0001213900-22-022823 | 10-Q/A | XBRL Viewer

Print Document View Excel Document

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Sep. 30, 2021	Nov. 18, 2021
Document Information Line Items
Entity Registrant Name	TATTOOED CHEF, INC.
Trading Symbol	TTCF
Document Type	10-Q/A
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		81,982,392
Amendment Flag	true
Amendment Description	This Amendment No. 1 to Quarterly Report on Form 10-Q/A (this “Form 10-Q/A”) amends and restates certain items noted below in the Quarterly Report on Form 10-Q of Tattooed Chef, Inc. (the “Company”) for the quarter ended September 30, 2021, as originally filed with the Securities and Exchange Commission (the “SEC”) on November 22, 2021 (the “Original Filing”). This Form 10-Q/A amends the Original Filing to reflect (1) the correction of errors related to (i) deferred tax assets resulting from the reverse recapitalization transaction that occurred in 2020 and related valuation allowance; (ii) classification among accounts receivable and deferred revenue; and (iii) other immaterial previously uncorrected adjustments and (2) the retrospective adoption of ASC 842, Leases, to the quarter ended September 30, 2021 because the Company adopted ASC 842 in the fourth quarter of 2021 with an effective date of January 1, 2021.See Note 1, under the caption “Restatement of Previously Issued Financial Statements”, to the Condensed Consolidated Financial Statements included in Item 1 of this Form 10-Q/A for additional information and a reconciliation of the previously reported amounts to the restated amounts.Items Amended in this Filing‌For the convenience of the reader, this Form 10-Q/A sets forth the Original Filing, as amended, in its entirety; however, this Form 10- Q/A amends and restates the following Items of the Original Filing to the extent necessary to reflect the adjustments discussed above and to make corresponding revisions to the Company’s financial data cited elsewhere in this Form 10-Q/A:-Part I, Item 1 – Financial Statements-Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of OperationsIn addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing (Exhibits 31.1, 31.2, 32.1 and 32.2), and the Company has provided its restated consolidated financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibit 101.Except as described above, no other changes have been made to the Original Filing. This Form 10-Q/A speaks as of the date of the Original Filing and does not reflect events that may have occurred after the date of the Original Filing or modify or update any disclosures that may have been affected by subsequent events.
Entity Central Index Key	0001741231
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Sep. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Shell Company	false
Entity Ex Transition Period	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-38615
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-5457906
Entity Address, Address Line One	6305 Alondra Blvd
Entity Address, City or Town	Paramount
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90723
City Area Code	(562)
Local Phone Number	602-0822
Title of 12(b) Security	Common stock, par value $0.0001 per share
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
CURRENT ASSETS
Cash	$ 129,476	$ 131,579
Accounts receivable, net	23,155	16,281
Inventory	45,271	38,002
Prepaid expenses and other current assets	8,217	18,416
TOTAL CURRENT ASSETS	206,119	204,278
Property, plant and equipment, net	36,769	16,083
Operating lease right-of-use asset, net	5,766
Finance lease right-of-use asset, net	5,683
Intangible assets, net	179
Deferred taxes		47,549
Goodwill	17,973
Other assets	287	605
TOTAL ASSETS	272,776	268,515
CURRENT LIABILITIES
Accounts payable	23,641	24,075
Accrued expenses	4,880	3,610
Line of credit	3,317	22
Notes payable to related parties, current portion	7	66
Notes payable, current portion	3,263	111
Forward contract derivative liability	1,652
Operating lease liabilities, current	1,203
Other current liabilities	844	1,403
TOTAL CURRENT LIABILITIES	38,807	29,287
Warrant liability	1,343	5,184
Operating lease, net of current portion	4,622
Notes payable, net of current portion	2,627	1,990
TOTAL LIABILITIES	47,399	36,461
COMMITMENTS AND CONTINGENCIES (See Note 20)
STOCKHOLDERS’ EQUITY
Preferred stock - $0.0001 par value; 10,000,000 shares authorized, none issued and outstanding at September 30, 2021 and December 31, 2020
Common shares- $0.0001 par value; 1,000,000,000 shares authorized; 81,982,392 shares issued and outstanding at September 30, 2021, 71,551,067 shares issued and 71,469,980 shares outstanding at December 31, 2020	8	7
Treasury stock- 0 shares at June 30, 2021, 81,087 shares at December 31, 2020
Additional paid in capital	237,247	168,448
Accumulated other comprehensive income (loss)	(908)	1
Retained (deficit) earnings	(10,970)	63,598
TOTAL STOCKHOLDERS’ EQUITY	225,377	232,054
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 272,776	$ 268,515

