time by Oz Rey into common stock at the lower of $0.10 per share and the volume weighted average price on the last 10 trading days immediately prior to conversion. The 10% secured convertible debenture is also subject to adjustment if Amergent sells securities below this price (down round protection), among other triggers. In connection with the exchange of the debentures, Amergent issued warrants to Oz Rey and the original 8% non-convertible debenture holders to purchase 2,925,200 shares of common stock. The exercise price is $0.125 for 2,462,600 warrants and $0.50 for 462,500 warrants. The warrants can be exercised on a cashless basis and expire 10 years from the issuance date. The warrants were equity classified at March 31, 2021 and December 31, 2020. The Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes. Amortization of $44,736 was recorded as interest expense during the three months ended March 31, 2021. |
Condensed Consolidated and Co_3
Condensed Consolidated and Combined Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue: | ||
Total revenue | $ 4,593,450 | $ 5,681,238 |
Expenses: | ||
Restaurant cost of sales | 1,315,922 | 1,797,770 |
Restaurant operating expenses | 3,245,115 | 3,625,844 |
Restaurant pre-opening and closing expenses | 20,730 | |
General and administrative expenses | 1,167,127 | 1,175,153 |
Asset impairment charge | 1,287,579 | |
Depreciation and amortization | 367,655 | 415,831 |
Total expenses | 7,383,398 | 7,035,328 |
Operating loss | (2,789,948) | (1,354,090) |
Other income (expense): | ||
Interest expense | (157,241) | (162,988) |
Change in fair value of derivative liabilities | 184,800 | (297,000) |
Change in the fair value of investment | 3,706 | |
Gain on extinguished lease liabilities | 43,355 | |
Other income | 2,616 | 242,193 |
Total other income (expense) | 77,236 | (217,795) |
Loss before income taxes | (2,712,712) | (1,571,885) |
Income tax expense | 3,676 | |
Consolidated and combined net loss | (2,712,712) | (1,568,209) |
Less: Net loss (income) attributable to non-controlling interests | 164,285 | (203,405) |
Net loss attributable to Amergent Hospitality Group Inc. | (2,548,427) | (1,771,614) |
Dividends on redeemable preferred stock | (28,219) | |
Net loss attributable to common shareholders of Amergent Hospitality Group Inc. | $ (2,548,427) | $ (1,799,833) |
Net loss attributable to Amergent Hospitality Group, Inc. per common share, basic and diluted | $ (0.18) | $ (0.15) |
Weighted average shares outstanding, basic and diluted | 14,482,736 | 11,909,690 |
Restaurant Sales Net [Member] | ||
Revenue: | ||
Total revenue | $ 4,444,192 | $ 5,491,457 |
Gaming Income Net [Member] | ||
Revenue: | ||
Total revenue | 57,030 | 99,749 |
Franchise Income [Member] | ||
Revenue: | ||
Total revenue | 92,228 | 90,032 |
Management Fee Income [Member] | ||
Revenue: | ||
Total revenue |
Condensed Consolidated and Co_4
Condensed Consolidated and Combined Statements of Comprehensive Loss - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss attributable to Amergent Hospitality Group | $ (2,548,427) | $ (1,771,614) |
Foreign currency translation gain (loss) | 8,792 | (81,069) |
Comprehensive loss | $ (2,539,635) | $ (1,852,683) |
Condensed Consolidated and Co_5
Condensed Consolidated and Combined Statements of Stockholders' Deficit - USD ($) | Temporary Equity Preferred Shares 2 [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2019 | $ 1,041 | $ 71,505,989 | $ (75,068,385) | $ (46,437) | $ 455,781 | $ (3,152,011) | |
Balance, shares at Dec. 31, 2019 | 10,404,342 | ||||||
Common stock and warrants issued for: Preferred Unit dividend | $ 4 | 19,519 | (28,219) | (8,696) | |||
Common stock and warrants issued for: Preferred Unit dividend, shares | 37,518 | ||||||
Common stock and warrants issued for: Exercise of warrants | $ 246 | 1,528,867 | (325,366) | 1,203,747 | |||
Common stock and warrants issued for: Exercise of warrants, shares | 2,414,022 | ||||||
Preferred Shares - Series 2: Issuance of shares, net of transaction costs of $95,000 | $ 1,405,000 | ||||||
Preferred Shares - Series 2: Issuance of shares, net of transaction costs of $95,000, shares | 1,500 | ||||||
Bifurcation of derivative liability | $ (529,000) | ||||||
Beneficial conversion feature | (729,000) | 729,000 | 729,000 | ||||
Preferred stock deemed dividend | 729,000 | (729,000) | (729,000) | ||||
Conversion of Series 2 preferred to common | $ (416,392) | $ 143 | 416,249 | 416,392 | |||
Conversion of Series 2 preferred to common, shares | (713) | 1,426,854 | |||||
Foreign currency translation | (81,069) | (81,069) | |||||
Net loss | (1,771,614) | 203,405 | (1,568,209) | ||||
Balance at Mar. 31, 2020 | $ 459,608 | $ 1,434 | 73,470,624 | (77,193,584) | (127,506) | 659,186 | (3,189,846) |
Balance, shares at Mar. 31, 2020 | 787 | 14,282,736 | |||||
Balance at Dec. 31, 2020 | $ 459,608 | $ 1,428 | 92,433,344 | (94,587,482) | (25,916) | (969,680) | (3,148,306) |
Balance, shares at Dec. 31, 2020 | 787 | 14,282,736 | |||||
Conversion of preferred stock into common | $ (73,000) | $ 25 | 72,975 | 73,000 | |||
Conversion of preferred stock into common, shares | (125) | 250,000 | |||||
Foreign currency translation | 8,792 | 8,792 | |||||
Net loss | (2,548,427) | (164,285) | (2,712,712) | ||||
Balance at Mar. 31, 2021 | $ 386,608 | $ 1,453 | $ 92,506,319 | $ (97,135,909) | $ (17,124) | $ (1,133,965) | $ (5,779,226) |
Balance, shares at Mar. 31, 2021 | 662 | 14,532,736 |
Condensed Consolidated and Co_6
Condensed Consolidated and Combined Statements of Stockholders' Deficit (Parenthetical) | Mar. 31, 2020USD ($) |
Statement of Stockholders' Equity [Abstract] | |
Transaction cost | $ 95,000 |
Condensed Consolidated and Co_7
Condensed Consolidated and Combined Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (2,712,712) | $ (1,568,209) |
Adjustments to reconcile net loss to net cash flows from operations | ||
Depreciation and amortization | 367,655 | 415,831 |
Amortization of operating lease assets | 225,947 | 628,210 |
Asset impairment charges | 1,287,579 | |
Gain from extinguished lease liabilities | (43,355) | |
Stock-based compensation | 28,000 | |
Gain on investments | (3,706) | (8,198) |
Amortization of debt discount | 44,736 | |
Derivative liabilities revaluation | (184,800) | 297,000 |
Change in assets and liabilities | ||
Accounts and other receivables | 221,463 | 68,339 |
Prepaid and other assets | 182,355 | (683,972) |
Inventories | 3,474 | 12,807 |
Accounts payable and accrued expenses | 328,345 | (195,975) |
Operating lease liabilities | (381,873) | (874,842) |
Contract liabilities | (17,856) | (24,043) |
Net cash flows from operating activities | (682,748) | (1,905,052) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (1,693) | (19,713) |
Net cash flows used in investing activities | (1,693) | (19,713) |
Cash flows from financing activities: | ||
Proceeds from Series 2 Preferred | 1,405,000 | |
Proceeds from warrant exercises | 885,046 | |
Loan proceeds | 2,000,000 | 414,400 |
Loan repayments | (44,642) | (697,237) |
Net cash flows provided by financing activities | 1,955,358 | 2,007,209 |
Effect of exchange rate of on cash | 6,661 | (34,195) |
Net increase in cash and restricted cash | 1,277,578 | 48,249 |
Cash and restricted cash, beginning of period | 1,928,804 | 501,017 |
Cash and restricted cash, end of period | 3,206,382 | 549,266 |
Supplemental cash flow information: | ||
Interest | 203,775 | 46,899 |
Income taxes | 3,490 | |
Non-cash investing and financing activities | ||
Conversion of Preferred stock - Series 2 to common stock | 73,000 | 416,392 |
Preferred stock dividends paid through issuance of common stock | 19,523 | |
Accrued interest paid through warrant exercise | 318,700 | |
Bifurcation of derivative liability from Preferred Stock - Series 2 | $ 529,000 |
Nature of Business
Nature of Business | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Nature of Business | 1. NATURE OF BUSINESS BASIS OF PRESENTATION Amergent Hospitality Group, Inc. (“Amergent”) was incorporated on February 18, 2020 as a wholly-owned subsidiary of Chanticleer Holdings, Inc. (“Chanticleer”) for the purpose of conducting the business of Chanticleer and its subsidiaries after completion of the Spin-Off of Amergent to the shareholders of Chanticleer (Spin-Off”). The Spin-Off transaction was completed on April 1, 2020 in connection with the merger (the “Merger”) of Sonnet BioTherapeutics, Inc. (“Sonnet”) on that date. Amergent is in the business of owning, operating and franchising fast casual dining concepts domestically and internationally. On March 31, 2020, Chanticleer contributed all its assets and liabilities, including the stock interest in all its subsidiaries (other than Amergent), to Amergent. Based on this being a transaction between entities under common control the carryover basis of accounting was used to record the assets and liabilities contributed to Amergent. Further, as a common control transaction the condensed consolidated and combined financial statements of Amergent reflect the transaction as if the contribution had occurred as of the earliest period presented herein. As such, the accompanying condensed consolidated and combined financial statements include the accounts of Amergent and its subsidiaries along with Chanticleer and its subsidiaries (collectively “we,” “us,” “our,” or the “Company”). All intercompany and inter-entity balances have been eliminated in consolidation and combination. GENERAL The accompanying condensed consolidated and combined financial statements included in this report have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting and include all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation. These condensed consolidated and combined financial statements have not been audited. The condensed consolidated and combined balance sheet as of December 31, 2020 has been derived from the audited consolidated and combined financial statements as of December 31, 2020 and for the year then ended included in Amergent’s annual report filed with the SEC on April 15, 2021. The results of operations for the three-month period ended March 31, 2021 are not necessarily indicative of the operating results for the full year ending December 31, 2021. Certain information and footnote disclosures normally included in unaudited condensed consolidated and combined financial statements prepared in accordance with generally accepted accounting principles of the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. However, these financial statements should be read in conjunction with the audited consolidated and combined financial statements and notes thereto included in Amergent’s Annual Report for the year ended December 31, 2020 previously filed with the SEC. LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN Liquidity, Capital Resources and Going Concern As of March 31, 2021, the Company’s cash balance was $3,206,382, of which $850,000 was restricted cash, its working capital deficiency was $12,686,393 and it had significant near-term commitments and contractual obligations. The level of additional cash needed to fund operations and our ability to conduct business for the next 12 months will be influenced primarily by the following factors: ● our ability to access the capital and debt markets to satisfy current obligations and operate the business; ● our ability to qualify for and access financial stimulus programs available through federal and state government programs; ● our ability to refinance or otherwise extend maturities of current debt obligations; ● our ability to manage our operating expenses and maintain gross margins; ● popularity of and demand for our fast-casual dining concepts; and ● general economic conditions and changes in consumer discretionary income. We have typically funded our operating costs, acquisition activities, working capital requirements and capital expenditures with proceeds from the issuances of our common stock and other financing arrangements, including convertible debt, lines of credit, notes payable, capital leases, and other forms of external financing. The Company expects to have to seek additional debt or equity funding