Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Apr. 06, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Amergent Hospitality Group, Inc | ||
Entity Central Index Key | 0001805024 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 14,782,736 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
Consolidated and Combined Balan
Consolidated and Combined Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 678,468 | $ 500,681 |
Restricted cash | 1,250,336 | 336 |
Investments | 413,268 | |
Accounts and other receivables | 314,043 | 131,887 |
Inventories | 172,695 | 287,111 |
Prepaid expenses and other current assets | 290,227 | 249,579 |
TOTAL CURRENT ASSETS | 3,119,037 | 1,169,594 |
Property and equipment, net | 3,702,894 | 5,630,490 |
Operating lease assets | 9,529,443 | 11,668,026 |
Intangible assets, net | 3,043,885 | 3,656,995 |
Goodwill | 8,591,149 | 8,567,888 |
Investments | 365,001 | 381,397 |
Deposits and other assets | 295,930 | 309,462 |
Assets of discontinued operations | 149,000 | |
TOTAL ASSETS | 28,647,339 | 31,532,852 |
Current liabilities: | ||
Accounts payable and accrued expenses | 8,667,268 | 8,165,195 |
Current maturities of long-term debt and notes payable | 2,338,978 | 6,630,961 |
Current operating lease liabilities | 4,209,389 | 3,299,309 |
Derivative liabilities | 184,800 | |
TOTAL CURRENT LIABILITIES | 15,400,435 | 18,095,465 |
Long-term operating lease liabilities | 10,677,862 | 14,382,354 |
Contract liabilities | 794,989 | 959,445 |
Deferred tax liabilities | 108,809 | 102,304 |
Long-term debt and notes payable, net of current maturities | 539,734 | |
Convertible debt, net of debt discount of $223,681 at December 31, 2020 | 3,814,208 | |
Liabilities of discontinued operations | 435,600 | |
TOTAL LIABILITIES | 31,336,037 | 34,684,863 |
Commitments and contingencies (see Note 12) | ||
Stockholders' Deficit: | ||
Common stock: $0.0001 par value; authorized 50,000,000 and 45,000,000 shares; 14,282,736 and 10,404,347 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | 1,428 | 1,041 |
Additional paid-in-capital | 92,433,344 | 71,505,989 |
Accumulated deficit | (94,587,482) | (75,068,385) |
Accumulated other comprehensive loss | (25,916) | (46,437) |
Total Amergent Hospitality Group, Inc., Stockholders' Deficit | (2,178,626) | (3,607,792) |
Non-controlling interests | (969,680) | 455,781 |
TOTAL STOCKHOLDERS' DEFICIT | (3,148,306) | (3,152,011) |
TOTAL LIABILITIES, REDEEMABLE SHARES AND STOCKHOLDERS' DEFICIT | 28,647,339 | 31,532,852 |
Redeemable Preferred Stock: Series 1 [Member] | ||
Current liabilities: | ||
Redeemable preferred stock Series 1: no par value; 0 and 62,876 shares issued and outstanding, net of discount of $0 and $139,131 at December 31, 2020 and December 31, 2019, respectively | 709,695 | |
Convertible Preferred Stock: Series 2 [Member] | ||
Current liabilities: | ||
Preferred Stock Value | $ 459,608 |
Consolidated and Combined Bal_2
Consolidated and Combined Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | |
Debt discount | [1] | $ 223,681 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized | 50,000,000 | 45,000,000 | |
Common stock, shares issued | 14,282,736 | 10,404,347 | |
Common stock, shares outstanding | 14,282,736 | 10,404,347 | |
Redeemable Preferred Stock: Series 1 [Member] | |||
Preferred stock, par value | |||
Prefered stock, shares discount | $ 0 | $ 139,131 | |
Preferred stock, shares issued | 0 | 62,876 | |
Preferred stock, shares outstanding | 0 | 62,876 | |
Convertible Preferred Stock: Series 2 [Member] | |||
Preferred stock, par value | $ 1,000 | $ 1,000 | |
Preferred stock, shares issued | 787 | ||
Preferred stock, shares outstanding | 787 | ||
Preferred stock, shares authorized | 1,500 | ||
[1] | In connection with and prior to the Spin-Off and Merger, on April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% non-convertible debentures (see (a) above), the Company issued a 10% secured convertible debenture to Oz Rey in exchange for the 8% non-convertible debentures. The principal amount of the 10% secured convertible debenture is $4,037,889, payable in full on April 1, 2022, subject to extension by the holders in two-year intervals for up to 10 years from the issuance date upon Amergent meeting certain conditions. Interest is payable quarterly in cash. Prior to August 17, 2020, the 10% secured convertible debenture was convertible at any time by Oz Rey into common stock at the lower of $0.10 per share and the volume weighted average price on the last 10 trading days immediately prior to conversion. The 10% secured convertible debenture is also subject to adjustment if Amergent sells securities below this price (down round protection), among other triggers. In connection with the exchange of the debentures, Amergent issued warrants to Oz Rey and the original 8% non-convertible debenture holders to purchase 2,925,200 shares of common stock. The exercise price is $0.125 for 2,462,600 warrants and $0.50 for 462,500 warrants. The warrants can be exercised on a cashless basis and expire 10 years from the issuance date. Through August 16, 2020, Amergent did not have an adequate amount of authorized common stock to cover shares issuable upon exercise of the warrants and conversion of the 10% convertible notes. As such, the warrants were liability classified and the conversion feature was bifurcated from the host debt instrument and accounted for as a derivative and recorded as a liability in the accompanying consolidated and combined balance sheets through August 16, 2020, with the change in the liability for the warrants and the conversion feature from the April 1, 2020 issuance date through August 16, 2020 recorded in the accompanying consolidated and combined statements of operations. The warrants issued had an estimated fair value of $935,000 as of April 1, 2020 using a Monte Carlo simulation to determine the value. The fair value of the conversion feature was $11,231,000 as of April 1, 2020 using a Monte Carlo simulation to determine the value. The estimated carrying value of the 10% convertible secured debentures without the conversion feature was $3,680,000, and with the conversion feature was $14,911,000. 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. Through the date of the amendment, the warrants and the conversion feature were marked to fair value with the change in the liability recorded in the accompanying consolidated and combined statements of operations. The liabilities for the warrants and conversion feature were reclassified into additional paid in-capital at the amendment date. The estimated fair value of the warrants and conversion feature at August 16, 2020 were $924,000 and $10,970,000, respectively. The change in value of these instruments from the issuance date through August 16, 2020 of ($11,000) and ($261,000) has been recorded as a component of other expense (income) and included in change in fair value of derivative liabilities and warrants in the accompanying consolidated statements of operations for the year ended December 31, 2020. See note 11 for further discussion of determining the estimated fair value of these instruments. The exchange of the notes has been accounted for as the extinguishment of the 8% non-convertible notes with the difference in the carrying value of the 8% non-convertible notes, $4,037,889, and the fair value of the 10% convertible notes and warrants, $15,846,000, at the date of the exchange recorded as a debt extinguishment charge of $11,808,111 in the accompanying consolidated and combined statements of operations for the year ended December 31, 2020. The Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes. Amortization of $134,208 was recorded as interest expense during the year ended December 31, 2020. The Company's various loan agreements contain financial and non-financial covenants and provisions providing for cross-default. The evaluation of compliance with these provisions is subject to interpretation and the exercise of judgment. The Company's lender has provided a waiver of certain financial covenants through March 31, 2021. |
Consolidated and Combined State
Consolidated and Combined Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue: | ||
Total revenue | $ 18,763,916 | $ 30,143,118 |
Expenses: | ||
Restaurant cost of sales | 5,749,876 | 9,494,777 |
Restaurant operating expenses | 13,194,583 | 19,406,358 |
Restaurant pre-opening and closing expenses | 287,768 | 361,554 |
General and administrative expenses | 4,691,541 | 5,966,447 |
Asset impairment charge | 1,578,464 | 9,149,852 |
Depreciation and amortization | 1,525,367 | 1,842,352 |
Total expenses | 27,027,599 | 46,221,340 |
Operating loss | (8,263,683) | (16,078,222) |
Other (expense) income: | ||
Interest expense | (684,315) | (673,573) |
Change in fair value of derivative liabilities | 616,200 | |
Change in the fair value of investment | (1,232,037) | |
Debt extinguishment expense | (11,808,111) | |
Gain on extinguished lease liabilities | 506,185 | |
Other income (expense) | 281,293 | (617,837) |
Total other expense | (12,320,785) | (1,291,410) |
Loss before income taxes | (20,584,468) | (17,369,632) |
Income tax expense | (6,505) | (73,726) |
Loss from continuing operations | (20,590,973) | (17,443,358) |
Discontinued operations | ||
Loss from discontinued operations, net of tax | (1,021,674) | |
Consolidated net loss | (20,590,973) | (18,465,032) |
Less: Net loss attributable to non-controlling interests | 619,552 | 402,386 |
Less: Net loss attributable to non-controlling interest of discontinued operations | 336,262 | |
Net loss attributable to Amergent Hospitality Group Inc. | (19,971,421) | (17,726,384) |
Dividends on redeemable preferred stock | (28,219) | (112,238) |
Net loss attributable to common shareholders of Amergent Hospitality Group Inc. | $ (19,999,640) | $ (17,838,622) |
Net loss attributable to Amergent Hospitality Group, Inc. per common share, basic and diluted | $ (1.46) | $ (2.56) |
Net loss attributable to Amergent Hospitality Group, Inc. before discontinued operations per common share, basic and diluted | $ (1.46) | $ (2.46) |
Weighted average shares outstanding, basic and diluted | 13,708,985 | 6,978,848 |
Restaurant Sales Net [Member] | ||
Revenue: | ||
Total revenue | $ 18,131,097 | $ 29,055,521 |
Gaming Income Net [Member] | ||
Revenue: | ||
Total revenue | 292,011 | 462,507 |
Franchise Income [Member] | ||
Revenue: | ||
Total revenue | 340,808 | 575,090 |
Management Fee Income [Member] | ||
Revenue: | ||
Total revenue | $ 50,000 |
Consolidated and Combined Sta_2
Consolidated and Combined Statements of Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss attributable to Amergent Hospitality Group | $ (19,971,421) | $ (17,726,384) |
Foreign currency translation gain | 20,521 | 155,678 |
Comprehensive loss | $ (19,950,900) | $ (17,570,706) |
Consolidated and Combined Sta_3
Consolidated and Combined Statements of Stockholders' Equity (Deficit) - USD ($) | Temporary Equity Preferred Shares 2 [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2018 | $ 373 | $ 64,756,903 | $ (57,124,673) | $ (202,115) | $ 827,037 | $ 8,257,525 | |
Balance, shares at Dec. 31, 2018 | 3,715,444 | ||||||
Common stock and warrants issued for: Preferred Unit dividend | $ 7 | 77,144 | (112,238) | (35,087) | |||
Common stock and warrants issued for: Preferred Unit dividend, shares | 77,975 | ||||||
Common stock and warrants issued for: Director Fees | $ 19 | 336,940 | 336,959 | ||||
Common stock and warrants issued for: Director Fees, shares | 194,475 | ||||||
Common stock and warrants issued for: Consulting Services | $ 4 | 117,087 | 117,091 | ||||
Common stock and warrants issued for: Consulting Services, shares | 36,765 | ||||||
Common stock and warrants issued for: Subscriptions pursuant to rights offerings,net | $ 300 | 2,614,315 | 2,614,615 | ||||
Common stock and warrants issued for: Subscriptions pursuant to rights offerings net, shares | 3,009,733 | ||||||
Common stock and warrants issued for: Accrued interest on note payable | $ 1 | 13,839 | 13,840 | ||||
Common stock and warrants issued for: Accrued interest on note payable, shares | 10,400 | ||||||
Common stock and warrants issued for: Exercise of warrants | $ 24 | 258,144 | (105,090) | 153,078 | |||
Common stock and warrants issued for: Exercise of warrants, shares | 239,555 | ||||||
Share-based compensation | $ 5 | 126,829 | 126,834 | ||||
Share-based compensation, shares | 45,000 | ||||||
Stock issued to settle convertible debt and note payable | $ 308 | 3,074,692 | 3,075,000 | ||||
Stock issued to settle convertible debt and note payable, shares | 3,075,000 | ||||||
Foreign currency translation | 155,678 | 155,678 | |||||
Shareholder payment for short swing | 1,676 | 1,676 | |||||
Non-controlling interest contributions | 575,000 | 575,000 | |||||
Non-controlling interest distributions | (79,188) | (79,188) | |||||
Reclassification of non-controlling interest | 128,420 | (128,420) | |||||
Net loss | (17,726,384) | (738,648) | (18,465,032) | ||||
Balance at Dec. 31, 2019 | $ 1,041 | 71,505,989 | (75,068,385) | (46,437) | 455,781 | (3,152,011) | |
Balance, shares at Dec. 31, 2019 | 10,404,347 | ||||||
Common stock and warrants issued for: Preferred Unit dividend | $ 4 | 19,519 | (28,219) | (8,696) | |||
Common stock and warrants issued for: Preferred Unit dividend, shares | 37,518 | ||||||
Common stock and warrants issued for: Exercise of warrants | $ 241 | 1,528,867 | (325,366) | 1,203,742 | |||
Common stock and warrants issued for: Exercise of warrants, shares | 2,414,022 | ||||||
Foreign currency translation | 20,521 | 20,521 | |||||
Reclassification of non-controlling interest | 805,909 | (805,909) | |||||
Preferred Shares - Series 2: Issuance of shares, net of transaction costs of $95,000 | $ 1,405,000 | ||||||
Preferred Shares - Series 2: Issuance of shares, net of transaction costs of $95,000, shares | 1,500 | ||||||
Bifurcation of derivative liability | $ (529,000) | ||||||
Beneficial conversion feature | (729,000) | 729,000 | 729,000 | ||||
Preferred stock deemed dividend | 729,000 | (729,000) | (729,000) | ||||
Conversion of Series 2 preferred to common | $ (713) | $ 142 | 416,255 | 416,397 | |||
Conversion of Series 2 preferred to common, shares | (416,392) | 1,426,849 | |||||
Reclassification of warrants and conversion feature | 11,894,000 | 11,894,000 | |||||
Warrant issued for True-Up Payment extension | 28,060 | 28,060 | |||||
Warrant issued for True-Up Payment extension,shares | |||||||
Cash consideration of merger consideration, net of transaction costs of $588,255 | 5,411,745 | 5,411,745 | |||||
Cash consideration of merger consideration, net of transaction costs of $588,255,shares | |||||||
Contribution of warrant portion of merger consideration | 1,628,909 | 1,628,909 | |||||
Net loss | (19,971,421) | (619,552) | (20,590,973) | ||||
Balance at Dec. 31, 2020 | $ 459,608 | $ 1,428 | $ 92,433,344 | $ (94,587,482) | $ (25,916) | $ (969,680) | $ (3,148,306) |
Balance, shares at Dec. 31, 2020 | 787 | 14,282,736 |
Consolidated and Combined Sta_4
Consolidated and Combined Statements of Stockholders' Equity (Deficit) (Parenthetical) - USD ($) | Dec. 31, 2020 | Mar. 31, 2020 |
Statement of Stockholders' Equity [Abstract] | ||
Transaction cost | $ 588,255 | $ 95,000 |
Consolidated and Combined Sta_5
Consolidated and Combined Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss from continuing operations | $ (20,590,973) | $ (17,443,358) |
Net income from discontinued operations | (1,021,674) | |
Net loss | (20,590,973) | (18,465,032) |
Adjustments to reconcile net loss to net cash flows from continuing operations | ||
Depreciation and amortization | 1,525,367 | 1,842,352 |
Amortization of operating lease assets | 1,081,052 | 1,701,962 |
Asset impairment charges | 1,578,464 | 9,149,852 |
Gain from extinguished lease liabilities | (506,185) | |
ROU liability remeasurement | (224,317) | |
Warrant issued for True-Up Payment extension | 28,060 | |
Write down of investment | 435,000 | |
Common stock and warrants issued for services | 24,507 | |
Stock-based compensation | 126,829 | |
Loss on warrant inducement | 105,089 | |
Loss (gain) on investments | 1,232,037 | (21,616) |
Gain on tax settlements | (195,982) | |
Amortization of debt discount | 134,208 | |
Loss on extinguishment of redeemable Series 1 Preferred | 161,900 | |
Loss on debt extinguishment | 11,808,111 | |
Gain on derivative liabilities revaluation | (616,200) | |
Change in assets and liabilities | ||
Accounts and other receivables | (33,444) | 180,431 |
Prepaid and other assets | (29,302) | (152,588) |
Inventories | 107,686 | (68,163) |
Accounts payable and accrued expenses | 377,248 | 2,134,821 |
Change in amounts payable to related parties | (185,726) | |
Deferred income taxes | 6,505 | 25,539 |
Operating lease liabilities | (1,491,899) | (1,793,197) |
Contract liabilities | (164,456) | (215,061) |
Net cash flows from operating activities | (5,616,136) | (4,349,309) |
Net cash used in operating activities from discontinued operations | 302,759 | |
Net cash used in operations | (5,616,136) | (4,046,550) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (63,751) | (472,882) |
Proceeds from tenant improvement allowances | 335,075 | |
Proceeds from sale of assets | 525,872 | |
Net cash flows provided by (used in) investing activities | (63,751) | 388,065 |
Net cash used in investing activities from discontinued operations | 290,604 | |
Net cash provided by (used in) investing activities | (63,751) | 678,669 |
Cash flows from financing activities: | ||
Proceeds from the sale of common stock and warrants | 153,055 | |
Proceeds from rights offerings, net | 2,694,530 | |
Proceeds from Series 2 Preferred | 1,405,000 | |
Proceeds from warrant exercises | 885,046 | |
Redemption of Series 1 Preferred | (880,290) | |
Loan proceeds | 2,991,676 | |
Loan repayments | (2,706,036) | |
Merger consideration, net | 5,411,745 | |
Distributions to non-controlling interests | (79,188) | |
Contributions from non-controlling interests | 575,000 | |
Net cash flows provided by financing activities | 7,107,141 | 3,343,397 |
Net cash used in financing activities from discontinued operations | ||
Net cash flows provided by financing activities | 7,107,141 | 3,343,397 |
Effect of exchange rate of cash | 533 | 1,390 |
Net increase (decrease) in cash and restricted cash | 1,427,787 | (23,094) |
Cash and restricted cash, beginning of year | 501,017 | 524,111 |
Cash and restricted cash, end of year | 1,928,804 | 501,017 |
Supplemental cash flow information: | ||
Interest | 471,707 | 556,352 |
Income taxes | 25,956 | 110,707 |
Non-cash investing and financing activities | ||
Preferred stock dividends paid through issuance of common stock | 19,523 | 77,144 |
Common stock issued for the payment of directors fees | 444,119 | |
Convertible debt and notes payable settled through subscriptions in the rights offerings | 3,075,000 | |
Fixed asset additions included in accounts payable and accrued expenses at year end | 330,771 | |
Conversion of Preferred stock - Series 2 to common stock | 416,392 | |
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 | |
Reclassification of warrants and conversion feature from liability to equity | $ 11,894,000 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Nature of Business | 1. NATURE OF BUSINESS BASIS OF PRESENTATION Amergent Hospitality Group, Inc. (“Amergent”) was incorporated on February 18, 2020 as a wholly-owned subsidiary of Chanticleer Holdings, Inc. (“Chanticleer”) for the purpose of conducting the business of Chanticleer and its subsidiaries after completion of the spin-off of Amergent to the shareholders of Chanticleer. The spin-off transaction was completed on April 1, 2020. 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 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 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. ORGANIZATION, MERGER, SPIN-OFF, REVERSE SPLIT On April 1, 2020, Chanticleer completed its merger transaction with Sonnet BioTherapeutics, Inc. (“Sonnet”), in accordance with the terms of the Agreement and Plan of Merger, dated as of October 10, 2019, among Chanticleer, Sonnet, Biosub Inc. (“Merger Sub”), and Sonnet Sub, as amended by Amendment No. 1 thereto, dated as of February 7, 2020 (as so amended, the “Merger Agreement”), pursuant to which Merger Sub merged with and into Sonnet Sub, with Sonnet Sub surviving as a wholly-owned subsidiary of Chanticleer (the “Merger”). On April 1, 2020, in connection with the Merger, Chanticleer changed its name to “Sonnet BioTherapeutics Holdings, Inc.” In connection with and prior to the Merger, Chanticleer contributed and transferred to Amergent, a newly-formed, wholly-owned subsidiary of Chanticleer, all of the assets and liabilities relating to Chanticleer’s restaurant business. On March 16, 2020, the board of directors of Chanticleer declared a dividend with respect to the shares of Chanticleer’s common stock outstanding at the close of business on March 26, 2020 of one share of the Amergent common stock held by Chanticleer for each outstanding share of Chanticleer common stock. The dividend, which together with the contribution and transfer of Chanticleer’s restaurant business described above, is referred to as the “Spin-Off.” Prior to the Spin-Off, Amergent engaged in no business or operations. The Spin-Off of Amergent to the stockholders of record on March 26, 2020 occurred prior to the Merger on April 1, 2020 (“Spin-Off Date”). As a result of the Spin-Off, Amergent emerged as successor to the business, operations, assets and liabilities of pre-merger Chanticleer. Additionally, Amergent’s shareholder base and their holdings (on a pro-rata basis) are substantially identical to that of pre-merger Chanticleer. In connection with the Merger on April 1, 2020, Amergent received proceeds from Sonnet of $6,000,000 as well as a warrant to purchase 2% of the outstanding common shares of Sonnet (186,161 shares) for $0.01 per share (“Merger Consideration”). Amergent simultaneously entered into agreements to refinance a note payable and issue warrants to the note holder. See Note 7 for additional information on the note refinancing. The consolidated and combined financial statements include the accounts of Amergent and its subsidiaries presented below: Amergent Hospitality Group,. Inc Jurisdiction of Incorporation Percent owned American Roadside Burgers, Inc. DE, USA American Burger Ally, LLC NC, USA 100 % American Burger Morehead, LLC NC, USA 100 % American Burger Prosperity, LLC NC, USA 50 % American Roadside Burgers Smithtown, Inc. DE, USA 100 % BGR Acquisition, LLC NC, USA 100 % BGR Franchising, LLC VA, USA 100 % BGR Operations, LLC VA, USA 100 % BGR Acquisition 1, LLC NC, USA 100 % BGR Annapolis, LLC MD, USA 100 % BGR Arlington, LLC VA, USA 46 % BGR Columbia, LLC MD, USA 100 % BGR Michigan Ave, LLC DC, USA 100 % BGR Mosaic, LLC VA, USA 100 % BGR Old Keene Mill, LLC VA, USA 100 % BGR Washingtonian, LLC MD, USA 46 % Capitol Burger, LLC MD, USA 100 % BT Burger Acquisition, LLC NC, USA 100 % BT’s Burgerjoint Rivergate LLC NC, USA 100 % BT’s Burgerjoint Sun Valley, LLC NC, USA 100 % LBB Acquisition, LLC NC, USA 100 % Cuarto LLC OR, USA 100 % LBB Acquisition 1 LLC OR, USA 100 % LBB Hassalo LLC OR, USA 80 % LBB Platform LLC OR, USA 80 % LBB Capitol Hill LLC WA, USA 50 % LBB Franchising LLC NC, USA 100 % LBB Green Lake LLC OR, USA 50 % LBB Lake Oswego LLC OR, USA 100 % LBB Magnolia Plaza LLC NC, USA 50 % LBB Multnomah Village LLC OR, USA 50 % LBB Progress Ridge LLC OR, USA 50 % LBB Rea Farms LLC NC, USA 50 % LBB Wallingford LLC WA, USA 50 % LBB Downtown PDX LLC WA, USA 100 % Noveno LLC OR, USA 100 % Octavo LLC OR, USA 100 % Primero LLC OR, USA 100 % Quinto LLC OR, USA 100 % Segundo LLC OR, USA 100 % Septimo LLC OR, USA 100 % Sexto LLC OR, USA 100 % Jantzen Beach Wings, LLC OR, USA 100 % Oregon Owl’s Nest, LLC OR, USA 100 % West End Wings LTD United Kingdom 100 % LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN Liquidity, Capital Resources and Going Concern As of December 31, 2020, the Company’s cash balance was $1,928,804, of which $1,250,336 was restricted cash, its working capital deficiency was $12,281,398 and it had significant near-term commitments and contractual obligations. The level of additional cash needed to fund operations and our ability to conduct business for the next 12 months will be influenced primarily by the following factors: ● our ability to access the capital and debt markets to satisfy current obligations and operate the business; ● our ability to qualify for and access financial stimulus programs available through federal and state government programs; ● our ability to refinance or otherwise extend maturities of current debt obligations; ● our ability to manage our operating expenses and maintain gross margins; ● popularity of and demand for our fast-casual dining concepts; and ● general economic conditions and changes in consumer discretionary income. We have typically funded our operating costs, acquisition activities, working capital requirements and capital expenditures with proceeds from the issuances of our common stock and other financing arrangements, including convertible debt, lines of credit, notes payable, capital leases, and other forms of external financing. On February 7, 2020, the Company entered into a Securities Purchase Agreement for the sale (the “Bridge Financing”) of up to 1,500 shares of a new series of convertible preferred stock of the Company (the “Series 2 Preferred Stock”) with an institutional investor for gross proceeds to the Company of up to $1,500,000 (the “Preferred Securities Purchase Agreement”). The transaction occurred in two closings, the first of which, for 1,000 shares, occurred in mid-February 2020, and the second of which, for 500 shares, occurred in March 2020. In March 2020, an aggregate of 713 shares of Series 2 Preferred Stock were converted into 1,426,849 shares of common stock. In connection with the Merger, all outstanding shares of the Series 2 Preferred Stock were automatically cancelled and exchanged for substantially similar shares of preferred stock in Amergent. At December 31,2021, 787 shares of Series 2 Preferred Stock were outstanding. 