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock, par value (in Dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common shares, par value (in Dollars per share)	$ 0.0001	$ 0.0001
Common shares, shares authorized	1,000,000,000	1,000,000,000
Common shares, shares issued	81,982,392	71,551,067
Common shares, shares outstanding	81,982,392	71,469,980
Treasury stock issued	0	81,087

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
REVENUE	$ 58,355	$ 40,964	$ 161,094	$ 108,903
COST OF GOODS SOLD	52,836	36,733	140,078	91,619
GROSS PROFIT	5,519	4,231	21,016	17,284
OPERATING EXPENSES	13,687	7,620	44,302	12,590
(LOSS) INCOME FROM OPERATIONS	(8,168)	(3,389)	(23,286)	4,694
Interest expense	(45)	(188)	(159)	(569)
Other (expense) income	(588)	825	(2,536)	1,113
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES	(8,801)	(2,752)	(25,981)	5,238
INCOME TAX BENEFIT (EXPENSE)	255	(493)	(48,279)	(1,776)
NET (LOSS) INCOME	(8,546)	(3,245)	(74,260)	3,462
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(158)		1,148
NET (LOSS) INCOME ATTRIBUTABLE TO TATTOOED CHEF, INC.	$ (8,546)	$ (3,087)	$ (74,260)	$ 2,314
NET (LOSS) INCOME PER SHARE
Basic (in Dollars per share)	$ (0.1)	$ (0.11)	$ (0.91)	$ 0.08
Diluted (in Dollars per share)	$ (0.1)	$ (0.11)	$ (0.91)	$ 0.08
WEIGHTED AVERAGE COMMON SHARES
Basic (in Shares)	81,957,170	28,324,038	81,404,348	28,324,038
Diluted (in Shares)	82,011,216	28,324,038	81,548,673	28,324,038
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX
Foreign currency translation adjustments	$ (808)	$ (584)	$ (909)	$ (201)
Total other comprehensive (loss) income, net of tax	(808)	(584)	(909)	(201)
Comprehensive (loss) income	(9,354)	(3,829)	(75,169)	3,261
Less: comprehensive income attributable to the noncontrolling interest		(101)		1,239
Comprehensive (loss) income attributable to Tattooed Chef, Inc. stockholders	$ (9,354)	$ (3,728)	$ (75,169)	$ 2,022

