Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 05, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-56160 | |
Entity Registrant Name | AMERGENT HOSPITALITY GROUP INC. | |
Entity Central Index Key | 0001805024 | |
Entity Tax Identification Number | 84-4842958 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 7621 Little Avenue Suite 414 | |
Entity Address, City or Town | Charlotte | |
Entity Address, State or Province | NC | |
Entity Address, Postal Zip Code | 28226 | |
City Area Code | (704) | |
Local Phone Number | 366-5122 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,706,736 |
Condensed Consolidated and Comb
Condensed Consolidated and Combined Balance Sheets - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 1,100,919 | $ 678,468 |
Restricted cash | 1,948,813 | 1,250,336 |
Investments | 423,262 | 413,268 |
Accounts and other receivables | 51,157 | 314,043 |
Inventories | 140,837 | 172,695 |
Prepaid expenses and other current assets | 301,811 | 290,227 |
Current assets held for sale | 175,553 | |
TOTAL CURRENT ASSETS | 4,142,352 | 3,119,037 |
Property and equipment, net | 3,001,897 | 3,702,894 |
Operating lease asset | 8,971,766 | 9,529,443 |
Intangible assets, net | 3,272,796 | 3,043,885 |
Goodwill | 7,809,874 | 8,591,149 |
Investments | 15,709 | 365,001 |
Deposits and other assets | 350,285 | 295,930 |
Noncurrent assets held for sale | 1,605,135 | |
TOTAL ASSETS | 29,169,814 | 28,647,339 |
Current liabilities: | ||
Accounts payable and accrued expenses | 6,152,855 | 8,667,268 |
Current maturities of long-term debt, convertible debt and notes payable | 7,080,737 | 2,338,978 |
Current operating lease liabilities | 4,581,582 | 4,209,389 |
Derivative liabilities | 184,800 | |
Deferred grant income | 1,948,813 | |
Current liabilities held for sale | 362,615 | |
TOTAL CURRENT LIABILITIES | 20,126,602 | 15,400,435 |
Long-term operating lease liabilities | 9,683,643 | 10,677,862 |
Contract liabilities | 777,420 | 794,989 |
Deferred tax liabilities | 108,809 | 108,809 |
Long-term debt, convertible debt and notes payable, net of current maturities | 2,819,348 | 4,353,942 |
Noncurrent liabilities held for sale | 839,395 | |
TOTAL LIABILITIES | 34,355,217 | 31,336,037 |
Commitments and contingencies (see Note 11) | ||
Convertible Preferred Stock: Series 2: $1,000 stated value; authorized 1,500 shares; 100 and 787 issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 58,400 | 459,608 |
Stockholders’ Deficit: | ||
Common stock: $0.0001 par value; authorized 50,000,000 shares; 15,706,736 and 14,282,736 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 1,570 | 1,428 |
Additional paid-in-capital | 92,876,775 | 92,433,344 |
Accumulated deficit | (96,963,419) | (94,587,482) |
Accumulated other comprehensive loss | (44,801) | (25,916) |
Total Amergent Hospitality Group, Inc., Stockholders’ Deficit | (4,129,875) | (2,178,626) |
Non-controlling interests | (1,113,928) | (969,680) |
TOTAL STOCKHOLDERS’ DEFICIT | (5,243,803) | (3,148,306) |
TOTAL LIABILITIES, REDEEMABLE SHARES AND STOCKHOLDERS’ DEFICIT | $ 29,169,814 | $ 28,647,339 |
Condensed Consolidated and Co_2
Condensed Consolidated and Combined Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Outstanding | 15,706,736 | 14,282,736 |
Common Stock, Shares Issued | 15,706,736 | 14,282,736 |
Convertible Preferred Stock: Series 2 [Member] | ||
Convertible Preferred Stock, par value | $ 1,000 | $ 1,000 |
Convertible Preferred Stock, shares authorized | 1,500 | 1,500 |
Convertible Preferred Stock, shares outstanding | 100 | 787 |
Convertible Preferred Stock, shares issued | 100 | 787 |
Condensed Consolidated and Co_3
Condensed Consolidated and Combined Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue: | ||||
Total revenue | $ 6,358,575 | $ 4,702,151 | $ 15,907,096 | $ 14,301,859 |
Expenses: | ||||
Restaurant cost of sales | 2,031,666 | 1,498,922 | 4,782,780 | 4,458,983 |
Restaurant operating expenses | 3,674,755 | 3,448,843 | 10,100,284 | 10,322,644 |
Restaurant pre-opening and closing expenses | 20,730 | |||
General and administrative expenses | 1,394,766 | 1,255,918 | 3,755,866 | 3,891,739 |
Asset impairment charge | 1,136,129 | 1,287,579 | 1,288,599 | |
Depreciation and amortization | 350,599 | 277,999 | 1,080,604 | 1,109,608 |
Employee retention credit/other grant income | (1,229,831) | (2,703,186) | ||
Total expenses | 6,221,955 | 7,617,811 | 18,303,927 | 21,092,303 |
Operating income (loss) | 136,620 | (2,915,660) | (2,396,831) | (6,790,444) |
Other income (expense): | ||||
Interest expense | (165,775) | (177,420) | (481,706) | (499,870) |
Change in fair value of derivative liabilities | (5,841,517) | 118,664 | 300,000 | |
Change in the fair value of investment | (100,422) | (199,154) | (220,882) | (1,152,185) |
Debt extinguishment expense | (11,808,111) | |||
Other income (expense) | 18,203 | (25,404) | 164,761 | 150,904 |
Gain on extinguished lease liabilities | 66,821 | 385,340 | ||
Total other income (expense) | (181,173) | (6,243,497) | (33,823) | (13,009,262) |
Net loss before income taxes | (44,553) | (9,159,155) | (2,430,654) | (19,799,706) |
Income tax expense | (44,637) | (28,473) | (44,637) | (32,149) |
Consolidated net loss | (89,190) | (9,187,628) | (2,475,291) | (19,831,855) |
Less: Net loss (income) attributable to non-controlling interests | (5,047) | 401,529 | 99,354 | 287,840 |
Net loss attributable to Amergent Hospitality Group Inc. | (94,237) | (8,786,099) | (2,375,937) | (19,544,015) |
Dividends on redeemable preferred stock | (28,219) | |||
Net loss attributable to common shareholders of Amergent Hospitality Group Inc. | $ (94,237) | $ (8,786,099) | $ (2,375,937) | $ (19,572,234) |
Net loss attributable to Amergent Hospitality Group, Inc. per common share, basic: | $ (0.01) | $ (0.62) | $ (0.16) | $ (1.45) |
Net loss attributable to Amergent Hospitality Group, Inc. per common share, diluted: | $ (0.01) | $ (0.62) | $ (0.16) | $ (1.45) |
Weighted average shares outstanding, basic | 15,685,540 | 14,282,736 | 15,167,688 | 13,516,339 |
Weighted average shares outstanding, diluted | 15,685,540 | 14,282,736 | 15,167,688 | 13,516,339 |
Restaurant Sales Net [Member] | ||||
Revenue: | ||||
Total revenue | $ 6,106,261 | $ 4,509,082 | $ 15,288,320 | $ 13,881,380 |
Gaming Income Net [Member] | ||||
Revenue: | ||||
Total revenue | 136,135 | 107,403 | 304,173 | 236,615 |
Franchise Income [Member] | ||||
Revenue: | ||||
Total revenue | $ 116,179 | $ 85,666 | $ 314,603 | $ 183,864 |
Condensed Consolidated and Co_4
Condensed Consolidated and Combined Statements of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Net loss attributable to Amergent Hospitality Group | $ (94,237) | $ (8,786,099) | $ (2,375,937) | $ (19,544,015) |
Foreign currency translation gain/(loss) | (34,479) | 50,344 | (18,885) | (37,266) |
Comprehensive loss | $ (128,716) | $ (8,735,755) | $ (2,394,822) | $ (19,581,281) |
Condensed Consolidated and Co_5
Condensed Consolidated and Combined Statements of Stockholders' Deficit (Unaudited) - USD ($) | Temporary Equity Preferred Shares Two [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value 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 | ||||||
Preferred unit dividend | $ 4 | 19,519 | (28,219) | (8,696) | |||
Preferred unit dividend, shares | 37,518 | ||||||
Exercise of warrants | $ 246 | 1,528,867 | (325,366) | 1,203,747 | |||
Exercise of warrants, shares | 2,414,022 | ||||||
Issuance of shares, net of transaction costs of $95,000 | $ 1,405,000 | ||||||
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 income (loss) | (1,771,614) | 203,405 | (1,568,209) | ||||
Ending balance, value 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 | |||||
Beginning balance, value 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 | ||||||
Foreign currency translation | (37,266) | ||||||
Net income (loss) | (19,831,855) | ||||||
Ending balance, value at Sep. 30, 2020 | $ 459,608 | $ 1,434 | 92,433,338 | (94,160,076) | (83,703) | (637,968) | (2,446,975) |
Balance, shares at Sep. 30, 2020 | 787 | 14,282,736 | |||||
Beginning balance, value 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 | |||||
Reclassification of non-controlling interest | 805,909 | (805,909) | |||||
Cash contribution of merger consideration, net transaction costs of $588,255 | 5,411,745 | 5,411,745 | |||||
Contribution of warrant portion of merger consideration | 1,628,909 | 1,628,909 | |||||
Foreign currency translation | (6,541) | (6,541) | |||||
Net income (loss) | (8,986,302) | (89,716) | (9,076,018) | ||||
Ending balance, value at Jun. 30, 2020 | $ 459,608 | $ 1,434 | 80,511,278 | (85,373,977) | (134,047) | (236,439) | (5,231,751) |
Balance, shares at Jun. 30, 2020 | 787 | 14,282,736 | |||||
Warrants issued for extension of the make-whole provision | 28,060 | 28,060 | |||||
Reclassification of warrants and conversion feature | 11,894,000 | 11,894,000 | |||||
Foreign currency translation | 50,344 | 50,344 | |||||
Net income (loss) | (8,786,099) | (401,529) | (9,187,628) | ||||
Ending balance, value at Sep. 30, 2020 | $ 459,608 | $ 1,434 | 92,433,338 | (94,160,076) | (83,703) | (637,968) | (2,446,975) |
Balance, shares at Sep. 30, 2020 | 787 | 14,282,736 | |||||
Beginning balance, value 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 income (loss) | (2,548,427) | (164,285) | (2,712,712) | ||||
Ending balance, value 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 | |||||
Beginning balance, value 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 | |||||
Foreign currency translation | (18,885) | ||||||
Net income (loss) | (2,475,291) | ||||||
Ending balance, value at Sep. 30, 2021 | $ 58,400 | $ 1,570 | 92,876,775 | (96,963,419) | (44,801) | (1,113,928) | (5,243,803) |
Balance, shares at Sep. 30, 2021 | 100 | 15,706,736 | |||||
Beginning balance, value 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 | |||||
Conversion of preferred stock into common | $ (328,208) | $ 112 | 328,096 | 328,208 | |||
Conversion of preferred stock into common, shares | (562) | 1,124,000 | |||||
Foreign currency translation | 6,802 | 6,802 | |||||
Net income (loss) | 266,727 | 59,884 | 326,611 | ||||
Ending balance, value at Jun. 30, 2021 | $ 58,400 | $ 1,565 | 92,834,415 | (96,869,182) | (10,322) | (1,074,081) | (5,117,605) |
Balance, shares at Jun. 30, 2021 | 100 | 15,656,736 | |||||
Issuance of common stock for services | $ 5 | 26,995 | 27,000 | ||||
Issuance of common stock for services, shares | 50,000 | ||||||
Share-based compensation expense | 15,365 | 15,365 | |||||
Non-controlling interest distributions | (44,894) | (44,894) | |||||
Foreign currency translation | (34,479) | (34,479) | |||||
Net income (loss) | (94,237) | 5,047 | (89,190) | ||||
Ending balance, value at Sep. 30, 2021 | $ 58,400 | $ 1,570 | $ 92,876,775 | $ (96,963,419) | $ (44,801) | $ (1,113,928) | $ (5,243,803) |
Balance, shares at Sep. 30, 2021 | 100 | 15,706,736 |
Condensed Consolidated and Co_6
Condensed Consolidated and Combined Statements of Stockholders' Deficit (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | ||
Transaction costs | $ 588,255 | $ 95,000 |
Condensed Consolidated and Co_7
Condensed Consolidated and Combined Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (2,475,291) | $ (19,831,855) |
Adjustments to reconcile net loss to net cash flows from operations | ||
Depreciation and amortization | 1,080,604 | 1,109,608 |
Amortization of operating lease assets | 467,916 | 1,206,985 |
Asset impairment charges | 1,287,579 | 1,288,599 |
Warrants issued from extension of True-Up Payment | 28,060 | |