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. The Company has been impacted due to restrictions placed by state and local governments that caused temporary restaurant closures or significantly reduced the Company’s ability to operate, restricting the Company’s restaurants to take-out only. It is difficult to estimate the length or severity of this outbreak; however, the Company has made operational changes, as needed, to reduce the impact. However, there can be no certainty regarding the length and severity of the outbreak and as such its ultimate financial impact on the Company’s operations. On March 27, 2020, Congress passed “The Coronavirus Aid, Relief, and Economic Security Act” (CARES Act), which included the “Paycheck Protection Program” (PPP) for small businesses. On April 27, 2020, Amergent received a PPP loan in the amount of $2.1 million. Due to the Spin-Off and Merger, Amergent was not publicly traded at the time of the loan application or funding. On February 25, 2021, the Company received an additional $2.0 million PPP loan (see Note 13). The $2.1 million note bears interest at 1% per year, matures in April 2022, and requires monthly interest and principal payments of approximately $119,000 beginning in November 2020 and through maturity. The currently issued guidelines of the program allow for the loan proceeds to be forgiven if certain requirements are met. Any loan proceeds not forgiven will be repaid in full. The Company applied for forgiveness of the loan and the application is under review by the government agency administering the PPP. No assurance can be given as to the amount, if any, of forgiveness. The application for forgiveness allowed the Company to defer the timing of repayment until the forgiveness assessment is completed. As a result of the Merger on April 1, 2020, Amergent received $6,000,000 in gross proceeds from Sonnet and a warrant to purchase 186,161 shares of Sonnet’s common stock, as well as paid down and refinanced certain debt obligations. On November 17, 2020, the Company exercised its warrant to purchase Sonnet common stock and sold 100 shares in 2020. The remaining shares are held as investments and are carried at fair value at December 31, 2020 (see Note 4). Even considering the additional liquidity obtained on April 1, 2020 in connection with the Merger and through the PPP loan proceeds received on April 27, 2020 and February 25, 2021, among other financing events, the Company expects to have to seek additional debt or equity funding to support operations and there can be no assurances that such funding would be available at commercially reasonable terms, if at all. As Amergent executes its business plan over the next 12 months, it intends to carefully monitor its working capital needs and cash balances relative to the availability of cost-effective debt and equity financing. In the event that capital is not available, Amergent may then have to scale back or freeze its growth plans, sell assets on less than favorable terms, reduce expenses, and/or curtail future acquisition plans to manage its liquidity and capital resources. The Company’s current operating losses, combined with its working capital deficit and uncertainties regarding the impact of COVID-19, raise substantial doubt about our ability to continue as a going concern. The accompanying 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 | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying 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”). The consolidated and combined financial statements include accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. 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 valuing derivatives, options and warrants using the Binomial Lattice and Black-Scholes models, and analysis of the recoverability of goodwill and long-lived assets. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties associated with the ongoing COVID-19 pandemic and the COVID-19 control responses. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. U.S. GAAP provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority, referred to as Level 1, to quoted prices in active markets for identical assets and liabilities. The next priority, referred to as Level 2, is given to quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active; that is, markets in which there are few transactions for the asset or liability. The lowest priority, referred to as Level 3, is given to unobservable inputs. The table below reflects the level of the inputs used in the Company’s fair value calculations: Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2020 Assets (Note 4) Common stock of Sonnet $ 413,268 $ — $ 413,268 Liabilities (Note 11) True-up provision of Convertible Preferred Series 2 $ — $ — $ 184,800 $ 184,800 Inputs used in the Company’s Level 3 calculation of fair value are discussed in Note 11. There were no assets or liabilities recorded at fair value on a recurring basis at December 31, 2019. The Company is required to disclose fair value information about financial instruments when it is practicable to estimate that value. The carrying amounts of the Company’s cash, accounts receivable, other receivables, accounts payable, other current liabilities, convertible notes payable and notes payable approximate fair value due to the short-term maturities of these financial instruments and/or because related interest rates offered to the Company approximate current rates. CASH Cash consists of deposits held at financial institutions and is stated at fair value. The Company limits its credit risk associated with cash by maintaining its bank accounts at major financial institutions. RESTRICTED CASH As of December 31, 2020 and 2019, the Company maintained restricted cash of $1,250,336 and $336, respectively. The $1,250,000 of restricted cash held at December 31, 2020 is collateral for the true-up provision discussed in Note 11. The restricted cash is maintained in a segregated bank account. For purposes of the cash flow statements, the restricted cash is aggregated with cash of $678,468 and $500,681 to arrive at total cash and restricted cash of $1,928,804 and $501,017 at December 31, 2020 and 2019, respectively. ACCOUNTS AND OTHER RECEIVABLES The Company monitors its exposure for credit losses on its receivable balances and the credit worthiness of its receivables on an ongoing basis and records related allowances for doubtful accounts. Allowances are estimated based upon specific customer and other balances where a risk of default has been identified, and also include a provision for non-customer specific defaults based upon historical experience. The majority of the Company’s accounts are from customer credit card transactions with minimal historical credit risk. As of December 31, 2020 and 2019, the Company has not recorded an allowance for doubtful accounts. If circumstances related to specific customers change, estimates of the recoverability of receivables could also change. INVENTORIES Inventories are recorded at the lower of cost (first-in, first-out method) or net realizable value, and consist primarily of restaurant food items, supplies, beverages and merchandise. PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization, which includes amortization of assets held under capital leases, are recorded generally using the straight-line method over the estimated useful lives of the respective assets or, if shorter, the term of the lease for certain assets held under a capital lease. Leasehold improvements are amortized over the lesser of the expected lease term or the estimated useful lives of the related assets using the straight-line method. Maintenance and repairs that do not improve or extend the useful lives of the assets are not considered assets and are charged to expense when incurred. The estimated useful lives used to compute depreciation and amortization are as follows: Leasehold improvements 5-15 years Restaurant furnishings and equipment 3-10 years Furniture and fixtures 3-10 years Office and computer equipment 3-7 years INTANGIBLE ASSETS Trade Name/Trademark The fair value of trade name/trademarks are estimated and compared to the carrying value. The Company estimates the fair value of trademarks using the relief-from-royalty method, which requires assumptions related to projected sales from its annual long-range plan; assumed royalty rates that could be payable if the Company did not own the trademarks; and a discount rate. Certain of the Company’s trade name/trademarks have been determined to have a definite-lived life and are being amortized on a straight-line basis over estimated useful lives of 10 years. The amortization expense of these definite-lived intangibles is included in depreciation and amortization in the Company’s consolidated and combined statements of operations and comprehensive loss. Certain of the Company’s trade name/trademarks have been classified as indefinite-lived intangible assets and are not amortized, but instead are reviewed for impairment at least annually or more frequently if indicators of impairment exist. Franchise Costs Intangible assets are recorded for the initial franchise fees for our Hooter’s restaurants. The Company amortizes these amounts over a 20-year period, which is the life of the franchise agreement. The Company also has intangible assets representing the acquisition date fair value of customer contracts acquired in connection with BGR’s franchise business. The Company also amortizes these amounts over its estimated useful life of the related intangible asset and amortizes the related asset over the weighted average life of the underlying franchise agreements. 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, 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. As discussed in Note 1, in March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. Due to the continued impact of this pandemic on the Company’s business, management has performed an impairment analysis of its long-lived assets at each quarter end in 2020 including December 31, 2020 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 12 for further discussion) were impaired. The determination was based on the best judgment of management for the future of the asset and on information known at the time of the assessment. GOODWILL Goodwill, which is not subject to amortization, is evaluated for impairment annually as of the end of the Company’s year-end, or more frequently if an event occurs or circumstances change, such as material deterioration in performance or a significant number of store closures, that would indicate an impairment may exist. Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. Management determined that the Company has one reporting unit. As discussed in Note 1, in March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. Due to the continued impact of this pandemic on the Company’s business, management has performed an impairment analysis of goodwill as of each quarter end in 2020, including December 31, 2020. 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 each quarter end and determined that goodwill was not impaired due to the excess fair value of the reporting unit over its carrying value based on the best judgement of management for the future of the reporting unit and on information known at the time of the assessment. FOREIGN CURRENCY TRANSLATION Assets and liabilities denominated in local currency are translated to U.S. dollars using the exchange rates as in effect at the balance sheet date. Results of operations are translated using average exchange rates prevailing throughout the period. Adjustments resulting from the process of translating foreign currency financial statements from functional currency into U.S. dollars are included in accumulated other comprehensive loss within stockholders’ equity. Foreign currency transaction gains and losses are included in current earnings. The Company has determined that local currency is the functional currency for its foreign operations. REVENUE RECOGNITION The Company generates revenues from the following sources: (i) restaurant sales; (ii) management fee income; (iii) gaming income; and (iv) franchise revenues, consisting of royalties based on a percentage of sales reported by franchise restaurants and initial signing fees. Restaurant Sales, Net The Company records revenue from restaurant sales at the time of sale, net of discounts, coupons, employee meals, and complimentary meals. Sales tax and value added tax (“VAT”) collected from customers and remitted to governmental authorities are presented on a net basis within revenue in our consolidated and combined statements of operations. Management Fee Income The Company received revenue from management fees from certain non-affiliated companies in 2019, including from managing its investment in Hooters of America, which are generally earned and recognized over the performance period. No management fee income has been recognized during the year ended December 31, 2020. Gaming Income The Company receives revenue from operating a gaming facility adjacent to its Hooters restaurant in Jantzen Beach, Oregon. Revenue from gaming is recognized as earned from gaming activities, net of payouts to customers, taxes and government fees. These fees are recognized as they are earned based on the terms of the agreements. Franchise Income The Company grants franchises to operators in exchange for initial franchise license fees and continuing royalty payments. The license granted for each restaurant or area is considered a performance obligation. All other obligations (such as providing assistance during the opening of a restaurant) are combined with the license and were determined to be a single performance obligation. Accordingly, the total transaction price (comprised of the restaurant opening and territory fees) is allocated to each restaurant expected to be opened by the licensee under the contract. There are significant judgments regarding the estimated total transaction price, including the number of stores expected to be opened. We recognize the fee allocated to each restaurant as revenue on a straight-line basis over the restaurant’s license term, which generally begins upon the signing of the contract for area development agreements and upon the signing of a store lease for franchise agreements. The payments for these upfront fees are generally received upon contract execution. Continuing fees, which are based upon a percentage of franchisee revenues and are not subject to any constraints, are recognized on the accrual basis as those sales occur. The payments for these continuing fees are generally made on a weekly basis. Contract Liabilities Contract liabilities consist of deferred revenue resulting from initial and renewal franchise license fees paid by franchisees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement, as well as upfront development fees paid by franchisees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement once it is executed. The recognition of initial and renewal license fees are accelerated if the development agreement is terminated. Approximately $165,000 and $215,000 of revenue related to contract liabilities was recognized during the years ended December 31, 2020 and 2019, respectively. RESTAURANT PRE-OPENING AND CLOSING EXPENSES Restaurant pre-opening expenses consist of the costs of hiring and training the initial hourly work force for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional costs, the cost of the initial stocking of operating supplies and other direct costs related to the opening of a restaurant, including rent during the construction and in-restaurant training period. Restaurant opening expenses are expensed as incurred. Restaurant closing expenses consist of costs related to closing a restaurant location and include, among other things lease termination costs and franchise breakage fees directly related to the closure. Impairment charges associated with closed locations are recorded as a component of asset impairment charges. Restaurant closing costs are expensed as incurred. LIQUOR LICENSES The costs of obtaining non-transferable liquor licenses that are directly issued by local government agencies for nominal fees are expensed as incurred. The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets and included in other assets. Liquor licenses are reviewed for impairment annually or when events or changes in circumstances indicate that the carrying amount may not be recoverable. Annual liquor license renewal fees are expensed over the renewal term. ADVERTISING Advertising costs are expensed as incurred. Advertising expenses which are included in restaurant operating expenses and general and administrative expenses in the accompanying consolidated and combined statements of operations, totaled approximately $273,000 and $500,000 for the years ended December 31, 2020 and 2019, respectively. LEASES We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space. Our leases generally have remaining terms of 1-20 years and most include options to extend the leases for additional 5-year periods. Generally, the lease term is the minimum of the non-cancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years. If the estimate of our reasonably certain lease term was changed, our depreciation and rent expense could differ materially. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates corresponding to the reasonably certain lease term. We estimated this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. If the estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially. In April 2020, the FASB staff issued a question and answer document (“FASB Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, the Company would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant or if a lease concession was under the enforceable rights and obligations within the existing lease agreement. The FASB Q&A allows the Company, if certain criteria have been met, to bypass the lease-by-lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The Company elected to apply such relief and availed itself of the election to avoid performing a lease-by-lease analysis for the lease concessions received as the concessions granted as relief were due to the COVID-19 pandemic and result in the cash flows to the landlord remaining substantially the same or less. STOCK-BASED COMPENSATION The compensation cost relating to share-based payment transactions (including the cost of all employee stock options) is required to be recognized in the consolidated and combined financial statements. That cost is measured based on the estimated fair value of the equity or liability instruments issued. A wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans are included. The Company did not have an active stock-based compensation plan in 2020. 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. In connection with the Merger and Spin-Off, Amergent performed an analysis of the existing net operating loss carryforwards of Chanticleer and, based on the rules of the Internal Revenue Code (“IRC”), has determined that Amergent has approximately $18,960,000 of net operating loss carryforwards available to the Company as of April 1, 2020 to offset future taxable income of the Company. Approximately $7,245,000 of the net operating loss carryforwards available will be limited by section 382 of the IRC. There were no other income tax implications to Amergent as a result of the Merger and Spin-off. 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 December 31, 2020 and 2019, 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 10, and the potential conversion of the convertible debt, as described in Note 7, would be anti-dilutive. COMPREHENSIVE INCOME (LOSS) Standards for reporting and displaying comprehensive income (loss) and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements requires that all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements. We are required to (a) classify items of other comprehensive income (loss) by their nature in financial statements, and (b) display the accumulated balance of other comprehensive income (loss) separately in the equity section of the balance sheet for all periods presented. Other comprehensive income (loss) represents foreign currency translation adjustments. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS On January 1, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” along with related clarifications and improvements. This pronouncement requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use asset on the balance sheet. The guidance requires disclosure of key information about leasing arrangements that is intended to give financial statement users the ability to assess the amount, timing, and potential uncertainty of cash flows related to leases. The Company elected the optional transition method to apply the standard as of the effective date and therefore, the Company has not applied the standard to the comparative period presented in its condensed consolidated financial statements. The practical expedients elected in connection with the adoption of Leases Topic 842 were as follows: Implications as of January 1, 2019 Practical expedient package The Company has not reassessed whether any expired or existing contracts are, or contain, leases. The Company has not reassessed the lease classification for any expired or existing leases. The Company has not reassessed initial direct costs for any expired or existing leases. Hindsight practical expedient The Company has not elected the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of operating lease asset Upon adoption of Leases (Topic 842), the Company recorded operating lease right-of-use assets and operating lease liabilities and derecognized deferred rent liabilities (including unamortized tenant improvement allowances) and favorable/unfavorable lease assets and liabilities upon transition. Upon adoption, the Company recorded operating lease liabilities of approximately $22.1 million based on the present value of the remaining rental payments using discount rates as of the effective date. In addition, the Company recorded corresponding operating lease right-of-use assets of approximately $19.8 million, calculated as the initial amount of the Company’s operating lease liabilities adjusted for deferred rent (including unamortized tenant improvement allowances) and unamortized favorable/unfavorable lease assets and lease liabilities. As of December 31, 2020, the Company maintained an operating lease right-of-use assets of approximately $9.9 million, and operating lease liabilities (current and long-term) of approximately $16.2 million. In June 2016, the Financial Accounting Standards Board “FASB” issued Accounting Standards Update “ASU” 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of ASU 2016-13 as of January 1, 2020 did not result in a material change to our consolidated and combined financial statements. In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)”: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which clarifies the accounting for implementation costs in cloud computing arrangements. The adoption of ASU 2018-15 as of January 1, 2020 did not result in a material change to our consolidated and combined financial statements. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”. The new guidance improves and clarifies the fair value measurement disclosure requirement of ASC 820 (“ASU 2018-13”). ASU 2018-13 provides new disclosure requirements that include the changes in unrealized gains or losses included in other comprehensive income for recurring Level 3 fair value measurement held at the end of the reporting period and the explicit requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The other provisions of ASU 2018-13 also include eliminated and modified disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption of ASU 2018-13 as of January 1, 2020 did not have a material impact on the consolidated and combined financial statements. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment (Topic 350)” which provides for the elimination of Step 2 from the goodwill impairment test. If impairment charges are recognized, the amount recorded will be the amount by which the carrying amount exceeds the reporting unit’s fair value with certain limitations. The guidance is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of ASU 2017-04 as of January 1, 2020 did not have a material impact on the 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 ” 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 ASC 740 and clarifying existing guidance to facilitate consistent application. The standard will become effective for the Company beginning on January 1, 2021. The Company is currently evaluating the new standard but does not expect adoption to have a material impact on its financial condition, results of operations, cash flows, and financial statement disclosures. 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. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 3. DISCONTINUED OPERATIONS In October 2019, the Company entered into a sale of business agreement for three of its South Africa Hooters locations. The total purchase price was approximately $385,000. The net proceeds received by the Company was approximately $220,000. In December 2019, the Company entered into a sale of business agreement for its two remaining South Africa Hooters locations. The total purchase price was approximately $265,000. The net proceeds received by the Company was approximately $130,000. On November 6, 2019, the Company sold Just Fresh through the sale of 100% of the Company membership interest of JF Restaurants, LLC. The purchase price was $500,000 with $125,000 due at closing and the remaining $375,000 in the form of a promissory note to be paid in full by December 31, 2019. The sale agreement included the assumption of trade payables at the closing date. The Company also entered into a Management Services Agreement whereby the Company would continue to act as the manager of JF Restaurants, LLC until the note was repaid in full. As manager, the Company would be entitled to a management fee of 5% of the monthly net cash flow from the operation of the restaurants. As of December 31, 2019, $149,000 remained outstanding on the note and the Company gave the buyer an extension to pay the remaining balance owed. When the outstanding balance of the note was paid, the Company was to distribute to the non-controlling interest holders their portion of the proceeds. The note was repaid in 2020 and the Company accrued the distribution to the non-controlling interest holders at the time of repayment. That liability of approximately $20,000 remains outstanding at December 31, 2020. As noted above, during the year ended December 31, 2019, the Company completed two transactions in which eight Just Fresh franchise restaurants and one Hooters franchised restaurant located in South Africa were sold. Because of the sale, the Company has reclassified the operations of Just Fresh and the South Africa Hooters locations to discontinued operations. As of December 31, 2020, all underlying assets and liabilities of discontinued operations were eliminated and settled. The carrying amount of major classes of assets and liabilities included as part of discontinued operations are as follows: December 31, 2020 December 31, 2019 Other receivable $ — $ 149,000 Total assets — 149,000 Accounts payable and accrued expenses — 435,600 Total liabilities — 435,600 Net assets of discontinued operations $ — $ (286,600 ) The major line items comprising the loss of discontinued operations are as follows: Year Ended December 31, 2020 December 31, 2019 Restaurant revenues $ — $ 8,203,692 Expenses: Administration expenses — 588,368 Cost of sales — 3,067,867 Depreciation and amortization — 252,234 Asset impairment charge — 857,357 Restaurant operating expenses — 4,460,078 Other (income) expense — (538 ) — 9,225,366 Income (Loss) of discontinued operations — $ (1,021,674 ) Cash flows from discontinued operations is as follows: Year Ended December 31, 2020 December 31, 2019 Cash flows provided by (used in) Operations Activities $ — $ 302,759 Cash flows provided by (used in) Investing Activities — 290,604 Cash flows provided by (used in) Financing Activities — — Net Cash provided by (used in) Discontinued Operations $ — $ 593,363 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2020 | |