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock	Treasury Shares	Additional Paid-In Capital	Accumulated Comprehensive Income (Loss)	Retained Earnings (Deficit)	Redeemable Noncontrolling Interest Amount	Noncontrolling Interests	Total
BALANCE at Dec. 31, 2019	$ 3		$ 2,314	$ (692)	$ 1,056	$ 6,900	$ 256	$ 2,937
BALANCE (in Shares) at Dec. 31, 2019	28,324,038
CAPITAL CONTRIBUTIONS							355	355
FOREIGN CURRENCY TRANSLATION ADJUSTMENT				(292)			91	(201)
DISTRIBUTIONS					(6,230)			(6,230)
ACCRETION OF REDEEMABLE NONCONTROLLING INTEREST TO REDEMPTION VALUE			(2,314)		(34,405)	36,719		(36,719)
NET INCOME (LOSS)					2,314	198	950	3,264
BALANCE at Sep. 30, 2020	$ 3			(984)	(37,265)	43,817	1,652	(36,594)
BALANCE (in Shares) at Sep. 30, 2020	28,324,038
BALANCE at Jun. 30, 2020	$ 3			(343)	(29,456)	43,815	1,313	(28,483)
BALANCE (in Shares) at Jun. 30, 2020	28,324,038
FOREIGN CURRENCY TRANSLATION ADJUSTMENT				(641)			57	(584)
DISTRIBUTIONS					(4,280)			(4,280)
ACCRETION OF REDEEMABLE NONCONTROLLING INTEREST TO REDEMPTION VALUE					(442)	442		(442)
NET INCOME (LOSS)					(3,087)	(440)	282	(2,805)
BALANCE at Sep. 30, 2020	$ 3			(984)	(37,265)	$ 43,817	$ 1,652	(36,594)
BALANCE (in Shares) at Sep. 30, 2020	28,324,038
BALANCE at Dec. 31, 2020	$ 7		168,448	1	63,598			232,054
BALANCE (in Shares) at Dec. 31, 2020	71,551,067	(81,087)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT				(909)				(909)
DISTRIBUTIONS					(308)			(308)
STOCK-BASED COMPENSATION			4,499					4,499
NON-EMPLOYEE STOCK-BASED COMPENSATION			290					290
NON-EMPLOYEE STOCK-BASED COMPENSATION (in Shares)	839,918
FORFEITURE OF STOCK-BASED AWARDS			(445)					(445)
FORFEITURE OF STOCK-BASED AWARDS (in Shares)	(395,084)
CANCELLATION OF TREASURY SHARES
CANCELLATION OF TREASURY SHARES (in Shares)	(81,087)	81,087
EXERCISE OF WARRANTS	$ 1		64,455					64,456
EXERCISE OF WARRANTS (in Shares)	10,067,578
NET INCOME (LOSS)					(74,260)			(74,260)
BALANCE at Sep. 30, 2021	$ 8		237,247	(908)	(10,970)			225,377
BALANCE (in Shares) at Sep. 30, 2021	81,982,392
BALANCE at Jun. 30, 2021	$ 8		235,383	(100)	(2,424)			232,867
BALANCE (in Shares) at Jun. 30, 2021	81,938,668
FOREIGN CURRENCY TRANSLATION ADJUSTMENT				(808)				(808)
STOCK-BASED COMPENSATION			733					733
NON-EMPLOYEE STOCK-BASED COMPENSATION			109					109
NON-EMPLOYEE STOCK-BASED COMPENSATION (in Shares)	4,918
EXERCISE OF WARRANTS			1,022					1,022
EXERCISE OF WARRANTS (in Shares)	38,806
NET INCOME (LOSS)					(8,546)			(8,546)
BALANCE at Sep. 30, 2021	$ 8		$ 237,247	$ (908)	$ (10,970)			$ 225,377
BALANCE (in Shares) at Sep. 30, 2021	81,982,392

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$ (8,546)	$ (3,245)	$ (74,260)	$ 3,462
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization			2,553	693
Bad debt expense			539
Accretion of debt financing costs			4	34
Revaluation of warrant liability			(158)
Unrealized forward contract loss			2,342	(728)
Stock compensation expense			4,344
Deferred taxes, net			47,549
Non-cash lease cost			59
Accounts receivable			(3,847)	(7,702)
Inventory			(4,099)	(9,502)
Prepaid expenses and other assets			(3,051)	(229)
Accounts payable			(6,554)	13,746
Accrued expenses			1,192	1,630
Other current liabilities			262	416
Net cash (used in) provided by operating activities			(33,125)	1,820
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment			(13,048)	(5,957)
Acquisition of subsidiaries, net of cash acquired			(33,918)
Proceeds from sale of property, plant and equipment				36
Net cash used in investing activities			(46,966)	(5,921)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings in line of credit			3,295	9,657
Borrowings of notes payable to related parties				32
Repayments of notes payable to related parties			(59)	(644)
Borrowings of notes payable			1,168	28
Repayments of notes payable			(296)	(512)
Capital contributions				355
Proceeds from the exercise of warrants			74,316
Distributions			(308)	(5,613)
Net cash provided by financing activities			78,116	3,303
NET DECREASE IN CASH			(1,975)	(798)
EFFECT OF EXCHANGE RATE ON CASH			(128)	(557)
CASH AT BEGINNING OF PERIOD			131,579	4,537	$ 4,537
CASH AT END OF PERIOD	$ 129,476	$ 3,182	129,476	3,182	$ 131,579
Cash paid for
Interest			145	237
Income taxes			759	16
Noncash investing and financing activities
Distributions				617
Capital expenditures included in accounts payable			$ 1,049