to support operations and there can be no assurances that such funding would be available at commercially reasonable terms, if at all. As Amergent executes its business plan over the next 12 months, it intends to carefully monitor its working capital needs and cash balances relative to the availability of cost-effective debt and equity financing. In the event that capital is not available, Amergent may then have to scale back or freeze its growth plans, sell assets on less than favorable terms, reduce expenses, and/or curtail future acquisition plans to manage its liquidity and capital resources. On March 10, 2020, the World Health Organization characterized the novel COVID-19 virus as a global pandemic. The COVID-19 outbreak in the United States has resulted in a significant impact throughout the hospitality industry that have continued through March 31, 2021. The Company has been impacted due to restrictions placed by state and local governments that caused temporary restaurant closures or significantly reduced the Company’s ability to operate, restricting some of the Company’s restaurants to take-out only. It is difficult to estimate the length or severity of this outbreak; however, the Company has made operational changes, as needed, to reduce the impact. The Company’s current operating losses, combined with its working capital deficit and uncertainties regarding the impact of COVID-19, raise substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated and combined financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. SIGNIFICANT ACCOUNTING POLICIES There have been no changes to our significant accounting policies described in the annual report for the year ended December 31, 2020 filed with the SEC on April 15, 2021, that would have had a significant impact on these unaudited condensed consolidated and combined financial statements and related notes. BASIS OF PRESENTATION The accompanying condensed consolidated and combined financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). USE OF ESTIMATES The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include analysis of the recoverability of goodwill and long-lived assets. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties associated with the ongoing COVID-19 pandemic and the COVID-19 control responses. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. U.S. GAAP provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority, referred to as Level 1, to quoted prices in active markets for identical assets and liabilities. The next priority, referred to as Level 2, is given to quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active; that is, markets in which there are few transactions for the asset or liability. The lowest priority, referred to as Level 3, is given to unobservable inputs. The table below reflects the level of the inputs used in the Company’s fair value calculations: Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value March 31, 2021 Assets (Note 3) Common stock of Sonnet $ 416,974 $ — $ 416,974 Liabilities (Note 9) True-up provision of Convertible Preferred Series 2 $ — $ — $ — $ — Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2020 Assets (Note 3) Common stock of Sonnet $ 413,268 $ — $ 413,268 Liabilities (Note 9) True-up provision of Convertible Preferred Series 2 $ — $ — $ 184,800 $ 184,800 Inputs used in the Company’s Level 3 calculation of fair value are discussed in Note 9. The Company is required to disclose fair value information about financial instruments when it is practicable to estimate that value. The carrying amounts of the Company’s cash, accounts receivable, other receivables, accounts payable, other current liabilities, convertible notes payable and notes payable approximate fair value due to the short-term maturities of these financial instruments and/or because related interest rates offered to the Company approximate current rates. CASH Cash consists of deposits held at financial institutions and is stated at fair value. The Company limits its credit risk associated with cash by maintaining its bank accounts at major financial institutions. RESTRICTED CASH As of March 31, 2021 and December 31, 2020, the Company maintained restricted cash of $850,000 and $1,250,336, respectively. Approximately $441,000 of restricted cash is collateral for the True-Up Payment discussed in Note 8. The restricted cash is maintained in a segregated bank account. PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization, which includes amortization of assets held under capital leases, are recorded generally using the straight-line method over the estimated useful lives of the respective assets or, if shorter, the term of the lease for certain assets held under a capital lease. Leasehold improvements are amortized over the lesser of the expected lease term or the estimated useful lives of the related assets using the straight-line method. Maintenance and repairs that do not improve or extend the useful lives of the assets are not considered assets and are charged to expense when incurred. The estimated useful lives used to compute depreciation and amortization are as follows: Leasehold improvements 5-15 years Restaurant furnishings and equipment 3-10 years Furniture and fixtures 3-10 years Office and computer equipment 3-7 years INTANGIBLE ASSETS Trade Name/Trademark The fair value of trade name/trademarks are estimated and compared to the carrying value. The Company estimates the fair value of trademarks using the relief-from-royalty method, which requires assumptions related to projected sales from its annual long-range plan; assumed royalty rates that could be payable if the Company did not own the trademarks; and a discount rate. Certain of the Company’s trade name/trademarks have been determined to have a definite-lived life and are being amortized on a straight-line basis over estimated useful lives of 10 years. The amortization expense of these definite-lived intangibles is included in depreciation and amortization in the Company’s condensed consolidated and combined statements of operations and comprehensive income (loss). Certain of the Company’s trade name/trademarks have been classified as indefinite-lived intangible assets and are not amortized, but instead are reviewed for impairment at least annually or more frequently if indicators of impairment exist. LONG-LIVED ASSETS Long-lived assets, such as property and equipment, operating lease assets, and purchased intangible assets subject to depreciation and amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Some of the events or changes in circumstances that would trigger an impairment test include, but are not limited to: ● significant under-performance relative to expected and/or historical results (negative comparable sales growth or operating cash flows for two consecutive years); ● significant negative industry or economic trends; ● knowledge of transactions involving the sale of similar property at amounts below the Company’s carrying value; or ● the Company’s expectation to dispose of long-lived assets before the end of their estimated useful lives, even though the assets do not meet the criteria to be classified as “Held for Sale.” If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. During the third quarter of 2019 and continuing in 2020 and 2021, the Company determined that triggering events occurred some of which were related to the COVID-19 outbreak requiring management to review the certain long-lived assets for impairment. In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. Due to the continued impact of this pandemic on the Company’s business, management has performed an impairment analysis of its long-lived assets at each quarter end in 2020 and at March 31, 2021 and determined that the carrying value of the Company’s trade name/trademark intangible asset, property and equipment and operating lease assets (see Notes 4, 5, and 10 for further discussion) were impaired. The determination was based on the best judgment of management for the future of the asset and on information known at the time of the assessment. GOODWILL Goodwill, which is not subject to amortization, is evaluated for impairment annually as of the end of the Company’s year-end, or more frequently if an event occurs or circumstances change, such as material deterioration in performance or a significant number of store closures, that would indicate an impairment may exist. Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. Management determined that the Company has one reporting unit. In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. Due to the continued impact of this pandemic on the Company’s business, management has performed an impairment analysis of goodwill as of beginning in the first quarter of 2020 and quarterly thereafter through March 2021. When evaluating goodwill for impairment, the Company may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If the Company does not perform a qualitative assessment, or determines that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, a quantitative assessment is performed to calculate the estimated fair value of the reporting unit. If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value. The Company’s decision to perform a qualitative impairment assessment is influenced by a number of factors, including the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments, and the price of our common stock. Step one of the impairment test is based upon a comparison of the carrying value of net assets, including goodwill balances, to the fair value of net assets. The Company performed a quantitative assessment at the quarter end and determined that goodwill was not impaired due to the excess fair value of the reporting unit over its carrying value based on the best judgement of management for the future of the reporting unit and on information known at the time of the assessment. FOREIGN CURRENCY TRANSLATION Assets and liabilities denominated in local currency are translated to U.S. dollars using the exchange rates as in effect at the balance sheet date. Results of operations are translated using average exchange rates prevailing throughout the period. Adjustments resulting from the process of translating foreign currency financial statements from functional currency into U.S. dollars are included in accumulated other comprehensive loss within stockholders’ equity. Foreign currency transaction gains and losses are included in current earnings. The Company has determined that local currency is the functional currency for its foreign operations. LEASES We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space. Our leases generally have remaining terms of 1-20 years and most include options to extend the leases for additional 5-year periods. Generally, the lease term is the minimum of the non-cancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years. If the estimate of our reasonably certain lease term was changed, our depreciation and rent expense could differ materially. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates corresponding to the reasonably certain lease term. We estimated this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. If the estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially. INCOME TAXES Deferred income taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company has provided a valuation allowance for the full amount of the deferred tax assets in the accompanying consolidated and combined financial statements. As of March 31, 2021 and December 31, 2020, the Company had no accrued interest or penalties relating to any income tax obligations. The Company currently has no federal or state examinations in progress, nor has it had any federal or state tax examinations since its inception. The last three years of the Company’s tax years are subject to federal and state tax examination. LOSS PER COMMON SHARE The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the entire amount of the Company’s outstanding warrants, as described in Note 8, and the potential conversion of the convertible debt, as described in Note 6, would be anti-dilutive. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The objective of the standard is to improve areas of GAAP by removing certain exceptions permitted by Accounting Standards Codification 740 and clarifying existing guidance to facilitate consistent application. The standard was effective for the Company beginning on January 1, 2021. The adoption of ASU 2019-12 as of January 1, 2021 did not have a material impact on the condensed consolidated financial statements. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In August 2020, the FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options ” We reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated and combined financial statements. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2021 | |