Investments [Abstract] | |
Investments | 4. INVESTMENTS Investments consist of the following: December 31, 2020 December 31, 2019 Common stock of Sonnet, at fair value $ 413,268 $ — Chanticleer Investors, LLC, at cost 365,001 381,397 Total $ 778,269 $ 381,397 Common stock of Sonnet Upon consummation of the Merger discussed in Note 1, the Company received a warrant to purchase 2% of the common stock of Sonnet as part of the Merger Consideration. Amergent could not exercise the warrant until 180 days after the closing of the Merger. On November 17, 2020, the Company exercised the warrant in a cashless exercise and received 185,422 shares of Sonnet common stock. The estimated fair value of the warrant to purchase 2% of the common stock of Sonnet (186,161 shares) was $1,628,909 as of April 1, 2020 and was recognized as a capital contribution in accompanying 2020 consolidated and combined statement of stockholders’ deficit. The warrant had an exercise price of $0.01 per share and was exercisable beginning on September 28, 2020 through April 1, 2025. The estimated fair value of the warrant was determined based on the $8.76 closing stock price of a common share of Sonnet as of April 1, 2020, net of the $0.01 exercise price multiplied by the 186,161 shares issuable upon exercise of the warrant. This value is also equal to the value under the Black-Scholes option pricing model with the following inputs: As of April 1, 2020 Fair value of Sonnet common stock $ 8.76 Exercise price $ 0.01 Term 5 years Volatility 103 % Risk-free interest rate 0.37 % On December 4, 2020, the Company sold 100 shares of Sonnet common stock for net proceeds of $244. As of December 31, 2020, the remaining 185,322 shares of Sonnet common stock held by the Company were marked to market using the Sonnet closing trading price of $2.23 per share. Chanticleer Investors LLC The Company invested $800,000 during 2011 and 2012 in exchange for a 22% ownership stake in Chanticleer Investors, LLC, which in turn held a 3% interest in Hooters of America, the operator and franchisor of the Hooters Brand worldwide. As a result, the Company’s effective economic interest in Hooters of America was approximately 0.6%. Effective June 28, 2019, Hooters of America closed on the sale of a controlling interest in the company. The consideration paid in the sale transaction was a combination of cash proceeds and equity in the newly formed company. The Company netted approximately $48,000 in cash upon the transaction and retained a non-controlling interest in the equity of the newly-formed company. In June 2019, an analysis of the transaction and the value of the cash received and retained non-controlling interest was performed. The Company concluded that its investment was impaired as of June 30, 2019 and recorded a $435,000 write down of the investment during the year ended December 31, 2019. No further impairment charges were recognized for the year ended December 31, 2020. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following at December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Leasehold improvements $ 7,301,908 $ 7,926,789 Restaurant furniture and equipment 2,132,726 3,032,859 Construction in progress 5,450 650 Office and computer equipment 125,535 62,304 Office furniture and fixtures 59,635 169,034 9,625,254 11,191,636 Accumulated depreciation and amortization (5,922,360 ) (5,561,146 ) $ 3,702,894 $ 5,630,490 As discussed in Note 1, 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 in 2020, including December 31, 2020. Several stores were permanently or temporarily closed during 2020 while others are operating at reduced capacity. Based on the assessment of recoverability, an impairment charge of $832,821 for property and equipment was recorded during the year ended December 31, 2020. During the year ended December 31, 2019, the Company recorded an impairment of property and equipment of $1,231,282. Depreciation expense was $1,158,915 and $1,468,576 for the years ended December 31, 2020 and 2019, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 6. INTANGIBLE ASSETS, NET GOODWILL A roll-forward of goodwill is as follows: Year Ended December 31, 2020 December 31, 2019 Beginning balance $ 8,567,888 $ 10,564,353 Impairment — (2,025,720 ) Foreign currency translation gain (loss) 23,261 29,255 Ending balance $ 8,591,149 $ 8,567,888 OTHER INTANGIBLE ASSETS Franchise and trademark/tradename intangible assets consist of the following at December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Trademark, Tradenames: American Roadside Burger 10 years 1,786,930 $ 1,786,930 BGR: The Burger Joint Indefinite 739,245 985,996 Little Big Burger Indefinite 1,550,000 1,550,000 4,076,175 4,322,926 Acquired Franchise Rights: BGR: The Burger Joint 7 years 827,757 827,757 Franchise License Fees: Hooters Pacific NW 20 years 74,507 74,507 Hooters UK 5 years 11,001 12,917 85,508 87,424 Total intangibles at cost 4,989,440 5,238,107 Accumulated amortization (1,945,555 ) (1,581,112 ) Intangible assets, net $ 3,043,885 $ 3,656,995 Based on an analysis of the recoverability of the carrying value at each quarter end during 2020 including December 31, 2020, an impairment charge of approximately $247,000 was recorded to trademarks/tradenames for BRG: The Burger Joint. No other intangible assets were impaired during the year ended December 31, 2020. Management also tested its long-lived assets for impairment as of December 31, 2019 comparing each brand’s fair value to its carrying value. Based on this analysis, management determined there was a tradename/trademark impairment of BGR: The Burger Joint of approximately $440,000. Amortization of intangible assets was $366,452 and $373,776 for the year ended December 31, 2020 and 2019, respectively. Amortization expense for the next five years is as follows: Year ended: 2021 $ 361,182 2022 251,720 2023 133,121 2024 3,725 2025 3,725 Thereafter: 1,167 $ 754,640 |
Debt and Notes Payable
Debt and Notes Payable | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt and Notes Payable | 7. DEBT AND NOTES PAYABLE Debt and notes payable are summarized as follows at December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Notes Payable (a) $ — $ 6,000,000 Notes Payable TowneBank (b) — 142,746 Receivables financing facilities (c) — 23,688 Notes payable (d) 25,850 25,850 Notes payable (e) 27,048 90,408 Contractor note (f) 348,269 348,269 PPP loan (g) 2,109,400 — UK Bounce Back loan (h) 68,245 — EIDI loans (i) 299,900 — Convertible debt (j) 4,037,889 — Total Debt 6,916,601 6,630,961 Less: discount on convertible debt (j) (223,681 ) — Total Debt, net of discount $ 6,692,920 $ 6,630,961 Current portion of long-term debt $ 2,338,978 $ 6,630,961 Long-term debt, less current portion $ 4,353,942 $ — (a) The Company lowered the strike price for several classes of warrants to $0.50 to allow for warrant holders to exercise their warrants in order to induce the exercise thereof and raise capital for the Company. See Note 10 for further discussion of warrant modification. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey LLC, a Texas limited liability company (“Oz Rey”), the Company and certain other original holders of the 8% non-convertible secured debentures, the Company was released from all of its obligations under the 8% non-convertible secured debentures, and the 8% non-convertible secured debentures were cancelled. In exchange, Amergent (i) issued a 10% convertible secured debenture in principal amount of $4,037,889 to Oz Rey, (ii) issued warrants to purchase 2,925,200 of shares of common stock of Amergent to Oz Rey and certain of the original holders of the 8% non-convertible secured debentures, and (iii) remitted payment of $650,000 prior to March 31, 2020 and an additional $1,350,000 plus reimbursement of certain expenses to the purchasers on April 1, 2020. See further discussion in (i) below. (b) (c) (d) (e) (f) (g) (h) (i) (j) Through August 16, 2020, Amergent did not have an adequate amount of authorized common stock to cover shares issuable upon exercise of the warrants and conversion of the 10% convertible notes. As such, the warrants were liability classified and the conversion feature was bifurcated from the host debt instrument and accounted for as a derivative and recorded as a liability in the accompanying consolidated and combined balance sheets through August 16, 2020, with the change in the liability for the warrants and the conversion feature from the April 1, 2020 issuance date through August 16, 2020 recorded in the accompanying consolidated and combined statements of operations. The warrants issued had an estimated fair value of $935,000 as of April 1, 2020 using a Monte Carlo simulation to determine the value. The fair value of the conversion feature was $11,231,000 as of April 1, 2020 using a Monte Carlo simulation to determine the value. The estimated carrying value of the 10% convertible secured debentures without the conversion feature was $3,680,000, and with the conversion feature was $14,911,000. 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. Through the date of the amendment, the warrants and the conversion feature were marked to fair value with the change in the liability recorded in the accompanying consolidated and combined statements of operations. The liabilities for the warrants and conversion feature were reclassified into additional paid in-capital at the amendment date. The estimated fair value of the warrants and conversion feature at August 16, 2020 were $924,000 and $10,970,000, respectively. The change in value of these instruments from the issuance date through August 16, 2020 of ($11,000) and ($261,000) has been recorded as a component of other expense (income) and included in change in fair value of derivative liabilities and warrants in the accompanying consolidated statements of operations for the year ended December 31, 2020. See note 11 for further discussion of determining the estimated fair value of these instruments. The exchange of the notes has been accounted for as the extinguishment of the 8% non-convertible notes with the difference in the carrying value of the 8% non-convertible notes, $4,037,889, and the fair value of the 10% convertible notes and warrants, $15,846,000, at the date of the exchange recorded as a debt extinguishment charge of $11,808,111 in the accompanying consolidated and combined statements of operations for the year ended December 31, 2020. The Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes. Amortization of $134,208 was recorded as interest expense during the year ended December 31, 2020. The Company’s various loan agreements contain financial and non-financial covenants and provisions providing for cross-default. The evaluation of compliance with these provisions is subject to interpretation and the exercise of judgment. The Company’s lender has provided a waiver of certain financial covenants through March 31, 2021. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses are summarized as follows: December 31, 2020 December 31, 2019 Accounts payable $ 3,752,036 $ 1,265,435 Accrued expenses 1,436,679 2,965,205 Accrued taxes (VAT, Sales, Payroll, etc.) 3,356,496 3,318,022 Accrued interest 122,057 616,533 $ 8,667,268 $ 8,165,195 As of December 31, 2020 and 2019, approximately $3.0 million and $2.9 million, respectively, of employee and employer 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. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. INCOME TAXES The income tax expense for the years ended December 31, 2020 and 2019 consists of the following: December 31, 2020 December 31, 2019 Foreign Current $ — $ 48,187 Deferred (36,443 ) 653,790 Change in valuation allowance 36,443 (652,679 ) U.S. Federal Current — — Deferred 5,765,837 (4,683,141 ) Change in valuation allowance (5,815,197 ) 4,662,699 State and local Current — — Deferred (103,357 ) (272,656 ) Change in valuation allowance 159,222 317,526 $ 6,505 $ 73,726 The income tax expense using statutory U.S. federal tax rate of 21% is reconciled to the Company’s effective tax rate as of December 31, 2020 and 2019 is as follows: 2020 2019 Computed “expected” income tax benefit $ (4,325,270 ) $ (3,647,623 ) State income taxes, net of federal benefit (57,543 ) (367,974 ) Non-controlling interest — 185,031 Prior year true-ups other deferred tax balances 24,549 (323,763 ) Permanent items 2,500,281 37,480 Foreign tax expense — 48,187 Rate change (142,085 ) — Other (248,955 ) 59,421 Adjustment to NOLs due to Merger 8,350,360 — Change in valuation allowance (6,094,832 ) 4,082,967 $ 6,505 $ 73,726 Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for tax purposes. Major components of deferred tax assets at December 31, 2020 and 2019 were: 2020 2019 Net operating loss carryforwards $ 6,802,404 $ 13,099,412 Capital loss carryforwards 369,447 — Fixed assets and intangibles 1,118,850 1,058,814 Section 1231 loss carryforwards 39,491 103,230 Charitable contribution carryforwards 12,474 23,731 Section 163(j) limitation 789,007 648,074 Other — 45,801 Restaurant startup expenses 5,293 — Accrued expenses 915,177 946,040 Deferred occupancy liabilities — 37,044 Contract liabilities 226,671 240,333 Total deferred tax assets 10,278,814 16,202,479 Deferred occupancy liabilities (38,390 ) — Investments (202,307 ) (328,825 ) Other (30,833 ) — Total deferred tax liabilities (271,530 ) (328,825 ) Net deferred tax assets 10,007,284 15,873,654 Valuation allowance (10,116,093 ) (15,975,958 ) $ (108,809 ) $ (102,304 ) As of December 31, 2020, Company has U.S. federal and state net operating loss carryovers of approximately $26,200,000, which will expire at various dates beginning in 2031 through 2036, if not utilized with exception of loss carryovers generated in tax years after 2017. As a result of Tax Cut and Jobs Act of 2017, net operating losses generated in 2018 and beyond have indefinite lives. In accordance with Section 382 of the internal revenue code, deductibility of the Company’s U.S. net operating loss carryovers may be subject to an annual limitation in the event of a change of control as defined under the Section 382 regulations. Based on prior acquisitions and ownership changes, the Company expects approximately $7.2 million of net operating loss carryforwards to be limited based on section 382. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the years ended December 31, 2020 and December 31, 2019 the change in valuation allowance was approximately $(5,860,000) and $4,083,000, respectively. The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in their financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the company has taken or expects to take in its return. For those benefits to be recognized, a tax position must be more-likely-than- not to be sustained upon examination by taxing authorities. Differences between two positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing-authority for a tax position that was not recognized as a result of applying the provisions of ASC 740. Interest related to uncertain tax positions are required to be calculated, if applicable, and would be classified as “interest expense” in the consolidated and combined statements of operations. Penalties would be recognized as a component of “general and administrative expenses”. As of December 31, 2020 and 2019, no interest or penalties were required to be reported. The Company previously did not record a provision for taxes on undistributed foreign earnings based on an intention and ability to permanently reinvest the earnings of its foreign subsidiaries in those operations. Under the Tax Cuts and Jobs Act, the Company has re-assessed its strategies by evaluating the impact of the Tax Cuts and Jobs Act on its operations. As a result of the Act, the Company analyzed if a liability needed to be recorded for the deemed repatriation of undistributed earnings. It was determined that there is no outstanding liability associated with this based on overall negative undistributed earnings (accumulated deficit) in the consolidated foreign group. An additional provision of the TJCA is the implementation of the Global Intangible-Low Taxed Income Tax, or “GILTI.” The Company has elected to account for the impact of GILTI in the period in which the tax actually applies to the Company. During fiscal 2019, the Company incurred $157,000 of additional taxable income as a result of this provision. This increase of taxable income was incorporated into the overall net operating loss and valuation. Due to foreign losses in 2020, the impact of GILTI on taxable income is nil. |
Stockholder's Equity
Stockholder's Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Deficit: | |
Stockholder's Equity | 10. STOCKHOLDER’S EQUITY Redeemable Preferred Stock – Series 1 Beginning in December 2016, the Company conducted a rights offering of units, each unit consisting of one share of 9% Redeemable Series 1 Preferred Stock (“Series 1 Preferred”) and one Series 1 Warrant (“Series 1 Warrant”) to purchase 10 shares of common stock. Preferred unit dividends of 37,518 shares and 77,975 shares were paid in 2020 and 2019, respectively. In connection with the Merger, on April 1, 2020, all outstanding Series 1 Preferred units, comprised of shares of Series 1 Preferred and Series 1 Warrants, were redeemed and extinguished for their cash redemption price of $0.50 per unit. The difference between the carrying value of the Series 1 Preferred and the cash redemption amount of $161,900 was recognized as a loss on extinguishment and included in other expense during the year ended December 31, 2020. 2019 Rights Offering In 2019 the Company conducted a rights offering of units to its stockholders of record to purchase common stock at a subscription price of $1.00 per share. The rights offering was made pursuant to Chanticleer’s effective registration statement on Form S-1 on file with the U.S. Securities and Exchange Commission (the “SEC”) and accompanying prospectus filed with the SEC on June 12, 2019. Upon closing of the rights offering in July 2019, a total of 1,894,311 shares of common stock were issued pursuant to record holders’ basic subscription privilege and a total of 4,190,524 shares of common stock were issued pursuant to record holders’ over subscription. The Company accepted subscriptions to purchase 6,084,733 shares in the rights offering upon expiration of the rights offering on June 28, 2019. The Company received $6,009,733 in gross proceeds from the rights offering and $3,075,000 was subscribed by certain record holders’ through the reduction in outstanding debt obligations of the Company. The shares associated with the reduction in outstanding debt obligations were deemed issued at June 30, 2019. The remaining proceeds of approximately $2.7 million, which is net of fees owed to the dealer-managers and other offering costs, were received in early July 2019 after the closing of the rights offering. Chardan Capital Markets, LLC and The Oak Ridge Financial Services Group Inc. were the co-dealer-managers on the transaction and the Company agreed to pay the dealer-managers a fee equal to 7% of the gross proceeds of the rights offering (excluding proceeds from the reduction of the debt obligations) and to reimburse the dealer-managers for their expenses up to $75,000 for an aggregate commission of approximately $286,000. Additional offering costs were incurred for legal, accounting and transfer agent services. 