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

General

Tattooed Chef, Inc. was originally incorporated in Delaware on May 4, 2018 under the name of Forum Merger II Corporation (“Forum”), as a special purpose acquisition company (“SPAC”) for the purpose of effecting a merger, capital stock exchange, asset acquisitions, stock purchase, reorganization or similar business combination with one or more business.

On October 15, 2020 (the “Closing Date”), Forum consummated the transactions contemplated within the Agreement and Plan of Merger dated June 11, 2020 as amended on August 10, 2020 (the “Merger Agreement”), by and among Forum, Myjojo, Inc., a Delaware corporation (“Myjojo (Delaware)”), Sprout Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Forum (“Merger Sub”), and Salvatore Galletti, in his capacity as the holder representative (the “Holder Representative”). The transactions contemplated by the Merger Agreement are referred to herein as the “Transaction”.

Upon the consummation of the Transaction, Merger Sub merged with and into Myjojo (Delaware) (the “Merger”), with Myjojo (Delaware) surviving the merger. Immediately upon the completion of the Transaction, Myjojo (Delaware) became a direct wholly owned subsidiary of Forum. Following the Closing Date, Forum changed its name to Tattooed Chef, Inc. (“Tattooed Chef”). Tattooed Chef’s common stock began trading on the Nasdaq under the symbol “TTCF” on October 16, 2020.

Tattooed Chef, Inc. and its subsidiaries, (collectively, the “Company”) are principally engaged in the manufacturing of plant-based foods including, but not limited to, acai and smoothie bowls, zucchini spirals, riced cauliflower, vegetable bowls and cauliflower crust pizza primarily in the United States and Italy.

About the Subsidiaries

Myjojo, Inc. was an S corporation formed under the laws of California (“Myjojo (California)”) on February 26, 2019 to facilitate a corporate reorganization of Ittella International Inc. On March 27, 2019, Salvatore Galletti, the sole stockholder of Ittella International, Inc. contributed all of his share ownership of Ittella International, Inc. to Myjojo (California) in exchange for 100% interest in the latter, becoming Myjojo (California)’s sole stockholder.

On May 21, 2020, Myjojo (Delaware) was formed with Salvatore Galletti owning all of the shares of common stock. On May 27, 2020, Myjojo, Inc. (California) merged into Myjojo, Inc., (Delaware) with Myjojo, Inc. (Delaware) issuing shares of common stock to Salvatore Galletti, the sole stockholder of Myjojo (California).

Ittella International, Inc. was formed in California as a tax pass-through entity and subsequently converted on April 10, 2019 to a limited liability company, Ittella International, LLC (“Ittella International”). On April 15, 2019, UMB Capital Corporation (“UMB”), a financial institution, acquired a 12.50% non-controlling interest in Ittella International (Note 3).

Ittella’s Chef, Inc. was incorporated under the laws of the State of California on July 20, 2017 as a qualified Subchapter S subsidiary and a wholly owned subsidiary of Ittella International. Ittella’s Chef, Inc. was formed as a tax passthrough entity for purposes of holding Ittella International’s 70% ownership interest in Ittella Italy, S.R.L. (“Ittella Italy”). On March 15, 2019, Ittella’s Chef, Inc. was converted to a limited liability company, Ittella’s Chef, LLC (“Ittella’s Chef”).