Investments [Abstract] | |
Investments | 3. INVESTMENTS Investments consist of the following: March 31, 2021 December 31, 2020 Common stock of Sonnet, at fair value $ 416,974 $ 413,268 Chanticleer Investors, LLC, at cost 365,001 365,001 Total $ 781,975 $ 778,269 Common stock of Sonnet In 2020 the Company received warrants to purchase Sonnet common stock as part of consideration for the Merger with Sonnet (See Note 1). On November 17, 2020, the Company exercised the warrants and holds common stock of Sonnet. Chanticleer Investors LLC The Company invested $800,000 during 2011 and 2012 in exchange for a 22% ownership stake in Chanticleer Investors, LLC, which in turn held a 3% interest in Hooters of America, the operator and franchisor of the Hooters Brand worldwide. As a result, the Company’s effective economic interest in Hooters of America was approximately 0.6%. Effective June 28, 2019, Hooters of America closed on the sale of a controlling interest in the company. The consideration paid in the sale transaction was a combination of cash proceeds and equity in the newly formed company. The Company netted approximately $48,000 in cash upon the transaction and retained a non-controlling interest in the equity of the newly-formed company. In June 2019, an analysis of the transaction and the value of the cash received and retained non-controlling interest was performed. The Company concluded that its investment was impaired as of June 30, 2019 and recorded a $435,000 write down of the investment during the year ended December 31, 2019. No further impairment charges were recognized since that time. |
Property and Equipment, Net
Property and Equipment, Net | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 4. PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: March 31, 2021 December 31, 2020 Leasehold improvements $ 6,920,113 $ 7,301,908 Restaurant furniture and equipment 1,978,555 2,132,726 Construction in progress 650 5,450 Office and computer equipment 112,073 125,535 Office furniture and fixtures 59,635 59,635 9,071,026 9,625,254 Accumulated depreciation and amortization (5,899,016 ) (5,922,360 ) $ 3,172,010 $ 3,702,894 The COVID-19 outbreak in the United States has resulted in a significant impact throughout the hospitality industry. The impact has varied by state/geographical area within the United States at various intervals since the pandemic has been declared. Accordingly, the operating results and cash flows at the store level have varied significantly leading to an analysis of impairment at the store level for each quarter end beginning at the end of the first quarter of 2020 and continuing through March 31, 2021. Several stores were permanently or temporarily closed during 2020 and 2021 while others are operating at reduced capacity. Based on the assessment of recoverability, an impairment charge of approximately $255,000 was recorded for property and equipment during the three months ended March 31, 2021. No impairment was recorded during the three months ended March 31, 2020. Depreciation expense was $277,563 and $324,872 for the three months ended March 31, 2021 and 2020, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 5. INTANGIBLE ASSETS, NET GOODWILL A roll-forward of goodwill is as follows: Three Months Ended March 31, 2021 Year Ended December 31, 2020 Beginning balance $ 8,591,149 $ 8,567,888 Impairment — — Foreign currency translation gain (loss) 6,769 23,261 Ending balance $ 8,597,918 $ 8,591,149 OTHER INTANGIBLE ASSETS Franchise and trademark/tradename intangible assets consist of the following: March 31, 2021 December 31, 2020 Trademark, Tradenames: American Roadside Burger 10 years $ 561,191 $ 1,786,930 BGR: The Burger Joint Indefinite 739,245 739,245 Little Big Burger Indefinite 1,550,000 1,550,000 2,850,436 4,076,175 Acquired Franchise Rights: BGR: The Burger Joint 7 years 827,757 827,757 Franchise License Fees: Hooters Pacific NW 20 years — 74,507 Hooters UK 5 years 12,073 11,001 12,073 85,508 Total intangibles at cost 3,690,266 4,989,440 Accumulated amortization (1,064,483 ) (1,945,555 ) Intangible assets, net $ 2,625,783 $ 3,043,885 An analysis of the recoverability of the carrying value was performed at each quarter end beginning at the end of the first quarter of 2020 and continuing through March 31, 2021. Based on that analysis, an impairment charge of approximately $327,000 was recorded to trademarks/tradenames for ABC: American Burger Company during the three months ended March 31, 2021. No other intangible assets were impaired during the three months ended March 31, 2020. Amortization of intangible assets was $90,760 and $90,959 for the three months ended ended March 31, 2021 and 2020, respectively. |
Debt and Notes Payable
Debt and Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt and Notes Payable | 6. DEBT AND NOTES PAYABLE Debt and notes payable are summarized as follows at March 31, 2021 and and December 31, 2020: March 31, 2021 December 31, 2020 Notes payable (a) $ — $ 25,850 Notes payable (b) 9,075 27,048 Contractor note (c) 348,269 348,269 PPP loans (d) 4,109,400 2,109,400 UK Bounce Back loan (e) 68,800 68,245 EIDI loans (f) 300,000 299,900 Convertible debt (g) 4,037,889 4,037,889 Total Debt 8,873,433 6,916,601 Less: discount on convertible debt (g) (178,945 ) (223,681 ) Total Debt, net of discount $ 8,694,488 $ 6,692,920 Current portion of long-term debt $ 2,648,736 $ 2,338,978 Long-term debt, less current portion $ 6,045,752 $ 4,353,942 (a) (b) (c) (d) On February 25, 2021, the Company received a second PPP Loan of $2.0 million. The note bears interest at 1% per year, matures on February 25, 2026, and requires monthly principal and interest payments of approximately $44,660 beginning June 25, 2022 through maturity. The loan may be forgiven if certain criteria are met. No assurance can be given as to the amount, if any, of forgiveness. (e) (f) (g) The Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes. Amortization of $44,736 was recorded as interest expense during the three months ended March 31, 2021. The Company’s various loan agreements contain financial and non-financial covenants and provisions providing for cross-default. The evaluation of compliance with these provisions is subject to interpretation and the exercise of judgment. The Company’s lender has provided a waiver of certain financial covenants through March 31, 2021. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | 7 ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses are summarized as follows: March 31, 2021 December 31, 2020 Accounts payable $ 3,746,271 $ 3,752,036 Accrued expenses 1,748,024 1,436,679 Accrued taxes (VAT, Sales, Payroll, etc.) 3,478,968 3,356,496 Accrued interest 26,703 122,057 $ 8,999,966 $ 8,667,268 As of March 31, 2020 and December 31, 2020, approximately $2.9 million and $3.0 million, respectively, of employee and employer payroll taxes and associated interest and penalties have been accrued but not remitted to certain taxing authorities by the Company. These accruals are for periods prior to 2019 for cash compensation paid and are reflected as a component of the accrued taxes line above. As a result, the Company is liable for such payroll taxes and any related penalties and interest. |
Stockholder's Equity
Stockholder's Equity | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Deficit: | |
Stockholder's Equity | 8. STOCKHOLDER’S EQUITY 2020 Bridge Financing Pursuant to a Securities Purchase Agreement dated February 7, 2020, the Company sold 1,500 shares of a new series of convertible preferred stock of Chanticleer (the “Series 2 Preferred Stock”) to an institutional investor for gross proceeds to the Company of $1,500,000 less transaction costs of $95,000. In addition, pursuant to the original agreement with the investors, the Company issued 5-year warrants to purchase an aggregate of 350,000 shares of common stock to the investors at $1.25 per share. Each share of Series 2 Preferred has a stated value of $1,000. Upon issuance, the Company bifurcated and recorded, as a liability, an embedded derivative (more fully described below and in Note 9) in the amount of $529,000. The effective conversion price of the Series 2 Preferred Stock after the bifurcation of the derivative resulted a beneficial conversion feature of $729,000, which was then immediately recorded as a deemed dividend as the preferred stock is immediately convertible. In March 2020, an aggregate of 713 shares of Series 2 Preferred Stock were converted into 1,426,854 shares of common stock. In connection with the Merger (see Note 1), all remaining outstanding shares of the Series 2 Preferred Stock were automatically cancelled and exchanged for substantially similar shares of preferred stock in Amergent, the shareholders of Chanticleer common stock received shares of Amergent on a 1 for 1 basis (Spin-Off shares) and received 1 share of Sonnet common stock for 26 shares of Chanticleer common stock held at the time of the Merger. In January 2021, an aggregate of 125 shares of Series 2 Preferred Stock were converted into 250,000 shares of common stock. At March 31, 2021, 662 shares of Series 2 Preferred Stock were outstanding. On August 17, 2020, the Company and the holders of the Series 2 Preferred Stock entered into a Waiver, Consent, and Amendment to the Certificate of Designations (the “Extension Agreement”) which included provisions for an extension of the true-up payment discussed below from August 7, 2020 to December 10, 2020 and permitted the shares of Amergent obtained by the investor in the Spin-Off to be included in the determination of the True-Up Payment discussed below, with the Company paying all expenses incurred by the institutional investor in connection with the Extension Agreement and certain consideration for the institutional in investor’s willingness to extend the date of the true-up payment. The consideration included $66,000 of cash and warrants to purchase 134,000 shares of the Company’s common stock with a value of $28,060 (see below). On February 16, 2021, the Company and the holders of the Series 2 Preferred Stock entered into a Waiver, Consent and Amendment to the Certificate of Designations (the “Waiver”). Pursuant to the Waiver, the Company filed the Second Amendment and Restated Certificate of Designations of Series 2 Convertible Preferred Stock (“Amended COD”) with the Delaware Secretary of State (i) providing for the extension of the True-Up Payment to April 1, 2021, (ii) providing for the deduction of proceeds to the original holders from sales of Series 2 Preferred for the True-Up Payment, and (iii) providing for a reduction in amount of cash subject to restriction as discussed below from $1,250,000 to $850,000. As of the date of this report, the original investors had disposed of all of the Series 2 Preferred Stock held on March 31, 2021 (see Note 12). The Series 2 Preferred Stock is classified in the accompanying condensed consolidated and combined balance sheet at March 31, 2021 as temporary equity due to certain contingent redemption features which are outside the control of the Company. Designations, rights and preferences of Series 2 Preferred Stock: Stated value : True-Up Payment: Redemption: Conversion at option of holder/ beneficial ownership limitation Forced conversion: Liquidation preference Voting rights: Triggering Events: Anti-Dilution: Concurrently with the Preferred Securities Purchase Agreement, the parties entered into a registration rights agreement (the “Preferred Registration Rights Agreement”). Pursuant to the Preferred Registration Rights Agreement, the Company was required to file a registration statement registering the conversion shares no later than 15 days from the closing of this transaction. Options and Warrants A summary of the warrant activity during the three months ended March 31, 2021 is presented below: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at December 31, 2020 3,409,200 $ 0.34 8.6 Granted — — — Exercised — — — Forfeited/Other Adjustments — — — Outstanding at March 31, 2021 3,409,200 $ 0.34 8.3 Exercisable March 31, 2021 3,409,200 $ 0.34 8.3 At March 31, 2021, the outstanding warrants consisted of the following: Date issued Number of warrants Exercise Price Expiration Date April 1, 2020 2,462,600 $ 0.125 April 1, 2030 April 1, 2020 462,600 $ 0.500 April 1, 2030 March 30, 2020 350,000 $ 1.250 March 30, 2025 August 17, 2020 134,000 $ 1.250 August 17, 2025 3,409,200 |