Gain from extinguished lease liabilities | (385,340) | |
Loss on change in fair value of investments | 220,882 | 1,152,185 |
Amortization of debt discount | 134,394 | 89,472 |
Loss on extinguishment of Series 1 Preferred | 161,899 | |
Loss on debt extinguishment | 11,808,111 | |
Issuance of common stock for services | 27,000 | |
Share-based compensation | 15,365 | |
Derivative liabilities revaluation | (118,664) | (300,000) |
Change in assets and liabilities | ||
Accounts and other receivables | 254,811 | 149,288 |
Prepaid expenses and other assets | 37,901 | (232,878) |
Inventories | (4,460) | 58,791 |
Accounts payable and accrued expenses | (2,283,232) | (26,761) |
Deferred grant income | (51,187) | |
Operating lease liabilities | (860,984) | (1,482,421) |
Derivative liability | (66,136) | |
Deferred rent | (41,587) | |
Deferred revenue | (53,569) | (71,644) |
Net cash flows from operating activities | (2,813,998) | (4,892,561) |
Cash flows from investing activities: | ||
Cash and restricted cash acquired in connection with acquisition | 2,071,000 | |
Purchase of property and equipment | (32,141) | (29,821) |
Proceeds from sale of investments | 118,416 | |
Net cash flows provided by (used in) investing activities | 2,157,275 | (29,821) |
Cash flows from financing activities: | ||
Loan proceeds | 2,000,000 | 2,989,350 |
Loan repayments | (53,949) | (2,563,346) |
Distributions to non-controlling interest | (44,894) | |
Proceeds from Series 2 Preferred | 1,405,000 | |
Proceeds from warrant exercises | 885,046 | |
Redemption of Series 1 Preferred | (880,289) | |
Merger consideration, net | 5,411,745 | |
Net cash flows provided by financing activities | 1,901,157 | 7,247,506 |
Effect of exchange rate of on cash | (12,615) | (14,496) |
Net increase in cash and restricted cash, including cash classified in current assets held for sale | 1,231,819 | 2,310,628 |
Less: cash classified in current assets held for sale | (110,891) | |
Net increase in cash and restricted cash | 1,120,928 | 2,310,628 |
Cash and restricted cash, beginning of period | 1,928,804 | 501,017 |
Cash and restricted cash, end of period | 3,049,732 | 2,811,645 |
Supplemental cash flow information: | ||
Interest | 320,794 | 222,173 |
Income taxes | ||
Non-cash investing and financing activities | ||
Conversion of Preferred stock - Series 2 to common stock | 401,208 | 416,392 |
Issuance of convertible promissory note as part of acquisition | 1,194,000 | |
Initial value of ROU asset and liability recorded for new lease | 130,775 | |
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 | |
Warrant portion of merger consideration | 1,628,909 | |
Equity classification of Oz Rey warrants and conversion feature | $ 11,894,000 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [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 Chanticleer with 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 and nine-month period ended September 30, 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 September 30, 2021, the Company’s cash balance was $ 3.0 1.9 16.0 ● our eligibility to access the capital and debt markets to satisfy current obligations and operate the business; ● our ability to qualify for and utilize 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, government tax credits and other financing arrangements, including convertible debt, lines of credit, notes payable, capital leases, and other forms of external financing. The Company plans to seek additional capital in the future through equity and/or debt financings or other sources in order to sustain operations. We may seek to work with vendors and suppliers on payment plans, settle certain obligations at a discount, seek forgiveness of Paycheck Protection Program loans and look for other government stimulus programs. Additionally, the Company has significant debt due within the next twelve months that will need to be refinanced and/or settled. 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 September 30, 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. 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 history of operating losses, combined with its working capital deficit which includes substantial near term debt repayment obligations 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 | 9 Months Ended |
Sep. 30, 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: SCHEDULE OF FAIR VALUE MEASUREMENTS, RECURRING AND NONRECURRING Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Total Fair Value September 30, 2021 Assets (Note 4) Common stock of Sonnet $ 73,970 — $ — $ 73,970 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 4) Common stock of Sonnet $ 413,268 — $ — $ 413,268 Liabilities (Note 10) True-up provision of Convertible Preferred Series 2 $ — $ — $ 184,800 $ 184,800 Inputs used in the Company’s Level 3 calculation of fair value related to the true-up provision of convertible preferred Series 2 are discussed in Note 11. 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 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 September 30, 2021 and December 31, 2020, the Company maintained restricted cash of $ 1,936,972 1,250,336 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: SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIVES Leasehold improvements 5 15 Restaurant furnishings and equipment 3 10 Furniture and fixtures 3 10 Office and computer equipment 3 7 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 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. 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 through September 30, 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 5, 6, and 11 for further discussion) were impaired during the nine-month period ended September 30, 2021. No impairments were recorded for the three-month period ended September 30, 2021. 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. Due to the continued impact of the COVID-19 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 September 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 September 30, 2021 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’ deficit. Foreign currency transaction gains and losses are included in current operating results. 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 include options to extend the leases for additional 5-year periods. or the lease term inclusive of reasonably certain renewal periods up to a term of 20 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. EMPLOYEE RETENTION CREDIT The Employee Retention Credit (“ERC”) under the CARES Act is a refundable tax credit which encourages businesses to keep employees on the payroll during the COVID-19 pandemic. Eligible employers can qualify for up to $7,000 of credit for each employee based on qualified wages paid after December 31, 2020 and before January 1, 2022. Qualified wages are the wages paid to an employee during an economic hardship, specifically, either (1) a full or partial suspension of operations by order of a governmental authority due to COVID-19, or (2) a significant decline in gross receipts. The Company recognized $ 1,178,644 2,651,999 RESTAURANT REVITALIZATION FUND The American Rescue Plan Act established the Restaurant Revitalization Fund (RRF) to provide funding to help restaurants and other eligible businesses keep their doors open. This program will provide restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Recipients are not required to repay the funding as long as funds are used for eligible uses no later than March 11, 2023. In 2021, and prior to the acquisition (see note 3), Pie Square Holdings, L.L.C. (Pie Squared Holdings) received a grant under the U.S. Small Business Administration’s Restaurant Revitalization Fund (RRF) for approximately $ 10 million. The proceeds received were mainly used to repay existing debt and to also pay operating expenses. The unused funds received under the RRF at closing of the acquisition were $ 2.0 million and these were placed into escrow for the benefit of the Company for working capital to be used solely in the operations of the acquired business. The Company recognized $ 51,187 of RRF as a contra-expense in the condensed consolidated and combined statements of operations for the three and nine months ended September 30, 2021. See additional information regarding RRF funds received in Note 3. SHARE-BASED COMPENSATION The Company measures and recognizes share-based compensation expense for both employee and nonemployee awards based on the grant date fair value of the awards. The Company recognizes share-based compensation expense on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The Company recognizes forfeitures as they occur. The Company estimates the fair value of employee and non-employee stock awards as of the date of grant using the Black-Scholes option pricing model. Management estimates the expected share price volatility based on the historical volatility of the Company. The expected term of the Company’s stock awards has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” stock awards. The risk-free interest rate is determined by reference to the yield curve of a zero-coupon U.S. Treasury bond on the date of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. 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 September 30, 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 9, the potential conversion of the convertible debt, as described in Note 7, and the share-based awards outstanding, as described in Note 12, 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 and combined 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. |
ACQUISITION
ACQUISITION | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITION | 3. ACQUISITION On August 30, 2021, the Company purchased all of the outstanding membership interests in Pie Squared Holdings pursuant to a Unit Purchase Agreement (Purchase Agreement). Pie Squared Holdings, directly and through its four wholly owned subsidiaries, owns, operates and franchises pizza restaurants operating under the tradename PizzaRev. The PizzaRev stores consist of three company owned stores and nine franchised locations. The purchase price is an 8% 1,000,000 1,194,000 190,000 150,000 Due to the close proximity of timing of the acquisition and our filing of this Quarterly Report on Form 10-Q, the fair value of assets acquired, and liabilities assumed represent a preliminary allocation as our evaluation of facts and circumstances available as of September 30, 2021 is ongoing. Pursuant to Topic 805, the financial statements will not be retrospectively adjusted for any provisional amount changes that occur in subsequent periods. Rather, we will recognize any provisional adjustments as we obtain information not available as of the completion of this preliminary fair value calculation as determined within the measurement period. We will also be required to record, in the same period as the financial statements, the effects to any income statement captions, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. We expect to finalize the purchase price allocation as soon as practicable, but no later than one year from the acquisition date. A preliminary estimate of the assets acquired, and liabilities assumed as of the acquisition date consists of the following: SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED Assets acquired: Cash $ 71,000 Restricted cash 2,000,000 Property and equipment 348,000 Right of use asset 1,391,000 Tradename/trademark