2020 Bridge Financing Pursuant to a Securities Purchase Agreement dated February 7, 2020, the Company sold 1,500 shares of a new series of convertible preferred stock of Chanticleer (the “Series 2 Preferred Stock”) to an institutional investor for gross proceeds to the Company of $1,500,000 less transaction costs of $95,000. In addition, pursuant to the original agreement with the investors, the Company issued 5-year warrants to purchase an aggregate of 350,000 shares of common stock to the investors at $1.25 per share. Each share of Series 2 Preferred has a stated value of $1,000. Upon issuance, the Company bifurcated and recorded, as a liability, an embedded derivative (more fully described below and in Note 10) in the amount of $529,000. The effective conversion price of the Series 2 Preferred Stock after the bifurcation of the derivative resulted a beneficial conversion feature of $729,000, which was then immediately recorded as a deemed dividend as the preferred stock is immediately convertible. In March 2020, an aggregate of 713 shares of Series 2 Preferred Stock were converted into 1,426,849 shares of common stock. In connection with the Merger, all remaining outstanding shares of the Series 2 Preferred Stock were automatically cancelled and exchanged for substantially similar shares of preferred stock in Amergent, the shareholders of Chanticleer common stock received shares of Amergent on a 1 for 1 basis (spin-off shares) and received 1 share of Sonnet common stock for 26 shares of Chanticleer common stock held at the time of the Merger. At December 31, 2020, 787 shares of Series 2 Preferred Stock were outstanding. On August 17, 2020, the Company and the holders of the Series 2 Preferred Stock entered into a Waiver, Consent, and Amendment to the Certificate of Designations (the “Extension Agreement”) which included provisions for an extension of the true-up payment discussed below from August 7, 2020 to December 10, 2020 and permitted the shares of Amergent obtained by the investor in the Spin-off to be included in the determination of the True-Up Payment discussed below, with the Company paying all expenses incurred by the institutional investor in connection with the Extension Agreement and certain consideration for the institutional in investor’s willingness to extend the date of the true-up payment. The consideration included $66,000 of cash and warrants to purchase 134,000 shares of the Company’s common stock with a value of $28,060 (see below). On February 16, 2021, the Company and the holders of the Series 2 Preferred Stock entered into a Waiver, Consent and Amendment to the Certificate of Designations (the “Waiver”). This Waiver further extended the settlement date to April 1, 2021. See Note 13 for further discussion. The Series 2 Preferred Stock is classified in the accompanying consolidated and combined balance sheet at December 31, 2020 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: The Company determined that the True-Up Payment constituted a “make-whole” provision as defined by U.S. GAAP that is required to be settled in cash and as such, was bifurcated from the host instrument, the Series 2 Preferred Stock, and is accounted for as a derivative liability. The fair value of the derivative was estimated using a Monte Carlo model and a liability of $529,000 was recorded at the Series 2 Preferred Stock issuance date. The fair value at December 31, 2020 was a liability of $184,800. The $344,200 decrease in the liability from the issuance date through December 31, 2020 is recorded as a component of the change in derivative liabilities in the accompanying consolidated statements of operations for the year ended December 31, 2020. See Note 11 for further information. Redemption: Conversion at option of holder/ beneficial ownership limitation Forced conversion: Liquidation preference Voting rights: Triggering Events: Anti-Dilution: 2020 Merger Transaction As a result of the Merger, the following reflects the net equity contribution of Merger Consideration to the Company which reflects the gross proceeds received, offset of the direct costs incurred for the transaction, the difference between the redemption payment and carrying value of the Redeemable Preferred Stock - Series 1, and redemption of certain warrants. Contributed cash portion of Merger Consideration $ 6,000,000 Contribution of Sonnet warrant portion of Merger Consideration 1,628,909 Transaction cost incurred (588,255 ) $ 7,040,654 Options and Warrants The Company’s shareholders approved the Chanticleer Holdings, Inc. 2014 Stock Incentive Plan (the “2014 Plan”) authorizing the issuance of options, stock appreciation rights, restricted stock awards and units, performance shares and units, phantom stock and other stock-based and dividend equivalent awards. Pursuant to the approved 2014 Plan, 400,010 were approved for grant. This Plan did not survive the Merger. Amergent intends to adopt a new equity incentive plan subject to shareholder approval in the near future. As of and in connection with the Merger and Spin-Off, all restricted and unrestricted stock options were cancelled and no awards have been granted since that date. In March 2020, the Company lowered the strike price for certain warrants from within several classes of warrants to $0.50 as an inducement to incentivize the warrant holders to exercise their warrants. The Company accounted for the warrant inducement as a deemed dividend based on the difference in the Black-Scholes value of the warrants immediately before and immediately after the inducement. The significant assumptions used by the Company included common stock volatility of between 88% - 95%, risk free rate between 1.7% and 0.84%, a weighted average term between 6.5 and 8 years and the stock price of the Company as of the date of inducement. Based on the Black-Scholes values calculated the Company recorded a deemed dividend to additional paid in capital and retained earnings on the inducement of approximately $325,000 and received proceeds from the warrants exercised of approximately $1.2 million. In connection with the Merger and Spin-Off on April 1, 2020, 261,050 warrants were redeemed by the Company for $66,900 and 525,554 warrants remained with the Company. Additionally, 3,275,200 warrants were issued of which 2,925,200 warrants were issued with an exercise price ranging between $.125 and $.50 in connection with the issuance of the Company’s 10% convertible note agreement and 350,000 warrants with an exercise price of $1.25 were issued to the Company’s bridge financing investor. On August 17, 2020, warrants for 134,000 shares of common stock were issued in connection with the extension of the True-Up Payment provision. See Note 11. The warrants are immediately exercisable at $1.25 per share and expire in August 2025. The value of these warrants was $28,060. A summary of the warrant activity during the year ended December 31, 2020 is presented below: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at December 31, 2019 3,306,238 $ 6.00 6.8 Granted 3,409,200 0.34 8.8 Exercised (2,414,022 ) 0.50 — Forfeited/Other Adjustments (892,216 ) — — Outstanding at December 31, 2020 3,409,200 $ 0.34 8.6 Exercisable December 31, 2020 3,409,200 $ 0.34 8.6 |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Liability [Abstract] | |
Derivative Liabilities | 11. DERIVATIVE LIABILITIES The derivative liabilities at December 31, 2020 consist of a True-Up Payment provision of the Series 2 Preferred Stock (See Note 10). There were no derivative liabilities at December 31, 2019. As discussed in Note 7(j), warrants were issued in connection with the 10% convertible note. The Company did not have an adequate amount of authorized common shares issuable upon exercise of the warrants and conversion of the 10% convertible note. As such, the warrants were liability classified and the conversion feature was bifurcated from the host debt instrument and both instruments were accounted for as derivatives. As a result of the amendment to the note discussed in Note 7(i), the warrant and conversion feature no longer required liability classification and were reclassified to equity. The table presented below is a summary of changes in the fair market value of the Company’s Level 3 valuations for the year ended December 31, 2020. True-Up Payment Warrants Debt Conversion Feature Total Balance at December 31, 2019 $ — $ — $ — $ — Inception of the instrument 529,000 935,000 11,231,000 12,695,000 Change in fair value during the period (344,200 ) (11,000 ) (261,000 ) (616,200 ) Instruments no longer meeting liability classification $ — $ (924,000 ) $ (10,970,000 ) $ (11,894,000 ) Balance at December 31, 2020 $ 184,800 $ — $ — $ 184,800 Assumptions used in calculating the fair value of the warrants at the issuance date and as of August 16, 2020 include the following: As of April 1, 2020 Stock price per share $ 0.34 Term 10.0 years Expected volatility 102 % Dividend yield — % Risk-free interest rate 0.62 % As of August 16, 2020 Stock price per share $ 0.34 Term 9.63 years Expected volatility 102 % Dividend yield — % Risk-free interest rate 0.51 % The Company also considered the probability, timing and amount of future capital raises. Assumptions used in calculating the fair value of the convertible notes at the issuance date and as of August 16, 2020 include the following: As of April 1, 2020 Face value $ 4,037,889 Term 2.0 years Expected volatility 120 % Risk-free interest rate 0.23 % Coupon 10.00 % Conversion price $ 0.10 Credit spread 15.0 % As of August 16, 2020 Face value $ 4,037,889 Term 1.63 years Expected volatility 127 % Risk-free interest rate 0.23 % Coupon 10.00 % Conversion price $ 0.10 Credit spread 15.0 % The Company also considered the probability, timing and amount of future capital raises. Assumptions used in calculating the fair value of the True-Up Payment provision at the issuance date and as of December 31, 2020 include the following: Issuance Date Term .5 years Expected volatility 83 % Dividend yield — % Risk-free interest rate 1.56 % December 31, 2020 Term .25 years Expected volatility 89 % Dividend yield — % Risk-free interest rate 0.09 % |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. COMMITMENTS AND CONTINGENCIES Legal proceedings South Africa matter On March 26, 2013, our South African operations received Notice of Motion filed in the Kwazulu-Natal High Court, Durban, Republic of South Africa, filed against Rolalor (PTY) LTD (“Rolalor”) and Labyrinth Trading 18 (PTY) LTD (“Labyrinth”) by Jennifer Catherine Mary Shaw (“Shaw”). It was requested that the Respondents, Rolalor and Labyrinth, be wound up in satisfaction of an alleged debt owed in the total amount of R4,082,636 (approximately $480,000). The outcome of the case resulted in the proposed liquidation of Rolalor in which the Company did not object as the entity has no assets. The Company does not expect there to be a material impact as a result of the proceedings, as the South African entities were sold and the buyers retained any and all liabilities. Employee matter In connection with the Merger, a former executive officer filed a claim for damages against a wholly owned subsidiary of the Company for unpaid severance. The former executive received timely notification of non-renewal of his employment agreement, which expired December 31, 2019, but argues he is entitled to severance benefits triggered by the Merger. Amergent has been advised by legal counsel that there is a low probability that the claim will result in any damages payable by the Company. Indemnification agreement and tail policy On March 25, 2020, pursuant to the requirements of the Merger Agreement, Chanticleer, Sonnet and Amergent entered into an indemnification agreement (“Indemnification Agreement”) providing that Amergent will fully indemnify and hold harmless each of Chanticleer and Sonnet, and each of their respective, directors, officers, stockholders and managers who assumes such role upon or following the closing of the merger against all actual or threatened claims, losses, liabilities, damages, judgments, fines and reasonable fees, costs and expenses, including attorneys’ fees and disbursements, incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, administrative, investigative or otherwise, related to the Spin-Off Business prior to or in connection with its disposition to Amergent. In addition, pursuant to Merger Agreement, prior to closing of the Merger, the Spin-Off Entity acquired a tail insurance policy in a coverage amount of $3.0 million, prepaid in full by the Spin-Off Entity, at no cost to the indemnitees, and effective for at least six years following the consummation of the disposition, covering the Spin-Off Entity’s indemnification obligations to the indemnitees (referred to herein as the “Tail Policy”). The Company does not anticipate that any potential liability would exceed the insured amount. Litigation related to leased properties During 2020 the Company was in arrears on rent due on several of its leases as a result of the COVID-19 pandemic. As a result, the Company has pending litigation related to 11 sites of which 5 have permanently closed. The outcome of this litigation could result in the permanent closure of additional restaurant locations as well as the possibility of the Company being required to pay interest and damages, modify certain leases on unfavorable terms and could result in material impairments to the Company’s assets. No amounts have been accrued as of December31, 2020 and December 31, 2019 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 December 31, 2020, 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 are amortized through the right-of-use asset as reductions of expense over the lease term. Some of the Company’s leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurant’s sales in excess of stipulated amounts. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As part of the lease agreements, the Company is also responsible for payments regarding non-lease components (common area maintenance, operating expenses, etc.) and percentage rent payments based on monthly or annual restaurant sales amounts which are considered variable costs and are not included as part of the lease liabilities. Related to the adoption of Leases Topic 842, our policy elections were as follows: Separation of lease and non-lease components The Company elected this expedient to account for lease and non-lease components as a single component for the entire population of operating lease assets. Short-term policy The Company has elected the short-term lease recognition exemption for all applicable classes of underlying assets. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet. Supplemental balance sheet information related to leases was as follows: Operating Leases Classification December 31, 2020 December 31, 2019 Right-of-use assets Operating lease assets $ 9,529,443 $ 11,668,026 Current lease liabilities Current operating lease liabilities 4,209,389 3,299,309 Non-current lease liabilities Long-term operating lease liabilities 10,667,862 14,382,354 $ 14,877,251 $ 17,681,663 Lease term and discount rate were as follows: December 31, 2020 December 31, 2019 Weighted average remaining lease term (years) 7.7 8.19 Weighted average discount rate 10 % 10 % As discussed in Note 5, 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 December 31, 2020 an impairment charge of $486,000 was recorded for the year then ended. During 2020, $506,185 of lease liabilities were derecognized due to modifications resulting from the COVID-19 pandemic. The Company had lease liabilities of $3,136,223 related to abandoned leases. These lease liabilities are presented as part of current operating lease liabilities. Rent expense of approximately $2.5 million was incurred in the year ended December 31, 2020, of which approximately $0.1 million was variable. Rent expense of approximately $4.5 million was recognized the year ended December 31, 2019, of which approximately $0.7 was variable. PPP Loan The Company received a PPP loan for an amount of $2.1 million, which was established under the CARES Act and administered by the Small Business Administration (“SBA”). The application for the PPP loan requires the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operation of the Company. This certification further requires the Company to take into account current business activity and the Company’s ability to access other sources of liquidity sufficient to support the ongoing operations in a manner that is not significantly detrimental to the business. The receipt of funds from the PPP loans and forgiveness of the PPP loans is dependent on the Company having initially qualified for the PPP loans and qualifying for the forgiveness of such PPP loans based on funds being used for certain expenditures such as payroll costs and rent, as required by the terms of the PPP loans. There is no assurance that the Company’s obligation under the PPP loans will be forgiven. If the PPP loans are not forgiven, the Company will need to repay the PPP loans over the applicable deferral period. Presently, the SBA and other governmental communications have indicated that all loans in excess of $2.0 million will be subject to audit and that those audits could take up to seven years to complete. If the SBA determines that the PPP loan was not properly obtained and/or expenditures supporting forgiveness were not appropriate, the Company would need to repay some or all of the PPP loan and record additional expense which could have a material adverse impact on the business, financial condition and results of operations in a future period. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. SUBSEQUENT EVENTS The Company has evaluated subsequent events from the balance sheet date through the date at which the consolidated and combined financial statements were available to be issued, and there are no other items requiring disclosure except the following: PPP Loan On February 25, 2021, the Company received a second loan of $2,000,000 under the Paycheck Protection Program PPP discussed in Note 7(g). The note bears interest at 1% per year, matures on February 25, 2026, and requires monthly principal and interest payments of approximately $44,660 beginning June 25, 2022 through maturity. The loan may be forgiven if certain criteria are met. True-up payment 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”) (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, with the Delaware Secretary of State and (iii) providing for a reduction in amount required to be held in a segregated cash account as discussed in Note 10 from $1,250,000 to $850,000. The Company is in negotiations with investors to purchase the Series 2 Preferred Stock from the original holders and convert the Series 2 Preferred Stock to Common Stock. These negotiations are ongoing and may or may not conclude in a favourable manner for the Company. Subsequent Settlement of Delinquent Leases After December 31, 2020, the Company has reached agreements to be released from one lease contracts for stores that have been closed due to the Covid-19 pandemic. The Company has agreed to pay approximately $26,250 to the landlords in the agreements to be released from making future lease payments. |
Restatements of Previously Issu
Restatements of Previously Issued Interim Financial Statements (Unaudited) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Restatements of Previously Issued Interim Financial Statements (Unaudited) | 14. RESTATEMENTS OF PREVIOUSLY ISSUED INTERIM 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. In addition to the above, in the third quarter of 2020 the Company and the holders of the Series 2 Preferred Stock entered into the Extension Agreement (see Note 10). This agreement provided for the extension of the True-Up Payment date and for the inclusion of certain “spin-off” shares obtained by the holder of the Series 2 Preferred Stock in the settlement of the Series 2 Preferred for the True-Up Payment. The derivative liability recorded as of September 30, 2020 did not reflect this change in calculation of the True-Up Payment resulting in an overstatement of the derivative liability by approximately $695,000 and the associated change in fair value of derivative liabilities for the three months ended September 30, 2020. The following tables sets forth the effects of the adjustments on affected items within the Company’s previously reported Condensed Consolidated and Combined Interim Balance Sheets as of March 31, 2020, June 30, 2020, and September 30, 2020, had the adjustments been made in the corresponding quarters: March 31, 2020 As reported Adjustment As restated Operating lease assets $ 11,256,497 $ (216,681 ) $ 11,039,816 Long-term operating lease liabilities $ 14,064,517 $ (440,998 ) $ 13,623,519 Accumulated deficit $ (77,343,539 ) $ 149,955 $ (77,193,584 ) Non-controlling interests $ 584,824 $ 74,362 $ 659,186 June 30, 2020 As reported Adjustment As restated Operating lease assets $ 11,007,038 $ (98,944 ) $ 10,908,094 Long-term operating lease liabilities $ 13,832,826 $ (458,154 ) $ 13,374,672 Accumulated deficit $ (85,658,825 ) $ 284,848 $ (85,373,977 ) Non-controlling interests $ (310,801 ) $ 74,362 $ (236,439 ) 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 months ended March 31, 2020, June 30, 2020, and September 30, 2020: Three Months Ended March 31, 2020 As reported Adjustment As restated Restaurant operating expenses $ 3,625,844 $ - $ 3,625,844 Asset impairment charge $ - $ - $ - Operating loss $ (1,354,090 ) $ - $ (1,354,090 ) Other income (expense) $ 17,876 $ 224,317 $ 242,193 Consolidated and combined net loss $ (1,792,526 ) $ 224,317 $ (1,568,209 ) Net income attributable to non-controlling interests $ (129,043 ) $ (74,362 ) $ (203,405 ) Net loss attributable to Amergent Hospitality Group Inc $ (1,921,569 ) $ 149,955 $ (1,771,614 ) Net loss per common share, basic and diluted $ (0.16 ) $ 0.01 $ (0.15 ) Three Months Ended June 30, 2020 As reported Adjustment As restated Restaurant operating expenses $ 3,261,393 $ (13,436 ) $ 3,247,957 Asset impairment charge $ 273,927 $ (121,457 ) $ 152,470 Operating loss $ (2,655,587 ) $ 134,893 $ (2,520,694 ) Other income (expense) $ (70,748 ) $ - $ (70,748 ) Consolidated and combined net loss $ (9,210,911 ) $ 134,893 $ (9,076,018 ) Net loss attributable to non-controlling interests $ 89,716 $ - $ 89,716 Net loss attributable to Amergent Hospitality Group Inc $ (9,121,195 ) $ 134,893 $ (8,986,302 ) Net loss per common share, basic and diluted $ (0.64 ) $ 0.01 $ (0.63 ) 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 $ (199,154 ) $ 694,724 $ 495,570 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 ) 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 six months ended June 30, 2020 and nine months ended September 30, 2020: Six Months Ended June 30, 2020 As reported Adjustment As restated Restaurant operating expenses $ 6,887,237 $ (13,436 ) $ 6,873,801 Asset impairment charge $ 273,927 $ (121,457 ) $ 152,470 Operating loss $ (4,009,677 ) $ 134.893 $ (3,874,784 ) Other income (expense) $ (48,009 ) $ 224,317 $ 176,308 Consolidated and combined net loss $ (11,003,437 ) $ 359,210 $ (10,644,227 ) Net income attributable to non-controlling interests $ (39,327 ) $ (74,362 ) $ (113,689 ) Net loss attributable to Amergent Hospitality Group Inc $ (11,042,764 ) $ 284,848 $ (10,757,916 ) Net loss per common share, basic and diluted $ (0.85 ) $ 0.03 $ (0.82 ) 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 $ (1,152,185 ) $ 694,724 $ (457,461 ) 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. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The accompanying 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”). The consolidated and combined financial statements include accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
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 valuing derivatives, options and warrants using the Binomial Lattice and Black-Scholes models, and analysis of the recoverability of goodwill and long-lived assets. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties associated with the ongoing COVID-19 pandemic and the COVID-19 control responses. |
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. U.S. GAAP provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority, referred to as Level 1, to quoted prices in active markets for identical assets and liabilities. The next priority, referred to as Level 2, is given to quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active; that is, markets in which there are few transactions for the asset or liability. The lowest priority, referred to as Level 3, is given to unobservable inputs. The table below reflects the level of the inputs used in the Company’s fair value calculations: Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2020 Assets (Note 4) Common stock of Sonnet $ 413,268 $ — $ 413,268 Liabilities (Note 11) True-up provision of Convertible Preferred Series 2 $ — $ — $ 184,800 $ 184,800 Inputs used in the Company’s Level 3 calculation of fair value are discussed in Note 11. There were no assets or liabilities recorded at fair value on a recurring basis at December 31, 2019. The Company is required to disclose fair value information about financial instruments when it is practicable to estimate that value. The carrying amounts of the Company’s cash, accounts receivable, other receivables, accounts payable, other current liabilities, convertible notes payable and notes payable approximate fair value due to the short-term maturities of these financial instruments and/or because related interest rates offered to the Company approximate current rates. |
Cash | CASH Cash consists of deposits held at financial institutions and is stated at fair value. The Company limits its credit risk associated with cash by maintaining its bank accounts at major financial institutions. |
Restricted Cash | RESTRICTED CASH As of December 31, 2020 and 2019, the Company maintained restricted cash of $1,250,336 and $336, respectively. The $1,250,000 of restricted cash held at December 31, 2020 is collateral for the true-up provision discussed in Note 11. The restricted cash is maintained in a segregated bank account. For purposes of the cash flow statements, the restricted cash is aggregated with cash of $678,468 and $500,681 to arrive at total cash and restricted cash of $1,928,804 and $501,017 at December 31, 2020 and 2019, respectively. |
Accounts and Other Receivables | ACCOUNTS AND OTHER RECEIVABLES The Company monitors its exposure for credit losses on its receivable balances and the credit worthiness of its receivables on an ongoing basis and records related allowances for doubtful accounts. Allowances are estimated based upon specific customer and other balances where a risk of default has been identified, and also include a provision for non-customer specific defaults based upon historical experience. The majority of the Company’s accounts are from customer credit card transactions with minimal historical credit risk. As of December 31, 2020 and 2019, the Company has not recorded an allowance for doubtful accounts. If circumstances related to specific customers change, estimates of the recoverability of receivables could also change. |
Inventories | INVENTORIES Inventories are recorded at the lower of cost (first-in, first-out method) or net realizable value, and consist primarily of restaurant food items, supplies, beverages and merchandise. |