Derivative Liabilities
Derivative Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Liability [Abstract] | |
Derivative Liabilities | 9. DERIVATIVE LIABILITIES The derivative liabilities at December 31, 2020 consisted of a True-Up Payment provision of the Series 2 Preferred Stock (See Note 8). The True-Up payment was valued at March 31, 2021 and was determined to have a value of 0; however, the True-Up Payment has not been settled. See Note 12 for further discussion of this matter. The table presented below is a summary of changes in the fair market value of the Company’s Level 3 valuations for the three months ended March 31, 2021. True-Up Payment Balance at December 31, 2020 $ 184,800 Change in fair value during the period (184,800 ) Balance at March 31, 2021 $ — |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. COMMITMENTS AND CONTINGENCIES Legal proceedings Indemnification agreement and tail policy On March 25, 2020, pursuant to the requirements of the Merger Agreement, Chanticleer, Sonnet and Amergent entered into an indemnification agreement (“Indemnification Agreement”) providing that Amergent will fully indemnify and hold harmless each of Chanticleer and Sonnet, and each of their respective, directors, officers, stockholders and managers who assumes such role upon or following the closing of the merger against all actual or threatened claims, losses, liabilities, damages, judgments, fines and reasonable fees, costs and expenses, including attorneys’ fees and disbursements, incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, administrative, investigative or otherwise, related to the Spin-Off Business prior to or in connection with its disposition to Amergent. In addition, pursuant to Merger Agreement, prior to closing of the Merger, the Spin-Off Entity acquired a tail insurance policy in a coverage amount of $3.0 million, prepaid in full by the Spin-Off Entity, at no cost to the indemnitees, and effective for at least six years following the consummation of the disposition, covering the Spin-Off Entity’s indemnification obligations to the indemnitees (referred to herein as the “Tail Policy”). The Company does not anticipate that any potential liability would exceed the insured amount. Litigation related to leased properties During 2020 and 2021 the Company was in arrears on rent due on several of its leases as a result of the COVID-19 pandemic. As a result, the Company has pending litigation related to 11 sites of which 5 have permanently closed. The outcome of this litigation could result in the permanent closure of additional restaurant locations as well as the possibility of the Company being required to pay interest and damages, modify certain leases on unfavorable terms and could result in material impairments to the Company’s assets. No amounts have been accrued as of March 31, 2021 and December 31, 2020 in the accompanying condensed consolidated and combined balance sheets as management does not believe the outcome will result in additional liabilities to the Company; however, there can be no guarantees. From time to time, the Company may be involved in other legal proceedings and claims that have arisen in the ordinary course of business are generally covered by insurance. As of March 31, 2021, the Company does not expect the amount of ultimate liability with respect to these matters to be material to the Company’s financial condition, results of operations or cash flows. Leases The Company’s leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These incentives are amortized through the right-of-use asset as reductions of expense over the lease term. Some of the Company’s leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurant’s sales in excess of stipulated amounts. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As part of the lease agreements, the Company is also responsible for payments regarding non-lease components (common area maintenance, operating expenses, etc.) and percentage rent payments based on monthly or annual restaurant sales amounts which are considered variable costs and are not included as part of the lease liabilities. Related to the adoption of Leases Topic 842, our policy elections were as follows: Separation of lease and non-lease components The Company elected this expedient to account for lease and non-lease components as a single component for the entire population of operating lease assets. Short-term policy The Company has elected the short-term lease recognition exemption for all applicable classes of underlying assets. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet. Supplemental balance sheet information related to leases was as follows: Operating Leases Classification March 31, 2021 December 31, 2020 Right-of-use assets Operating lease assets $ 8,598,374 $ 9,529,443 Current lease liabilities Current operating lease liabilities 5,054,829 4,209,389 Non-current lease liabilities Long-term operating lease liabilities 9,407,194 10,667,862 $ 14,462,023 $ 14,877,251 Lease term and discount rate were as follows: March 31, 2021 December 31, 2020 Weighted average remaining lease term (years) 7.80 7.70 Weighted average discount rate 10 % 10 % COVID-19 has negatively impacted operating results and cash flows at significantly varying amounts at the store level. Several stores were permanently closed during the year ended December 31, 2020 while others operated at a reduced capacity. Based on an assessment of the recoverability of the right-of-use asset as of March 31, 2021, an impairment charge of $705,122 was recorded during the three-months then ended. During the three months ended March 31, 2021 $43,355 of lease liabilities were derecognized due to the Company negotiating the cancellation of its obligations under certain lease agreements. The cancellations resulted from the COVID-19 pandemic. The Company had lease liabilities of $3,464,889 related to abandoned leases. These lease liabilities are presented as part of current operating lease liabilities. Rent expense of approximately $0.6 million was incurred during the three months ended March 31, 2021, of which approximately $0.1 million was variable. Rent expense of approximately $0.6 million was recognized the three months ended March 31, 2020, of which approximately $0.1 million was variable. PPP Loan The Company received two PPP loans for amounts of $2.1 million and $2.0 million. The PPP loan program was established under the CARES Act and administered by the Small Business Administration (“SBA”). The application for PPP loans requires the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operation of the Company. This certification further requires the Company to take into account current business activity and the Company’s ability to access other sources of liquidity sufficient to support the ongoing operations in a manner that is not significantly detrimental to the business. The receipt of funds from the PPP loans and forgiveness of the PPP loans is dependent on the Company having initially qualified for the PPP loans and qualifying for the forgiveness of such PPP loans based on funds being used for certain expenditures such as payroll costs and rent, as required by the terms of the PPP loans. There is no assurance that the Company’s obligation under the PPP loans will be forgiven. If the PPP loans are not forgiven, the Company will need to repay the PPP loans over the applicable deferral period. Presently, the SBA and other governmental communications have indicated that all loans in excess of $2.0 million will be subject to audit and that those audits could take up to seven years to complete. If the SBA determines that the PPP loans were not properly obtained and/or expenditures supporting forgiveness were not appropriate, the Company would need to repay some or all of the PPP loans and record additional expense which could have a material adverse impact on the business, financial condition and results of operations in a future period. |
Restatement of Previously Issue
Restatement of Previously Issued Condensed Consolidated and Combined Financial Statements (Unaudited) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Restatement of Previously Issued Condensed Consolidated and Combined Financial Statements (Unaudited) | 11. Restatement of Previously Issued Condensed Consolidated and Combined Financial Statements (Unaudited) The Company, while undergoing the audit of its consolidated and combined financial statements as of December 31, 2020 and for the year then ended, re-evaluated the lease term for three restaurants that were permanently closed in 2020 due to the pandemic and determined that the lease terms should no longer have included periods subject to renewal options. Impairment charges had been recorded for these restaurants during the respective quarter that the restaurants were closed, but the 2020 interim unaudited financial statements did not reflect the revised lease terms. This impacted the previously reported amounts for operating lease assets, operating lease liabilities, and rent expense, among other line items in the condensed consolidated and combined interim financial statements. The following table sets forth the effects of the adjustments on the affected items within the Company’s previously reported Condensed Consolidated and Combined Interim Balance Sheet as of March 31, 2020: March 31, 2020 As reported Adjustment As restated Operating lease assets $ 11,256,497 $ (216,681 ) $ 11,039,816 Long-term operating lease liabilities $ 14,067,517 $ (440,998 ) $ 13,626,519 Accumulated deficit $ (77,343,539 ) $ 149,955 $ (77,193,584 ) Non-controlling interests $ 584,824 $ 74,362 $ 659,186 The following tables sets forth the effects of the adjustments on affected items within the Company’s previously reported Condensed Consolidated and Combined Interim Statements of Operations for the three months ended March 31, 2020: March 31, 2020 As reported Adjustment As restated Restaurant operating expenses $ 3,625,844 $ — $ 3,625,844 Asset impairment charges $ — $ — $ — Operating loss $ (1,354,090 ) $ — $ (1,354,090 ) Other income (expense) $ 17,876 $ 224,317 $ 242,193 Consolidated and combined net loss $ (1,792,526 ) $ 224,317 $ (1,568,209 ) Net income attributable to non-controlling interests $ (129,043 ) $ (74,362 ) $ (203,405 ) Net loss attributable to Amergent Hospitality Group Inc $ (1,921,569 ) $ 149,955 $ (1,771,614 ) Net loss per common share, basic and diluted $ (0.16 ) $ 0.01 $ (0.15 ) |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. SUBSEQUENT EVENTS The Company has evaluated subsequent events from the balance sheet date through the date at which the condensed consolidated and combined financial statements were available to be issued, and there are no other items requiring disclosure except the following: Series 2 Preferred and True-Up Payment As of the date of this report, the original investors had disposed of all 662 shares of the Series 2 Preferred Stock held at March 31, 2021. The original investors converted 512 shares of the Series 2 Preferred Stock into 1,024,000 common shares. In addition, the original investors sold the remaining 150 Series 2 Preferred Stock to other investors who have not required a True-Up Payment. 50 shares of the remaining 150 Series 2 Preferred Stock sold to other investors were converted to common stock during May 2021. As of the date this repot was filed, the original investors are in the process of selling their common shares upon which the final True-Up payment will be determined, if any. Employee Retention Credit On April 1, 2021, the Company applied for a refund of $553,203 of payroll taxes previously paid as well as for the Internal Revenue Service to provide a credit for $275,760 of payroll taxes retained by the Company during the three months ended March 31, 2021. The Company expects to recognize the total Employee Retention Credit of $828,963 during the three months ending June 30, 2021. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The accompanying condensed consolidated and combined financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). |