intangible 410,000 Franchise rights intangible 410,000 Goodwill 51,000 Security deposits and other assets 126,000 Total assets acquired $ 4,807,000 Liabilities assumed Gift card liability $ 139,000 Deferred revenue 36,000 Deferred grant income 2,000,000 Right of use liability 1,438,000 Total liabilities assumed $ 3,613,000 Net purchase price $ 1,194,000 Interest on the Note is due quarterly and $ 500,000 August 30, 2022 August 30, 2023 4.99% 30 15% 0.50 2.00 1,194,000 SCHEDULE OF ESTIMATED FAIR VALUE ASSUMPTIONS 2021 Volatility 90.00 % Risk free rate 0.08 0.20 % Stock price 0.52 Credit spread 6.35 % In 2021, and prior to the acquisition, Pie Square Holdings received a grant under the U.S. Small Business Administration’s RRF for approximately $ 10 2.0 Restricted cash and a deferred grant income liability has been recorded on the opening balance sheet for the unused proceeds from the RRF, and the liability will be reduced as the restricted cash is used for eligible costs incurred under the RRF post acquisition. As the Company acquired all the outstanding membership interests in Pie Square Holdings, the Company assumed all the rights and obligations of Pie Square Holdings that arose from transactions of Pie Square Holdings prior to the sale event, both stated rights and obligations as well as those that are contingent. As noted above, Pie Square Holdings applied for and received an approximately $ 10 million grant from the U.S. Business Administration under the RRF and used approximately $ 8 million to repay existing debt of Pie Square Holdings and to fund some of its operating expenses. Under the RRF there is a requirement that the grant monies be for “eligible uses.” The Company, through the structure of the acquisition, is now responsible that the grant proceeds were, in fact, properly obtained and disbursed for “eligible uses.” If it is determined that Pie Square Holdings obtained the grant improperly or the disbursement of such grant monies were not “eligible uses” then the Company would be responsible for the ramifications of such actions, including repayment of the approximately $10 million of grant monies, among other items. Management is in the process of completing its analysis of this contingency, which includes consultation with outside legal counsel, and expects to complete such analysis prior to the filing of the 2021 annual financial statements. In connection with the acquisition, the Company obtained an indemnification from the sellers which is inclusive of any matters related to the RRF. As such, an assessment of the sellers’ indemnification agreement signed under the acquisition agreement will also be considered in the Company’s analysis. If it is determined that a contingency exists as of the acquisition date and it is probable of occurrence, then the preliminary purchase price allocation noted above will be revised, and the impact could be material. The following unaudited pro forma information reflects the impact of the acquisition as if it had closed on January 1, 2020. SCHEDULE OF PRO FORMA ACQUISITION Nine months ended September 30, 2021 Nine months ended September 30, 2020 Total revenue $ 16,229,033 $ 17,645,760 Operating loss $ (2,829,004 ) $ (10,907,158 ) Net loss $ (2,728,921 ) $ (25,551,202 ) Net loss per share (basic and diluted) $ (0.18 ) $ (1.89 ) The unaudited pro forma statement of operations data for the nine months ended September 30, 2021, excludes the approximately $ 8.0 3.0 |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2021 | |
Investments, All Other Investments [Abstract] | |
INVESTMENTS | 4. INVESTMENTS Investments consist of the following: SCHEDULE OF INVESTMENT September 30, 2021 December 31, 2020 Common stock of Sonnet, at fair value $ 73,970 $ 413,268 Chanticleer Investors, LLC, at cost 365,001 365,001 Total $ 438,971 $ 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. Shares were sold in 2021 and the Company received proceeds of $ 118,416 . At September 30, 2021, 122,064 shares of Sonnet were held. Chanticleer Investors LLC The Company invested $ 800,000 22% 3% 48,000 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 Hooters of America redeemed a portion of the Company’s ownership interest and paid $ 349,293 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT September 30, 2021 December 31, 2020 Leasehold improvements $ 6,962,366 $ 7,301,908 Restaurant furniture and equipment 2,287,064 2,132,726 Construction in progress 650 5,450 Office and computer equipment 114,623 125,535 Office furniture and fixtures 99,528 59,635 Property, plant and equipment, gross 9,464,231 9,625,254 Accumulated depreciation and amortization (6,462,334 ) (5,922,360 ) Property, plant and equipment, net $ 3,001,897 $ 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 September 30, 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 $ 255,115 No 555,702 685,333 13,374 Depreciation expense was $ 260,345 814,675 185,825 834,909 |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET | 6. INTANGIBLE ASSETS, NET GOODWILL A roll-forward of goodwill is as follows: SCHEDULE OF GOODWILL Nine Year Ended December 31, 2020 Beginning balance $ 8,591,149 $ 8,567,888 Foreign currency translation gain (11,768 ) 23,261 Goodwill acquired in acquisition 51,000 — Goodwill reclassified to noncurrent assets held for sale (Note 14) (820,507 ) — Ending balance $ 7,809,874 $ 8,591,149 OTHER INTANGIBLE ASSETS Franchise and trademark/tradename intangible assets consist of the following: SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS September 30, 2021 December 31, 2020 Trademark, Tradenames: American Roadside Burger 10 $ 561,191 $ 1,786,930 BGR: The Burger Joint Indefinite 739,245 739,245 Little Big Burger Indefinite 1,550,000 1,550,000 PizzaRev 5 410,000 — 3,260,436 4,076,175 Acquired Franchise Rights: BGR: The Burger Joint 7 827,757 827,757 PizzaRev 5 410,000 — Franchise License Fees: Hooters Pacific NW 20 — 74,507 Hooters UK 5 — 11,001 — 85,508 Total intangibles at cost 4,498,193 4,989,440 Accumulated amortization ( 1,225,397 ) ( 1,945,555 ) Intangible assets, net $ 3,272,796 $ 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 September 30, 2021. Based on that analysis, an impairment charge of approximately $ 327,342 246,751 Amortization of intangible assets was $ 90,254 265,929 92,174 274,699 |
DEBT AND NOTES PAYABLE
DEBT AND NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
DEBT AND NOTES PAYABLE | 7. DEBT AND NOTES PAYABLE Debt and notes payable are summarized as follows at September 30, 2021 and December 31, 2020: SCHEDULE OF DEBT AND NOTES PAYABLE September 30, 2021 December 31, 2020 Notes payable (a) $ — $ 25,850 Notes payable (b) — 27,048 Contractor note (c) 348,269 348,269 PPP loans (d) 4,109,400 2,109,400 UK Bounce Back loan (e) — 68,245 EIDL loans (f) 300,000 299,900 Convertible debt (g) 4,037,889 4,037,889 Convertible promissory note (h) 1,194,000 — Total Debt 9,989,558 6,916,601 Less: discount on convertible debt (g) (89,473 ) (223,681 ) Total Debt, net of discount $ 9,900,085 $ 6,692,920 Current portion of long-term debt $ 7,080,737 $ 2,338,978 Long-term debt, less current portion $ 2,819,348 $ 4,353,942 (a) In connection with the assets acquired from the two BGR franchisees, the Company entered into notes payable of $ 9,600 187,000 4% (b) During September 2019 and October 2019, the Company entered into two merchant capital advances in the amount of $ 46,000 84,700 (c) 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 12% 445,000 95,000 (d) On April 27, 2020, Amergent received a $ 2.1 1% April 2022 119,000 On February 25, 2021, the Company received a second PPP Loan of $ 2.0 1% February 25, 2026 44,660 (e) On November 24, 2020, Amergent received approximately $ 68,200 six years 10 years 2.5% (f) 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 3.75% August 4, 2021 1,762 (g) On April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% 10% 4,037,889 April 1, 2022 On August 17, 2020, the Company and Oz Rey amended the 10% secured convertible debenture to fix the conversion rate into common stock at $0.10 per share. Further, the amendment provides a limitation on Oz Rey’s ability to convert the debenture into common stock so that the conversion would not result in the issuance of common stock exceeding the amount of authorized shares. Oz Rey may; however, upon reasonably notice to the Company, require the Company to include in its proxy materials, for any annual meeting of shareholders being held by the Company, a proposal to amend the Company’s certificate of incorporation to increase the Company’s authorized shares to a number sufficient to allow for conversion of all shares underlying the debenture, on a fully diluted basis. Oz Rey also agreed that the Company would not be required under any circumstances to make a cash payment to settle the conversion feature not exercisable due to the authorized share cap or in an event that the Company was unable to deliver shares under the conversion feature. Oz Rey also agreed to waive any event of default under the debenture that occurred or existed prior to August 17, 2020. As a result of these modifications, the warrants are no longer liability classified and the conversion feature is no longer required to be bifurcated from the debt host as of the date of the amendment. 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 0.125 2,462,600 0.50 462,500 The Company recorded a debt discount of approximately $ 358,000 10% 44,550 134,394 (h) On August 30, 2021, the Company purchased all of the outstanding membership interests in Squared Holdings pursuant to a Unit Purchase Agreement (Purchase Agreement) (see note 3). The purchase price was an 8% secured, convertible promissory note with a face value of $ 1,000,000 1,194,000 500,000 August 30, 2023 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 September 30, 2021. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 8 ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses are summarized as follows: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES September 30, 2021 December 31, 2020 Accounts payable $ 2,463,068 $ 3,752,036 Accrued expenses 1,190,798 1,436,679 Accrued taxes (VAT, Sales, Payroll, etc.) 2,437,347 3,356,496 Accrued interest 61,642 122,057 Accounts payable and accrued expenses, total $ 6,152,855 $ 8,667,268 As of September 30, 2021 and December 31, 2020, approximately $ 2.2 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. Upon the advice of our tax professionals, we are paying the trust fund portion of the outstanding tax accruals which represents the portion of taxes withheld from our employees but not remitted to the taxing authorities. For our locations that have permanently closed, our tax liability after paying the trust fund balance is approximately $ 380,000 The taxing authorities have indicated that we are still liable for these amounts, however, since the locations are permanently closed and have no assets, they will stop active collection procedures on these amounts. |
STOCKHOLDER_S EQUITY
STOCKHOLDER’S EQUITY | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