Property and Equipment | PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization, which includes amortization of assets held under capital leases, are recorded generally using the straight-line method over the estimated useful lives of the respective assets or, if shorter, the term of the lease for certain assets held under a capital lease. Leasehold improvements are amortized over the lesser of the expected lease term or the estimated useful lives of the related assets using the straight-line method. Maintenance and repairs that do not improve or extend the useful lives of the assets are not considered assets and are charged to expense when incurred. The estimated useful lives used to compute depreciation and amortization are as follows: Leasehold improvements 5-15 years Restaurant furnishings and equipment 3-10 years Furniture and fixtures 3-10 years Office and computer equipment 3-7 years |
Intangible Assets | INTANGIBLE ASSETS Trade Name/Trademark The fair value of trade name/trademarks are estimated and compared to the carrying value. The Company estimates the fair value of trademarks using the relief-from-royalty method, which requires assumptions related to projected sales from its annual long-range plan; assumed royalty rates that could be payable if the Company did not own the trademarks; and a discount rate. Certain of the Company’s trade name/trademarks have been determined to have a definite-lived life and are being amortized on a straight-line basis over estimated useful lives of 10 years. The amortization expense of these definite-lived intangibles is included in depreciation and amortization in the Company’s consolidated and combined statements of operations and comprehensive loss. Certain of the Company’s trade name/trademarks have been classified as indefinite-lived intangible assets and are not amortized, but instead are reviewed for impairment at least annually or more frequently if indicators of impairment exist. Franchise Costs Intangible assets are recorded for the initial franchise fees for our Hooter’s restaurants. The Company amortizes these amounts over a 20-year period, which is the life of the franchise agreement. The Company also has intangible assets representing the acquisition date fair value of customer contracts acquired in connection with BGR’s franchise business. The Company also amortizes these amounts over its estimated useful life of the related intangible asset and amortizes the related asset over the weighted average life of the underlying franchise agreements. |
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, 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. As discussed in Note 1, in March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. Due to the continued impact of this pandemic on the Company’s business, management has performed an impairment analysis of its long-lived assets at each quarter end in 2020 including December 31, 2020 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 12 for further discussion) were impaired. The determination was based on the best judgment of management for the future of the asset and on information known at the time of the assessment. |
Goodwill | GOODWILL Goodwill, which is not subject to amortization, is evaluated for impairment annually as of the end of the Company’s year-end, or more frequently if an event occurs or circumstances change, such as material deterioration in performance or a significant number of store closures, that would indicate an impairment may exist. Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. Management determined that the Company has one reporting unit. As discussed in Note 1, in March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. Due to the continued impact of this pandemic on the Company’s business, management has performed an impairment analysis of goodwill as of each quarter end in 2020, including December 31, 2020. 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 each quarter end and determined that goodwill was not impaired due to the excess fair value of the reporting unit over its carrying value based on the best judgement of management for the future of the reporting unit and on information known at the time of the assessment. |
Foreign Currency Translation | FOREIGN CURRENCY TRANSLATION Assets and liabilities denominated in local currency are translated to U.S. dollars using the exchange rates as in effect at the balance sheet date. Results of operations are translated using average exchange rates prevailing throughout the period. Adjustments resulting from the process of translating foreign currency financial statements from functional currency into U.S. dollars are included in accumulated other comprehensive loss within stockholders’ equity. Foreign currency transaction gains and losses are included in current earnings. The Company has determined that local currency is the functional currency for its foreign operations. |
Revenue Recognition | REVENUE RECOGNITION The Company generates revenues from the following sources: (i) restaurant sales; (ii) management fee income; (iii) gaming income; and (iv) franchise revenues, consisting of royalties based on a percentage of sales reported by franchise restaurants and initial signing fees. Restaurant Sales, Net The Company records revenue from restaurant sales at the time of sale, net of discounts, coupons, employee meals, and complimentary meals. Sales tax and value added tax (“VAT”) collected from customers and remitted to governmental authorities are presented on a net basis within revenue in our consolidated and combined statements of operations. Management Fee Income The Company received revenue from management fees from certain non-affiliated companies in 2019, including from managing its investment in Hooters of America, which are generally earned and recognized over the performance period. No management fee income has been recognized during the year ended December 31, 2020. Gaming Income The Company receives revenue from operating a gaming facility adjacent to its Hooters restaurant in Jantzen Beach, Oregon. Revenue from gaming is recognized as earned from gaming activities, net of payouts to customers, taxes and government fees. These fees are recognized as they are earned based on the terms of the agreements. Franchise Income The Company grants franchises to operators in exchange for initial franchise license fees and continuing royalty payments. The license granted for each restaurant or area is considered a performance obligation. All other obligations (such as providing assistance during the opening of a restaurant) are combined with the license and were determined to be a single performance obligation. Accordingly, the total transaction price (comprised of the restaurant opening and territory fees) is allocated to each restaurant expected to be opened by the licensee under the contract. There are significant judgments regarding the estimated total transaction price, including the number of stores expected to be opened. We recognize the fee allocated to each restaurant as revenue on a straight-line basis over the restaurant’s license term, which generally begins upon the signing of the contract for area development agreements and upon the signing of a store lease for franchise agreements. The payments for these upfront fees are generally received upon contract execution. Continuing fees, which are based upon a percentage of franchisee revenues and are not subject to any constraints, are recognized on the accrual basis as those sales occur. The payments for these continuing fees are generally made on a weekly basis. Contract Liabilities Contract liabilities consist of deferred revenue resulting from initial and renewal franchise license fees paid by franchisees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement, as well as upfront development fees paid by franchisees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement once it is executed. The recognition of initial and renewal license fees are accelerated if the development agreement is terminated. Approximately $165,000 and $215,000 of revenue related to contract liabilities was recognized during the years ended December 31, 2020 and 2019, respectively. |
Restaurant Pre-opening and Closing Expenses | RESTAURANT PRE-OPENING AND CLOSING EXPENSES Restaurant pre-opening expenses consist of the costs of hiring and training the initial hourly work force for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional costs, the cost of the initial stocking of operating supplies and other direct costs related to the opening of a restaurant, including rent during the construction and in-restaurant training period. Restaurant opening expenses are expensed as incurred. Restaurant closing expenses consist of costs related to closing a restaurant location and include, among other things lease termination costs and franchise breakage fees directly related to the closure. Impairment charges associated with closed locations are recorded as a component of asset impairment charges. Restaurant closing costs are expensed as incurred. |
Liquor Licenses | LIQUOR LICENSES The costs of obtaining non-transferable liquor licenses that are directly issued by local government agencies for nominal fees are expensed as incurred. The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets and included in other assets. Liquor licenses are reviewed for impairment annually or when events or changes in circumstances indicate that the carrying amount may not be recoverable. Annual liquor license renewal fees are expensed over the renewal term. |
Advertising | ADVERTISING Advertising costs are expensed as incurred. Advertising expenses which are included in restaurant operating expenses and general and administrative expenses in the accompanying consolidated and combined statements of operations, totaled approximately $273,000 and $500,000 for the years ended December 31, 2020 and 2019, respectively. |
Leases | LEASES We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space. Our leases generally have remaining terms of 1-20 years and most include options to extend the leases for additional 5-year periods. Generally, the lease term is the minimum of the non-cancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years. If the estimate of our reasonably certain lease term was changed, our depreciation and rent expense could differ materially. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates corresponding to the reasonably certain lease term. We estimated this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. If the estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially. In April 2020, the FASB staff issued a question and answer document (“FASB Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, the Company would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant or if a lease concession was under the enforceable rights and obligations within the existing lease agreement. The FASB Q&A allows the Company, if certain criteria have been met, to bypass the lease-by-lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The Company elected to apply such relief and availed itself of the election to avoid performing a lease-by-lease analysis for the lease concessions received as the concessions granted as relief were due to the COVID-19 pandemic and result in the cash flows to the landlord remaining substantially the same or less. |
Stock-based Compensation | STOCK-BASED COMPENSATION The compensation cost relating to share-based payment transactions (including the cost of all employee stock options) is required to be recognized in the consolidated and combined financial statements. That cost is measured based on the estimated fair value of the equity or liability instruments issued. A wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans are included. The Company did not have an active stock-based compensation plan in 2020. |
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. In connection with the Merger and Spin-Off, Amergent performed an analysis of the existing net operating loss carryforwards of Chanticleer and, based on the rules of the Internal Revenue Code (“IRC”), has determined that Amergent has approximately $18,960,000 of net operating loss carryforwards available to the Company as of April 1, 2020 to offset future taxable income of the Company. Approximately $7,245,000 of the net operating loss carryforwards available will be limited by section 382 of the IRC. There were no other income tax implications to Amergent as a result of the Merger and Spin-off. 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 December 31, 2020 and 2019, 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 10, and the potential conversion of the convertible debt, as described in Note 7, would be anti-dilutive. |
Comprehensive Income (Loss) | COMPREHENSIVE INCOME (LOSS) Standards for reporting and displaying comprehensive income (loss) and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements requires that all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements. We are required to (a) classify items of other comprehensive income (loss) by their nature in financial statements, and (b) display the accumulated balance of other comprehensive income (loss) separately in the equity section of the balance sheet for all periods presented. Other comprehensive income (loss) represents foreign currency translation adjustments. |
Recently Adopted Accounting Pronouncements | RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS On January 1, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” along with related clarifications and improvements. This pronouncement requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use asset on the balance sheet. The guidance requires disclosure of key information about leasing arrangements that is intended to give financial statement users the ability to assess the amount, timing, and potential uncertainty of cash flows related to leases. The Company elected the optional transition method to apply the standard as of the effective date and therefore, the Company has not applied the standard to the comparative period presented in its condensed consolidated financial statements. The practical expedients elected in connection with the adoption of Leases Topic 842 were as follows: Implications as of January 1, 2019 Practical expedient package The Company has not reassessed whether any expired or existing contracts are, or contain, leases. The Company has not reassessed the lease classification for any expired or existing leases. The Company has not reassessed initial direct costs for any expired or existing leases. Hindsight practical expedient The Company has not elected the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of operating lease asset Upon adoption of Leases (Topic 842), the Company recorded operating lease right-of-use assets and operating lease liabilities and derecognized deferred rent liabilities (including unamortized tenant improvement allowances) and favorable/unfavorable lease assets and liabilities upon transition. Upon adoption, the Company recorded operating lease liabilities of approximately $22.1 million based on the present value of the remaining rental payments using discount rates as of the effective date. In addition, the Company recorded corresponding operating lease right-of-use assets of approximately $19.8 million, calculated as the initial amount of the Company’s operating lease liabilities adjusted for deferred rent (including unamortized tenant improvement allowances) and unamortized favorable/unfavorable lease assets and lease liabilities. As of December 31, 2020, the Company maintained an operating lease right-of-use assets of approximately $9.9 million, and operating lease liabilities (current and long-term) of approximately $16.2 million. In June 2016, the Financial Accounting Standards Board “FASB” issued Accounting Standards Update “ASU” 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of ASU 2016-13 as of January 1, 2020 did not result in a material change to our consolidated and combined financial statements. In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)”: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which clarifies the accounting for implementation costs in cloud computing arrangements. The adoption of ASU 2018-15 as of January 1, 2020 did not result in a material change to our consolidated and combined financial statements. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”. The new guidance improves and clarifies the fair value measurement disclosure requirement of ASC 820 (“ASU 2018-13”). ASU 2018-13 provides new disclosure requirements that include the changes in unrealized gains or losses included in other comprehensive income for recurring Level 3 fair value measurement held at the end of the reporting period and the explicit requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The other provisions of ASU 2018-13 also include eliminated and modified disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption of ASU 2018-13 as of January 1, 2020 did not have a material impact on the consolidated and combined financial statements. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment (Topic 350)” which provides for the elimination of Step 2 from the goodwill impairment test. If impairment charges are recognized, the amount recorded will be the amount by which the carrying amount exceeds the reporting unit’s fair value with certain limitations. The guidance is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of ASU 2017-04 as of January 1, 2020 did not have a material impact on the 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 ” 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 ASC 740 and clarifying existing guidance to facilitate consistent application. The standard will become effective for the Company beginning on January 1, 2021. The Company is currently evaluating the new standard but does not expect adoption to have a material impact on its financial condition, results of operations, cash flows, and financial statement disclosures. 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. |
Nature of Business (Tables)
Nature of Business (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Consolidated and Combined Financial Statements | The consolidated and combined financial statements include the accounts of Amergent and its subsidiaries presented below: Amergent Hospitality Group,. Inc Jurisdiction of Incorporation Percent owned American Roadside Burgers, Inc. DE, USA American Burger Ally, LLC NC, USA 100 % American Burger Morehead, LLC NC, USA 100 % American Burger Prosperity, LLC NC, USA 50 % American Roadside Burgers Smithtown, Inc. DE, USA 100 % BGR Acquisition, LLC NC, USA 100 % BGR Franchising, LLC VA, USA 100 % BGR Operations, LLC VA, USA 100 % BGR Acquisition 1, LLC NC, USA 100 % BGR Annapolis, LLC MD, USA 100 % BGR Arlington, LLC VA, USA 46 % BGR Columbia, LLC MD, USA 100 % BGR Michigan Ave, LLC DC, USA 100 % BGR Mosaic, LLC VA, USA 100 % BGR Old Keene Mill, LLC VA, USA 100 % BGR Washingtonian, LLC MD, USA 46 % Capitol Burger, LLC MD, USA 100 % BT Burger Acquisition, LLC NC, USA 100 % BT’s Burgerjoint Rivergate LLC NC, USA 100 % BT’s Burgerjoint Sun Valley, LLC NC, USA 100 % LBB Acquisition, LLC NC, USA 100 % Cuarto LLC OR, USA 100 % LBB Acquisition 1 LLC OR, USA 100 % LBB Hassalo LLC OR, USA 80 % LBB Platform LLC OR, USA 80 % LBB Capitol Hill LLC WA, USA 50 % LBB Franchising LLC NC, USA 100 % LBB Green Lake LLC OR, USA 50 % LBB Lake Oswego LLC OR, USA 100 % LBB Magnolia Plaza LLC NC, USA 50 % LBB Multnomah Village LLC OR, USA 50 % LBB Progress Ridge LLC OR, USA 50 % LBB Rea Farms LLC NC, USA 50 % LBB Wallingford LLC WA, USA 50 % LBB Downtown PDX LLC WA, USA 100 % Noveno LLC OR, USA 100 % Octavo LLC OR, USA 100 % Primero LLC OR, USA 100 % Quinto LLC OR, USA 100 % Segundo LLC OR, USA 100 % Septimo LLC OR, USA 100 % Sexto LLC OR, USA 100 % Jantzen Beach Wings, LLC OR, USA 100 % Oregon Owl’s Nest, LLC OR, USA 100 % West End Wings LTD United Kingdom 100 % |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value of Financial Instruments | The table below reflects the level of the inputs used in the Company’s fair value calculations: Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2020 Assets (Note 4) Common stock of Sonnet $ 413,268 $ — $ 413,268 Liabilities (Note 11) True-up provision of Convertible Preferred Series 2 $ — $ — $ 184,800 $ 184,800 |
Schedule of Property and Equipment Useful Lives | The estimated useful lives used to compute depreciation and amortization are as follows: Leasehold improvements 5-15 years Restaurant furnishings and equipment 3-10 years Furniture and fixtures 3-10 years Office and computer equipment 3-7 years |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | The carrying amount of major classes of assets and liabilities included as part of discontinued operations are as follows: December 31, 2020 December 31, 2019 Other receivable $ — $ 149,000 Total assets — 149,000 Accounts payable and accrued expenses — 435,600 Total liabilities — 435,600 Net assets of discontinued operations $ — $ (286,600 ) The major line items comprising the loss of discontinued operations are as follows: Year Ended December 31, 2020 December 31, 2019 Restaurant revenues $ — $ 8,203,692 Expenses: Administration expenses — 588,368 Cost of sales — 3,067,867 Depreciation and amortization — 252,234 Asset impairment charge — 857,357 Restaurant operating expenses — 4,460,078 Other (income) expense — (538 ) — 9,225,366 Income (Loss) of discontinued operations — $ (1,021,674 ) Cash flows from discontinued operations is as follows: Year Ended December 31, 2020 December 31, 2019 Cash flows provided by (used in) Operations Activities $ — $ 302,759 Cash flows provided by (used in) Investing Activities — 290,604 Cash flows provided by (used in) Financing Activities — — Net Cash provided by (used in) Discontinued Operations $ — $ 593,363 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments [Abstract] | |
Schedule of Investments | Investments consist of the following: December 31, 2020 December 31, 2019 Common stock of Sonnet, at fair value $ 413,268 $ — Chanticleer Investors, LLC, at cost 365,001 381,397 Total $ 778,269 $ 381,397 |
Schedule of Fair Value of Warrant | This value is also equal to the value under the Black-Scholes option pricing model with the following inputs: As of April 1, 2020 Fair value of Sonnet common stock $ 8.76 Exercise price $ 0.01 Term 5 years Volatility 103 % Risk-free interest rate 0.37 % |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net consists of the following at December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Leasehold improvements $ 7,301,908 $ 7,926,789 Restaurant furniture and equipment 2,132,726 3,032,859 Construction in progress 5,450 650 Office and computer equipment 125,535 62,304 Office furniture and fixtures 59,635 169,034 9,625,254 11,191,636 Accumulated depreciation and amortization (5,922,360 ) (5,561,146 ) $ 3,702,894 $ 5,630,490 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | A roll-forward of goodwill is as follows: Year Ended December 31, 2020 December 31, 2019 Beginning balance $ 8,567,888 $ 10,564,353 Impairment — (2,025,720 ) Foreign currency translation gain (loss) 23,261 29,255 Ending balance $ 8,591,149 $ 8,567,888 |
Schedule of Other Intangible Assets | Franchise and trademark/tradename intangible assets consist of the following at December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Trademark, Tradenames: American Roadside Burger 10 years 1,786,930 $ 1,786,930 BGR: The Burger Joint Indefinite 739,245 985,996 Little Big Burger Indefinite 1,550,000 1,550,000 4,076,175 4,322,926 Acquired Franchise Rights: BGR: The Burger Joint 7 years 827,757 827,757 Franchise License Fees: Hooters Pacific NW 20 years 74,507 74,507 Hooters UK 5 years 11,001 12,917 85,508 87,424 Total intangibles at cost 4,989,440 5,238,107 Accumulated amortization (1,945,555 ) (1,581,112 ) Intangible assets, net $ 3,043,885 $ 3,656,995 |
Summary of Amortization Expense | Amortization of intangible assets was $366,452 and $373,776 for the year ended December 31, 2020 and 2019, respectively. Amortization expense for the next five years is as follows: Year ended: 2021 $ 361,182 2022 251,720 2023 133,121 2024 3,725 2025 3,725 Thereafter: 1,167 $ 754,640 |
Debt and Notes Payable (Tables)
