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CORRESP
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filename1.htm

June
22, 2020

Securities
and Exchange Commission

Division
of Corporation Finance

Office
of Trade & Services

    Attention:

    Blaise
    Rhodes

    Adam
    Phippen

    Katherine
    Bagley

    Lilyanna
    Peyser

    Re:

    Amergent
    Hospitality Group Inc. (the “Company”)

    Amendment
    No. 1 to Registration Statement on Form 10-12G

    Filed
    June 3, 2020

    File
    No. 000-56160

Ladies
and Gentlemen:

Please
find the Company’s responses to your letter dated June 16, 2020 set forth below. We have reproduced the text of your comments
for ease of reference. We are submitting this letter concurrently with our Amendment No. 2 to Form 10-12G (“Form 10/A”)
which has been revised to respond to your comments.

Amendment
No. 1 to Registration Statement on Form 10-12G filed June 3, 2020

Assumption
of Series 2 Preferred Stock, page 9

    1.
    We
    note your disclosure that “[i]n the event the proceeds received by the investor from the sale of all the shares of common
    stock issued upon conversion of Series 2 Preferred Stock in both Amergent and its former Parent (“Conversion Shares”)
    do not equal at least $1,875,000 on August 10, 2020, Amergent must pay the investors an amount in cash equal to the difference
    between $1,875,000 and the proceeds previously realized by the investors from the sale of the Conversion Shares, net of brokerage
    commissions and any other fees incurred by investor in connection with the sale of Conversion Shares.” Please amend
    your filing to disclose the estimated payment you would be required to make as of August 10, 2020, or tell us why you cannot
    provide this estimate at this time.

    The
    True-up payment term of the Series 2 Preferred Stock is accounted for as a derivative instrument. 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
    dates. The fair value is updated at each reporting date and the liability was $826,000 at March 31, 2020, with the $297,000
    increase in the liability recorded as an expense in the statement of operations for the three months ended March 31, 2020.
    The liability will continue to be re-measured through the August 10, 2020 settlement date. The Amended Form 10 was revised
    on page 10 to also include this disclosure.

    2.
    We
    note your response to comment 19, and your amended disclosure on page F-21 describing the terms of the True-up payment. Please
    amend your filing to discuss the material terms of the True-up payment where you discuss the terms of the Series 2 Preferred
    Stock.

    The
    Amended Form 10 was revised in footnote 9 to the March 31, 2020 interim financial statements to include the material terms
    of the True-up payment where the terms of the Series 2 Preferred Stock are disclosed including the estimated amount of the
    derivative liability at the issue date and March 31, 2020, and change in the liability during the three month period ended
    March 31, 2020, as well as the method (Monte Carlo model) used to estimate the liability.

    3.
    In
    an appropriate place in your filing, please disclose the number of votes per Series 2 preferred share.

    We
    have revised our filing accordingly on page 10.

Spin-off
Proceeds and Assumed Liabilities Assumed Liabilities, page 9

    4.
    We
    note your disclosures that “[v]arious subsidiaries of Amergent are delinquent in payment of payroll taxes to taxing
    authorities,” “subsidiaries have received warnings and demands from the taxing authorities,” and “[f]ailure
    to remit these payments promptly could result in increased penalty fees.” Please provide an estimate of the amount of
    increased penalty fees, or tell us why you are unable to do so at this time.

    As
    disclosed in the Accounts Payable and Accrued Expenses footnote to the 2019 annual and Q1 2020 interim financial statements
    an accrual of approximately $2.9 million and $2.6 million has been recorded in the December 31, 2019 and March 31, 2020 consolidated
    and combined balance sheets, respectively, for the delinquency in payment of payroll taxes to tax authorities, including an
    estimate for penalties. Of this amount, $81,000 of this liability has subsequently been settled. Interest and penalties on
    the remaining liability are accruing at approximately $3,000 per month. This information was added to the disclosure for the
    Spin-off Proceeds and Assumed Liabilities on page 9 of the Amended Form 10.

Item
1. Business

Overview,
page 15

    5.
    We
    note your response to comment 5, but your amended disclosure does not appear to be completely responsive to our comment. While
    you describe the terms of your partnership agreements, we were unable to find a description of the material terms of your
    franchise agreements. Therefore, please amend your filing to briefly describe the material terms of your franchise agreements,
    including the amount of control you have in the operations of your franchised locations.

    The
    material terms of the franchise agreements have been added in Item 1. Business- Overview.

    6.
    As
    a related matter, we note your disclosure that “[w]hile terms may vary by LLC, the investor generally contributes between
    $250,000 and $350,000 per location and is entitled to 80% of the net income of the LLC until such time as the investor recoups
    the initial investment and the investor return on net income changes from 80% to 50%, and in certain cases to 20%, of net
    income.” Please briefly describe the “certain cases” under which investor return on net income is reduced
    to 20% of net income.

    There
    are no longer any arrangements whereby net income is allocated 80%/20% after the investor’s recoupment of the initial
    investment and as such, the phrase “and in certain cases to 20%, of net income” has been deleted from the Risk
    Factor.

    7.
    You
    disclose that “continuing fees . . . are based upon a percentage of franchisee revenues and are not subject to any constraints.”
    Please disclose the typical percentage of franchisee revenues upon which continuing fees are based.

    The
    typical continuing franchise fee of 5.5% of revenues has been added to the disclosure.