STOCKHOLDER’S EQUITY | 9. STOCKHOLDER’S EQUITY 2020 Bridge Financing Pursuant to a Securities Purchase Agreement dated February 7, 2020, the Company sold 1,500 1,500,000 95,000 5 350,000 1.25 1,000 529,000 729,000 713 1,426,854 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. 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 $ 66,000 134,000 28,060 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 $ 1,250,000 850,000 During the nine months ended September 30, 2021, the investors converted 637 1,274,000 150 50 100 The Series 2 Preferred Stock is classified in the accompanying condensed consolidated and combined balance sheet at September 30, 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: 125% 66,136 Redemption: Conversion at option of holder/ beneficial ownership limitation 1.00 4.99% 9.99% Forced conversion: 1,400 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. Warrants A summary of the warrant activity during the nine months ended September 30, 2021 is presented below: SCHEDULE OF OUTSTANDING WARRANTS 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 September 30, 2021 3,409,200 $ 0.34 7.8 Exercisable September 30, 2021 3,409,200 $ 0.34 7.8 At September 30, 2021, the outstanding warrants consisted of the following: SCHEDULE OF OUTSTANDING WARRANTS TABLE 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 | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITIES | 10. DERIVATIVE LIABILITIES The derivative liabilities at December 31, 2020 consisted of a True-Up Payment provision of the Series 2 Preferred Stock (See Note 9). The True-Up payment was settled in July 2021 with a cash payment of $ 66,136 The table presented below is a summary of changes in the fair market value of the Company’s Level 3 valuations for the nine months ended September 30, 2021. SUMMARY OF CHANGES IN FAIR VALUE DERIVATIVE LIABILITIES True-Up Payment Balance at December 31, 2020 $ 184,800 Change in fair value during the period (118,664 ) Settlement of derivative liability (66,136 ) Balance at September 30, 2021 $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 11. 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 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 8 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 September 30, 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 September 30, 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: SCHEDULE OF OPERATING LEASE INFORMATION Operating Leases Classification September 30, 2021 December 31, 2020 Right-of-use assets Operating lease assets $ 8,971,766 $ 9,529,443 Current lease liabilities Current operating lease liabilities $ 4,581,582 $ 4,209,389 Non-current lease liabilities Long-term operating lease liabilities 9,683,643 10,677,862 $ 14,265,225 $ 14,887,251 Lease term and discount rate were as follows: September 30, 2021 December 31, 2020 Weighted average remaining lease term (years) 7.30 7.70 Weighted average discount rate 8.7 % 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 September 30, 2021, an impairment charge of $ 705,122 No 333,676 343,141 During the three and nine months ended September 30, 2021, respectively, $ 66,821 385,340 3,249,227 Rent expense of approximately $ 0.6 1.8 0.1 0.6 1.8 0.1 PPP Loan The Company received two PPP loans for amounts of $ 2.1 2.0 Presently, the SBA and other governmental communications have indicated that all loans in excess of $ 2.0 seven years RRF As discussed in Note 3, Pie Squared received an approximately $ 10 10 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2021 | |
Compensation Related Costs [Abstract] | |
SHARE-BASED COMPENSATION | 12. SHARE-BASED COMPENSATION In August 2021, the Company adopted the 2021 Inducement Plan (“the Plan”). Under the 2021 Inducement Plan, the Company can grant stock options and stock awards. There are 500,000 Share-based awards generally vest over a period of three years, and share-based awards that lapse or are forfeited are available to be granted again. The contractual life of all share-based awards is five years. The expiration date of the outstanding share-based awards is August 2026. The Company measures share-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the service period of the awards. Share-based compensation is allocated to employees and consultants based on their respective departments. The Company recorded share-based compensation expense of $ 15,365 The assumptions used in the Black-Scholes option pricing model to determine the fair value of share-based awards granted to employees during the nine months ended September 30, 2021, were as follows: SCHEDULE OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS 2021 Volatility 90.00 % Risk free rate 0.66 % Expected term 2.54 Dividend — The following table summarizes the share-based award activity for the periods presented: SCHEDULE OF STOCK OPTIONS ACTIVITY Number of Options Weighted Average Weighted Average Outstanding at December 31, 2020 - $ - - Granted 450,000 $ 1.38 Outstanding at September 30, 2021 450,000 $ 1.38 4.8 Exercisable at September 30, 2021 175,000 $ 2.22 4.8 Vested and expected to vest at September 30, 2021 450,000 $ 1.38 4.8 The weighted average fair value of share-based awards granted during the nine months ended September 30, 2021 was $ 0.15 0.1 1.8 |
Restatement of Previously Issue
Restatement of Previously Issued Condensed Consolidated and Combined Financial Statements (Unaudited) | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Restatement of Previously Issued Condensed Consolidated and Combined Financial Statements (Unaudited) | 13. 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 September 30, 2020: SCHEDULE OF PREVIOUSLY ISSUED INTERIM FINANCIAL STATEMENTS September 30, 2020 As reported Adjustment As restated Operating lease assets $ 10,117,900 $ - $ 10,117,900 Derivative liabilities $ 1,195,724 $ (694,724 ) $ 501,000 Long-term operating lease liabilities $ 15,115,651 $ (479,855 ) $ 14,635,796 Accumulated deficit $ (95,208,526 ) $ 1,048,450 $ (94,160,076 ) Non-controlling interests $ (764,097 ) $ 126,129 $ (637,968 ) 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 and nine months ended September 30, 2020: Three Months Ended September 30, 2020 As reported Adjustment As restated Restaurant operating expenses $ 3,462,279 $ (13,436 ) $ 3,448,843 Asset impairment charge $ 1,231,352 $ (95,223 ) $ 1,136,129 Operating loss $ (3,024,319 ) $ 108,659 $ (2,915,660 ) Change in fair value of derivative liabilities * $ (6,536,241 ) $ 694,724 $ (5,841,517 ) Other income (expense) $ (37,390 ) $ 11,986 $ (25,404 ) Consolidated and combined net loss $ (10,002,997 ) $ 815,369 $ (9,187,628 ) Net loss attributable to non-controlling interests $ 453,296 $ (51,767 ) $ 401,529 Net loss attributable to Amergent Hospitality Group Inc $ (9,549,701 ) $ 763,602 $ (8,786,099 ) Net loss per common share, basic and diluted $ (0.67 ) $ (0.05 ) $ (0.62 ) Nine Months Ended September 30, 2020 As reported Adjustment As restated Restaurant operating expenses $ 10,349,516 $ (26,872 ) $ 10,322,644 Asset impairment charge $ 1,505,279 $ (216,680 ) $ 1,288,599 Operating loss $ (7,033,996 ) $ 243,552 $ (6,790,444 ) Change in fair value of derivative liabilities * $ (394,724 ) $ 694,724 $ 300,000 Other income (expense) $ (85,399 ) $ 236,303 $ 150,904 Consolidated and combined net loss $ (21,006,434 ) $ 1,174,579 $ (19,831,855 ) Net loss attributable to non-controlling interests $ 413,969 $ (126,129 ) $ 287,840 Net loss attributable to Amergent Hospitality Group Inc $ (20,592,465 ) $ 1,048,450 $ (19,544,015 ) Net loss per common share, basic and diluted $ (1.53 ) $ 0.08 $ (1.45 ) There was no impact to the Company’s cash flows from operating, investing, or financing activities for the periods ended March 31, 2020, June 30, 2020, or September 30, 2020 as a result of these restatements. * These amounts have been changed from the amounts reported in Note 14 to the 2020 annual financial statements filed on Form 10-K; however, the changes do not impact the restated operating loss, net loss, net loss attributable to non-controlling interests and to Amergent Hospitality Group Inc., and let loss per common share, basis and diluted previously reported. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 14. 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. On October 8, 2021, the Company, through its wholly owned UK subsidiary, Chanticleer UK Group Limited, sold West End Wings Limited (UK), the Company’s Hooters restaurant located in Nottingham, England, to Hard Four Consultancy Limited (UK) for the final purchase price of £ 518,295 705,710 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 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: SCHEDULE OF FAIR VALUE MEASUREMENTS, RECURRING AND NONRECURRING Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Total Fair Value September 30, 2021 Assets (Note 4) Common stock of Sonnet $ 73,970 — $ — $ 73,970 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 4) Common stock of Sonnet $ 413,268 — $ — $ 413,268 Liabilities (Note 10) True-up provision of Convertible Preferred Series 2 $ — $ — $ 184,800 $ 184,800 Inputs used in the Company’s Level 3 calculation of fair value related to the true-up provision of convertible preferred Series 2 are discussed in Note 11. 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 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 September 30, 2021 and December 31, 2020, the Company maintained restricted cash of $ 1,936,972 1,250,336 |
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: SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIVES Leasehold improvements 5 15 Restaurant furnishings and equipment 3 10 Furniture and fixtures 3 10 Office and computer equipment 3 7 |
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 |
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. 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 through September 30, 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 5, 6, and 11 for further discussion) were impaired during the nine-month period ended September 30, 2021. No impairments were recorded for the three-month period ended September 30, 2021. 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. Due to the continued impact of the COVID-19 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 September 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 September 30, 2021 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’ deficit. Foreign currency transaction gains and losses are included in current operating results. 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 include options to extend the leases for additional 5-year periods. or the lease term inclusive of reasonably certain renewal periods up to a term of 20 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. |
EMPLOYEE RETENTION CREDIT | EMPLOYEE RETENTION CREDIT The Employee Retention Credit (“ERC”) under the CARES Act is a refundable tax credit which encourages businesses to keep employees on the payroll during the COVID-19 pandemic. Eligible employers can qualify for up to $7,000 of credit for each employee based on qualified wages paid after December 31, 2020 and before January 1, 2022. Qualified wages are the wages paid to an employee during an economic hardship, specifically, either (1) a full or partial suspension of operations by order of a governmental authority due to COVID-19, or (2) a significant decline in gross receipts. The Company recognized $ 1,178,644 2,651,999 |