Debt and Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt and Notes Payable | Debt and notes payable are summarized as follows at December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Notes Payable (a) $ — $ 6,000,000 Notes Payable TowneBank (b) — 142,746 Receivables financing facilities (c) — 23,688 Notes payable (d) 25,850 25,850 Notes payable (e) 27,048 90,408 Contractor note (f) 348,269 348,269 PPP loan (g) 2,109,400 — UK Bounce Back loan (h) 68,245 — EIDI loans (i) 299,900 — Convertible debt (j) 4,037,889 — Total Debt 6,916,601 6,630,961 Less: discount on convertible debt (j) (223,681 ) — Total Debt, net of discount $ 6,692,920 $ 6,630,961 Current portion of long-term debt $ 2,338,978 $ 6,630,961 Long-term debt, less current portion $ 4,353,942 $ — (a) The Company lowered the strike price for several classes of warrants to $0.50 to allow for warrant holders to exercise their warrants in order to induce the exercise thereof and raise capital for the Company. See Note 10 for further discussion of warrant modification. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey LLC, a Texas limited liability company (“Oz Rey”), the Company and certain other original holders of the 8% non-convertible secured debentures, the Company was released from all of its obligations under the 8% non-convertible secured debentures, and the 8% non-convertible secured debentures were cancelled. In exchange, Amergent (i) issued a 10% convertible secured debenture in principal amount of $4,037,889 to Oz Rey, (ii) issued warrants to purchase 2,925,200 of shares of common stock of Amergent to Oz Rey and certain of the original holders of the 8% non-convertible secured debentures, and (iii) remitted payment of $650,000 prior to March 31, 2020 and an additional $1,350,000 plus reimbursement of certain expenses to the purchasers on April 1, 2020. See further discussion in (i) below. (b) (c) (d) (e) (f) (g) (h) (i) (j) |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses are summarized as follows: December 31, 2020 December 31, 2019 Accounts payable $ 3,752,036 $ 1,265,435 Accrued expenses 1,436,679 2,965,205 Accrued taxes (VAT, Sales, Payroll, etc.) 3,356,496 3,318,022 Accrued interest 122,057 616,533 $ 8,667,268 $ 8,165,195 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense | The income tax expense for the years ended December 31, 2020 and 2019 consists of the following: December 31, 2020 December 31, 2019 Foreign Current $ — $ 48,187 Deferred (36,443) 653,790 Change in valuation allowance 36,443 (652,679 ) U.S. Federal Current — — Deferred 5,765,837 (4,683,141 ) Change in valuation allowance (5,815,197 ) 4,662,699 State and local Current — — Deferred (103,357 ) (272,656 ) Change in valuation allowance 159,222 317,526 $ 6,505 $ 73,726 |
Schedule of Effective Income Tax Rate Reconciliation | The income tax expense using statutory U.S. federal tax rate of 21% is reconciled to the Company’s effective tax rate as of December 31, 2020 and 2019 is as follows: 2020 2019 Computed “expected” income tax benefit $ (4,325,270 ) $ (3,647,623 ) State income taxes, net of federal benefit (57,543 ) (367,974 ) Non-controlling interest — 185,031 Prior year true-ups other deferred tax balances 24,549 (323,763 ) Permanent items 2,500,281 37,480 Foreign tax expense — 48,187 Rate change (142,085 ) — Other (248,955 ) 59,421 Adjustment to NOLs due to Merger 8,350,360 — Change in valuation allowance (6,094,832 ) 4,082,967 $ 6,505 $ 73,726 |
Summary of Major Components of Deferred Tax Assets | Major components of deferred tax assets at December 31, 2020 and 2019 were: 2020 2019 Net operating loss carryforwards $ 6,802,404 $ 13,099,412 Capital loss carryforwards 369,447 — Fixed assets and intangibles 1,118,850 1,058,814 Section 1231 loss carryforwards 39,491 103,230 Charitable contribution carryforwards 12,474 23,731 Section 163(j) limitation 789,007 648,074 Other — 45,801 Restaurant startup expenses 5,293 — Accrued expenses 915,177 946,040 Deferred occupancy liabilities — 37,044 Contract liabilities 226,671 240,333 Total deferred tax assets 10,278,814 16,202,479 Deferred occupancy liabilities (38,390 ) — Investments (202,307 ) (328,825 ) Other (30,833 ) — Total deferred tax liabilities (271,530 ) (328,825 ) Net deferred tax assets 10,007,284 15,873,654 Valuation allowance (10,116,093 ) (15,975,958 ) $ (108,809 ) $ (102,304 ) |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Merger Consideration | As a result of the Merger, the following reflects the net equity contribution of Merger Consideration to the Company which reflects the gross proceeds received, offset of the direct costs incurred for the transaction, the difference between the redemption payment and carrying value of the Redeemable Preferred Stock - Series 1, and redemption of certain warrants. Contributed cash portion of Merger Consideration $ 6,000,000 Contribution of Sonnet warrant portion of Merger Consideration 1,628,909 Transaction cost incurred (588,255 ) $ 7,040,654 |
Summary of Warrant Activity | A summary of the warrant activity during the year ended December 31, 2020 is presented below: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at December 31, 2019 3,306,238 $ 6.00 6.8 Granted 3,409,200 0.34 8.8 Exercised (2,414,022 ) 0.50 — Forfeited/Other Adjustments (892,216 ) — — Outstanding at December 31, 2020 3,409,200 $ 0.34 8.6 Exercisable December 31, 2020 3,409,200 $ 0.34 8.6 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Liability [Abstract] | |
Summary of Changes in Fair Value Derivative Liabilities | The table presented below is a summary of changes in the fair market value of the Company’s Level 3 valuations for the year ended December 31, 2020. True-Up Payment Warrants Debt Conversion Feature Total Balance at December 31, 2019 $ — $ — $ — $ — Inception of the instrument 529,000 935,000 11,231,000 12,695,000 Change in fair value during the period (344,200 ) (11,000 ) (261,000 ) (616,200 ) Instruments no longer meeting liability classification $ — $ (924,000 ) $ (10,970,000 ) $ (11,894,000 ) Balance at December 31, 2020 $ 184,800 $ — $ — $ 184,800 |
Summary of Changes in Fair Value Warrants | Assumptions used in calculating the fair value of the warrants at the issuance date and as of August 16, 2020 include the following: As of April 1, 2020 Stock price per share $ 0.34 Term 10.0 years Expected volatility 102 % Dividend yield — % Risk-free interest rate 0.62 % As of August 16, 2020 Stock price per share $ 0.34 Term 9.63 years Expected volatility 102 % Dividend yield — % Risk-free interest rate 0.51 % |
Summary of Changes in Fair Value Convertible Notes | Assumptions used in calculating the fair value of the convertible notes at the issuance date and as of August 16, 2020 include the following: As of April 1, 2020 Face value $ 4,037,889 Term 2.0 years Expected volatility 120 % Risk-free interest rate 0.23 % Coupon 10.00 % Conversion price $ 0.10 Credit spread 15.0 % As of August 16, 2020 Face value $ 4,037,889 Term 1.63 years Expected volatility 127 % Risk-free interest rate 0.23 % Coupon 10.00 % Conversion price $ 0.10 Credit spread 15.0 % |
Schedule of Assumptions Used in Calculating the Fair Value of Make-whole Provision at Issuance Date | Assumptions used in calculating the fair value of the True-Up Payment provision at the issuance date and as of December 31, 2020 include the following: Issuance Date Term .5 years Expected volatility 83 % Dividend yield — % Risk-free interest rate 1.56 % December 31, 2020 Term .25 years Expected volatility 89 % Dividend yield — % Risk-free interest rate 0.09 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Lease Information | Supplemental balance sheet information related to leases was as follows: Operating Leases Classification December 31, 2020 December 31, 2019 Right-of-use assets Operating lease assets $ 9,529,443 $ 11,668,026 Current lease liabilities Current operating lease liabilities 4,209,389 3,299,309 Non-current lease liabilities Long-term operating lease liabilities 10,667,862 14,382,354 $ 14,877,251 $ 17,681,663 Lease term and discount rate were as follows: December 31, 2020 December 31, 2019 Weighted average remaining lease term (years) 7.7 8.19 Weighted average discount rate 10 % 10 % |
Restatements of Previously Is_2
Restatements of Previously Issued Interim Financial Statements (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Previously Issued Interim Financial Statements | The following tables sets forth the effects of the adjustments on affected items within the Company’s previously reported Condensed Consolidated and Combined Interim Balance Sheets as of March 31, 2020, June 30, 2020, and September 30, 2020, had the adjustments been made in the corresponding quarters: March 31, 2020 As reported Adjustment As restated Operating lease assets $ 11,256,497 $ (216,681 ) $ 11,039,816 Long-term operating lease liabilities $ 14,064,517 $ (440,998 ) $ 13,623,519 Accumulated deficit $ (77,343,539 ) $ 149,955 $ (77,193,584 ) Non-controlling interests $ 584,824 $ 74,362 $ 659,186 June 30, 2020 As reported Adjustment As restated Operating lease assets $ 11,007,038 $ (98,944 ) $ 10,908,094 Long-term operating lease liabilities $ 13,832,826 $ (458,154 ) $ 13,374,672 Accumulated deficit $ (85,658,825 ) $ 284,848 $ (85,373,977 ) Non-controlling interests $ (310,801 ) $ 74,362 $ (236,439 ) 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 months ended March 31, 2020, June 30, 2020, and September 30, 2020: Three Months Ended March 31, 2020 As reported Adjustment As restated Restaurant operating expenses $ 3,625,844 $ - $ 3,625,844 Asset impairment charge $ - $ - $ - Operating loss $ (1,354,090 ) $ - $ (1,354,090 ) Other income (expense) $ 17,876 $ 224,317 $ 242,193 Consolidated and combined net loss $ (1,792,526 ) $ 224,317 $ (1,568,209 ) Net income attributable to non-controlling interests $ (129,043 ) $ (74,362 ) $ (203,405 ) Net loss attributable to Amergent Hospitality Group Inc $ (1,921,569 ) $ 149,955 $ (1,771,614 ) Net loss per common share, basic and diluted $ (0.16 ) $ 0.01 $ (0.15 ) Three Months Ended June 30, 2020 As reported Adjustment As restated Restaurant operating expenses $ 3,261,393 $ (13,436 ) $ 3,247,957 Asset impairment charge $ 273,927 $ (121,457 ) $ 152,470 Operating loss $ (2,655,587 ) $ 134,893 $ (2,520,694 ) Other income (expense) $ (70,748 ) $ - $ (70,748 ) Consolidated and combined net loss $ (9,210,911 ) $ 134,893 $ (9,076,018 ) Net loss attributable to non-controlling interests $ 89,716 $ - $ 89,716 Net loss attributable to Amergent Hospitality Group Inc $ (9,121,195 ) $ 134,893 $ (8,986,302 ) Net loss per common share, basic and diluted $ (0.64 ) $ 0.01 $ (0.63 ) 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 $ (199,154 ) $ 694,724 $ 495,570 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 ) 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 six months ended June 30, 2020 and nine months ended September 30, 2020: Six Months Ended June 30, 2020 As reported Adjustment As restated Restaurant operating expenses $ 6,887,237 $ (13,436 ) $ 6,873,801 Asset impairment charge $ 273,927 $ (121,457 ) $ 152,470 Operating loss $ (4,009,677 ) $ 134.893 $ (3,874,784 ) Other income (expense) $ (48,009 ) $ 224,317 $ 176,308 Consolidated and combined net loss $ (11,003,437 ) $ 359,210 $ (10,644,227 ) Net income attributable to non-controlling interests $ (39,327 ) $ (74,362 ) $ (113,689 ) Net loss attributable to Amergent Hospitality Group Inc $ (11,042,764 ) $ 284,848 $ (10,757,916 ) Net loss per common share, basic and diluted $ (0.85 ) $ 0.03 $ (0.82 ) 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 $ (1,152,185 ) $ 694,724 $ (457,461 ) 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 ($) | Feb. 25, 2021 | Nov. 17, 2020 | Aug. 17, 2020 | Apr. 02, 2020 | Mar. 27, 2020 | Feb. 07, 2020 | Jan. 30, 2020 | May 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | May 04, 2017 |
Cash balance | $ 1,928,804 | ||||||||||
Restricted cash | 1,250,336 | $ 336 | |||||||||
Working capital deficit | $ 12,281,398 | ||||||||||
Debt instrument interest rate | 2.50% | 8.00% | |||||||||
Debt instrument monthly interest and principal payments | $ 1,180 | $ 585 | |||||||||
PPP Loan [Member] | |||||||||||
Proceeds from loan | $ 2,000,000 | $ 2,100,000 | |||||||||
Debt instrument interest rate | 1.00% | ||||||||||
Debt instrument maturity date | Apr. 30, 2022 | ||||||||||
Debt instrument monthly interest and principal payments | $ 119,000 | ||||||||||
Convertible Preferred Stock: Series 2 [Member] | |||||||||||
Preferred stock, shares outstanding | 787 | ||||||||||
Series 2 Preferred Stock [Member] | |||||||||||
Warrant to purchase shares of common stock | 134,000 | ||||||||||
Shares issued during the period new issues | $ 28,060 | ||||||||||
Preferred stock, shares outstanding | 787 | ||||||||||
Securities Purchase Agreement [Member] | Convertible Preferred Stock: Series 2 [Member] | Common Stock [Member] | |||||||||||
Preferrred stock conversion | 1,426,849 | ||||||||||
Securities Purchase Agreement [Member] | Convertible Preferred Stock: Series 2 [Member] | Maximum [Member] | |||||||||||
Shares issued during the period new issues, shares | 1,500 | ||||||||||
Shares issued during the period new issues | $ 1,500,000 | ||||||||||
Shares issuing period description | The transaction occurred in two closings, the first of which, for 1,000 shares, occurred in mid-February 2020, and the second of which, for 500 shares, occurred in March 2020. | ||||||||||
Sonnet BioTherapeutics, Inc [Member] | |||||||||||
Proceeds from merger | $ 6,000,000 | ||||||||||
Warrant to purchase shares of common stock | 186,161 | ||||||||||
Price per share | $ 0.01 | ||||||||||
Warrant issued upon merger description | Amergent received proceeds from Sonnet of $6,000,000 as well as a warrant to purchase 2% of the outstanding common shares of Sonnet (186,161 shares) for $0.01 per share ("Merger Consideration"). | ||||||||||
Sale of stock, number of shares | 100 |
Nature of Business - Schedule o
Nature of Business - Schedule of Consolidated and Combined Financial Statements (Details) | 12 Months Ended |
Dec. 31, 2020 | |
American Roadside Burgers, Inc. [Member] | |
Name of Company | American Roadside Burgers, Inc. |
Jurisdiction of Incorporation | DE, USA |
American Burger Ally, LLC [Member] | |
Name of Company | American Burger Ally, LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 100.00% |
American Burger Morehead, LLC [Member] | |
Name of Company | American Burger Morehead, LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 100.00% |
American Burger Prosperity, LLC [Member] | |
Name of Company | American Burger Prosperity, LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 50.00% |
American Roadside Burgers Smithtown, Inc. [Member] | |
Name of Company | American Roadside Burgers Smithtown, Inc. |
Jurisdiction of Incorporation | DE, USA |
Percent owned | 100.00% |
BGR Acquisition, LLC [Member] | |
Name of Company | BGR Acquisition, LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 100.00% |
BGR Franchising, LLC [Member] | |
Name of Company | BGR Franchising, LLC |
Jurisdiction of Incorporation | VA, USA |
Percent owned | 100.00% |
BGR Operations, LLC [Member] | |
Name of Company | BGR Operations, LLC |
Jurisdiction of Incorporation | VA, USA |
Percent owned | 100.00% |
BGR Acquisition 1, LLC [Member] | |
Name of Company | BGR Acquisition 1, LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 100.00% |
BGR Annapolis, LLC [Member] | |
Name of Company | BGR Annapolis, LLC |
Jurisdiction of Incorporation | MD, USA |
Percent owned | 100.00% |
BGR Arlington, LLC [Member] | |
Name of Company | BGR Arlington, LLC |
Jurisdiction of Incorporation | VA, USA |
Percent owned | 46.00% |
BGR Columbia, LLC [Member] | |
Name of Company | BGR Columbia, LLC |
Jurisdiction of Incorporation | MD, USA |
Percent owned | 100.00% |
BGR Michigan Ave, LLC [Member] | |
Name of Company | BGR Michigan Ave, LLC |
Jurisdiction of Incorporation | DC, USA |
Percent owned | 100.00% |
BGR Mosaic, LLC [Member] | |
Name of Company | BGR Mosaic, LLC |
Jurisdiction of Incorporation | VA, USA |
Percent owned | 100.00% |
BGR Old Keene Mill, LLC [Member] | |
Name of Company | BGR Old Keene Mill, LLC |
Jurisdiction of Incorporation | VA, USA |
Percent owned | 100.00% |
BGR Washingtonian, LLC [Member] | |
Name of Company | BGR Washingtonian, LLC |
Jurisdiction of Incorporation | MD, USA |
Percent owned | 46.00% |
Capitol Burger, LLC [Member] | |
Name of Company | Capitol Burger, LLC |
Jurisdiction of Incorporation | MD, USA |
Percent owned | 100.00% |
BT Burger Acquisition, LLC [Member] | |
Name of Company | BT Burger Acquisition, LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 100.00% |
BT's Burgerjoint Rivergate, LLC [Member] | |
Name of Company | BT's Burgerjoint Rivergate LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 100.00% |
BT's Burgerjoint Sun Valley, LLC [Member] | |
Name of Company | BT's Burgerjoint Sun Valley, LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 100.00% |
LBB Acquisition, LLC [Member] | |
Name of Company | LBB Acquisition, LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 100.00% |
Cuarto LLC [Member] | |
Name of Company | Cuarto LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
LBB Acquisition 1 LLC [Member] | |
Name of Company | LBB Acquisition 1 LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
LBB Hassalo LLC [Member] | |
Name of Company | LBB Hassalo LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 80.00% |
LBB Platform LLC [Member] | |
Name of Company | LBB Platform LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 80.00% |
LBB Capitol Hill LLC [Member] | |
Name of Company | LBB Capitol Hill LLC |
Jurisdiction of Incorporation | WA, USA |
Percent owned | 50.00% |
LBB Franchising LLC [Member] | |
Name of Company | LBB Franchising LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 100.00% |
LBB Green Lake LLC [Member] | |
Name of Company | LBB Green Lake LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 50.00% |
LBB Lake Oswego LLC [Member] | |
Name of Company | LBB Lake Oswego LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
LBB Magnolia Plaza LLC [Member] | |
Name of Company | LBB Magnolia Plaza LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 50.00% |
LBB Multnomah Village LLC [Member] | |
Name of Company | LBB Multnomah Village LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 50.00% |
LBB Progress Ridge LLC [Member] | |
Name of Company | LBB Progress Ridge LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 50.00% |
LBB Rea Farms LLC [Member] | |
Name of Company | LBB Rea Farms LLC |
Jurisdiction of Incorporation | NC, USA |
Percent owned | 50.00% |
LBB Wallingford LLC [Member] | |
Name of Company | LBB Wallingford LLC |
Jurisdiction of Incorporation | WA, USA |
Percent owned | 50.00% |
LBB Downtown PDX LLC [Member] | |
Name of Company | LBB Downtown PDX LLC |
Jurisdiction of Incorporation | WA, USA |
Percent owned | 100.00% |
Noveno LLC [Member] | |
Name of Company | Noveno LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
Octavo LLC [Member] | |
Name of Company | Octavo LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
Primero LLC [Member] | |
Name of Company | Primero LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
Quinto LLC [Member] | |
Name of Company | Quinto LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
Segundo LLC [Member] | |
Name of Company | Segundo LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
Septimo LLC [Member] | |
Name of Company | Septimo LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
Sexto LLC [Member] | |
Name of Company | Sexto LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
Jantzen Beach Wings, LLC [Member] | |
Name of Company | Jantzen Beach Wings, LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
Oregon Owl's Nest, LLC [Member] | |
Name of Company | Oregon Owl's Nest, LLC |
Jurisdiction of Incorporation | OR, USA |
Percent owned | 100.00% |
West End Wings LTD [Member] | |
Name of Company | West End Wings LTD |
Jurisdiction of Incorporation | United Kingdom |
Percent owned | 100.00% |
Significant Accounting Polici_4
Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||||||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Jun. 30, 2020 | Apr. 02, 2020 | Mar. 31, 2020 | Jan. 02, 2019 | |
Fair value on a recurring basis asset | |||||||
Fair value on a recurring basis liability | 184,800 | ||||||
Restricted cash | 1,250,336 | 336 | |||||
Restricted cash held | 1,250,000 | ||||||
Cash | 678,468 | 500,681 | |||||
Cash and restricted cash | 1,928,804 | 501,017 | |||||
Allowance for doubtful accounts | |||||||
Estimated useful lives of intangible assets | 10 years | ||||||
Management fee | |||||||
Revenue related to contract liabilities | 165,000 | 215,000 | |||||
Advertising expenses | $ 273,000 | 500,000 | |||||
Operating lease, remaining lease term | 5 years | ||||||
Operating lease, renewal term | 20 years | ||||||
Net operating loss carryforwards | $ 7,200,000 | $ 18,960,000 | |||||
Accrued interest or penalties | |||||||
Operating lease liabilities | 14,877,251 | 17,681,663 | $ 22,100,000 | ||||
Operating lease right-of-use assets | 9,529,443 | $ 11,668,026 | $ 10,117,900 | $ 10,908,094 | $ 11,039,816 | $ 19,800,000 | |
IRC [Member] | |||||||
Net operating loss carryforwards | $ 7,245,000 | ||||||
Minimum [Member] | |||||||
Operating lease, remaining lease term | 1 year | ||||||
Maximum [Member] | |||||||
Operating lease, remaining lease term | 20 years | ||||||
Franchise Agreement [Member] | |||||||
Estimated useful lives of intangible assets | 20 years |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Fair Value of Financial Instruments (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Common stock of Sonnet, at fair value | $ 413,268 | |
True-up provision of Convertible Preferred Series 2 | 184,800 | |
Level 1 [Member] | ||
Common stock of Sonnet, at fair value | 413,268 | |
True-up provision of Convertible Preferred Series 2 | ||
Level 2 [Member] | ||
Common stock of Sonnet, at fair value | ||
True-up provision of Convertible Preferred Series 2 | ||
Level 3 [Member] | ||
Common stock of Sonnet, at fair value | ||
True-up provision of Convertible Preferred Series 2 | $ 184,800 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Property and Equipment Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Leasehold Improvements [Member] | Minimum [Member] | |
Property and equipment useful life | 5 years |
Leasehold Improvements [Member] | Maximum [Member] | |
Property and equipment useful life | 15 years |
Restaurant Furnishings and Equipment [Member] | Minimum [Member] | |
Property and equipment useful life | 3 years |
Restaurant Furnishings and Equipment [Member] | Maximum [Member] | |
Property and equipment useful life | 10 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property and equipment useful life | 3 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property and equipment useful life | 10 years |
Office and Computer Equipment [Member] | Minimum [Member] | |
Property and equipment useful life | 3 years |
Office and Computer Equipment [Member] | Maximum [Member] | |
Property and equipment useful life | 7 years |
Discontinued Operations (Detail
Discontinued Operations (Details Narrative) - USD ($) | Nov. 06, 2019 | Dec. 31, 2019 | Oct. 31, 2019 | Dec. 31, 2020 |
Purchase price of discontinued operation | $ 500,000 | |||
Management fee percentage | 5.00% | |||
Outstanding notes balance owed | 149,000 | |||
Remaining liability outstanding | $ 20,000 | |||
Closing Balance [Member] | ||||
Purchase price of discontinued operation | 125,000 | |||
Remaining Balance [Member] | ||||
Purchase price of discontinued operation | 375,000 | |||
JF Restaurants, LLC [Member] | ||||
Sale of membership interest percentage | 100.00% | |||
Sale of Business Agreement [Member] | Three of its South Africa Hooters Locations [Member] | ||||
Purchase price of discontinued operation | $ 385,000 | |||
Proceeds from business discontinued operation | $ 220,000 | |||
Sale of Business Agreement [Member] | Two Remaining South Africa Hooters Locations [Member] | ||||
Purchase price of discontinued operation | 265,000 | |||
Proceeds from business discontinued operation | $ 130,000 |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Discontinued Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Other receivable | $ 149,000 | |
Total assets | 149,000 | |
Accounts payable and accrued expenses | 435,600 | |
Total liabilities | 435,600 | |
Net assets of discontinued operations | (286,600) | |
Restaurant revenues | 8,203,692 | |
Administration expenses | 588,368 | |
Cost of sales | 3,067,867 | |
Depreciation and amortization | 252,234 | |
Asset impairment charge | 857,357 | |
Restaurant operating expenses | 4,460,078 | |
Other (income) expense | (538) | |
Expenses: | 9,225,366 | |
Income (Loss) of discontinued operations | (1,021,674) | |
Cash flows provided by (used in) Operations Activities | 302,759 | |
Cash flows provided by (used in) Investing Activities | 290,604 | |
Cash flows provided by (used in) Financing Activities | ||
Net Cash provided by (used in) Discontinued Operations | $ 593,363 |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) | Dec. 04, 2020 | Apr. 02, 2020 | Jun. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Nov. 17, 2020 | May 04, 2017 | Dec. 31, 2012 | Dec. 31, 2011 |
Warrant to purchase common stock | 1,199,978 | ||||||||
Fair value of warrant | $ 935,000 | $ 105,089 | |||||||
Warrant exercise price | $ 0.50 | ||||||||
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 | $ 778,269 | $ 381,397 | $ 80,000 | $ 80,000 | |||||
Non controlling interest | $ 48,000 | ||||||||
Investment write down | $ 435,000 | ||||||||
Chanticleer Investors, LLC [member] | |||||||||
Investment ownership percentage | 22.00% | ||||||||
Hooters [member] | |||||||||
Investment ownership percentage | 3.00% | ||||||||
Sonnet [Member] | |||||||||
Warrant to purchase common stock percentage | 2.00% | ||||||||
Warrant to purchase common stock | 186,161 | 185,422 | |||||||
Fair value of warrant | $ 1,628,909 | ||||||||
Warrant exercise price | $ 0.01 | ||||||||
Warrant exercisable date | Apr. 1, 2025 | ||||||||
Stock price per share | $ 8.76 | $ 2.23 | |||||||
Sale of stock, number of shares | 100 | ||||||||
Proceeds from sale of stock | $ 244 | ||||||||
Shares issued during the period new issues, shares | 185,322 |
Investments - Schedule of Inves
Investments - Schedule of Investments (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2012 | Dec. 31, 2011 |
Investments [Abstract] | ||||
Common stock of Sonnet, at fair value | $ 413,268 | |||
Chanticleer Investors, LLC, at cost | 365,001 | 381,397 | ||
Total | $ 778,269 | $ 381,397 | $ 80,000 | $ 80,000 |
Investments - Schedule of Fair
Investments - Schedule of Fair Value of Warrant (Details) | Aug. 16, 2020$ / shares | Apr. 02, 2020$ / shares |