In connection with the Transaction and as a condition to the Closing, Myjojo (Delaware) entered into a Contribution Agreement with the minority members of Ittella International and the minority shareholders of Ittella Italy. Under the Contribution Agreement, the minority holders contributed all of their equity interests in Ittella International to Myjojo (Delaware) and Ittella Italy to Ittella’s Chef in exchange for Myjojo (Delaware) stock (the “Restructuring”). The Restructuring was consummated prior to the Transaction. The shares of Myjojo (Delaware) were exchanged for shares of Forum’s common stock upon consummation of the Transaction.

On May 14, 2021, Tattooed Chef acquired New Mexico Food Distributors, Inc. (“NMFD”) and Karsten Tortilla Factory, LLC (“Karsten”) in an all-cash transaction for approximately $34.09 million (collectively, the “NMFD Transaction”). NMFD and Karsten were privately held companies based in Albuquerque, New Mexico. NMFD produces and sells frozen and ready-to-eat New Mexican food products to retail and food service customers through its network of distributors in the United States. NMFD processes its products in two leased facilities located in New Mexico. See Note 10 Business combination and asset purchases.

Basis of Consolidation. The condensed consolidated financial statements include the accounts of Tattooed Chef and its subsidiaries in which Tattooed Chef has a controlling interest directly or indirectly, and variable interest entities for which the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed, consolidated or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC on March 19, 2021, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2020 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.

The Transaction was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”). Under this method, Forum was treated as the “acquired” company (“Accounting Acquiree”) and Myjojo (Delaware), the accounting acquirer, was assumed to have issued stock for the net assets of Forum, accompanied by a recapitalization.

The net assets of Forum were stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the reverse recapitalization were those of Myjojo (Delaware). The shares and corresponding capital amounts and earnings per share available for common stockholders, prior to the reverse recapitalization, have been retroactively restated.

Revision of Previously Issued Financial Statements for Correction of Immaterial Errors.

The Company identified errors in its previously issued annual financial statements that were determined to be individually, and in the aggregate, quantitatively and qualitatively immaterial based on its analysis of Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”. These immaterial errors have been corrected in the accompanying consolidated balance sheet as of December 31, 2020, and the consolidated statements of operations and comprehensive income, stockholders’ equity for the three and six months ended June 30, 2020 and cash flows for the six months ended June 30, 2020. The nature of these error corrections is as follows:

●

In further consideration of the guidance in Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity, the Company concluded that a provision in the warrant agreement related to certain settlement methods specific to the Private Placement Warrants precludes the Private Placement Warrants from being accounted for as components of equity. As the Private Placement Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Placement Warrants should have been recorded as derivative liabilities on the consolidated balance sheet and measured at fair value upon recognition on the Closing Date and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the consolidated statement of operations and comprehensive income in the period of change. Therefore, the Company concluded that it is appropriate to revise the classification of the Private Placement Warrants as of and for the year ended December 31, 2020.

●

The Company revised the accompanying consolidated balance sheet and statement of stockholders’ equity as of December 31, 2020 to reflect the correction of an immaterial error related to the presentation of 81,087 treasury shares. The treasury shares are now presented separately from common stock shares. This revision has an immaterial impact on the Company’s previously reported net income, earnings per share, or stockholders’ equity.

	●	The Company revised the accompanying consolidated statements of equity and operations and comprehensive income for the year ended December 31, 2020 to reflect the correction of an immaterial error related to the grant of 825,000 stock awards to Harrison Co. (“Harrison”) on October 15, 2020 as consideration for advisory services provided by Harrison to facilitate the successful completion of the Transaction (see Note 18). The stock awards were fully vested on grant date, and therefore a weighted average 174,041 shares should have been included in basic and diluted outstanding shares when calculating earnings per share for the year ended December 31, 2020. In addition, the fair value of the stock awards issued in the amount of $20.54 million should have been included as a reduction to the “Reverse Recapitalization” line item and an increase by the same amount to the “Transaction costs, net of tax” line item. Both items are included within the Company’s additional paid-in capital for the year ended December 31, 2020. The Company also identified a $4.0 million deferred tax asset (with the corresponding offset to additional paid-in capital) that should have been recorded in connection with this grant. The revision has no impact on the Company’s previously reported net income but reduced the earnings per share for the year ended December 31, 2020. The impact of the tax consequences associated with the grant have been reflected in the balance sheet and statement of stockholders’ equity.