RESTAURANT REVITALIZATION FUND | RESTAURANT REVITALIZATION FUND The American Rescue Plan Act established the Restaurant Revitalization Fund (RRF) to provide funding to help restaurants and other eligible businesses keep their doors open. This program will provide restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Recipients are not required to repay the funding as long as funds are used for eligible uses no later than March 11, 2023. In 2021, and prior to the acquisition (see note 3), Pie Square Holdings, L.L.C. (Pie Squared Holdings) received a grant under the U.S. Small Business Administration’s Restaurant Revitalization Fund (RRF) for approximately $ 10 million. The proceeds received were mainly used to repay existing debt and to also pay operating expenses. The unused funds received under the RRF at closing of the acquisition were $ 2.0 million and these were placed into escrow for the benefit of the Company for working capital to be used solely in the operations of the acquired business. The Company recognized $ 51,187 of RRF as a contra-expense in the condensed consolidated and combined statements of operations for the three and nine months ended September 30, 2021. See additional information regarding RRF funds received in Note 3. |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION The Company measures and recognizes share-based compensation expense for both employee and nonemployee awards based on the grant date fair value of the awards. The Company recognizes share-based compensation expense on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The Company recognizes forfeitures as they occur. The Company estimates the fair value of employee and non-employee stock awards as of the date of grant using the Black-Scholes option pricing model. Management estimates the expected share price volatility based on the historical volatility of the Company. The expected term of the Company’s stock awards has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” stock awards. The risk-free interest rate is determined by reference to the yield curve of a zero-coupon U.S. Treasury bond on the date of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. |
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 September 30, 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 9, the potential conversion of the convertible debt, as described in Note 7, and the share-based awards outstanding, as described in Note 12, 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 and combined 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) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
SCHEDULE OF FAIR VALUE MEASUREMENTS, RECURRING AND NONRECURRING | SCHEDULE OF FAIR VALUE MEASUREMENTS, RECURRING AND NONRECURRING Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Total Fair Value September 30, 2021 Assets (Note 4) Common stock of Sonnet $ 73,970 — $ — $ 73,970 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 4) Common stock of Sonnet $ 413,268 — $ — $ 413,268 Liabilities (Note 10) 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: SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIVES Leasehold improvements 5 15 Restaurant furnishings and equipment 3 10 Furniture and fixtures 3 10 Office and computer equipment 3 7 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED | A preliminary estimate of the assets acquired, and liabilities assumed as of the acquisition date consists of the following: SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED Assets acquired: Cash $ 71,000 Restricted cash 2,000,000 Property and equipment 348,000 Right of use asset 1,391,000 Tradename/trademark intangible 410,000 Franchise rights intangible 410,000 Goodwill 51,000 Security deposits and other assets 126,000 Total assets acquired $ 4,807,000 Liabilities assumed Gift card liability $ 139,000 Deferred revenue 36,000 Deferred grant income 2,000,000 Right of use liability 1,438,000 Total liabilities assumed $ 3,613,000 Net purchase price $ 1,194,000 |
SCHEDULE OF ESTIMATED FAIR VALUE ASSUMPTIONS | SCHEDULE OF ESTIMATED FAIR VALUE ASSUMPTIONS 2021 Volatility 90.00 % Risk free rate 0.08 0.20 % Stock price 0.52 Credit spread 6.35 % |
SCHEDULE OF PRO FORMA ACQUISITION | The following unaudited pro forma information reflects the impact of the acquisition as if it had closed on January 1, 2020. SCHEDULE OF PRO FORMA ACQUISITION Nine months ended September 30, 2021 Nine months ended September 30, 2020 Total revenue $ 16,229,033 $ 17,645,760 Operating loss $ (2,829,004 ) $ (10,907,158 ) Net loss $ (2,728,921 ) $ (25,551,202 ) Net loss per share (basic and diluted) $ (0.18 ) $ (1.89 ) The unaudited pro forma statement of operations data for the nine months ended September 30, 2021, excludes the approximately $ 8.0 3.0 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Investments, All Other Investments [Abstract] | |
SCHEDULE OF INVESTMENT | Investments consist of the following: SCHEDULE OF INVESTMENT September 30, 2021 December 31, 2020 Common stock of Sonnet, at fair value $ 73,970 $ 413,268 Chanticleer Investors, LLC, at cost 365,001 365,001 Total $ 438,971 $ 778,269 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT | Property and equipment, net consists of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT September 30, 2021 December 31, 2020 Leasehold improvements $ 6,962,366 $ 7,301,908 Restaurant furniture and equipment 2,287,064 2,132,726 Construction in progress 650 5,450 Office and computer equipment 114,623 125,535 Office furniture and fixtures 99,528 59,635 Property, plant and equipment, gross 9,464,231 9,625,254 Accumulated depreciation and amortization (6,462,334 ) (5,922,360 ) Property, plant and equipment, net $ 3,001,897 $ 3,702,894 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF GOODWILL | A roll-forward of goodwill is as follows: SCHEDULE OF GOODWILL Nine Year Ended December 31, 2020 Beginning balance $ 8,591,149 $ 8,567,888 Foreign currency translation gain (11,768 ) 23,261 Goodwill acquired in acquisition 51,000 — Goodwill reclassified to noncurrent assets held for sale (Note 14) (820,507 ) — Ending balance $ 7,809,874 $ 8,591,149 |
SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS | Franchise and trademark/tradename intangible assets consist of the following: SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS September 30, 2021 December 31, 2020 Trademark, Tradenames: American Roadside Burger 10 $ 561,191 $ 1,786,930 BGR: The Burger Joint Indefinite 739,245 739,245 Little Big Burger Indefinite 1,550,000 1,550,000 PizzaRev 5 410,000 — 3,260,436 4,076,175 Acquired Franchise Rights: BGR: The Burger Joint 7 827,757 827,757 PizzaRev 5 410,000 — Franchise License Fees: Hooters Pacific NW 20 — 74,507 Hooters UK 5 — 11,001 — 85,508 Total intangibles at cost 4,498,193 4,989,440 Accumulated amortization ( 1,225,397 ) ( 1,945,555 ) Intangible assets, net $ 3,272,796 $ 3,043,885 |
DEBT AND NOTES PAYABLE (Tables)
DEBT AND NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF DEBT AND NOTES PAYABLE | Debt and notes payable are summarized as follows at September 30, 2021 and December 31, 2020: SCHEDULE OF DEBT AND NOTES PAYABLE September 30, 2021 December 31, 2020 Notes payable (a) $ — $ 25,850 Notes payable (b) — 27,048 Contractor note (c) 348,269 348,269 PPP loans (d) 4,109,400 2,109,400 UK Bounce Back loan (e) — 68,245 EIDL loans (f) 300,000 299,900 Convertible debt (g) 4,037,889 4,037,889 Convertible promissory note (h) 1,194,000 — Total Debt 9,989,558 6,916,601 Less: discount on convertible debt (g) (89,473 ) (223,681 ) Total Debt, net of discount $ 9,900,085 $ 6,692,920 Current portion of long-term debt $ 7,080,737 $ 2,338,978 Long-term debt, less current portion $ 2,819,348 $ 4,353,942 (a) In connection with the assets acquired from the two BGR franchisees, the Company entered into notes payable of $ 9,600 187,000 4% (b) During September 2019 and October 2019, the Company entered into two merchant capital advances in the amount of $ 46,000 84,700 (c) 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 12% 445,000 95,000 (d) On April 27, 2020, Amergent received a $ 2.1 1% April 2022 119,000 On February 25, 2021, the Company received a second PPP Loan of $ 2.0 1% February 25, 2026 44,660 (e) On November 24, 2020, Amergent received approximately $ 68,200 six years 10 years 2.5% (f) 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 3.75% August 4, 2021 1,762 (g) On April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% 10% 4,037,889 April 1, 2022 On August 17, 2020, the Company and Oz Rey amended the 10% secured convertible debenture to fix the conversion rate into common stock at $0.10 per share. Further, the amendment provides a limitation on Oz Rey’s ability to convert the debenture into common stock so that the conversion would not result in the issuance of common stock exceeding the amount of authorized shares. Oz Rey may; however, upon reasonably notice to the Company, require the Company to include in its proxy materials, for any annual meeting of shareholders being held by the Company, a proposal to amend the Company’s certificate of incorporation to increase the Company’s authorized shares to a number sufficient to allow for conversion of all shares underlying the debenture, on a fully diluted basis. Oz Rey also agreed that the Company would not be required under any circumstances to make a cash payment to settle the conversion feature not exercisable due to the authorized share cap or in an event that the Company was unable to deliver shares under the conversion feature. Oz Rey also agreed to waive any event of default under the debenture that occurred or existed prior to August 17, 2020. As a result of these modifications, the warrants are no longer liability classified and the conversion feature is no longer required to be bifurcated from the debt host as of the date of the amendment. 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 0.125 2,462,600 0.50 462,500 The Company recorded a debt discount of approximately $ 358,000 10% 44,550 134,394 (h) On August 30, 2021, the Company purchased all of the outstanding membership interests in Squared Holdings pursuant to a Unit Purchase Agreement (Purchase Agreement) (see note 3). The purchase price was an 8% secured, convertible promissory note with a face value of $ 1,000,000 1,194,000 500,000 August 30, 2023 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 September 30, 2021. |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES | Accounts payable and accrued expenses are summarized as follows: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES September 30, 2021 December 31, 2020 Accounts payable $ 2,463,068 $ 3,752,036 Accrued expenses 1,190,798 1,436,679 Accrued taxes (VAT, Sales, Payroll, etc.) 2,437,347 3,356,496 Accrued interest 61,642 122,057 Accounts payable and accrued expenses, total $ 6,152,855 $ 8,667,268 |
STOCKHOLDER_S EQUITY (Tables)
STOCKHOLDER’S EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
SCHEDULE OF OUTSTANDING WARRANTS | A summary of the warrant activity during the nine months ended September 30, 2021 is presented below: SCHEDULE OF OUTSTANDING WARRANTS 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 September 30, 2021 3,409,200 $ 0.34 7.8 Exercisable September 30, 2021 3,409,200 $ 0.34 7.8 |
SCHEDULE OF OUTSTANDING WARRANTS TABLE | At September 30, 2021, the outstanding warrants consisted of the following: SCHEDULE OF OUTSTANDING WARRANTS TABLE 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) | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [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 nine months ended September 30, 2021. SUMMARY OF CHANGES IN FAIR VALUE DERIVATIVE LIABILITIES True-Up Payment Balance at December 31, 2020 $ 184,800 Change in fair value during the period (118,664 ) Settlement of derivative liability (66,136 ) Balance at September 30, 2021 $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