“We
are subject to the risks associated with leasing space subject to long-term non-cancelable leases.”, page 23

    8.
    We
    note your response to comment 6, and your amended disclosure on page F-41, describing that the Company remained contractually
    obligated for the leases related to three permanently closed restaurant locations amounting to approximately $2,300,000. Please
    amend your filing to prominently disclose the extent of these lease obligations in your risk factor. Please also clearly disclose
    that you are not contractually obligated to guarantee the leasing arrangements between franchises and their landlords, as
    you assert in your response.

    The
    Risk Factor noted was updated to include the amount of the remaining contractual obligations at March 31, 2020 for the leases
    related to our three permanently closed restaurant locations. Further, the disclosures have also been revised to state that
    we are not contractually obligated to guarantee the leasing arrangements between franchisees and their landlords.

“We
have identified material weaknesses in our internal controls and procedures and internal control over financial reporting . .
.”, page 25

    9.
    We note your disclosure that you have “re-evaluated
[y]our internal control over financial reporting and [y]our disclosure controls and procedures and concluded that they were not
effective as of March 31, 2020,” and “[i]mplementation of the Company’s remediation plans has commenced and
is being overseen by the audit committee.” Please identify the specific internal control(s), disclosure control(s) or procedure(s)
that constitute your material weakness(es). Please also describe the specific steps you have taken and are planning to take to
remediate the material weakness(es).

    The Risk Factor
    noted has been updated to specify the internal control matter deemed to be a material weakness and the steps taken and expect
    to be taken to remediate the internal control matter.

“We
have insufficient authorized shares to cover conversion in full of Oz Rey’s 10% debenture . . .”, page 29

    10.
    We
    note your disclosure that “[you] must seek shareholder approval to increase our authorized common stock to satisfy contractual
    requirements to Oz Rey and holders of our Series 2 Preferred.” Please amend your disclosure to briefly describe the
    consequences to you if you do not obtain shareholder approval to increase your authorized common stock.

    The
    disclosures in the Risk Factor noted have been revised to include that the conversion feature of the debenture will be accounted
    for as a derivative liability in the consolidated balance sheet due to the authorized share deficiency and until the share
    deficiency is resolved, and the change in estimated fair value will be recorded in the consolidated statement of operations.
    If the shareholders do not approve a requested increase the Company risks that Oz Rey and holders of Series 2 Preferred
    will declare defaults under their respective financing documents.

Item
2. Financial Information Capitalization, page 32

    11.
    Please
    revise the table to include your debt as of March 31, 2020 on an actual and pro forma basis.

    Item
    2. Financial Information- Capitalization has been revised to include debt as of March 31, 2020 on an actual and pro forma
    basis in the capitalization table.

Results
of Operations for the Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019, page 33

    12.
    When
    you describe two or more reasons that contributed to a material change in a financial statement line item between periods,
    please quantify, to the extent practicable, the incremental impact of each individual reason on the overall change. For example,
    in your discussion of revenue from restaurant sales, please quantify the impact of the closing of non-performing stores and
    the decline due to COVID-19 pandemic restrictions. Refer to Item 303 of Regulation S-K. Please note that this comment also
    applies to your discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018.

    In
    the Management Discussion and Analysis for both the three months ended March 31, 2020 and year ended December 31, 2019 as
    compared to the comparable prior period the dollar amount for individual items included in the explanation of a change in
    account balance has been added to the extent possible.

    13.
    Please
    revise to discuss and analyze underlying causes of changes in results of operations. For example, discuss changes in gaming
    income, franchise income, and depreciation and amortization. Refer to Item 303 of Regulation S-K. Please note that this comment
    also applies to your discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018.

    The
    Management Discussion and Analysis for both the three months ended March 31, 2020 and year ended December 31, 2019 as compared
    to the comparable prior period has been revised to discuss the underlying causes of changes in results of operations including
    gaming revenue, franchise revenue and depreciation and amortization.

    14.
    Please
    also revise to discuss non-operating income and expenses.

    The
    Management Discussions and Analysis for both the three months ended March 31, 2020 and year ended December 31, 2019 as compared
    to the comparable prior period has been revised to discuss the underlying causes of changes in non-operating income and expenses.

Results
of Operations for the Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018, page 36

    15.
    Reference
    is made to the first bullet point on page 37 where you note a decline in same store sales. Please revise to define same store
    sales and disclose the percentage growth or decline for the financial statement periods presented.

    A
    definition of same store sales has been added to the explanation of changes in revenue in the Management Discussion and Analysis
    for the year ended December 31, 2019 and compared to 2018, as well disclosing the percent change.

Critical
Accounting Policies

Goodwill
and intangible Assets, page 41

    16.
    Please
    revise to also discuss your impairment testing as of March 31, 2020.

    Critical
    Accounting Policies- Goodwill and intangible assets has been revised to include discussion of the impairment testing as of
    March 31, 2020.

    Please
    do not hesitate to contact the undersigned with any questions or comments.

    Very
    truly yours,

    LIBERTAS
    LAW GROUP, INC.

    /s/
    Ruba Qashu

    Tel:
    949-355-5405

    c:
    Michael
    D. Pruitt, CEO Amergent Hospitality Group Inc.

    Patrick
    Harkleroad, CFO Amergent Hospitality Group Inc