Use of Estimates | USE OF ESTIMATES The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include analysis of the recoverability of goodwill and long-lived assets. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties associated with the ongoing COVID-19 pandemic and the COVID-19 control responses. |
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. U.S. GAAP provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority, referred to as Level 1, to quoted prices in active markets for identical assets and liabilities. The next priority, referred to as Level 2, is given to quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active; that is, markets in which there are few transactions for the asset or liability. The lowest priority, referred to as Level 3, is given to unobservable inputs. The table below reflects the level of the inputs used in the Company’s fair value calculations: Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value March 31, 2021 Assets (Note 3) Common stock of Sonnet $ 416,974 $ — $ 416,974 Liabilities (Note 9) True-up provision of Convertible Preferred Series 2 $ — $ — $ — $ — Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2020 Assets (Note 3) Common stock of Sonnet $ 413,268 $ — $ 413,268 Liabilities (Note 9) True-up provision of Convertible Preferred Series 2 $ — $ — $ 184,800 $ 184,800 Inputs used in the Company’s Level 3 calculation of fair value are discussed in Note 9. The Company is required to disclose fair value information about financial instruments when it is practicable to estimate that value. The carrying amounts of the Company’s cash, accounts receivable, other receivables, accounts payable, other current liabilities, convertible notes payable and notes payable approximate fair value due to the short-term maturities of these financial instruments and/or because related interest rates offered to the Company approximate current rates. |
Cash | CASH Cash consists of deposits held at financial institutions and is stated at fair value. The Company limits its credit risk associated with cash by maintaining its bank accounts at major financial institutions. |
Restricted Cash | RESTRICTED CASH As of March 31, 2021 and December 31, 2020, the Company maintained restricted cash of $850,000 and $1,250,336, respectively. Approximately $441,000 of restricted cash is collateral for the True-Up Payment discussed in Note 8. The restricted cash is maintained in a segregated bank account. |
Property and Equipment | PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization, which includes amortization of assets held under capital leases, are recorded generally using the straight-line method over the estimated useful lives of the respective assets or, if shorter, the term of the lease for certain assets held under a capital lease. Leasehold improvements are amortized over the lesser of the expected lease term or the estimated useful lives of the related assets using the straight-line method. Maintenance and repairs that do not improve or extend the useful lives of the assets are not considered assets and are charged to expense when incurred. The estimated useful lives used to compute depreciation and amortization are as follows: Leasehold improvements 5-15 years Restaurant furnishings and equipment 3-10 years Furniture and fixtures 3-10 years Office and computer equipment 3-7 years |
Intangible Assets | INTANGIBLE ASSETS Trade Name/Trademark The fair value of trade name/trademarks are estimated and compared to the carrying value. The Company estimates the fair value of trademarks using the relief-from-royalty method, which requires assumptions related to projected sales from its annual long-range plan; assumed royalty rates that could be payable if the Company did not own the trademarks; and a discount rate. Certain of the Company’s trade name/trademarks have been determined to have a definite-lived life and are being amortized on a straight-line basis over estimated useful lives of 10 years. The amortization expense of these definite-lived intangibles is included in depreciation and amortization in the Company’s condensed consolidated and combined statements of operations and comprehensive income (loss). Certain of the Company’s trade name/trademarks have been classified as indefinite-lived intangible assets and are not amortized, but instead are reviewed for impairment at least annually or more frequently if indicators of impairment exist. |
Long-lived Assets | LONG-LIVED ASSETS Long-lived assets, such as property and equipment, operating lease assets, and purchased intangible assets subject to depreciation and amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Some of the events or changes in circumstances that would trigger an impairment test include, but are not limited to: ● significant under-performance relative to expected and/or historical results (negative comparable sales growth or operating cash flows for two consecutive years); ● significant negative industry or economic trends; ● knowledge of transactions involving the sale of similar property at amounts below the Company’s carrying value; or ● the Company’s expectation to dispose of long-lived assets before the end of their estimated useful lives, even though the assets do not meet the criteria to be classified as “Held for Sale.” If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. During the third quarter of 2019 and continuing in 2020 and 2021, the Company determined that triggering events occurred some of which were related to the COVID-19 outbreak requiring management to review the certain long-lived assets for impairment. In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. Due to the continued impact of this pandemic on the Company’s business, management has performed an impairment analysis of its long-lived assets at each quarter end in 2020 and at March 31, 2021 and determined that the carrying value of the Company’s trade name/trademark intangible asset, property and equipment and operating lease assets (see Notes 4, 5, and 10 for further discussion) were impaired. The determination was based on the best judgment of management for the future of the asset and on information known at the time of the assessment. |
Goodwill | GOODWILL Goodwill, which is not subject to amortization, is evaluated for impairment annually as of the end of the Company’s year-end, or more frequently if an event occurs or circumstances change, such as material deterioration in performance or a significant number of store closures, that would indicate an impairment may exist. Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. Management determined that the Company has one reporting unit. In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. Due to the continued impact of this pandemic on the Company’s business, management has performed an impairment analysis of goodwill as of beginning in the first quarter of 2020 and quarterly thereafter through March 2021. When evaluating goodwill for impairment, the Company may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If the Company does not perform a qualitative assessment, or determines that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, a quantitative assessment is performed to calculate the estimated fair value of the reporting unit. If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value. The Company’s decision to perform a qualitative impairment assessment is influenced by a number of factors, including the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments, and the price of our common stock. Step one of the impairment test is based upon a comparison of the carrying value of net assets, including goodwill balances, to the fair value of net assets. The Company performed a quantitative assessment at the quarter end and determined that goodwill was not impaired due to the excess fair value of the reporting unit over its carrying value based on the best judgement of management for the future of the reporting unit and on information known at the time of the assessment. |
Foreign Currency Translation | FOREIGN CURRENCY TRANSLATION Assets and liabilities denominated in local currency are translated to U.S. dollars using the exchange rates as in effect at the balance sheet date. Results of operations are translated using average exchange rates prevailing throughout the period. Adjustments resulting from the process of translating foreign currency financial statements from functional currency into U.S. dollars are included in accumulated other comprehensive loss within stockholders’ equity. Foreign currency transaction gains and losses are included in current earnings. The Company has determined that local currency is the functional currency for its foreign operations. |
Leases | LEASES We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space. Our leases generally have remaining terms of 1-20 years and most include options to extend the leases for additional 5-year periods. Generally, the lease term is the minimum of the non-cancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years. If the estimate of our reasonably certain lease term was changed, our depreciation and rent expense could differ materially. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates corresponding to the reasonably certain lease term. We estimated this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. If the estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially. |
Income Taxes | INCOME TAXES Deferred income taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company has provided a valuation allowance for the full amount of the deferred tax assets in the accompanying consolidated and combined financial statements. As of March 31, 2021 and December 31, 2020, the Company had no accrued interest or penalties relating to any income tax obligations. The Company currently has no federal or state examinations in progress, nor has it had any federal or state tax examinations since its inception. The last three years of the Company’s tax years are subject to federal and state tax examination. |
Loss Per Common Share | LOSS PER COMMON SHARE The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the entire amount of the Company’s outstanding warrants, as described in Note 8, and the potential conversion of the convertible debt, as described in Note 6, would be anti-dilutive. |
Recently Adopted Accounting Pronouncements | RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The objective of the standard is to improve areas of GAAP by removing certain exceptions permitted by Accounting Standards Codification 740 and clarifying existing guidance to facilitate consistent application. The standard was effective for the Company beginning on January 1, 2021. The adoption of ASU 2019-12 as of January 1, 2021 did not have a material impact on the condensed consolidated financial statements. |