SCHEDULE OF OPERATING LEASE INFORMATION | Supplemental balance sheet information related to leases was as follows: SCHEDULE OF OPERATING LEASE INFORMATION Operating Leases Classification September 30, 2021 December 31, 2020 Right-of-use assets Operating lease assets $ 8,971,766 $ 9,529,443 Current lease liabilities Current operating lease liabilities $ 4,581,582 $ 4,209,389 Non-current lease liabilities Long-term operating lease liabilities 9,683,643 10,677,862 $ 14,265,225 $ 14,887,251 Lease term and discount rate were as follows: September 30, 2021 December 31, 2020 Weighted average remaining lease term (years) 7.30 7.70 Weighted average discount rate 8.7 % 10 % |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Compensation Related Costs [Abstract] | |
SCHEDULE OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS | The assumptions used in the Black-Scholes option pricing model to determine the fair value of share-based awards granted to employees during the nine months ended September 30, 2021, were as follows: SCHEDULE OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS 2021 Volatility 90.00 % Risk free rate 0.66 % Expected term 2.54 Dividend — |
SCHEDULE OF STOCK OPTIONS ACTIVITY | The following table summarizes the share-based award activity for the periods presented: SCHEDULE OF STOCK OPTIONS ACTIVITY Number of Options Weighted Average Weighted Average Outstanding at December 31, 2020 - $ - - Granted 450,000 $ 1.38 Outstanding at September 30, 2021 450,000 $ 1.38 4.8 Exercisable at September 30, 2021 175,000 $ 2.22 4.8 Vested and expected to vest at September 30, 2021 450,000 $ 1.38 4.8 |
Restatement of Previously Iss_2
Restatement of Previously Issued Condensed Consolidated and Combined Financial Statements (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [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 September 30, 2020: SCHEDULE OF PREVIOUSLY ISSUED INTERIM FINANCIAL STATEMENTS September 30, 2020 As reported Adjustment As restated Operating lease assets $ 10,117,900 $ - $ 10,117,900 Derivative liabilities $ 1,195,724 $ (694,724 ) $ 501,000 Long-term operating lease liabilities $ 15,115,651 $ (479,855 ) $ 14,635,796 Accumulated deficit $ (95,208,526 ) $ 1,048,450 $ (94,160,076 ) Non-controlling interests $ (764,097 ) $ 126,129 $ (637,968 ) 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 and nine months ended September 30, 2020: Three Months Ended September 30, 2020 As reported Adjustment As restated Restaurant operating expenses $ 3,462,279 $ (13,436 ) $ 3,448,843 Asset impairment charge $ 1,231,352 $ (95,223 ) $ 1,136,129 Operating loss $ (3,024,319 ) $ 108,659 $ (2,915,660 ) Change in fair value of derivative liabilities * $ (6,536,241 ) $ 694,724 $ (5,841,517 ) Other income (expense) $ (37,390 ) $ 11,986 $ (25,404 ) Consolidated and combined net loss $ (10,002,997 ) $ 815,369 $ (9,187,628 ) Net loss attributable to non-controlling interests $ 453,296 $ (51,767 ) $ 401,529 Net loss attributable to Amergent Hospitality Group Inc $ (9,549,701 ) $ 763,602 $ (8,786,099 ) Net loss per common share, basic and diluted $ (0.67 ) $ (0.05 ) $ (0.62 ) Nine Months Ended September 30, 2020 As reported Adjustment As restated Restaurant operating expenses $ 10,349,516 $ (26,872 ) $ 10,322,644 Asset impairment charge $ 1,505,279 $ (216,680 ) $ 1,288,599 Operating loss $ (7,033,996 ) $ 243,552 $ (6,790,444 ) Change in fair value of derivative liabilities * $ (394,724 ) $ 694,724 $ 300,000 Other income (expense) $ (85,399 ) $ 236,303 $ 150,904 Consolidated and combined net loss $ (21,006,434 ) $ 1,174,579 $ (19,831,855 ) Net loss attributable to non-controlling interests $ 413,969 $ (126,129 ) $ 287,840 Net loss attributable to Amergent Hospitality Group Inc $ (20,592,465 ) $ 1,048,450 $ (19,544,015 ) Net loss per common share, basic and diluted $ (1.53 ) $ 0.08 $ (1.45 ) |
NATURE OF BUSINESS (Details Nar
NATURE OF BUSINESS (Details Narrative) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cash and Cash Equivalents, at Carrying Value | $ 3,000,000 | |
Restricted Cash, Current | 1,948,813 | $ 1,250,336 |
Working capital deficit | $ 16,000,000 |
SCHEDULE OF FAIR VALUE MEASUREM
SCHEDULE OF FAIR VALUE MEASUREMENTS, RECURRING AND NONRECURRING (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Defined Benefit Plan Disclosure [Line Items] | ||
Common stock of Sonnet, at fair value | $ 73,970 | $ 413,268 |
True-up provision of Convertible Preferred Series 2 | 184,800 | |
Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Common stock of Sonnet, at fair value | 73,970 | 413,268 |
True-up provision of Convertible Preferred Series 2 | ||
Fair Value, Inputs, Level 2 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Common stock of Sonnet, at fair value | ||
True-up provision of Convertible Preferred Series 2 | ||
Fair Value, Inputs, Level 3 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Common stock of Sonnet, at fair value | ||
True-up provision of Convertible Preferred Series 2 | $ 184,800 |
SCHEDULE OF PROPERTY AND EQUIPM
SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIVES (Details) | 9 Months Ended |
Sep. 30, 2021 | |
Minimum [Member] | Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful life | 5 years |
Minimum [Member] | Restaurant Furnishings and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful life | 3 years |
Minimum [Member] | Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful life | 3 years |
Minimum [Member] | Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful life | 3 years |
Maximum [Member] | Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful life | 15 years |
Maximum [Member] | Restaurant Furnishings and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful life | 10 years |
Maximum [Member] | Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful life | 10 years |
Maximum [Member] | Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful life | 7 years |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Restricted cash | $ 1,936,972 | $ 1,936,972 | $ 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 | 20 years | |
Contra expense | $ 1,178,644 | $ 2,651,999 | |
[custom:RevitalizationFundDescription] | The American Rescue Plan Act established the Restaurant Revitalization Fund (RRF) to provide funding to help restaurants and other eligible businesses keep their doors open. This program will provide restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. | ||
Pie Square Holdings L L C [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Contra expense | $ 51,187 | ||
Proceeds from Related Party Debt | 10,000,000 | ||
Escrow Deposit | $ 2,000,000 | $ 2,000,000 | |
Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Operating lease, remaining lease term | 1 year | 1 year | |
Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Operating lease, remaining lease term | 20 years | 20 years |
SCHEDULE OF RECOGNIZED IDENTIFI
SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED (Details) | Sep. 30, 2021USD ($) |
Business Combination and Asset Acquisition [Abstract] | |
Cash | $ 71,000 |
Restricted cash | 2,000,000 |
Property and equipment | 348,000 |
Right of use asset | 1,391,000 |
Tradename/trademark intangible | 410,000 |
Franchise rights intangible | 410,000 |
Goodwill | 51,000 |
Security deposits and other assets | 126,000 |
Total assets acquired | 4,807,000 |
Gift card liability | 139,000 |
Deferred revenue | 36,000 |
Deferred grant income | 2,000,000 |
Right of use liability | 1,438,000 |
Total liabilities assumed | 3,613,000 |
Net purchase price | $ 1,194,000 |
SCHEDULE OF ESTIMATED FAIR VALU
SCHEDULE OF ESTIMATED FAIR VALUE ASSUMPTIONS (Details) | 9 Months Ended |
Sep. 30, 2021$ / shares | |
Volatility | 90.00% |
Risk free rate | 0.66% |
Stock price | $ 0.52 |
Credit spread | 6.35% |
Minimum [Member] | |
Risk free rate | 0.08% |
Maximum [Member] | |
Risk free rate | 0.20% |
SCHEDULE OF PRO FORMA ACQUISITI
SCHEDULE OF PRO FORMA ACQUISITION (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Business Combination and Asset Acquisition [Abstract] | ||
Total revenue | $ 16,229,033 | $ 17,645,760 |
Operating loss | (2,829,004) | (10,907,158) |
Net loss | $ (2,728,921) | $ (25,551,202) |
Net loss per share (basic and diluted) | $ (0.18) | $ (1.89) |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) | 9 Months Ended | ||
Sep. 30, 2021USD ($)Integer$ / shares | Sep. 30, 2020USD ($) | Aug. 30, 2021USD ($) | |
Business Acquisition [Line Items] | |||
Repayments of Debt | $ 53,949 | $ 2,563,346 | |
Income recognized | 8,000,000 | ||
Gain on debt extinguishment | 3,000,000 | ||
Pie Squared Holdings LLC [Member] | |||
Business Acquisition [Line Items] | |||
Proceeds from Related Party Debt | 10,000,000 | ||
Escrow Deposit | 2,000,000 | ||
Repayments of Debt | 8,000,000 | ||
Purchase Agreement [Member] | Pie Squared Holdings LLC [Member] | |||
Business Acquisition [Line Items] | |||
Secured debt, percentage | 8.00% | ||
Debt Instrument, Face Amount | $ 1,000,000 | ||
Debt Instrument, Fair Value | 1,194,000 | $ 1,194,000 | |
Transaction costs | 190,000 | ||
Interest payable | $ 500,000 | ||
Debt Instrument, Maturity Date | Aug. 30, 2022 | ||
Debt Instrument, Convertible, Conversion Date | Aug. 30, 2023 | ||
Beneficial ownership, percentage | 4.99% | ||
Trading Days | Integer | 30 | ||
Debt Discount Rate | 15.00% | ||
Purchase Agreement [Member] | Pie Squared Holdings LLC [Member] | Minimum [Member] | |||
Business Acquisition [Line Items] | |||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 0.50 | ||
Purchase Agreement [Member] | Pie Squared Holdings LLC [Member] | Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 2 | ||
Purchase Agreement [Member] | Pie Squared Holdings LLC [Member] | Chief Financial Officer [Member] | |||
Business Acquisition [Line Items] | |||
Transaction costs | $ 150,000 |
SCHEDULE OF INVESTMENT (Details
SCHEDULE OF INVESTMENT (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2012 |
Investments, All Other Investments [Abstract] | |||
Common stock of Sonnet, at fair value | $ 73,970 | $ 413,268 | |
Chanticleer Investors, LLC, at cost | 365,001 | 365,001 | |
Total | $ 438,971 | $ 778,269 | $ 800,000 |
INVESTMENTS (Details Narrative)
INVESTMENTS (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2012 | |
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%. | |||
Investment | $ 438,971 | $ 778,269 | $ 800,000 | |
Non controlling interest | 48,000 | |||
Investment write down | $ 435,000 | |||
Hooters Of America [Member] | ||||
Payment to related party | $ 349,293 | |||
Chanticleer Investors LLC [Member] | ||||
Investment ownership percentage | 22.00% | |||
Hooters Of America [Member] | ||||
Investment ownership percentage | 3.00% | |||
Sonet [Member] | ||||
Proceeds from Issuance or Sale of Equity | $ 118,416 | |||
[custom:NumberOfSharesHeld-0] | 122,064 |
SCHEDULE OF PROPERTY, PLANT AND
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 6,962,366 | $ 7,301,908 |
Restaurant furniture and equipment | 2,287,064 | 2,132,726 |
Construction in progress | 650 | 5,450 |
Office and computer equipment | 114,623 | 125,535 |
Office furniture and fixtures | 99,528 | 59,635 |
Property, plant and equipment, gross | 9,464,231 | 9,625,254 |
Accumulated depreciation and amortization | (6,462,334) | (5,922,360) |
Property, plant and equipment, net | $ 3,001,897 | $ 3,702,894 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Impairment of Intangible Assets, Finite-lived | $ 0 | $ 555,702 | $ 255,115 | $ 685,333 |