Sonnet BioTherapeutics, Inc [Member] | ||
Stock price per share | $ 0.01 | |
Sonnet BioTherapeutics, Inc [Member] | Exercise Price [Member] | ||
Fair value investment measurement input, percentage | 0.01 | |
Sonnet BioTherapeutics, Inc [Member] | Term [Member] | ||
Investment term fair value | 5 years | |
Sonnet BioTherapeutics, Inc [Member] | Volatility [Member] | ||
Fair value investment measurement input, percentage | 103 | |
Sonnet BioTherapeutics, Inc [Member] | Risk Free Interest Rate [Member] | ||
Fair value investment measurement input, percentage | 0.37 | |
Warrants [Member] | ||
Stock price per share | $ 0.34 | $ 0.34 |
Investment term fair value | 9 years 7 months 17 days | 10 years |
Warrants [Member] | Sonnet BioTherapeutics, Inc [Member] | ||
Stock price per share | $ 8.76 |
Property and Equipment, Net (De
Property and Equipment, Net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Impairment charge for property and equipment | $ 832,821 | |
Depreciation expense | $ 1,158,915 | $ 1,468,576 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 7,301,908 | $ 7,926,789 |
Restaurant furniture and equipment | 2,132,726 | 3,032,859 |
Construction in progress | 5,450 | 650 |
Office and computer equipment | 125,535 | 62,304 |
Office furniture and fixtures | 59,635 | 169,034 |
Property, plant and equipment, gross | 9,625,254 | 11,191,636 |
Accumulated depreciation and amortization | (5,922,360) | (5,561,146) |
Property, plant and equipment, net | $ 3,702,894 | $ 5,630,490 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Impairment charge | $ 832,821 | ||
Trademark, Tradenames [Member] | |||
Impairment charge | $ 246,751 | 246,751 | $ 440,000 |
Amortization of intangible assets | $ 366,452 | $ 373,776 |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule of Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning balance | $ 8,567,888 | $ 10,564,353 |
Impairment | (2,025,720) | |
Foreign currency translation gain (loss) | 23,261 | 29,255 |
Ending balance | $ 8,591,149 | $ 8,567,888 |
Intangible Assets, Net - Sche_2
Intangible Assets, Net - Schedule of Other Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Estimated life | 10 years | |
Total intangibles at cost | $ 4,989,440 | $ 5,238,107 |
Accumulated amortization | (1,945,555) | (1,581,112) |
Intangible assets, net | 3,043,885 | 3,656,995 |
Trademark, Tradenames [Member] | ||
Total intangibles at cost | $ 4,076,175 | 4,322,926 |
Trademark, Tradenames [Member] | American Roadside Burger [Member] | ||
Estimated life | 10 years | |
Total intangibles at cost | $ 1,786,930 | 1,786,930 |
Trademark, Tradenames [Member] | The Burger Joint [Member] | ||
Estimated life description | Indefinite | |
Total intangibles at cost | $ 739,245 | 985,996 |
Trademark, Tradenames [Member] | Little Big Burger [Member] | ||
Estimated life description | Indefinite | |
Total intangibles at cost | $ 1,550,000 | 1,550,000 |
Acquired Franchise Rights [Member] | The Burger Joint [Member] | ||
Estimated life | 7 years | |
Total intangibles at cost | $ 827,757 | 827,757 |
Franchise License Fees [Member] | ||
Total intangibles at cost | $ 85,508 | 87,424 |
Franchise License Fees [Member] | Hooters Pacific NW [Member] | ||
Estimated life | 20 years | |
Total intangibles at cost | $ 74,507 | 74,507 |
Franchise License Fees [Member] | Hooters UK [Member] | ||
Estimated life | 5 years | |
Total intangibles at cost | $ 11,001 | $ 12,917 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary of Amortization Expense (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 | $ 361,182 | |
2022 | 251,720 | |
2023 | 133,121 | |
2024 | 3,725 | |
2025 | 3,725 | |
Thereafter: | 1,167 | |
Total amortization expense of intangible assets | $ 3,043,885 | $ 3,656,995 |
Debt and Notes Payable - Schedu
Debt and Notes Payable - Schedule of Debt and Notes Payable (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | |
Notes Payable | [1] | $ 6,000,000 | |
Notes Payable TowneBank | [2] | 142,746 | |
Receivables financing facilities | [3] | 23,688 | |
Contractor note | [4] | 348,269 | 348,269 |
PPP loan | [5] | 2,109,400 | |
UK Bounce Back loan | [6] | 68,245 | |
EIDI Loans | [7] | 299,900 | |
Convertible debt | [8] | 4,037,889 | |
Total Debt | 6,916,601 | 6,630,961 | |
Less: discount on convertible debt | [8] | (223,681) | |
Total Debt, net of discount | 6,692,920 | 6,630,961 | |
Current portion of long-term debt | 2,338,978 | 6,630,961 | |
Long-term debt, less current portion | 4,353,942 | ||
Merchant Capital Advances [Member] | |||
Notes Payable | [9] | 27,048 | 90,408 |
BGR Franchisees [Member] | |||
Notes Payable | [10] | $ 25,850 | $ 25,850 |
[1] | On May 4, 2017, pursuant to a Securities Purchase Agreement, the Company issued 8% non-convertible secured debentures in the principal amount of $6,000,000 and warrants to purchase 1,199,978 shares of common stock to accredited investors. The debentures bore interest at a rate of 8% per year and were payable in cash quarterly in arrears. The Company lowered the strike price for several classes of warrants to $0.50 to allow for warrant holders to exercise their warrants in order to induce the exercise thereof and raise capital for the Company. See Note 10 for further discussion of warrant modification. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey LLC, a Texas limited liability company ("Oz Rey"), the Company and certain other original holders of the 8% non-convertible secured debentures, the Company was released from all of its obligations under the 8% non-convertible secured debentures, and the 8% non-convertible secured debentures were cancelled. In exchange, Amergent (i) issued a 10% convertible secured debenture in principal amount of $4,037,889 to Oz Rey, (ii) issued warrants to purchase 2,925,200 of shares of common stock of Amergent to Oz Rey and certain of the original holders of the 8% non-convertible secured debentures, and (iii) remitted payment of $650,000 prior to March 31, 2020 and an additional $1,350,000 plus reimbursement of certain expenses to the purchasers on April 1, 2020. See further discussion in (i) below. | ||
[2] | The Company had one outstanding term loan with TowneBank, all of which was collateralized by all assets of the Company and personally guaranteed by our Chief Executive Officer. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, the Company paid off the outstanding balance owed to TowneBank in full. | ||
[3] | During May 2019, the Company agreed to make payments of $585 per day for 220 days. During January 2020, in consideration for proceeds of $191,190, the Company agreed to make payments of $1,180 per day on two separate agreements for 220 days. The Company granted a security interest in the credit card receivables of the specified restaurants in connection with each of the Receivables Financing Agreements. Total outstanding on these advances is $0 and $23,688 at December 31, 2020 and 2019, respectively. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, these notes were assumed by Amergent. | ||
[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 had a balance of $348,269 as of both December 31, 2020 and 2019, and a stated interest rate of 12% per year. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, this note was assumed by Amergent. The Company is currently in default on this loan and a writ of garnishment was ordered against the Company in 2020 for approximately $445,000. The additional $95,000 is included in accounts payable and accrued expenses at December 31, 2020. | ||
[5] | On April 27, 2020, Amergent received a PPP loan in the amount of approximately $2.1 million. Due to the Spin-Off and Merger, Amergent was not publicly traded at the time of the loan application or funding. The note bears interest at 1% per year, matures in April 2022, and requires monthly interest and principal payments of approximately $119,000 beginning in November 2020 and through maturity. The currently issued guidelines of the program allow for the loan proceeds to be forgiven if certain requirements are met. Any loan proceeds not forgiven will be repaid in full. The Company has currently applied for loan forgiveness in the full amount of the loan, but no assurance can be given as to the amount, if any, of forgiveness. The application for forgiveness allowed the Company to defer the timing of repayment until the forgiveness assessment is completed. See Note 12 for additional information. | ||
[6] | On November 24, 2020 Amergent received approximately $68,200 through the Bounce Back Loan Scheme in the United Kingdom. The loan has a term of six years that can be extended to 10 years. No payments are required and no interest is accrued for the first twelve months after the loan is received. After the first year, the loan accrues interest at 2.5% per year. | ||
[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 $299,900, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per year. Total installment payments, including principal and interest, are due monthly beginning August 4, 2021 in the amount of $1,762. The balance of principal and interest is payable over the next thirty years from the date of the promissory note (August 2050). There are no penalties for prepayment. Based upon guidance issued by the SBA on June 19, 2020, the EIDL loans are not required to be refinanced by the PPP loan. | ||
[8] | In connection with and prior to the Spin-Off and Merger, on April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% non-convertible debentures (see (a) above), the Company issued a 10% secured convertible debenture to Oz Rey in exchange for the 8% non-convertible debentures. The principal amount of the 10% secured convertible debenture is $4,037,889, payable in full on April 1, 2022, subject to extension by the holders in two-year intervals for up to 10 years from the issuance date upon Amergent meeting certain conditions. Interest is payable quarterly in cash. Prior to August 17, 2020, the 10% secured convertible debenture was convertible at any time by Oz Rey into common stock at the lower of $0.10 per share and the volume weighted average price on the last 10 trading days immediately prior to conversion. The 10% secured convertible debenture is also subject to adjustment if Amergent sells securities below this price (down round protection), among other triggers. In connection with the exchange of the debentures, Amergent issued warrants to Oz Rey and the original 8% non-convertible debenture holders to purchase 2,925,200 shares of common stock. The exercise price is $0.125 for 2,462,600 warrants and $0.50 for 462,500 warrants. The warrants can be exercised on a cashless basis and expire 10 years from the issuance date. Through August 16, 2020, Amergent did not have an adequate amount of authorized common stock to cover shares issuable upon exercise of the warrants and conversion of the 10% convertible notes. As such, the warrants were liability classified and the conversion feature was bifurcated from the host debt instrument and accounted for as a derivative and recorded as a liability in the accompanying consolidated and combined balance sheets through August 16, 2020, with the change in the liability for the warrants and the conversion feature from the April 1, 2020 issuance date through August 16, 2020 recorded in the accompanying consolidated and combined statements of operations. The warrants issued had an estimated fair value of $935,000 as of April 1, 2020 using a Monte Carlo simulation to determine the value. The fair value of the conversion feature was $11,231,000 as of April 1, 2020 using a Monte Carlo simulation to determine the value. The estimated carrying value of the 10% convertible secured debentures without the conversion feature was $3,680,000, and with the conversion feature was $14,911,000. 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. Through the date of the amendment, the warrants and the conversion feature were marked to fair value with the change in the liability recorded in the accompanying consolidated and combined statements of operations. The liabilities for the warrants and conversion feature were reclassified into additional paid in-capital at the amendment date. The estimated fair value of the warrants and conversion feature at August 16, 2020 were $924,000 and $10,970,000, respectively. The change in value of these instruments from the issuance date through August 16, 2020 of ($11,000) and ($261,000) has been recorded as a component of other expense (income) and included in change in fair value of derivative liabilities and warrants in the accompanying consolidated statements of operations for the year ended December 31, 2020. See note 11 for further discussion of determining the estimated fair value of these instruments. The exchange of the notes has been accounted for as the extinguishment of the 8% non-convertible notes with the difference in the carrying value of the 8% non-convertible notes, $4,037,889, and the fair value of the 10% convertible notes and warrants, $15,846,000, at the date of the exchange recorded as a debt extinguishment charge of $11,808,111 in the accompanying consolidated and combined statements of operations for the year ended December 31, 2020. The Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes. Amortization of $134,208 was recorded as interest expense during the year ended December 31, 2020. The Company's various loan agreements contain financial and non-financial covenants and provisions providing for cross-default. The evaluation of compliance with these provisions is subject to interpretation and the exercise of judgment. The Company's lender has provided a waiver of certain financial covenants through March 31, 2021. | ||
[9] | During September 2019 and October 2019, the Company entered into two merchant capital advances in the amount of $46,000 and $84,700, respectively. The Company agreed to repay these advances through daily payments until those amounts are repaid with the specified interest rate per those agreements. Total outstanding on these advances is $27,048 and $90,408 as of December 31, 2020 and 2019, respectively. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, these notes were assumed by Amergent. | ||
[10] | In connection with the assets acquired from the two BGR franchisees, the Company entered into notes payable of $9,600 and $187,000 during 2018. The notes bear interest at 4% and were due within 12 months of each acquisition date. Principal and interest payments are due monthly. The total outstanding on these two notes is $25,850 at both December 31, 2020 and 2019. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, these notes were assumed by Amergent. |
Debt and Notes Payable - Sche_2
Debt and Notes Payable - Schedule of Debt and Notes Payable (Details) (Parenthetical) | Nov. 24, 2020USD ($) | Nov. 02, 2020USD ($) | Aug. 16, 2020USD ($) | Aug. 04, 2020USD ($) | Apr. 27, 2020USD ($) | Apr. 02, 2020USD ($)shares | Mar. 31, 2020USD ($) | Jan. 30, 2020USD ($) | Oct. 31, 2019USD ($) | Sep. 30, 2019USD ($) | May 31, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Aug. 17, 2020shares | May 04, 2017USD ($)$ / sharesshares | Mar. 26, 2013USD ($) | |
Debt instrument interest rate | 2.50% | 8.00% | ||||||||||||||||||
Debt instrument, face amount | $ 6,000,000 | $ 4,082,636 | ||||||||||||||||||
Warrant to purchase common stock | shares | 1,199,978 | |||||||||||||||||||
Warrant exercise price | $ / shares | $ 0.50 | |||||||||||||||||||
Remitted payment | $ 1,350,000 | $ 650,000 | ||||||||||||||||||
Periodic payment | $ 1,180 | $ 585 | ||||||||||||||||||
Proceeds from Consideration | $ 191,190 | |||||||||||||||||||
Outstanding consideration | $ 0 | $ 23,688 | ||||||||||||||||||
Note payable | [1] | 6,000,000 | ||||||||||||||||||
Default loan | 445,000 | |||||||||||||||||||
Accounts payable and accrued expenses | 95,000 | |||||||||||||||||||
Proceeds from issuance of debt | 2,991,676 | |||||||||||||||||||
Fair value of warrant | 935,000 | 105,089 | ||||||||||||||||||
Fair value of conversion future | 11,231,000 | |||||||||||||||||||
Carrying value of convertible secured debentures without the conversion feature | 3,680,000 | |||||||||||||||||||
Carrying value of convertible secured debentures with the conversion feature | $ 14,911,000 | |||||||||||||||||||
Change in fair value of derivative liabilities | $ (2,915,660) | $ (457,461) | 616,200 | |||||||||||||||||
Debt extinguishment expense | (11,808,111) | |||||||||||||||||||
Debt discount | [2] | $ 223,681 | ||||||||||||||||||
Minimum [Member] | ||||||||||||||||||||
Loan term | 6 years | |||||||||||||||||||
Maximum [Member] | ||||||||||||||||||||
Debt instrument, face amount | $ 480,000 | |||||||||||||||||||
Loan term | 10 years | |||||||||||||||||||
8% Non-convertible Secured Debentures [Member] | ||||||||||||||||||||
Debt instrument interest rate | 10.00% | |||||||||||||||||||
Debt instrument, face amount | $ 4,037,889 | |||||||||||||||||||
Warrant to purchase common stock | shares | 2,925,200 | |||||||||||||||||||
Note Payable One [Member] | ||||||||||||||||||||
Proceeds from Consideration | $ 9,600 | |||||||||||||||||||
Notes Payable Two [Member] | ||||||||||||||||||||
Proceeds from Consideration | $ 187,000 | |||||||||||||||||||
Notes Payable [Member] | ||||||||||||||||||||
Outstanding consideration | $ 25,850 | 25,850 | ||||||||||||||||||
Merchant Capital Advances [Member] | ||||||||||||||||||||
Proceeds from Consideration | $ 84,700 | $ 46,000 | ||||||||||||||||||
Note payable | [3] | $ 27,048 | $ 90,408 | |||||||||||||||||
Promissory Note [Member] | ||||||||||||||||||||
Debt instrument interest rate | 12.00% | 12.00% | ||||||||||||||||||
Note payable | $ 348,269 | $ 348,269 | ||||||||||||||||||
Paycheck Protection Program Loan [Member] | ||||||||||||||||||||
Debt instrument interest rate | 1.00% | |||||||||||||||||||
Periodic payment | $ 119,000 | |||||||||||||||||||
Proceeds from issuance of debt | $ 2,100,000 | |||||||||||||||||||
Debt instrument, maturity date | Apr. 30, 2022 | |||||||||||||||||||
Bounce Back Loan [Member] | ||||||||||||||||||||
Proceeds from issuance of debt | $ 68,200 | |||||||||||||||||||
Economic Injury Disaster Loan [Member] | ||||||||||||||||||||
Debt instrument interest rate | 3.75% | |||||||||||||||||||
Debt instrument, face amount | $ 299,900 | |||||||||||||||||||
Periodic payment | $ 1,762 | |||||||||||||||||||
Debt instrument, maturity date | Aug. 4, 2021 | |||||||||||||||||||
10% Secured Convertible Debenture [Member] | ||||||||||||||||||||
Debt instrument, face amount | $ 4,037,889 | |||||||||||||||||||
Warrant to purchase common stock | shares | 2,925,200 | |||||||||||||||||||
Debt description | In connection with and prior to the Spin-Off and Merger, on April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% non-convertible debentures (see (a) above), the Company issued a 10% secured convertible debenture to Oz Rey in exchange for the 8% non-convertible debentures. The principal amount of the 10% secured convertible debenture is $4,037,889, payable in full on April 1, 2022, subject to extension by the holders in two-year intervals for up to 10 years from the issuance date upon Amergent meeting certain conditions. Interest is payable quarterly in cash. Prior to August 17, 2020, the 10% secured convertible debenture was convertible at any time by Oz Rey into common stock at the lower of $0.10 per share and the volume weighted average price on the last 10 trading days immediately prior to conversion. The 10% secured convertible debenture is also subject to adjustment if Amergent sells securities below this price (down round protection), among other triggers. In connection with the exchange of the debentures, Amergent issued warrants to Oz Rey and the original 8% non-convertible debenture holders to purchase 2,925,200 shares of common stock. | |||||||||||||||||||
Percentage of note conversion | 0.10 | |||||||||||||||||||
Convertible Notes [Member] | Warrant One [Member] | ||||||||||||||||||||
Debt instrument interest rate | 12.50% | |||||||||||||||||||
Warrant to purchase common stock | shares | 2,462,600 | |||||||||||||||||||
Fair value of conversion future | $ 924,000 | |||||||||||||||||||
Convertible Notes [Member] | Warrant Two [Member] | ||||||||||||||||||||
Debt instrument interest rate | 50.00% | |||||||||||||||||||
Warrant to purchase common stock | shares | 462,500 | |||||||||||||||||||
Fair value of conversion future | 10,970,000 | |||||||||||||||||||
10% Convertible Notes [Member] | ||||||||||||||||||||
Debt instrument interest rate | 10.00% | |||||||||||||||||||
Warrant to purchase common stock | shares | 15,846,000 | |||||||||||||||||||
Change in fair value of derivative liabilities | $ (11,000) | $ (261,000) | ||||||||||||||||||
Debt extinguishment expense | 11,808,111 | |||||||||||||||||||
Debt discount | $ 358,000 | |||||||||||||||||||
Interest expenses | $ 134,208 | |||||||||||||||||||
8% Convertible Notes [Member] | ||||||||||||||||||||
Warrant to purchase common stock | shares | 4,037,889 | |||||||||||||||||||
[1] | On May 4, 2017, pursuant to a Securities Purchase Agreement, the Company issued 8% non-convertible secured debentures in the principal amount of $6,000,000 and warrants to purchase 1,199,978 shares of common stock to accredited investors. The debentures bore interest at a rate of 8% per year and were payable in cash quarterly in arrears. The Company lowered the strike price for several classes of warrants to $0.50 to allow for warrant holders to exercise their warrants in order to induce the exercise thereof and raise capital for the Company. See Note 10 for further discussion of warrant modification. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey LLC, a Texas limited liability company ("Oz Rey"), the Company and certain other original holders of the 8% non-convertible secured debentures, the Company was released from all of its obligations under the 8% non-convertible secured debentures, and the 8% non-convertible secured debentures were cancelled. In exchange, Amergent (i) issued a 10% convertible secured debenture in principal amount of $4,037,889 to Oz Rey, (ii) issued warrants to purchase 2,925,200 of shares of common stock of Amergent to Oz Rey and certain of the original holders of the 8% non-convertible secured debentures, and (iii) remitted payment of $650,000 prior to March 31, 2020 and an additional $1,350,000 plus reimbursement of certain expenses to the purchasers on April 1, 2020. See further discussion in (i) below. | |||||||||||||||||||
[2] | In connection with and prior to the Spin-Off and Merger, on April 1, 2020, pursuant to an agreement among Chanticleer, Oz Rey and certain original holders of the 8% non-convertible debentures (see (a) above), the Company issued a 10% secured convertible debenture to Oz Rey in exchange for the 8% non-convertible debentures. The principal amount of the 10% secured convertible debenture is $4,037,889, payable in full on April 1, 2022, subject to extension by the holders in two-year intervals for up to 10 years from the issuance date upon Amergent meeting certain conditions. Interest is payable quarterly in cash. Prior to August 17, 2020, the 10% secured convertible debenture was convertible at any time by Oz Rey into common stock at the lower of $0.10 per share and the volume weighted average price on the last 10 trading days immediately prior to conversion. The 10% secured convertible debenture is also subject to adjustment if Amergent sells securities below this price (down round protection), among other triggers. In connection with the exchange of the debentures, Amergent issued warrants to Oz Rey and the original 8% non-convertible debenture holders to purchase 2,925,200 shares of common stock. The exercise price is $0.125 for 2,462,600 warrants and $0.50 for 462,500 warrants. The warrants can be exercised on a cashless basis and expire 10 years from the issuance date. Through August 16, 2020, Amergent did not have an adequate amount of authorized common stock to cover shares issuable upon exercise of the warrants and conversion of the 10% convertible notes. As such, the warrants were liability classified and the conversion feature was bifurcated from the host debt instrument and accounted for as a derivative and recorded as a liability in the accompanying consolidated and combined balance sheets through August 16, 2020, with the change in the liability for the warrants and the conversion feature from the April 1, 2020 issuance date through August 16, 2020 recorded in the accompanying consolidated and combined statements of operations. The warrants issued had an estimated fair value of $935,000 as of April 1, 2020 using a Monte Carlo simulation to determine the value. The fair value of the conversion feature was $11,231,000 as of April 1, 2020 using a Monte Carlo simulation to determine the value. The estimated carrying value of the 10% convertible secured debentures without the conversion feature was $3,680,000, and with the conversion feature was $14,911,000. 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. Through the date of the amendment, the warrants and the conversion feature were marked to fair value with the change in the liability recorded in the accompanying consolidated and combined statements of operations. The liabilities for the warrants and conversion feature were reclassified into additional paid in-capital at the amendment date. The estimated fair value of the warrants and conversion feature at August 16, 2020 were $924,000 and $10,970,000, respectively. The change in value of these instruments from the issuance date through August 16, 2020 of ($11,000) and ($261,000) has been recorded as a component of other expense (income) and included in change in fair value of derivative liabilities and warrants in the accompanying consolidated statements of operations for the year ended December 31, 2020. See note 11 for further discussion of determining the estimated fair value of these instruments. The exchange of the notes has been accounted for as the extinguishment of the 8% non-convertible notes with the difference in the carrying value of the 8% non-convertible notes, $4,037,889, and the fair value of the 10% convertible notes and warrants, $15,846,000, at the date of the exchange recorded as a debt extinguishment charge of $11,808,111 in the accompanying consolidated and combined statements of operations for the year ended December 31, 2020. The Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes. Amortization of $134,208 was recorded as interest expense during the year ended December 31, 2020. The Company's various loan agreements contain financial and non-financial covenants and provisions providing for cross-default. The evaluation of compliance with these provisions is subject to interpretation and the exercise of judgment. The Company's lender has provided a waiver of certain financial covenants through March 31, 2021. | |||||||||||||||||||