	●	The Company revised the accompanying condensed consolidated statements of operations and comprehensive income for the period ended September 30, 2020 to reflect the correction of an immaterial error for amounts previously not reflected in the comprehensive income attributable to noncontrolling interest. This revision has no impact on the Company’s net income, retained earnings, or earnings per share.

	●	The Company identified errors related to inventoriable costs and the classification of certain expense accounts that primarily impacted revenue, cost of goods sold and operating expenses.
	●	The Company identified a classification error between accounts receivable and deferred revenue, which affected the balance sheet as of December 31, 2020.

The following table summarizes the effect of the revision on each financial statement line item as of the dates, and for the periods ended, indicated:

(In thousands)	Consolidated Balance Sheet
As of December 31, 2020	As Originally Reported		Revisions			Re- classification			As Revised
Accounts receivable	$	17,991	$	(1,710	)	$	-		$	16,281
Inventory		38,660		(658	)		-			38,002
Prepaid expenses and other current assets		18,240		176			-			18,416
TOTAL CURRENT ASSETS		206,470		(2,192	)		-			204,278
Deferred income taxes, net		43,525		4,024			-			47,549
TOTAL ASSETS		266,683		1,832			-			268,515
Accounts payable		25,391		-			(1,316	)		24,075
Accrued expenses		2,961		649			-			3,610
Deferred revenue		1,711		(1,711	)		-			-
Other current liabilities		87		-			1,316			1,403
TOTAL CURRENT LIABILITIES		30,349		(1,062	)		-			29,287
Warrant liabilities		-		5,184			-			5,184
TOTAL LIABILITIES		32,339		4,122			-			36,461
Additional paid-in capital		170,799		(2,351	)		-			168,448
Retained earnings		63,537		61			-			63,598
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		234,344		(2,290	)		-			232,054
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		266,683		1,832			-			268,515

	Condensed Consolidated Statements of
(In thousands, except EPS)	Operations and Comprehensive Income
	As Originally
For the three months ended September 30, 2020	Reported			Revisions			As Revised
Revenue	$	40,962		$	2		$	40,964
Cost of goods sold		37,180			(447	)		36,733
Gross profit		3,782			449			4,231
Operating expense		7,187			433			7,620
Loss from operations		(3,405	)		16			(3,389	)
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		(2,768	)		16			(2,752	)
INCOME TAX BENEFIT (EXPENSE)		(492	)		(1	)		(493	)
Net income (loss)		(3,260	)		15			(3,245	)
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(160	)		2			(158	)
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC.		(3,100	)		13			(3,087	)
Basic net loss per share		(0.11	)		-			(0.11	)
Diluted net loss per share		(0.11	)		-			(0.11	)
Comprehensive income		(3,844	)		15			(3,829	)
Less: income (loss) attributable to the noncontrolling interest		57			(158	)		(101	)
Comprehensive income attributable to Tattooed Chef, Inc. stockholders		(3,901	)		173			(3,728	)

	Condensed Consolidated Statements of
(In thousands, except EPS)	Operations and Comprehensive Income
	As Originally
For the nine months ended September 30, 2020	Reported		Revisions			As Revised
Revenue	$	108,896	$	7		$	108,903
Cost of goods sold		92,126		(507	)		91,619
Gross profit		16,770		514			17,284
Operating expense		11,645		945			12,590
Income from operations		5,125		(431	)		4,694
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		5,669		(431	)		5,238
Net income (loss)		3,894		(432	)		3,462
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		1,201		(53	)		1,148
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC.		2,693		(379	)		2,314
Basic net income per share		0.10		(0.02	)		0.08
Diluted net income per share		0.10		(0.02	)		0.08
Comprehensive income		3,693		(432	)		3,261
Less: income (loss) attributable to the noncontrolling interest		91		1,148			1,239
Comprehensive income attributable to Tattooed Chef, Inc. stockholders		3,602		(1,580	)		2,022