Other asset impairment charge | 13,374 | |||
Depreciation expense | $ 260,345 | $ 185,825 | $ 814,675 | $ 834,909 |
SCHEDULE OF GOODWILL (Details)
SCHEDULE OF GOODWILL (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning balance | $ 8,591,149 | $ 8,567,888 |
Foreign currency translation gain | (11,768) | 23,261 |
Goodwill acquired in acquisition | $ 51,000 | |
Goodwill reclassified to noncurrent assets held for sale (Note 14) | (820,507) | |
Ending balance | $ 7,809,874 | $ 8,591,149 |
SCHEDULE OF FINITE-LIVED INTANG
SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Estimated life | 10 years | |
Total intangibles at cost | $ 4,498,193 | $ 4,989,440 |
Accumulated amortization | 1,225,397 | 1,945,555 |
Intangible assets, net | 3,272,796 | 3,043,885 |
Trademarks and Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles at cost | $ 3,260,436 | 4,076,175 |
Trademarks and Trade Names [Member] | American Roadside Burger [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated life | 10 years | |
Total intangibles at cost | $ 561,191 | 1,786,930 |
Trademarks and Trade Names [Member] | The Burger Joint [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles at cost | $ 739,245 | 739,245 |
Estimated life description | Indefinite | |
Trademarks and Trade Names [Member] | Little Big Burger [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles at cost | $ 1,550,000 | 1,550,000 |
Estimated life description | Indefinite | |
Trademarks and Trade Names [Member] | Pizza Rev [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated life | 5 years | |
Total intangibles at cost | $ 410,000 | |
Franchise Rights [Member] | The Burger Joint [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated life | 7 years | |
Total intangibles at cost | $ 827,757 | 827,757 |
Franchise Rights [Member] | Pizza Rev [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated life | 5 years | |
Total intangibles at cost | $ 410,000 | |
Franchise License Fees [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles at cost | 85,508 | |
Franchise License Fees [Member] | Hooters Pacific NW [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated life | 20 years | |
Total intangibles at cost | 74,507 | |
Franchise License Fees [Member] | Hooters UK [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated life | 5 years | |
Total intangibles at cost | $ 11,001 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Impairment of Intangible Assets, Finite-lived | $ 0 | $ 555,702 | $ 255,115 | $ 685,333 |
Trademarks and Trade Names [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Impairment of Intangible Assets, Finite-lived | 246,751 | 327,342 | 246,751 | |
Amortization of intangible assets | $ 90,254 | $ 92,174 | $ 265,929 | $ 274,699 |
SCHEDULE OF DEBT AND NOTES PAYA
SCHEDULE OF DEBT AND NOTES PAYABLE (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | |
Short-term Debt [Line Items] | |||
Total Debt | $ 9,989,558 | $ 6,916,601 | |
Less: discount on convertible debt | [1] | (89,473) | (223,681) |
Total Debt, net of discount | 9,900,085 | 6,692,920 | |
Current portion of long-term debt | 7,080,737 | 2,338,978 | |
Long-term debt, less current portion | 2,819,348 | 4,353,942 | |
Notes Payable One [Member] | |||
Short-term Debt [Line Items] | |||
Total Debt | [2] | 25,850 | |
Notes Payable Two [Member] | |||
Short-term Debt [Line Items] | |||
Total Debt | [3] | 27,048 | |
Contractor Note [Member] | |||
Short-term Debt [Line Items] | |||
Total Debt | [4] | 348,269 | 348,269 |
PPP Loans [Member] | |||
Short-term Debt [Line Items] | |||
Total Debt | [5] | 4,109,400 | 2,109,400 |
United Kingdom Bounce Back Loan [Member] | |||
Short-term Debt [Line Items] | |||
Total Debt | [6] | 68,245 | |
Economic Injury Disaster Loan [Member] | |||
Short-term Debt [Line Items] | |||
Total Debt | [7] | 300,000 | 299,900 |
Convertible Debt [Member] | |||
Short-term Debt [Line Items] | |||
Total Debt | [1] | 4,037,889 | 4,037,889 |
Convertible Promissory Note [Member] | |||
Short-term Debt [Line Items] | |||
Total Debt | [8] | 1,194,000 | |
Promissory Note [Member] | |||
Short-term Debt [Line Items] | |||
Accounts payable and accrued expenses | $ 95,000 | $ 95,000 | |
[1] | On April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% 10% 4,037,889 April 1, 2022 | ||
[2] | In connection with the assets acquired from the two BGR franchisees, the Company entered into notes payable of $ 9,600 187,000 4% | ||
[3] | During September 2019 and October 2019, the Company entered into two merchant capital advances in the amount of $ 46,000 84,700 | ||
[4] | 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 12% 445,000 95,000 | ||
[5] | On April 27, 2020, Amergent received a $ 2.1 1% April 2022 119,000 | ||
[6] | On November 24, 2020, Amergent received approximately $ 68,200 six years 10 years 2.5% | ||
[7] | 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 3.75% August 4, 2021 1,762 | ||
[8] | On August 30, 2021, the Company purchased all of the outstanding membership interests in Squared Holdings pursuant to a Unit Purchase Agreement (Purchase Agreement) (see note 3). The purchase price was an 8% secured, convertible promissory note with a face value of $ 1,000,000 1,194,000 500,000 August 30, 2023 |
SCHEDULE OF DEBT AND NOTES PA_2
SCHEDULE OF DEBT AND NOTES PAYABLE (Details) (Parenthetical) | Feb. 25, 2021USD ($) | Nov. 24, 2020USD ($) | Aug. 04, 2020USD ($) | Apr. 27, 2020USD ($) | Aug. 31, 2021USD ($) | Nov. 30, 2020USD ($) | Oct. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($) | Dec. 31, 2018USD ($) | Aug. 30, 2022USD ($) | Dec. 31, 2020USD ($) | Apr. 02, 2020USD ($) | |
Short-term Debt [Line Items] | ||||||||||||||||
Proceeds from issuance of debt | $ 2,000,000 | $ 2,989,350 | ||||||||||||||
Debt discount | [1] | $ 89,473 | 89,473 | $ 223,681 | ||||||||||||
Note Payable One [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Proceeds from Consideration | $ 9,600 | |||||||||||||||
Notes Payable Two [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Proceeds from Consideration | $ 187,000 | |||||||||||||||
Notes Payable [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | |||||||||||||||
Merchant Capital Advances [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Proceeds from Consideration | $ 84,700 | $ 46,000 | ||||||||||||||
Promissory Note [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | |||||||||||||||
Note payable | $ 348,269 | |||||||||||||||
Default loan | 445,000 | |||||||||||||||
Accounts payable and accrued expenses | 95,000 | 95,000 | $ 95,000 | |||||||||||||
PPP Loan [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.00% | 1.00% | ||||||||||||||
Proceeds from issuance of debt | $ 2,000,000 | $ 2,100,000 | ||||||||||||||
Debt instrument, maturity month year | 2022-04 | |||||||||||||||
Periodic payment | $ 44,660 | $ 119,000 | ||||||||||||||
Debt instrument, maturity date | Feb. 25, 2026 | |||||||||||||||
Bounce Back Loan [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.50% | |||||||||||||||
Proceeds from issuance of debt | $ 68,200 | |||||||||||||||
Bounce Back Loan [Member] | Minimum [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Loan term | 6 years | |||||||||||||||
Bounce Back Loan [Member] | Maximum [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Loan term | 10 years | |||||||||||||||
Economic Injury Disaster Loan [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.75% | |||||||||||||||
Periodic payment | $ 1,762 | |||||||||||||||
Debt instrument, maturity date | Aug. 4, 2021 | |||||||||||||||
Debt Instrument, Face Amount | $ 300,000 | |||||||||||||||
10% Secured Convertible Debenture [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Instrument, Face Amount | 4,037,889 | $ 4,037,889 | ||||||||||||||
Percentage of note conversion | 0.08 | |||||||||||||||
Debt description | April 1, 2022 | |||||||||||||||
10% Convertible Notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |||||||||||||||
Debt discount | $ 358,000 | |||||||||||||||
Debt discount | $ 44,550 | $ 134,394 | ||||||||||||||
8% Non Convertible Debenture [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Warrant to purchase common stock | shares | 2,925,200 | 2,925,200 | ||||||||||||||
8% Non Convertible Debenture [Member] | Warrant One [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Warrant to purchase common stock | shares | 2,462,600 | 2,462,600 | ||||||||||||||
Warrant exercise price | $ / shares | $ 0.125 | $ 0.125 | ||||||||||||||
8% Non Convertible Debenture [Member] | Warrant Two [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Warrant to purchase common stock | shares | 462,500 | 462,500 | ||||||||||||||
Warrant exercise price | $ / shares | $ 0.50 | $ 0.50 | ||||||||||||||
Convertible Promissory Note [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt instrument, maturity date | Aug. 30, 2023 | |||||||||||||||
Debt Instrument, Face Amount | $ 1,000,000 | |||||||||||||||
Convertible Debt | $ 1,194,000 | |||||||||||||||
Convertible Promissory Note [Member] | Subsequent Event [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Instrument, Face Amount | $ 500,000 | |||||||||||||||
[1] | On April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% 10% 4,037,889 April 1, 2022 |
SCHEDULE OF ACCOUNTS PAYABLE AN
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 2,463,068 | $ 3,752,036 |
Accrued expenses | 1,190,798 | 1,436,679 |
Accrued taxes (VAT, Sales, Payroll, etc.) | 2,437,347 | 3,356,496 |
Accrued interest | 61,642 | 122,057 |
Accounts payable and accrued expenses, total | $ 6,152,855 | $ 8,667,268 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details Narrative) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Employee-related Liabilities | $ 2,200,000 | $ 3,000,000 |
Compensating Balance, Amount | $ 380,000 |
SCHEDULE OF OUTSTANDING WARRANT
SCHEDULE OF OUTSTANDING WARRANTS (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Equity [Abstract] | |
Number of Warrants Outstanding, Beginning Balance | shares | 3,409,200 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 0.34 |
Weighted Average Remaining Life, Beginning Balance | 8 years 7 months 6 days |
Number of Warrants Outstanding, Granted | shares | |
Weighted Average Exercise Price, Granted | $ / shares | |
Number of Warrants Outstanding, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Number of Warrants Outstanding, Forfeited / Other Adjustments | shares | |
Weighted Average Exercise Price, Forfeited / Other Adjustments | $ / shares | |
Number of Warrants Outstanding, Ending Balance | shares | 3,409,200 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 0.34 |
Weighted Average Remaining Life, Ending Balance | 7 years 9 months 18 days |
Number of Warrants Exercisable, Ending Balance | shares | 3,409,200 |
Weighted Average Exercise Price Exercisable, Ending Balance | $ / shares | $ 0.34 |
Weighted Average Remaining Life, Exercisable | 7 years 9 months 18 days |
SCHEDULE OF OUTSTANDING WARRA_2
SCHEDULE OF OUTSTANDING WARRANTS TABLE (Details) | Sep. 30, 2021$ / sharesshares |
Class of Warrant or Right [Line Items] | |
Number of warrants | 3,409,200 |
Warrants Issued on April 1, 2020 [Member] | |
Class of Warrant or Right [Line Items] | |
Number of warrants | 2,462,600 |
Exercise Price | $ / shares | $ 0.125 |
Expiration Date | Apr. 1, 2030 |
Warrants Issued on April 1, 2020 [Member] [Default Label] | |
Class of Warrant or Right [Line Items] | |
Number of warrants | 462,600 |
Exercise Price | $ / shares | $ 0.500 |
Expiration Date | Apr. 1, 2030 |