Recently Issued Accounting Pronouncements | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In August 2020, the FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options ” We reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated and combined financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value of Financial Instruments | The table below reflects the level of the inputs used in the Company’s fair value calculations: Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value March 31, 2021 Assets (Note 3) Common stock of Sonnet $ 416,974 $ — $ 416,974 Liabilities (Note 9) True-up provision of Convertible Preferred Series 2 $ — $ — $ — $ — Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2020 Assets (Note 3) Common stock of Sonnet $ 413,268 $ — $ 413,268 Liabilities (Note 9) True-up provision of Convertible Preferred Series 2 $ — $ — $ 184,800 $ 184,800 |
Schedule of Property and Equipment Useful Lives | The estimated useful lives used to compute depreciation and amortization are as follows: Leasehold improvements 5-15 years Restaurant furnishings and equipment 3-10 years Furniture and fixtures 3-10 years Office and computer equipment 3-7 years |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Investments [Abstract] | |
Schedule of Investments | Investments consist of the following: March 31, 2021 December 31, 2020 Common stock of Sonnet, at fair value $ 416,974 $ 413,268 Chanticleer Investors, LLC, at cost 365,001 365,001 Total $ 781,975 $ 778,269 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net consists of the following: March 31, 2021 December 31, 2020 Leasehold improvements $ 6,920,113 $ 7,301,908 Restaurant furniture and equipment 1,978,555 2,132,726 Construction in progress 650 5,450 Office and computer equipment 112,073 125,535 Office furniture and fixtures 59,635 59,635 9,071,026 9,625,254 Accumulated depreciation and amortization (5,899,016 ) (5,922,360 ) $ 3,172,010 $ 3,702,894 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | A roll-forward of goodwill is as follows: Three Months Ended March 31, 2021 Year Ended December 31, 2020 Beginning balance $ 8,591,149 $ 8,567,888 Impairment — — Foreign currency translation gain (loss) 6,769 23,261 Ending balance $ 8,597,918 $ 8,591,149 |
Schedule of Other Intangible Assets | OTHER INTANGIBLE ASSETS Franchise and trademark/tradename intangible assets consist of the following: March 31, 2021 December 31, 2020 Trademark, Tradenames: American Roadside Burger 10 years $ 561,191 $ 1,786,930 BGR: The Burger Joint Indefinite 739,245 739,245 Little Big Burger Indefinite 1,550,000 1,550,000 2,850,436 4,076,175 Acquired Franchise Rights: BGR: The Burger Joint 7 years 827,757 827,757 Franchise License Fees: Hooters Pacific NW 20 years — 74,507 Hooters UK 5 years 12,073 11,001 12,073 85,508 Total intangibles at cost 3,690,266 4,989,440 Accumulated amortization (1,064,483 ) (1,945,555 ) Intangible assets, net $ 2,625,783 $ 3,043,885 |
Debt and Notes Payable (Tables)
Debt and Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Debt and Notes Payable | Debt and notes payable are summarized as follows at March 31, 2021 and and December 31, 2020: March 31, 2021 December 31, 2020 Notes payable (a) $ — $ 25,850 Notes payable (b) 9,075 27,048 Contractor note (c) 348,269 348,269 PPP loans (d) 4,109,400 2,109,400 UK Bounce Back loan (e) 68,800 68,245 EIDI loans (f) 300,000 299,900 Convertible debt (g) 4,037,889 4,037,889 Total Debt 8,873,433 6,916,601 Less: discount on convertible debt (g) (178,945 ) (223,681 ) Total Debt, net of discount $ 8,694,488 $ 6,692,920 Current portion of long-term debt $ 2,648,736 $ 2,338,978 Long-term debt, less current portion $ 6,045,752 $ 4,353,942 (a) (b) (c) (d) On February 25, 2021, the Company received a second PPP Loan of $2.0 million. The note bears interest at 1% per year, matures on February 25, 2026, and requires monthly principal and interest payments of approximately $44,660 beginning June 25, 2022 through maturity. The loan may be forgiven if certain certain criteria are met. No assurance can be given as to the amount, if any, of forgiveness. (e) (f) (g) The Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes. Amortization of $44,736 was recorded as interest expense during the three months ended March 31, 2021. The Company’s various loan agreements contain financial and non-financial covenants and provisions providing for cross-default. The evaluation of compliance with these provisions is subject to interpretation and the exercise of judgment. The Company’s lender has provided a waiver of certain financial covenants through March 31, 2021. |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses are summarized as follows: March 31, 2021 December 31, 2020 Accounts payable $ 3,746,271 $ 3,752,036 Accrued expenses 1,748,024 1,436,679 Accrued taxes (VAT, Sales, Payroll, etc.) 3,478,968 3,356,496 Accrued interest 26,703 122,057 $ 8,999,966 $ 8,667,268 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Summary of Warrant Activity | Options and Warrants A summary of the warrant activity during the three months ended March 31, 2021 is presented below: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at December 31, 2020 3,409,200 $ 0.34 8.6 Granted — — — Exercised — — — Forfeited/Other Adjustments — — — Outstanding at March 31, 2021 3,409,200 $ 0.34 8.3 Exercisable March 31, 2021 3,409,200 $ 0.34 8.3 |
Schedule of Outstanding Warrants | At March 31, 2021, the outstanding warrants consisted of the following: Date issued Number of warrants Exercise Price Expiration Date April 1, 2020 2,462,600 $ 0.125 April 1, 2030 April 1, 2020 462,600 $ 0.500 April 1, 2030 March 30, 2020 350,000 $ 1.250 March 30, 2025 August 17, 2020 134,000 $ 1.250 August 17, 2025 3,409,200 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Liability [Abstract] | |
Summary of Changes in Fair Value Derivative Liabilities | The table presented below is a summary of changes in the fair market value of the Company’s Level 3 valuations for the three months ended March 31, 2021. True-Up Payment Balance at December 31, 2020 $ 184,800 Change in fair value during the period (184,800 ) Balance at March 31, 2021 $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Lease Information | Supplemental balance sheet information related to leases was as follows: Operating Leases Classification March 31, 2021 December 31, 2020 Right-of-use assets Operating lease assets $ 8,598,374 $ 9,529,443 Current lease liabilities Current operating lease liabilities 5,054,829 4,209,389 Non-current lease liabilities Long-term operating lease liabilities 9,407,194 10,667,862 $ 14,462,023 $ 14,877,251 Lease term and discount rate were as follows: March 31, 2021 December 31, 2020 Weighted average remaining lease term (years) 7.80 7.70 Weighted average discount rate 10 % 10 % |
Restatement of Previously Iss_2
Restatement of Previously Issued Condensed Consolidated and Combined Financial Statements (Unaudited) (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Previously Issued Interim Financial Statements | The following table sets forth the effects of the adjustments on the affected items within the Company’s previously reported Condensed Consolidated and Combined Interim Balance Sheet as of March 31, 2020: March 31, 2020 As reported Adjustment As restated Operating lease assets $ 11,256,497 $ (216,681 ) $ 11,039,816 Long-term operating lease liabilities $ 14,067,517 $ (440,998 ) $ 13,626,519 Accumulated deficit $ (77,343,539 ) $ 149,955 $ (77,193,584 ) Non-controlling interests $ 584,824 $ 74,362 $ 659,186 The following tables sets forth the effects of the adjustments on affected items within the Company’s previously reported Condensed Consolidated and Combined Interim Statements of Operations for the three months ended March 31, 2020: March 31, 2020 As reported Adjustment As restated Restaurant operating expenses $ 3,625,844 $ — $ 3,625,844 Asset impairment charges $ — $ — $ — Operating loss $ (1,354,090 ) $ — $ (1,354,090 ) Other income (expense) $ 17,876 $ 224,317 $ 242,193 Consolidated and combined net loss $ (1,792,526 ) $ 224,317 $ (1,568,209 ) Net income attributable to non-controlling interests $ (129,043 ) $ (74,362 ) $ (203,405 ) Net loss attributable to Amergent Hospitality Group Inc $ (1,921,569 ) $ 149,955 $ (1,771,614 ) Net loss per common share, basic and diluted $ (0.16 ) $ 0.01 $ (0.15 ) |
Nature of Business (Details Nar
Nature of Business (Details Narrative) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Cash balance | $ 3,206,382 | |
Restricted cash | 850,000 | $ 1,250,336 |
Working capital deficit | $ 12,686,393 |
Significant Accounting Polici_4
Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Restricted cash | $ 850,000 | $ 1,250,336 |
Estimated useful lives of intangible assets | 10 years | |
Operating lease, option to extend | Include options to extend the leases for additional 5-year periods. | |
Operating lease, renewal term | 20 years | |
Accrued interest or penalties | ||
Minimum [Member] | ||
Operating lease, remaining lease term | 1 year | |
Maximum [Member] | ||
Operating lease, remaining lease term | 20 years | |
True-Up Payment [Member] | ||
Restricted cash | $ 441,000 |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Fair Value of Financial Instruments (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Common stock of Sonnet, at fair value | $ 416,974 | $ 413,268 |
True-up provision of Convertible Preferred Series 2 | 184,800 | |
Level 1 [Member] | ||
Common stock of Sonnet, at fair value | 416,974 | 413,268 |
True-up provision of Convertible Preferred Series 2 | ||
Level 2 [Member] | ||
Common stock of Sonnet, at fair value | ||
True-up provision of Convertible Preferred Series 2 | ||
Level 3 [Member] | ||
Common stock of Sonnet, at fair value | ||
True-up provision of Convertible Preferred Series 2 | $ 184,800 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Property and Equipment Useful Lives (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Leasehold Improvements [Member] | Minimum [Member] | |
Property and equipment useful life | 5 years |
Leasehold Improvements [Member] | Maximum [Member] | |
Property and equipment useful life | 15 years |
Restaurant Furnishings and Equipment [Member] | Minimum [Member] | |
Property and equipment useful life | 3 years |
Restaurant Furnishings and Equipment [Member] | Maximum [Member] | |
Property and equipment useful life | 10 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property and equipment useful life | 3 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property and equipment useful life | 10 years |
Office and Computer Equipment [Member] | Minimum [Member] | |
Property and equipment useful life | 3 years |
Office and Computer Equipment [Member] | Maximum [Member] | |
Property and equipment useful life | 7 years |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2021 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2012 | Dec. 31, 2011 | |
Investment | $ 781,975 | $ 778,269 | $ 80,000 | $ 80,000 | |
Investment description | The Company invested $800,000 during 2011 and 2012 in exchange for a 22% ownership stake in Chanticleer Investors, LLC, which in turn held a 3% interest in Hooters of America, the operator and franchisor of the Hooters Brand worldwide. As a result, the Company's effective economic interest in Hooters of America was approximately 0.6%. | ||||
Non controlling interest | $ 48,000 | ||||
Investment write down | $ 435,000 | ||||
Chanticleer Investors, LLC [member] | |||||
Investment ownership percentage | 22.00% | ||||
Hooters [member] | |||||
Investment ownership percentage | 3.00% |
Investments - Schedule of Inves
Investments - Schedule of Investments (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2012 | Dec. 31, 2011 |
Investments [Abstract] | ||||
Common stock of Sonnet, at fair value | $ 416,974 | $ 413,268 | ||
Chanticleer Investors, LLC, at cost | 365,001 | 365,001 | ||
Total | $ 781,975 | $ 778,269 | $ 80,000 | $ 80,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Impairment charge for property and equipment | $ 255,000 | |
Depreciation expense | $ 277,563 | $ 324,872 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 6,920,113 | $ 7,301,908 |
Restaurant furniture and equipment | 1,978,555 | 2,132,726 |
Construction in progress | 650 | 5,450 |
Office and computer equipment | 112,073 | 125,535 |
Office furniture and fixtures | 59,635 | 59,635 |
