SCHEDULE OF DEBT AND NOTES PAYABLE |
Debt
and notes payable are summarized as follows at September 30, 2021 and December 31, 2020:
SCHEDULE OF DEBT AND NOTES PAYABLE
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
Notes payable (a) |
|
$ |
— |
|
|
$ |
25,850 |
|
Notes payable (b) |
|
|
— |
|
|
|
27,048 |
|
Contractor note (c) |
|
|
348,269 |
|
|
|
348,269 |
|
PPP loans (d) |
|
|
4,109,400 |
|
|
|
2,109,400 |
|
UK Bounce Back loan (e) |
|
|
— |
|
|
|
68,245 |
|
EIDL loans (f) |
|
|
300,000 |
|
|
|
299,900 |
|
Convertible debt (g) |
|
|
4,037,889 |
|
|
|
4,037,889 |
|
Convertible promissory note (h) |
|
|
1,194,000 |
|
|
|
— |
|
Total Debt |
|
|
9,989,558 |
|
|
|
6,916,601 |
|
Less: discount on convertible debt (g) |
|
|
(89,473 |
) |
|
|
(223,681 |
) |
Total Debt, net of discount |
|
$ |
9,900,085 |
|
|
$ |
6,692,920 |
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
7,080,737 |
|
|
$ |
2,338,978 |
|
Long-term debt, less current portion |
|
$ |
2,819,348 |
|
|
$ |
4,353,942 |
|
(a) |
In connection with the assets acquired from the two BGR franchisees, the Company entered into notes payable of $9,600 and $187,000 during 2018. The notes bore interest at 4% and were due within 12 months of each acquisition date. Principal and interest payments were due monthly and were fully repaid in 2021. |
(b) |
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 were repaid with the specified interest
rate per those agreements. These notes were fully repaid in 2021. |
(c) |
The Company entered into a promissory note to repay a contractor
for the build-out of a new Little Big Burger location. The note has a balance of $348,269,
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 September 30, 2021 and December 31, 2020. |
(d) |
On April 27, 2020, Amergent received a $2.1
million loan under the first round of the Payment
Protection Program (PPP Loan). The note bears interest at 1%
per year, matures in April
2022, and requires monthly interest and principal
payments of approximately $119,000
beginning in November 2020 and through maturity.
The currently issued guidelines of the program allow for the loan proceeds to be forgiven if certain requirements are met. Any loan proceeds
not forgiven will be repaid in full. The Company has currently applied for loan forgiveness in the full amount of the loan, but no assurance
can be given as to the amount, if any, of forgiveness. The application for forgiveness allowed the Company to defer the timing of repayment
until the forgiveness assessment is completed. See Note 11 for additional information. |
|
On February 25, 2021, the Company received a second PPP Loan of $2.0
million. The note bears interest at 1%
per year, matures on February
25, 2026, and requires monthly principal and interest payments of approximately $44,660
beginning June 25, 2022 through maturity. The loan may be forgiven if certain criteria are met. No assurance can be given as to the
amount, if any, of forgiveness. |
(e) |
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. The note has been reclassified to noncurrent
assets held for sale at September 30, 2021 (see note 14). |
(f) |
On August 4, 2020, the Company obtained two loans under the
Economic Injury Disaster Loan (“EIDL”) assistance program from the Small Business Administration (“SBA”) in light
of the impact of the COVID-19 pandemic on the Company’s business. The principal amount of the loans is $300,000,
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. |
(g) |
On April 1, 2020, pursuant to an agreement among Chanticleer,
Oz Rey and certain original holders of the 8% non-convertible debentures previously outstanding, the Company issued a 10% secured convertible
debenture to Oz Rey in exchange for the 8%
non-convertible debentures. The principal amount
of the 10%
secured convertible debenture is $4,037,889,
payable in full on April
1, 2022, subject to extension by the holders
in two-year intervals for up to 10 years from the issuance date upon Amergent meeting certain conditions. Interest is payable quarterly
in cash. Prior to August 17, 2020, the 10% secured convertible debenture was convertible at any time by Oz Rey into common stock at the
lower of $0.10 per share and the volume weighted average price on the last 10 trading days immediately prior to conversion. The 10% secured
convertible debenture is also subject to adjustment if Amergent sells securities below this price (down round protection), among other
triggers. |
|
On
August 17, 2020, the Company and Oz Rey amended the 10% secured convertible debenture to fix the conversion rate into common stock at
$0.10 per share. Further, the amendment provides a limitation on Oz Rey’s ability to convert the debenture into common stock so
that the conversion would not result in the issuance of common stock exceeding the amount of authorized shares. Oz Rey may; however,
upon reasonably notice to the Company, require the Company to include in its proxy materials, for any annual meeting of shareholders
being held by the Company, a proposal to amend the Company’s certificate of incorporation to increase the Company’s authorized
shares to a number sufficient to allow for conversion of all shares underlying the debenture, on a fully diluted basis. Oz Rey also agreed
that the Company would not be required under any circumstances to make a cash payment to settle the conversion feature not exercisable
due to the authorized share cap or in an event that the Company was unable to deliver shares under the conversion feature. Oz Rey also
agreed to waive any event of default under the debenture that occurred or existed prior to August 17, 2020. As a result of these modifications,
the warrants are no longer liability classified and the conversion feature is no longer required to be bifurcated from the debt host
as of the date of the amendment. |
|
In
connection with the exchange of the debentures, Amergent issued warrants to Oz Rey and the original 8% non-convertible debenture holders
to purchase 2,925,200 shares of common stock. The exercise price is $0.125 for 2,462,600 warrants and $0.50 for 462,500 warrants. The
warrants can be exercised on a cashless basis and expire 10 years from the issuance date. The warrants were equity classified at September
30, 2021 and December 31, 2020. |
|
The
Company recorded a debt discount of approximately $358,000 for the difference between the face value of the 10% secured convertible debenture
and the estimated fair value at the April 1, 2020 issuance date and is amortizing this discount over the two-year period of the notes.
Amortization of $44,550 and $134,394 was recorded as interest expense during the three and nine months ended September 30, 2021, respectively. |
(h) |
On August 30, 2021, the Company purchased all of the outstanding
membership interests in Squared Holdings pursuant to a Unit Purchase Agreement (Purchase Agreement) (see note 3). The purchase price
was an 8% secured, convertible promissory note with a face value of $1,000,000
and a fair value of $1,194,000.
Interest on the note is due quarterly and $500,000
of principal is due on August
30, 2022, and any remaining unpaid amount is
due on August 30, 2023. |
|
The Company’s various loan agreements contain financial and non-financial covenants and provisions
providing for cross-default. The evaluation of compliance with these provisions is subject to interpretation and the exercise of judgment.
The Company’s lender has provided a waiver of certain financial covenants through September 30, 2021. |
|