DERIVATIVE LIABILITIES |
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DERIVATIVE LIABILITIES |
12. DERIVATIVE LIABILITIES
The derivative liabilities at December 31, 2020 consisted of the True-Up Payment provision of the Series 2 Preferred (see Note 11). The True-Up Payment was settled in July 2021 with a cash payment of $0.1 million.
As discussed in Note 8(a), 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 8(a), the warrant and conversion feature no longer required liability classification as of August 16, 2020 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 years ended December 31, 2021 and 2020.
Assumptions used in calculating the fair value of the warrants at the issuance date and as of August 16, 2020 include the following:
Amergent Hospitality Group, Inc. and Subsidiaries Notes to the Consolidated and Combined Financial Statements
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 (amounts in thousands except conversion price data):
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:
Amergent Hospitality Group, Inc. and Subsidiaries Notes to the Consolidated and Combined Financial Statements
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