Property, plant and equipment, gross | 9,071,026 | 9,625,254 |
Accumulated depreciation and amortization | (5,899,016) | (5,922,360) |
Property, plant and equipment, net | $ 3,172,010 | $ 3,702,894 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Impairment charge | $ 255,000 | |
Trademark, Tradenames [Member] | ||
Impairment charge | 327,000 | |
Amortization of intangible assets | $ 90,760 | $ 90,959 |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule of Goodwill (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning balance | $ 8,591,149 | $ 8,567,888 |
Impairment | ||
Foreign currency translation gain (loss) | 6,769 | 23,261 |
Ending balance | $ 8,597,918 | $ 8,591,149 |
Intangible Assets, Net - Sche_2
Intangible Assets, Net - Schedule of Other Intangible Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Estimated life | 10 years | |
Total intangibles at cost | $ 3,690,266 | $ 4,989,440 |
Accumulated amortization | (1,064,483) | (1,945,555) |
Intangible assets, net | 2,625,783 | 3,043,885 |
Trademark, Tradenames [Member] | ||
Total intangibles at cost | $ 2,850,436 | 4,076,175 |
Trademark, Tradenames [Member] | American Roadside Burger [Member] | ||
Estimated life | 10 years | |
Total intangibles at cost | $ 561,191 | 1,786,930 |
Trademark, Tradenames [Member] | The Burger Joint [Member] | ||
Estimated life description | Indefinite | |
Total intangibles at cost | $ 739,245 | 739,245 |
Trademark, Tradenames [Member] | Little Big Burger [Member] | ||
Estimated life description | Indefinite | |
Total intangibles at cost | $ 1,550,000 | 1,550,000 |
Acquired Franchise Rights [Member] | The Burger Joint [Member] | ||
Estimated life | 7 years | |
Total intangibles at cost | $ 827,757 | 827,757 |
Franchise License Fees [Member] | ||
Total intangibles at cost | $ 12,073 | 85,508 |
Franchise License Fees [Member] | Hooters Pacific NW [Member] | ||
Estimated life | 20 years | |
Total intangibles at cost | 74,507 | |
Franchise License Fees [Member] | Hooters UK [Member] | ||
Estimated life | 5 years | |
Total intangibles at cost | $ 12,073 | $ 11,001 |
Debt and Notes Payable - Schedu
Debt and Notes Payable - Schedule of Debt and Notes Payable (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | |
Contractor note | [1] | $ 348,269 | $ 348,269 |
PPP loan | [2] | 4,109,400 | 2,109,400 |
UK Bounce Back loan | [3] | 68,800 | 68,245 |
EIDI Loans | [4] | 300,000 | 299,900 |
Convertible debt | [5] | 4,037,889 | 4,037,889 |
Total Debt | 8,873,433 | 6,916,601 | |
Less: discount on convertible debt | [5] | (178,945) | (223,681) |
Total Debt, net of discount | 8,694,488 | 6,692,920 | |
Current portion of long-term debt | 2,648,736 | 2,338,978 | |
Long-term debt, less current portion | 6,045,752 | 4,353,942 | |
Merchant Capital Advances [Member] | |||
Notes Payable | [6] | 9,075 | 27,048 |
BGR Franchisees [Member] | |||
Notes Payable | [7] | $ 25,850 | |
[1] | The Company entered into a promissory note to repay a contractor for the build-out of a new Little Big Burger location. The note has a balance of $348,269, and a stated interest rate of 12% per year. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, this note was assumed by Amergent. The Company is currently in default on this loan and a writ of garnishment was ordered against the Company in 2020 for approximately $445,000. The additional $95,000 is included in accounts payable and accrued expenses at March 31, 2021 and December 31, 2020. | ||
[2] | On April 27, 2020, Amergent received a $2.1 million loan under the first round of the Payment Protection Program (PPP Loan). The note bears interest at 1% per year, matures in April 2022, and requires monthly interest and principal payments of approximately $119,000 beginning in November 2020 and through maturity. The currently issued guidelines of the program allow for the loan proceeds to be forgiven if certain requirements are met. Any loan proceeds not forgiven will be repaid in full. The Company has currently applied for loan forgiveness in the full amount of the loan, but no assurance can be given as to the amount, if any, of forgiveness. The application for forgiveness allowed the Company to defer the timing of repayment until the forgiveness assessment is completed. See Note 10 for additional information. On February 25, 2021, the Company received a second PPP Loan of $2.0 million. The note bears interest at 1% per year, matures on February 25, 2026, and requires monthly principal and interest payments of approximately $44,660 beginning June 25, 2022 through maturity. The loan may be forgiven if certain criteria are met. No assurance can be given as to the amount, if any, of forgiveness. | ||
[3] | On November 24, 2020, Amergent received approximately $68,200 through the Bounce Back Loan Scheme in the United Kingdom. The loan has a term of six years that can be extended to 10 years. No payments are required and no interest is accrued for the first twelve months after the loan is received. After the first year, the loan accrues interest at 2.5% per year. | ||
[4] | On August 4, 2020, the Company obtained two loans under the Economic Injury Disaster Loan ("EIDL") assistance program from the Small Business Administration ("SBA") in light of the impact of the COVID-19 pandemic on the Company's business. The principal amount of the loans is $300,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per year. Total installment payments, including principal and interest, are due monthly beginning August 4, 2021 in the amount of $1,762. The balance of principal and interest is payable over the next thirty years from the date of the promissory note (August 2050). There are no penalties for prepayment. Based upon guidance issued by the SBA on June 19, 2020, the EIDL loans are not required to be refinanced by the PPP Loan. | ||
[5] | On April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% non-convertible debentures previously outstanding, the Company issued a 10% secured convertible debenture to Oz Rey in exchange for the 8% non-convertible debentures. The principal amount of the 10% secured convertible debenture is $4,037,889, payable in full on April 1, 2022, subject to extension by the holders in two-year intervals for up to 10 years from the issuance date upon Amergent meeting certain conditions. Interest is payable quarterly in cash. Prior to August 17, 2020, the 10% secured convertible debenture was convertible at any time by Oz Rey into common stock at the lower of $0.10 per share and the volume weighted average price on the last 10 trading days immediately prior to conversion. The 10% secured convertible debenture is also subject to adjustment if Amergent sells securities below this price (down round protection), among other triggers. In connection with the exchange of the debentures, Amergent issued warrants to Oz Rey and the original 8% non-convertible debenture holders to purchase 2,925,200 shares of common stock. The exercise price is $0.125 for 2,462,600 warrants and $0.50 for 462,500 warrants. The warrants can be exercised on a cashless basis and expire 10 years from the issuance date. The warrants were equity classified at March 31, 2021 and December 31, 2020. The Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes. Amortization of $44,736 was recorded as interest expense during the three months ended March 31, 2021. | ||
[6] | During September 2019 and October 2019, the Company entered into two merchant capital advances in the amount of $46,000 and $84,700, respectively. The Company agreed to repay these advances through daily payments until those amounts are repaid with the specified interest rate per those agreements. | ||
[7] | In connection with the assets acquired from the two BGR franchisees, the Company entered into notes payable of $9,600 and $187,000 during 2018. The notes bore interest at 4% and were due within 12 months of each acquisition date. Principal and interest payments were due monthly. |
Debt and Notes Payable - Sche_2
Debt and Notes Payable - Schedule of Debt and Notes Payable (Details) (Parenthetical) | Feb. 25, 2021USD ($) | Nov. 24, 2020USD ($) | Nov. 01, 2020USD ($) | Aug. 04, 2020USD ($) | Apr. 27, 2020USD ($) | Oct. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Mar. 31, 2021USD ($)$ / sharesshares | Mar. 31, 2020USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2020USD ($) | Apr. 02, 2020USD ($) | |
Default loan | $ 445,000 | ||||||||||||
Accounts payable and accrued expenses | $ 95,000 | 95,000 | |||||||||||
Proceeds from issuance of debt | 2,000,000 | $ 414,400 | |||||||||||
Debt discount | [1] | 178,945 | 223,681 | ||||||||||
Note Payable One [Member] | |||||||||||||
Proceeds from Consideration | $ 9,600 | ||||||||||||
Notes Payable Two [Member] | |||||||||||||
Proceeds from Consideration | $ 187,000 | ||||||||||||
Merchant Capital Advances [Member] | |||||||||||||
Proceeds from Consideration | $ 84,700 | $ 46,000 | |||||||||||
Note payable | [2] | 9,075 | $ 27,048 | ||||||||||
Promissory Note [Member] | |||||||||||||
Note payable | $ 348,269 | ||||||||||||
Debt instrument interest rate | 12.00% | ||||||||||||
Paycheck Protection Program Loan [Member] | |||||||||||||
Debt instrument interest rate | 1.00% | 1.00% | |||||||||||
Proceeds from issuance of debt | $ 2,000,000 | $ 2,100,000 | |||||||||||
Debt instrument, maturity date | Feb. 25, 2026 | Apr. 30, 2022 | |||||||||||
Periodic payment | $ 44,660 | $ 119,000 | |||||||||||
Bounce Back Loan [Member] | |||||||||||||
Debt instrument interest rate | 2.50% | ||||||||||||
Proceeds from issuance of debt | $ 68,200 | ||||||||||||
Bounce Back Loan [Member] | Minimum [Member] | |||||||||||||
Loan term | 6 years | ||||||||||||
Bounce Back Loan [Member] | Maximum [Member] | |||||||||||||
Loan term | 10 years | ||||||||||||
Economic Injury Disaster Loan [Member] | |||||||||||||
Debt instrument interest rate | 3.75% | ||||||||||||
Debt instrument, maturity date | Aug. 4, 2021 | ||||||||||||
Periodic payment | $ 1,762 | ||||||||||||
Debt instrument, face amount | $ 300,000 | ||||||||||||
10% Secured Convertible Debenture [Member] | |||||||||||||
Debt instrument, face amount | $ 4,037,889 | ||||||||||||
Debt description | On April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% non-convertible debentures previously outstanding, the Company issued a 10% secured convertible debenture to Oz Rey in exchange for the 8% non-convertible debentures. The principal amount of the 10% secured convertible debenture is $4,037,889, payable in full on April 1, 2022, subject to extension by the holders in two-year intervals for up to 10 years from the issuance date upon Amergent meeting certain conditions. Interest is payable quarterly in cash. Prior to August 17, 2020, the 10% secured convertible debenture was convertible at any time by Oz Rey into common stock at the lower of $0.10 per share and the volume weighted average price on the last 10 trading days immediately prior to conversion. The 10% secured convertible debenture is also subject to adjustment if Amergent sells securities below this price (down round protection), among other triggers. In connection with the exchange of the debentures, Amergent issued warrants to Oz Rey and the original 8% non-convertible debenture holders to purchase 2,925,200 shares of common stock. | ||||||||||||
Percentage of note conversion | 0.10 | ||||||||||||
Warrant to purchase common stock | shares | 2,925,200 | ||||||||||||
Convertible Notes [Member] | Warrant One [Member] | |||||||||||||
Warrant to purchase common stock | shares | 2,462,600 | ||||||||||||
Warrant exercise price | $ / shares | $ 0.125 | ||||||||||||
Convertible Notes [Member] | Warrant Two [Member] | |||||||||||||
Warrant to purchase common stock | shares | 462,500 | ||||||||||||
Warrant exercise price | $ / shares | $ 0.50 | ||||||||||||
10% Convertible Notes [Member] | |||||||||||||
Debt instrument interest rate | 10.00% | ||||||||||||
Debt discount | $ 358,000 | ||||||||||||
Interest expenses | $ 44,736 | ||||||||||||