[3] | During September 2019 and October 2019, the Company entered into two merchant capital advances in the amount of $46,000 and $84,700, respectively. The Company agreed to repay these advances through daily payments until those amounts are repaid with the specified interest rate per those agreements. Total outstanding on these advances is $27,048 and $90,408 as of December 31, 2020 and 2019, respectively. In connection with and prior to the Merger and Spin-Off, on April 1, 2020, these notes were assumed by Amergent. |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details Narrative) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Employee and employer accrued taxes | $ 3,000,000 | $ 2,900,000 |
Accounts Payable and Accrued _4
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 3,752,036 | $ 1,265,435 |
Accrued expenses | 1,436,679 | 2,965,205 |
Accrued taxes (VAT, Sales, Payroll, etc.) | 3,356,496 | 3,318,022 |
Accrued interest | 122,057 | 616,533 |
Accounts payable and accrued expenses, total | $ 8,667,268 | $ 8,165,195 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Apr. 02, 2020 | |
Net operating loss carryovers | $ 7,200,000 | $ 18,960,000 | |
Expiration date | Expire at various dates beginning in 2031 through 2036 | ||
Change in valuation allowance | $ 10,116,093 | $ 15,975,958 | |
Interest or penalties | |||
Additional taxable income | $ 157,000 | ||
Foreign [Member] | |||
Net operating loss carryovers | 26,200,000 | ||
State [Member] | |||
Net operating loss carryovers | $ 26,200,000 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Foreign Current | $ 48,187 | |
Foreign Deferred | (36,443) | 653,790 |
Foreign Change in valuation allowance | 36,443 | (652,679) |
U.S. Federal Current | ||
U.S. Federal Deferred | 5,765,837 | (4,683,141) |
U.S. Federal Change in valuation allowance | (5,815,197) | 4,662,699 |
State and local Current | ||
State and local Deferred | (103,357) | (272,656) |
State and local Change in valuation allowance | 159,222 | 317,526 |
Income tax expense | $ 6,505 | $ 73,726 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Computed "expected" income tax benefit | $ (4,325,270) | $ (3,647,623) |
State income taxes, net of federal benefit | (57,543) | (367,974) |
Non-controlling interest | 185,031 | |
Prior year true-ups other deferred tax balances | 24,549 | (323,763) |
Permanent items | 2,500,281 | 37,480 |
Foreign tax expense | 48,187 | |
Rate change | (142,085) | |
Other | (248,955) | 59,421 |
Adjustment to NOLs due to Merger | 8,350,360 | |
Change in valuation allowance | (6,094,832) | 4,082,967 |
Income tax expense | $ 6,505 | $ 73,726 |
Income Taxes - Summary of Major
Income Taxes - Summary of Major Components of Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 6,802,404 | $ 13,099,412 |
Capital loss carryforwards | 369,447 | |
Fixed assets and intangibles | 1,118,850 | 1,058,814 |
Section 1231 loss carryforwards | 39,491 | 103,230 |
Charitable contribution carryforwards | 12,474 | 23,731 |
Section 163(j) limitation | 789,007 | 648,074 |
Other | 45,801 | |
Restaurant startup expenses | 5,293 | |
Accrued expenses | 915,177 | 946,040 |
Deferred occupancy liabilities | 37,044 | |
Contract liabilities | 226,671 | 240,333 |
Total deferred tax assets | 10,278,814 | 16,202,479 |
Deferred occupancy liabilities | (38,390) | |
Investments | (202,307) | (328,825) |
Other | (30,833) | |
Total deferred tax liabilities | (271,530) | (328,825) |
Net deferred tax assets | 10,007,284 | 15,873,654 |
Valuation allowance | (10,116,093) | (15,975,958) |
Deferred tax assets | $ (108,809) | $ (102,304) |
Stockholder's Equity (Details N
Stockholder's Equity (Details Narrative) - USD ($) | Nov. 17, 2020 | Aug. 17, 2020 | Aug. 17, 2020 | Apr. 02, 2020 | Apr. 02, 2020 | Feb. 07, 2020 | Mar. 31, 2020 | Jul. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2016 | May 04, 2017 | Mar. 26, 2013 |
Warrant to purchase common stock | 1,199,978 | |||||||||||||
Loss on extinguishment | $ (11,808,111) | |||||||||||||
Outstanding debt obligations | $ 6,000,000 | $ 4,082,636 | ||||||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||
Warrants price | $ 0.50 | |||||||||||||
Warrants exercised | $ 935,000 | $ 105,089 | ||||||||||||
True-Up Payment [Member] | ||||||||||||||
Number of warrants issued to purchase common stock | 134,000 | 134,000 | ||||||||||||
Warrant exercisable per share | $ 1.25 | $ 1.25 | ||||||||||||
Warrant expiration date | Aug. 31, 2025 | |||||||||||||
Warrants value | $ 28,060 | $ 28,060 | ||||||||||||
Chanticleer Holdings, Inc [Member] | 2014 Stock Incentive Plan [Member] | ||||||||||||||
Stock options granted | 400,010 | |||||||||||||
Warrants price | $ 0.50 | |||||||||||||
Deemed dividend | $ 325,000 | |||||||||||||
Warrants exercised | $ 1,200,000 | |||||||||||||
Sonnet BioTherapeutics, Inc [Member] | ||||||||||||||
Subscription price | $ 0.01 | $ 0.01 | ||||||||||||
Sale of stock, number of shares | 100 | |||||||||||||
Number of warrants issued to purchase common stock | 186,161 | 186,161 | ||||||||||||
Sonnet BioTherapeutics, Inc [Member] | 2014 Stock Incentive Plan [Member] | ||||||||||||||
Warrants price | $ 1.25 | $ 1.25 | ||||||||||||
Warrants exercised | $ 350,000 | |||||||||||||
Redeemed warrants, shares | 261,050 | |||||||||||||
Redeemed warrants, value | $ 66,900 | |||||||||||||
Warrants remained shares | 525,554 | |||||||||||||
Convertible note agreement percentage | 10.00% | |||||||||||||
Warrant issued description | Additionally, 3,275,200 warrants were issued of which 2,925,200 warrants were issued with an exercise price ranging between $.125 and $.5 in connection with the issuance of the Company's 10% convertible note agreement and 350,000 warrants with an exercise price of $.125 were issued to the Company's bridge financing investor. | |||||||||||||
Maximum [Member] | ||||||||||||||
Outstanding debt obligations | $ 480,000 | |||||||||||||
Maximum [Member] | Chanticleer Holdings, Inc [Member] | 2014 Stock Incentive Plan [Member] | ||||||||||||||
Stock price volatility | 95.00% | |||||||||||||
Risk-free interest rates | 84.00% | |||||||||||||
Weighted average term | 8 years | |||||||||||||
Maximum [Member] | Sonnet BioTherapeutics, Inc [Member] | 2014 Stock Incentive Plan [Member] | ||||||||||||||
Warrants price | $ 0.5 | 0.5 | ||||||||||||
Minimum [Member] | Chanticleer Holdings, Inc [Member] | 2014 Stock Incentive Plan [Member] | ||||||||||||||
Stock price volatility | 88.00% | |||||||||||||
Risk-free interest rates | 1.70% | |||||||||||||
Weighted average term | 6 years 6 months | |||||||||||||
Minimum [Member] | Sonnet BioTherapeutics, Inc [Member] | 2014 Stock Incentive Plan [Member] | ||||||||||||||
Warrants price | $ 1.25 | $ 1.25 | ||||||||||||
2019 Rights Offering [Member] | ||||||||||||||
Subscription price | $ 1 | |||||||||||||
Common stock were issued | 1,894,311 | |||||||||||||
Subscription shares | $ 4,190,524 | |||||||||||||
Gross proceeds from rights offering | 6,009,733 | |||||||||||||
Outstanding debt obligations | 3,075,000 | |||||||||||||
Remaining proceeds from the rights offering | $ 2,700,000 | |||||||||||||
2019 Rights Offering [Member] | Chardan Capital Markets, LLC and The Oak Ridge Financial Services Group Inc [Member] | ||||||||||||||
Percentage of gross proceeds of rights offering | 7.00% | |||||||||||||
Reimburse expenses | $ 75,000 | |||||||||||||
Sales commission | 286,000 | |||||||||||||
2019 Rights Offering [Member] | Maximum [Member] | ||||||||||||||
Subscription shares | $ 6,084,733 | |||||||||||||
2020 Bridge Financing [Member] | ||||||||||||||
Fair value of the derivative liability | $ 184,800 | $ 184,800 | ||||||||||||
Conversion price | $ 0.50 | $ 0.50 | ||||||||||||
9% Redeemable Series 1 Preferred Stock [member] | ||||||||||||||
Redeemable preferred stock offering rights description | The Company conducted a rights offering of units, each unit consisting of one share of 9% Redeemable Series 1 Preferred Stock ("Series 1 Preferred") and one Series 1 Warrant ("Series 1 Warrant") to purchase 10 shares of common stock. | |||||||||||||
Warrant to purchase common stock | 10 | |||||||||||||
Preferred unit dividends | 37,518 | 77,975 | ||||||||||||
Redemption price | $ 0.50 | |||||||||||||
Loss on extinguishment | $ 161,900 | |||||||||||||
Convertible Preferred Stock: Series 2 [Member] | ||||||||||||||
Preferred stock, par value | $ 1,000 | $ 1,000 | $ 1,000 | |||||||||||
Preferred stock, shares authorized | 1,500 | 1,500 | ||||||||||||
Preferred stock, shares issued | 787 | 787 | ||||||||||||
Preferred stock, shares outstanding | 787 | 787 | ||||||||||||
Convertible Preferred Stock: Series 2 [Member] | Maximum [Member] | Securities Purchase Agreement [Member] | ||||||||||||||
Common stock were issued | 1,500 | |||||||||||||
Common stock were issued value | $ 1,500,000 | |||||||||||||
Convertible Preferred Stock: Series 2 [Member] | 2020 Bridge Financing [Member] | Securities Purchase Agreement [Member] | ||||||||||||||
Preferred stock, shares issued | 713 | |||||||||||||
Stock issued during period conversion of convertible securities | 1,426,849 | |||||||||||||
Convertible Preferred Stock: Series 2 [Member] | 2020 Bridge Financing [Member] | Chanticleer [Member] | Securities Purchase Agreement [Member] | ||||||||||||||
Sale of stock, number of shares | 1,500 | |||||||||||||
Gross proceeds preference stock | $ 1,500,000 | |||||||||||||
Sale of stock, transaction costs | $ 95,000 | |||||||||||||
Warrants term | 5 years | |||||||||||||
Warrants to purchase common stock | 350,000 | |||||||||||||
Common stock, par value | $ 1.25 | |||||||||||||
Preferred stock value | $ 1,000 | |||||||||||||
Embedded derivative liability | 529,000 | |||||||||||||
Beneficial conversion feature | $ 729,000 | |||||||||||||
Preferred Stock: Series 2 [Member] | 2020 Bridge Financing [Member] | ||||||||||||||
Stock issued during period conversion of convertible securities | 1,400 | |||||||||||||
Preferred stock description | The shareholders of Chanticleer common stock received shares of Amergent on a 1 for 1 basis (spin-off shares) and received 1 share of Sonnet common stock for 26 shares of Chanticleer common stock held at the time of the Merger. | |||||||||||||
Common stock were issued value | $ 1,250,000 | |||||||||||||
Percentage of cash equal to dollar value | 1.25% | |||||||||||||
Trigger default interest rate | 18.00% | |||||||||||||
Fair value of the derivative liability | $ 529,000 | $ 529,000 | ||||||||||||
Increase (decrease) in derivative liabilities | $ 344,200 | |||||||||||||
Conversion price | $ 1 | $ 1 | ||||||||||||
Beneficial ownership percentage limitation | 4.99% | 4.99% | ||||||||||||
Percentage of limitation prior to merger | 9.99% | |||||||||||||
Series 2 Preferred Stock [Member] | ||||||||||||||
Preferred stock, shares outstanding | 787 | 787 | ||||||||||||
Cash payment to stock holders | $ 66,000 | |||||||||||||
Number of warrants issued to purchase common stock | 134,000 | 134,000 | ||||||||||||
Common stock were issued value | $ 28,060 |
Stockholder's Equity - Schedule
Stockholder's Equity - Schedule of Merger Consideration (Details) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Stockholders' Deficit: | |
Contributed cash portion of Merger Consideration | $ 6,000,000 |
Contribution of Sonnet warrant portion of Merger Consideration | 1,628,909 |
Transaction cost incurred | (588,255) |
Total net equity contribution of merger consideration | $ 7,040,654 |
Stockholder's Equity - Summary
Stockholder's Equity - Summary of Warrant Activity (Details) | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Stockholders' Deficit: | |
Number of Warrants Outstanding, Beginning Balance | shares | 3,306,238 |
Number of Warrants Outstanding, Granted | shares | 3,409,200 |
Number of Warrants Outstanding, Exercised | shares | (2,414,022) |
Number of Warrants Outstanding, Forfeited / Other Adjustments | shares | (892,216) |
Number of Warrants Outstanding, Ending Balance | shares | 3,409,200 |
Number of Warrants Exercisable, Ending Balance | shares | 3,409,200 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 6 |
Weighted Average Exercise Price, Granted | $ / shares | 0.34 |
Weighted Average Exercise Price, Exercised | $ / shares | 0.50 |
Weighted Average Exercise Price, Forfeited / Other Adjustments | $ / shares | |
Weighted Average Exercise Price, Ending Balance | $ / shares | 0.34 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 0.34 |
Weighted Average Remaining Life, Beginning Balance | 6 years 9 months 18 days |
Weighted Average Remaining Life, Granted | 8 years 9 months 18 days |
Weighted Average Remaining Life, Ending Balance | 8 years 7 months 6 days |
Weighted Average Remaining Life, Ending Balance | 8 years 7 months 6 days |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative Liability [Abstract] | |||
Derivative liabilities | $ 695,000 | $ 501,000 |
Derivative Liabilities - Summar
Derivative Liabilities - Summary of Changes in Fair Value Derivative Liabilities (Details) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Balance at December 31, 2019 | |
Inception of the instrument | 12,695,000 |
Change in fair value during the period | (616,200) |
Instruments no longer meeting liability classification | (11,894,000) |
Balance at December 31, 2020 | 184,800 |
Debt Conversion Feature [Member] | |
Balance at December 31, 2019 | |
Inception of the instrument | 11,231,000 |
Change in fair value during the period | (261,000) |
Instruments no longer meeting liability classification | (10,970,000) |
Balance at December 31, 2020 | |
True-Up Payment [Member] | |
Balance at December 31, 2019 | |
Inception of the instrument | 529,000 |
Change in fair value during the period | (344,200) |
Instruments no longer meeting liability classification | |
Balance at December 31, 2020 | 184,800 |
Warrants [Member] | |
Balance at December 31, 2019 | |
Inception of the instrument | 935,000 |
Change in fair value during the period | (11,000) |
Instruments no longer meeting liability classification | (924,000) |
Balance at December 31, 2020 |
Derivative Liabilities - Summ_2
Derivative Liabilities - Summary of Changes in Fair Value Warrants (Details) | Aug. 16, 2020$ / shares | Apr. 02, 2020$ / shares |
Volatility [Member] | ||
Fair value assumptions, measurement input, percentages | 102 | 102 |
Dividend Yield [Member] | ||
Fair value assumptions, measurement input, percentages | 0 | 0 |
Risk Free Interest Rate [Member] | ||
Fair value assumptions, measurement input, percentages | 0.51 | 0.62 |
Warrants [Member] | ||
Stock price per share | $ 0.34 | $ 0.34 |
Term | 9 years 7 months 17 days | 10 years |
Derivative Liabilities - Summ_3
Derivative Liabilities - Summary of Changes in Fair Value Convertible Notes (Details) | Aug. 16, 2020USD ($) | Apr. 02, 2020USD ($) | May 04, 2017USD ($) | Mar. 26, 2013USD ($) |
Face value | $ 6,000,000 | $ 4,082,636 | ||
Volatility [Member] | ||||
Fair value assumptions, measurement input, percentages | 102 | 102 | ||
Risk Free Interest Rate [Member] | ||||
Fair value assumptions, measurement input, percentages | 0.51 | 0.62 | ||
Convertible Notes [Member] | ||||
Face value | $ 4,037,889 | $ 4,037,889 | ||
Term | 1 year 7 months 17 days | 2 years | ||
Convertible Notes [Member] | Volatility [Member] | ||||
Fair value assumptions, measurement input, percentages | 127 | 120 | ||
Convertible Notes [Member] | Risk Free Interest Rate [Member] | ||||
Fair value assumptions, measurement input, percentages | 0.23 | 23 | ||
Convertible Notes [Member] | Coupon [Member] | ||||
Fair value assumptions, measurement input, percentages | 10 | 10 | ||
Convertible Notes [Member] | Conversion Price [Member] | ||||
Fair value assumptions, measurement input, percentages | 0.10 | 0.10 | ||
Convertible Notes [Member] | Credit Spread [Member] | ||||
Fair value assumptions, measurement input, percentages | 15 | 15 |
Derivative Liabilities - Schedu
Derivative Liabilities - Schedule of Assumptions Used in Calculating the Fair Value of Make-whole Provision at Issuance Date (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Term [Member] | |
Term | 6 months |
Volatility [Member] | |
Fair value measurement input | 83 |
Volatility [Member] | Issuance Date [Member] | |
Fair value measurement input | 89 |
Measurement Input, Expected Dividend Rate [Member] | |
Fair value measurement input | 0 |
Measurement Input, Expected Dividend Rate [Member] | Issuance Date [Member] | |
Fair value measurement input | 0 |
Risk Free Interest Rate [Member] | |
Fair value measurement input | 1.56 |
Risk Free Interest Rate [Member] | Issuance Date [Member] | |
Fair value measurement input | 0.09 |
Term [Member] | Issuance Date [Member] | |
Term | 2 months 30 days |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | May 04, 2017 | Mar. 26, 2013 | |
Debt instrument, face amount | $ 6,000,000 | $ 4,082,636 | ||
Insurance in coverage amount | $ 3,000,000 | |||
Impairment charge of right-of-use asset | 486,000 | |||
Unrecognized lease liabilities | 506,185 | |||
Related to abandoned leases liabilities | 3,136,223 | |||
Rent expenses | 2,500,000 | $ 4,500,000 | ||
Loans payable | 445,000 | |||
Variable [Member] | ||||
Rent expenses | 100,000 | $ 700,000 | ||
Paycheck Protection Program Loan [Member] | ||||
Debt instrument, face amount | 2,100,000 | |||
Loans payable | $ 2,000,000 | |||
Maximum [Member] | ||||
Debt instrument, face amount | $ 480,000 | |||
Debt instrument, term | 10 years | |||
Maximum [Member] | Paycheck Protection Program Loan [Member] | ||||
Debt instrument, term | 7 years |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Operating Lease Information (Details) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jan. 02, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||||||
Right-of-use assets | $ 9,529,443 | $ 10,117,900 | $ 10,908,094 | $ 11,039,816 | $ 11,668,026 | $ 19,800,000 |
Current lease liabilities | 4,209,389 | 3,299,309 | ||||
Non-current lease liabilities | 10,677,862 | $ 14,635,796 | $ 13,374,672 | $ 13,623,519 | 14,382,354 | |
Operating Lease Liability | $ 14,877,251 | $ 17,681,663 | $ 22,100,000 | |||
Weighted average remaining lease term (years) | 7 years 8 months 12 days | 8 years 2 months 8 days | ||||
Weighted average discount rate | 10.00% | 10.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Feb. 25, 2021 | Feb. 16, 2021 | Aug. 17, 2020 | Apr. 15, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | May 04, 2017 | Mar. 26, 2013 |
Debt instrument, face amount | $ 6,000,000 | $ 4,082,636 | ||||||
Debt instrument, interest rate | 2.50% | 8.00% | ||||||
Payments for landlords | $ 2,500,000 | $ 4,500,000 | ||||||
Maximum [Member] | ||||||||
Debt instrument, face amount | $ 480,000 | |||||||
Series 2 Preferred Stock [Member] | ||||||||
Common stock were issued value | $ 28,060 | |||||||
Subsequent Event [Member] | ||||||||
Payments for landlords | $ 26,250 | |||||||
Subsequent Event [Member] | Series 2 Preferred Stock [Member] | Maximum [Member] | ||||||||
Common stock were issued value | $ 1,250,000 | |||||||
Subsequent Event [Member] | Series 2 Preferred Stock [Member] | Minimum [Member] | ||||||||
Common stock were issued value | $ 850,000 | |||||||
Subsequent Event [Member] | Paycheck Protection Program [Member] | ||||||||
Debt instrument, face amount | $ 2,000,000 | |||||||
Debt instrument, interest rate | 1.00% | |||||||
Debt instrument, maturity date | Feb. 25, 2026 | |||||||
Debt instrument, principal interest payment | $ 44,660 |
Restatements of Previously Is_3
Restatements of Previously Issued Interim Financial Statements (Unaudited) (Details Narrative) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | |||
Derivative liability | $ 695,000 | $ 501,000 |
Restatements of Previously Is_4
Restatements of Previously Issued Interim Financial Statements (Unaudited) - Schedule of Previously Issued Interim Financial Statements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 02, 2019 | |
Operating lease assets | $ 10,117,900 | $ 10,908,094 | $ 11,039,816 | $ 10,908,094 | $ 10,117,900 | $ 9,529,443 | $ 11,668,026 | $ 19,800,000 |
Long-term operating lease liabilities | 14,635,796 | 13,374,672 | 13,623,519 | 13,374,672 | 14,635,796 | 10,677,862 | 14,382,354 | |
Accumulated deficit | (94,160,076) | (85,373,977) | (77,193,584) | (85,373,977) | (94,160,076) | (94,587,482) | (75,068,385) | |
Non-controlling interests | (637,968) | (236,439) | 659,186 | (236,439) | (637,968) | (969,680) | 455,781 | |
Derivative liabilities | 501,000 | 501,000 | 695,000 | |||||
Restaurant operating expenses | 3,448,843 | 3,247,957 | 3,625,844 | 6,873,801 | 10,322,644 | 13,194,583 | 19,406,358 | |
Asset impairment charge | 1,136,129 | 152,470 | 152,470 | 1,288,599 | 1,578,464 | 9,149,852 | ||
Operating loss | 495,570 | (2,520,694) | (1,354,090) | (3,874,784) | (6,790,444) | (8,263,683) | (16,078,222) | |
Other income (expense) | (25,404) | (70,748) | 242,193 | 176,308 | 150,904 | 281,293 | (617,837) | |
Consolidated and combined net loss | (9,187,628) | (9,076,018) | (1,568,209) | (10,644,227) | (19,831,855) | (20,590,973) | (18,465,032) | |
Change in fair value of derivative liabilities | (2,915,660) | (457,461) | 616,200 | |||||
Net loss attributable to non-controlling interests | 401,529 | 89,716 | 203,405 | (113,689) | 287,840 | 619,552 | 402,386 | |
Net loss attributable to Amergent Hospitality Group Inc | $ (8,786,099) | $ (8,986,302) | $ (1,771,614) | $ (10,757,916) | $ (19,544,015) | $ (19,971,421) | $ (17,726,384) | |
Net loss per common share, basic and diluted | $ (0.62) | $ (0.63) | $ (0.15) | $ (0.82) | $ (1.45) | $ (1.46) | $ (2.56) | |
As Reported [Member] | ||||||||
Operating lease assets | $ 10,117,900 | $ 11,007,038 | $ 11,256,497 | $ 11,007,038 | $ 10,117,900 | |||
Long-term operating lease liabilities | 15,115,651 | 13,832,826 | 14,064,517 | 13,832,826 | 15,115,651 | |||
Accumulated deficit | (95,208,526) | (85,658,825) | (77,343,539) | (85,658,825) | (95,208,526) | |||
Non-controlling interests | (764,097) | (310,801) | 584,824 | (310,801) | (764,097) | |||
Derivative liabilities | 1,195,724 | 1,195,724 | ||||||
Restaurant operating expenses | 3,462,279 | 3,261,393 | 3,625,844 | 6,887,237 | 10,349,516 | |||
Asset impairment charge | 1,231,352 | 273,927 | 273,927 | 1,505,279 | ||||
Operating loss | (3,024,319) | (2,655,587) | (1,354,090) | (4,009,677) | (7,033,996) | |||
Other income (expense) | (37,390) | (70,748) | 17,876 | (48,009) | (85,399) | |||
Consolidated and combined net loss | (10,002,997) | (9,210,911) | (1,792,526) | (11,003,437) | (21,006,434) | |||
Change in fair value of derivative liabilities | (199,154) | (1,152,185) | ||||||
Net loss attributable to non-controlling interests | 453,296 | 89,716 | (129,043) | (39,327) | 413,969 | |||
Net loss attributable to Amergent Hospitality Group Inc | $ (9,549,701) | $ (9,121,195) | $ (1,921,569) | $ (11,042,764) | $ (20,592,465) | |||
Net loss per common share, basic and diluted | $ (0.67) | $ (0.64) | $ (0.16) | $ (0.85) | $ (1.53) | |||
Adjustment [Member] | ||||||||
Operating lease assets | $ (98,944) | $ (216,681) | $ (98,944) | |||||
Long-term operating lease liabilities | (479,855) | (458,154) | (440,998) | (458,154) | (479,855) | |||
Accumulated deficit | 1,048,450 | 284,848 | 149,955 | 284,848 | 1,048,450 | |||
Non-controlling interests | 126,129 | 74,362 | 74,362 | 74,362 | 126,129 | |||
Derivative liabilities | (694,724) | (694,724) | ||||||
Restaurant operating expenses | (13,436) | (13,436) | (13,436) | (26,872) | ||||
Asset impairment charge | (95,223) | (121,457) | (121,457) | (216,680) | ||||
Operating loss | 108,659 | 134,893 | 134,893 | 243,552 | ||||
Other income (expense) | 11,986 | 224,317 | 224,317 | 236,303 | ||||
Consolidated and combined net loss | 815,369 | 134,893 | 224,317 | 359,210 | 1,174,579 | |||
Change in fair value of derivative liabilities | 694,724 | 694,724 | ||||||
Net loss attributable to non-controlling interests | 51,767 | (74,362) | (74,362) | 126,129 | ||||
Net loss attributable to Amergent Hospitality Group Inc | $ 763,602 | $ 134,893 | $ 149,955 | $ 284,848 | $ 1,048,450 | |||
Net loss per common share, basic and diluted | $ 0.05 | $ 0.01 | $ 0.01 | $ 0.03 | $ 0.08 |