Warrants Issued on March 30, 2020 [Member] | |
Class of Warrant or Right [Line Items] | |
Number of warrants | 350,000 |
Exercise Price | $ / shares | $ 1.250 |
Expiration Date | Mar. 30, 2025 |
Warrants Issued on August 17, 2020 [Member] | |
Class of Warrant or Right [Line Items] | |
Number of warrants | 134,000 |
Exercise Price | $ / shares | $ 1.250 |
Expiration Date | Aug. 17, 2025 |
STOCKHOLDER_S EQUITY (Details N
STOCKHOLDER’S EQUITY (Details Narrative) | Feb. 16, 2021USD ($) | Aug. 17, 2020USD ($)shares | Feb. 07, 2020USD ($)$ / sharesshares | Jul. 31, 2021USD ($) | May 31, 2021shares | Mar. 31, 2020shares | Jun. 30, 2021shares | Mar. 31, 2021shares | Sep. 30, 2021$ / sharesshares | Dec. 31, 2020$ / sharesshares |
Class of Stock [Line Items] | ||||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | ||||||||
Number of warrants issued to purchase common stock | 3,409,200 | |||||||||
Payment for Incentive Fee | $ | $ 66,136 | |||||||||
Common Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period conversion of convertible securities | 1,124,000 | 250,000 | ||||||||
Other Investors [Member] | Common Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period conversion of convertible securities | 150 | |||||||||
True Up Payment [Member] | Original Investors [Member] | Common Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period conversion of convertible securities | 1,274,000 | |||||||||
2020 Bridge Financing [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Percentage of cash equal to dollar value | 1.25 | |||||||||
Convertible Preferred Stock: Series 2 [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Preferred stock, shares issued | 100 | 787 | ||||||||
Convertible Preferred Stock: Series 2 [Member] | 2020 Bridge Financing [Member] | Securities Purchase Agreement [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Preferred stock, shares issued | 713 | |||||||||
Stock issued during period conversion of convertible securities | 1,426,854 | |||||||||
Convertible Preferred Stock: Series 2 [Member] | 2020 Bridge Financing [Member] | Securities Purchase Agreement [Member] | Chanticleer [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
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 | $ / shares | $ 1.25 | |||||||||
Preferred stock value | $ | $ 1,000 | |||||||||
Embedded derivative liability | $ | 529,000 | |||||||||
Beneficial conversion feature | $ | $ 729,000 | |||||||||
Preferred Stock: Series 2 [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period conversion of convertible securities | 1,400 | |||||||||
Preferred Stock: Series 2 [Member] | 2020 Bridge Financing [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
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. | |||||||||
Conversion price | $ / shares | $ 1 | |||||||||
Beneficial ownership percentage limitation | 4.99% | |||||||||
Percentage of limitation prior to merger | 9.99% | |||||||||
Preferred Stock: Series 2 [Member] | 2020 Bridge Financing [Member] | Maximum [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock were issued value | $ | $ 1,250,000 | |||||||||
Preferred Stock: Series 2 [Member] | 2020 Bridge Financing [Member] | Minimum [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock were issued value | $ | $ 850,000 | |||||||||
Series 2 Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Cash payment to stock holders | $ | $ 66,000 | |||||||||
Number of warrants issued to purchase common stock | 134,000 | |||||||||
Common stock were issued value | $ | $ 28,060 | |||||||||
Series 2 Preferred Stock [Member] | Other Investors [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period conversion of convertible securities | 50 | 100 | ||||||||
Series 2 Preferred Stock [Member] | True Up Payment [Member] | Original Investors [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of shares disposed | 637 |
SUMMARY OF CHANGES IN FAIR VALU
SUMMARY OF CHANGES IN FAIR VALUE DERIVATIVE LIABILITIES (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Balance at December 31, 2020 | $ 184,800 |
Change in fair value during the period | (118,664) |
Settlement of derivative liability | (66,136) |
Balance at September 30, 2021 |
DERIVATIVE LIABILITIES (Details
DERIVATIVE LIABILITIES (Details Narrative) - USD ($) | Jul. 31, 2021 | Sep. 30, 2020 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative Liability | $ 66,136 | $ 501,000 |
SCHEDULE OF OPERATING LEASE INF
SCHEDULE OF OPERATING LEASE INFORMATION (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |||
Right-of-use assets | $ 8,971,766 | $ 9,529,443 | $ 10,117,900 |
Current lease liabilities | 4,581,582 | 4,209,389 | |
Non-current lease liabilities | 9,683,643 | 10,677,862 | $ 14,635,796 |
Operating Lease Liability | $ 14,265,225 | $ 14,887,251 | |
Weighted average remaining lease term (years) | 7 years 3 months 18 days | 7 years 8 months 12 days | |
Weighted average discount rate | 8.70% | 10.00% |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Loss Contingencies [Line Items] | ||||
Insurance in coverage amount | $ 3,000,000 | |||
Impairment charge of right-of-use asset | $ 0 | $ 333,676 | 705,122 | $ 343,141 |
Unrecognized lease liabilities | 66,821 | 385,340 | ||
Related to abandoned leases liabilities | 3,249,227 | |||
Rent expenses | 600,000 | $ 600,000 | 1,800,000 | 1,800,000 |
Grant | 10,000,000 | |||
Repayment of grant | 10,000,000 | |||
Variable [Member] | ||||
Loss Contingencies [Line Items] | ||||
Rent expenses | 100,000 | $ 100,000 | ||
Paycheck Protection Program Loan One [Member] | ||||
Loss Contingencies [Line Items] | ||||
Debt instrument, face amount | 2,100,000 | 2,100,000 | ||
Paycheck Protection Program Loan Two [Member] | ||||
Loss Contingencies [Line Items] | ||||
Debt instrument, face amount | 2,000,000 | 2,000,000 | ||
PPP Loan [Member] | ||||
Loss Contingencies [Line Items] | ||||
Loans payable | $ 2,000,000 | $ 2,000,000 | ||
PPP Loan [Member] | Maximum [Member] | ||||
Loss Contingencies [Line Items] | ||||
Debt instrument, term | 7 years |
SCHEDULE OF STOCK OPTIONS FAIR
SCHEDULE OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS (Details) | 9 Months Ended |
Sep. 30, 2021 | |
Compensation Related Costs [Abstract] | |
Volatility | 90.00% |
Risk free rate | 0.66% |
Expected term | 2 years 6 months 14 days |
Dividend |
SCHEDULE OF STOCK OPTIONS ACTIV
SCHEDULE OF STOCK OPTIONS ACTIVITY (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Compensation Related Costs [Abstract] | |
Number of Options Outstanding, Beginning Balance | shares | |
Weighted Average Exercise Price Per Share, Beginning Balance | $ / shares | |
Number of Options Granted | shares | 450,000 |
Weighted Average Exercise Price Per Share, Granted | $ / shares | $ 1.38 |
Number of Options Outstanding, Ending Balance | shares | 450,000 |
Weighted Average Exercise Price Per Share, Beginning Balance | $ / shares | $ 1.38 |
Weighted Average Remaining Contractual Term, Outstanding | 4 years 9 months 18 days |
Number of Options Exercisable | shares | 175,000 |
Weighted Average Exercise Price Per Share, Exercisable | $ / shares | $ 2.22 |
Weighted Average Remaining Contractual Term, Exercisable | 4 years 9 months 18 days |
Number of Options Outstanding, Vested and Expected to Vest | shares | 450,000 |
Weighted Average Exercise Price Per Share, Vested and Expected to Vest | $ / shares | $ 1.38 |
Weighted Average Remaining Contractual Term, Vested and Expected to Vest | 4 years 9 months 18 days |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Aug. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 15,365 | $ 15,365 | ||
Weighted average grant date fair value | $ 0.15 | |||
Unrecognized compensation cost | $ 100,000 | $ 100,000 | ||
Weighted average recognition period | 1 year 9 months 18 days | |||
2021 Inducement Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares available for future grant under plan | 500,000 |
SCHEDULE OF PREVIOUSLY ISSUED I
SCHEDULE OF PREVIOUSLY ISSUED INTERIM FINANCIAL STATEMENTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jul. 31, 2021 | Dec. 31, 2020 | |
Operating lease assets | $ 8,971,766 | $ 10,117,900 | $ 8,971,766 | $ 10,117,900 | $ 9,529,443 | |||||
Derivative liabilities | 501,000 | 501,000 | $ 66,136 | |||||||
Long-term operating lease liabilities | 9,683,643 | 14,635,796 | 9,683,643 | 14,635,796 | 10,677,862 | |||||
Accumulated deficit | (96,963,419) | (94,160,076) | (96,963,419) | (94,160,076) | (94,587,482) | |||||
Non-controlling interests | (1,113,928) | (637,968) | (1,113,928) | (637,968) | $ (969,680) | |||||
Restaurant operating expenses | 3,674,755 | 3,448,843 | 10,100,284 | 10,322,644 | ||||||
Asset impairment charge | 1,136,129 | 1,288,599 | ||||||||
Operating loss | 136,620 | (2,915,660) | (2,396,831) | (6,790,444) | ||||||
Change in fair value of derivative liabilities * | (5,841,517) | 118,664 | 300,000 | |||||||
Other income (expense) | 18,203 | (25,404) | 164,761 | 150,904 | ||||||
Consolidated and combined net loss | (89,190) | $ 326,611 | $ (2,712,712) | (9,187,628) | $ (9,076,018) | $ (1,568,209) | (2,475,291) | (19,831,855) | ||
Net loss attributable to non-controlling interests | $ (5,047) | 401,529 | $ 99,354 | 287,840 | ||||||
Net loss attributable to Amergent Hospitality Group Inc | $ (8,786,099) | $ (19,544,015) | ||||||||
Net loss per common share, basic and diluted | $ (0.62) | $ (1.45) | ||||||||
Previously Reported [Member] | ||||||||||
Operating lease assets | $ 10,117,900 | $ 10,117,900 | ||||||||
Derivative liabilities | 1,195,724 | 1,195,724 | ||||||||
Long-term operating lease liabilities | 15,115,651 | 15,115,651 | ||||||||
Accumulated deficit | (95,208,526) | (95,208,526) | ||||||||
Non-controlling interests | (764,097) | (764,097) | ||||||||
Restaurant operating expenses | 3,462,279 | 10,349,516 | ||||||||
Asset impairment charge | 1,231,352 | 1,505,279 | ||||||||
Operating loss | (3,024,319) | (7,033,996) | ||||||||
Change in fair value of derivative liabilities * | (6,536,241) | (394,724) | ||||||||
Other income (expense) | (37,390) | (85,399) | ||||||||
Consolidated and combined net loss | (10,002,997) | (21,006,434) | ||||||||
Net loss attributable to non-controlling interests | 453,296 | 413,969 | ||||||||
Net loss attributable to Amergent Hospitality Group Inc | $ (9,549,701) | $ (20,592,465) | ||||||||
Net loss per common share, basic and diluted | $ (0.67) | $ (1.53) | ||||||||
Revision of Prior Period, Adjustment [Member] | ||||||||||
Operating lease assets | ||||||||||
Derivative liabilities | (694,724) | (694,724) | ||||||||
Long-term operating lease liabilities | (479,855) | (479,855) | ||||||||
Accumulated deficit | 1,048,450 | 1,048,450 | ||||||||
Non-controlling interests | 126,129 | 126,129 | ||||||||
Restaurant operating expenses | (13,436) | (26,872) | ||||||||
Asset impairment charge | (95,223) | (216,680) | ||||||||
Operating loss | 108,659 | 243,552 | ||||||||
Change in fair value of derivative liabilities * | 694,724 | 694,724 | ||||||||
Other income (expense) | 11,986 | 236,303 | ||||||||
Consolidated and combined net loss | 815,369 | 1,174,579 | ||||||||
Net loss attributable to non-controlling interests | (51,767) | (126,129) | ||||||||
Net loss attributable to Amergent Hospitality Group Inc | $ 763,602 | $ 1,048,450 | ||||||||
Net loss per common share, basic and diluted | $ (0.05) | $ 0.08 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Oct. 08, 2021 | USD ($) | GBP (£) |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Non-current assets held for sale | $ 705,710 | £ 518,295 |