[1] | On April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% non-convertible debentures previously outstanding, the Company issued a 10% secured convertible debenture to Oz Rey in exchange for the 8% non-convertible debentures. The principal amount of the 10% secured convertible debenture is $4,037,889, payable in full on April 1, 2022, subject to extension by the holders in two-year intervals for up to 10 years from the issuance date upon Amergent meeting certain conditions. Interest is payable quarterly in cash. Prior to August 17, 2020, the 10% secured convertible debenture was convertible at any time by Oz Rey into common stock at the lower of $0.10 per share and the volume weighted average price on the last 10 trading days immediately prior to conversion. The 10% secured convertible debenture is also subject to adjustment if Amergent sells securities below this price (down round protection), among other triggers. In connection with the exchange of the debentures, Amergent issued warrants to Oz Rey and the original 8% non-convertible debenture holders to purchase 2,925,200 shares of common stock. The exercise price is $0.125 for 2,462,600 warrants and $0.50 for 462,500 warrants. The warrants can be exercised on a cashless basis and expire 10 years from the issuance date. The warrants were equity classified at March 31, 2021 and December 31, 2020. The Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes. Amortization of $44,736 was recorded as interest expense during the three months ended March 31, 2021. | ||||||||||||
[2] | During September 2019 and October 2019, the Company entered into two merchant capital advances in the amount of $46,000 and $84,700, respectively. The Company agreed to repay these advances through daily payments until those amounts are repaid with the specified interest rate per those agreements. |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details Narrative) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Employee and employer accrued taxes | $ 2,900,000 | $ 3,000,000 |
Accounts Payable and Accrued _4
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 3,746,271 | $ 3,752,036 |
Accrued expenses | 1,748,024 | 1,436,679 |
Accrued taxes (VAT, Sales, Payroll, etc.) | 3,478,968 | 3,356,496 |
Accrued interest | 26,703 | 122,057 |
Accounts payable and accrued expenses, total | $ 8,999,966 | $ 8,667,268 |
Stockholder's Equity (Details N
Stockholder's Equity (Details Narrative) - USD ($) | Feb. 16, 2021 | Aug. 17, 2020 | Feb. 07, 2020 | Jan. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Common stock, par value | $ 0.0001 | $ 0.0001 | |||||
Number of warrants issued to purchase common stock | 3,409,200 | ||||||
Common Stock [Member] | |||||||
Stock issued during period conversion of convertible securities | 250,000 | ||||||
Convertible Preferred Stock: Series 2 [Member] | |||||||
Preferred stock, shares authorized | 1,500 | 1,500 | |||||
Preferred stock, shares issued | 662 | 787 | |||||
Preferred stock, shares outstanding | 662 | 787 | |||||
Preferred stock, par value | $ 1,000 | $ 1,000 | |||||
Preferred Stock: Series 2 [Member] | |||||||
Stock issued during period conversion of convertible securities | 1,400 | ||||||
Series 2 Preferred Stock [Member] | |||||||
Cash payment to stock holders | $ 66,000 | ||||||
Number of warrants issued to purchase common stock | 134,000 | ||||||
Common stock were issued value | $ 28,060 | ||||||
2020 Bridge Financing [Member] | Common Stock [Member] | |||||||
Stock issued during period conversion of convertible securities | 250,000 | ||||||
2020 Bridge Financing [Member] | Preferred Stock: Series 2 [Member] | |||||||
Stock issued during period conversion of convertible securities | 125 | ||||||
Preferred stock description | The shareholders of Chanticleer common stock received shares of Amergent on a 1 for 1 basis (spin-off shares) and received 1 share of Sonnet common stock for 26 shares of Chanticleer common stock held at the time of the Merger. | ||||||
Common stock were issued value | $ 1,250,000 | $ 850,000 | |||||
Percentage of cash equal to dollar value | 1.25% | ||||||
Trigger default interest rate | 18.00% | ||||||
Conversion price | $ 1 | ||||||
Beneficial ownership percentage limitation | 4.99% | ||||||
Percentage of limitation prior to merger | 9.99% | ||||||
2020 Bridge Financing [Member] | Preferred Stock: Series 2 [Member] | Minimum [Member] | |||||||
Common stock were issued value | $ 850,000 | ||||||
2020 Bridge Financing [Member] | Securities Purchase Agreement [Member] | Convertible Preferred Stock: Series 2 [Member] | |||||||
Preferred stock, shares issued | 713 | ||||||
Stock issued during period conversion of convertible securities | 1,426,849 | ||||||
2020 Bridge Financing [Member] | Securities Purchase Agreement [Member] | Chanticleer [Member] | Convertible Preferred Stock: Series 2 [Member] | |||||||
Sale of stock, number of shares | 1,500 | ||||||
Gross proceeds preference stock | $ 1,500,000 | ||||||
Sale of stock, transaction costs | $ 95,000 | ||||||
Warrants term | 5 years | ||||||
Warrants to purchase common stock | 350,000 | ||||||
Common stock, par value | $ 1.25 | ||||||
Preferred stock value | $ 1,000 | ||||||
Embedded derivative liability | 529,000 | ||||||
Beneficial conversion feature | $ 729,000 |
Stockholder's Equity - Summary
Stockholder's Equity - Summary of Warrant Activity (Details) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Stockholders' Deficit: | |
Number of Warrants Outstanding, Beginning Balance | shares | 3,409,200 |
Number of Warrants Outstanding, Granted | shares | |
Number of Warrants Outstanding, Exercised | shares | |
Number of Warrants Outstanding, Forfeited / Other Adjustments | shares | |
Number of Warrants Outstanding, Ending Balance | shares | 3,409,200 |
Number of Warrants Exercisable, Ending Balance | shares | 3,409,200 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 0.34 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited / Other Adjustments | $ / shares | |
Weighted Average Exercise Price, Ending Balance | $ / shares | 0.34 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 0.34 |
Weighted Average Remaining Life, Beginning Balance | 8 years 7 months 6 days |
Weighted Average Remaining Life, Granted | 0 years |
Weighted Average Remaining Life, Ending Balance | 8 years 3 months 19 days |
Weighted Average Remaining Life, Ending Balance | 8 years 3 months 19 days |
Stockholder's Equity - Schedule
Stockholder's Equity - Schedule of Outstanding Warrants (Details) | Mar. 31, 2021$ / sharesshares |
Number of warrants | 3,409,200 |
Warrants Issued on April 1, 2020 [Member] | |
Number of warrants | 2,462,600 |
Exercise Price | $ / shares | $ 0.125 |
Expiration Date | Apr. 1, 2030 |
Warrants Issued on April 1, 2020 [Member] | |
Number of warrants | 462,600 |
Exercise Price | $ / shares | $ 0.500 |
Expiration Date | Apr. 1, 2030 |
Warrants Issued on March 30, 2020 [Member] | |
Number of warrants | 350,000 |
Exercise Price | $ / shares | $ 1.250 |
Expiration Date | Mar. 30, 2025 |
Warrants Issued on August 17, 2020 [Member] | |
Number of warrants | 134,000 |
Exercise Price | $ / shares | $ 1.250 |
Expiration Date | Aug. 17, 2025 |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) | Mar. 31, 2021USD ($) |
Derivative Liability [Abstract] | |
Derivative liabilities |
Derivative Liabilities - Summar
Derivative Liabilities - Summary of Changes in Fair Value Derivative Liabilities (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Balance at December 31, 2020 | $ 184,800 |
Balance at March 31, 2021 | |
True-Up Payment [Member] | |
Balance at December 31, 2020 | 184,800 |
Change in fair value during the period | (184,800) |
Balance at March 31, 2021 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Insurance in coverage amount | $ 3,000,000 | ||
Impairment charge of right-of-use asset | 705,122 | ||
Unrecognized lease liabilities | 43,355 | ||
Related to abandoned leases liabilities | 3,464,889 | ||
Rent expenses | 600,000 | $ 600,000 | |
Loans payable | $ 445,000 | ||
Variable [Member] | |||
Rent expenses | 100,000 | $ 100,000 | |
Paycheck Protection Program Loan One [Member] | |||
Debt instrument, face amount | 2,100,000 | ||
Paycheck Protection Program Loan Two [Member] | |||
Debt instrument, face amount | 2,000,000 | ||
Paycheck Protection Program Loan [Member] | |||
Loans payable | $ 2,000,000 | ||
Maximum [Member] | Paycheck Protection Program Loan [Member] | |||
Debt instrument, term | 7 years |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Operating Lease Information (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |||
Right-of-use assets | $ 8,598,374 | $ 9,529,443 | $ 11,039,816 |
Current lease liabilities | 5,054,829 | 4,209,389 | |
Non-current lease liabilities | 9,407,194 | 10,677,862 | $ 13,626,519 |
Operating Lease Liability | $ 14,462,023 | $ 14,877,251 | |
Weighted average remaining lease term (years) | 7 years 9 months 18 days | 7 years 8 months 12 days | |
Weighted average discount rate | 10.00% | 10.00% |
Restatement of Previously Iss_3
Restatement of Previously Issued Condensed Consolidated and Combined Financial Statements (Unaudited) - Schedule of Previously Issued Interim Financial Statements (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Operating lease assets | $ 8,598,374 | $ 11,039,816 | $ 9,529,443 |
Long-term operating lease liabilities | 9,407,194 | 13,626,519 | 10,677,862 |
Accumulated deficit | (97,135,909) | (77,193,584) | (94,587,482) |
Non-controlling interests | (1,133,965) | 659,186 | $ (969,680) |
Restaurant operating expenses | 3,245,115 | 3,625,844 | |
Asset impairment charges | 1,287,579 | ||
Operating loss | (2,789,948) | (1,354,090) | |
Other income (expense) | 2,616 | 242,193 | |
Consolidated and combined net loss | (2,712,712) | (1,568,209) | |
Net income attributable to non-controlling interests | 164,285 | (203,405) | |
Net loss attributable to Amergent Hospitality Group Inc | $ (2,548,427) | $ (1,771,614) | |
Net loss per common share, basic and diluted | $ (0.18) | $ (0.15) | |
As Reported [Member] | |||
Operating lease assets | $ 11,256,497 | ||
Long-term operating lease liabilities | 14,067,517 | ||
Accumulated deficit | (77,343,539) | ||
Non-controlling interests | 584,824 | ||
Restaurant operating expenses | 3,625,844 | ||
Asset impairment charges | |||
Operating loss | (1,354,090) | ||
Other income (expense) | 17,876 | ||
Consolidated and combined net loss | (1,792,526) | ||
Net income attributable to non-controlling interests | (129,043) | ||
Net loss attributable to Amergent Hospitality Group Inc | $ (1,921,569) | ||
Net loss per common share, basic and diluted | $ (0.16) | ||
Adjustment [Member] | |||
Operating lease assets | $ (216,681) | ||
Long-term operating lease liabilities | (440,998) | ||
Accumulated deficit | 149,955 | ||
Non-controlling interests | 74,362 | ||
Restaurant operating expenses | |||
Asset impairment charges | |||
Operating loss | |||
Other income (expense) | 224,317 | ||
Consolidated and combined net loss | 224,317 | ||
Net income attributable to non-controlling interests | (74,362) | ||
Net loss attributable to Amergent Hospitality Group Inc | $ 149,955 | ||
Net loss per common share, basic and diluted | $ 0.01 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Apr. 02, 2021 | May 31, 2021 | Apr. 24, 2021 | Mar. 31, 2021 |
Common Stock [Member] | ||||
Number of shares converted | 250,000 | |||
Other Investors [Member] | Subsequent Event [Member] | Common Stock [Member] | ||||
Number of shares converted | 150 | |||
True-Up Payment [Member] | Original Investors [Member] | Subsequent Event [Member] | Common Stock [Member] | ||||
Number of shares converted | 1,024,000 | |||
Employee Retention Credit [Member] | Subsequent Event [Member] | ||||
Payroll taxes refund | $ 553,203 | |||
Retained payroll taxes | 275,760 | |||
Employee retention credit | $ 828,963 | |||
Series 2 Preferred Stock [Member] | Other Investors [Member] | Subsequent Event [Member] | ||||
Number of shares converted | 50 | |||
Series 2 Preferred Stock [Member] | True-Up Payment [Member] | Original Investors [Member] | ||||
Number of shares disposed | 662 | |||
Series 2 Preferred Stock [Member] | True-Up Payment [Member] | Original Investors [Member] | Subsequent Event [Member] | ||||
Number of shares converted | 512 | |||
Sale of stock, number of shares | 150 |