(In thousands)	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
For the three months ended September 30, 2020	As originally reported			Revisions			As revised

Redeemable noncontrolling interest beginning balance	$	43,900			(85	)	$	43,815
Net income in redeemable noncontrolling interest		(442	)		2			(440	)
Redeemable noncontrolling interest ending balance		43,900			(83	)		43,817
Retained earnings beginning balance		(28,853	)		(603	)		(29,456	)
Net income in retained earnings		(3,100	)		13			(3,087	)
Retained earnings ending balance		(36,675	)		(590	)		(37,265	)
Total Stockholders’ equity beginning balance		(27,882	)		(601	)		(28,483	)
Total Stockholders’ equity ending balance		(36,006	)		(588	)		(36,594	)

(In thousands)	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
For the nine months ended September 30, 2020	As originally reported			Revisions			As revised

Redeemable noncontrolling interest beginning balance	$	6,930			(30	)	$	6,900
Net income in redeemable noncontrolling interest		251			(53	)		198
Redeemable noncontrolling interest ending balance		43,900			(83	)		43,817
Retained earnings beginning balance		1,265			(209	)		1,056
Net income in retained earnings		2,693			(379	)		2,314
Retained earnings ending balance		(36,675	)		(590	)		(37,265	)
Total Stockholders’ equity beginning balance		3,146			(209	)		2,937
Total Stockholders’ equity ending balance		(36,006	)		(588	)		(36,594	)

(In thousands)	Condensed Consolidated Statements of Cash Flows
	As Originally
For the nine months ended September 30, 2020	Reported			Revisions			As revised
Cash Flows from Operating Activities:
Net income	$	3,894		$	(432	)	$	3,462
Changes in operating assets and liabilities:
Inventory		(9,934	)		432			(9,502	)
Net cash provided by operating activities		1,820			-			1,820

Restatement of Previously Issued Financial Statements

In connection with the preparation of the consolidated financial statements as of and for the year ended December 31, 2021 included in the Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2022, the Company identified errors related to (i) deferred tax assets resulting from the reverse recapitalization transaction that occurred in 2020 and related valuation allowance; (ii) classification among accounts receivable and deferred revenue; and (iii) other immaterial previously uncorrected adjustments. Amounts depicted as “As Restated” throughout the accompanying condensed consolidated financial statements and footnotes include the impact of the restatement, as well as the impact of the adoption of ASC 842, Leases as of January 1, 2021 to the quarter and nine months ended September 30, 2021. See Note 24 to the consolidated financial statements and Item 8 of the Form 10-K as aforementioned.

The table below sets forth the condensed consolidated financial statements, including as originally reported, the impacts resulting from ASC 842 adoption, the adjustments from the restatement, the reclassification, and the as restated balances for the quarterly period ended September 30, 2021 (in thousands):

	Condensed consolidated balance sheet
As of September 30, 2021 (in thousands, Unaudited)	As Reported			Adoption of ASC 842			Adjustments			As Restated
Accounts receivable, net	$	24,469			-			(1,314	)	$	23,155
Prepaid expenses and other current assets		8,256			(39	)		-			8,217
TOTAL CURRENT ASSETS		207,472			(39	)		(1,314	)		206,119
Property, plant and equipment, net		39,669			(2,900	)		-			36,769
Operating lease right-of-use asset, net		-			5,766			-			5,766
Finance lease right-of-use asset, net		-			5,683			-			5,683
Goodwill		19,351			(1,378	)		-			17,973
Other assets		1,731			(1,444	)		-			287
TOTAL ASSETS	$	268,402			5,688			(1,314	)	$	272,776
Notes payable, current portion		400			-			2,863			3,263
Deferred revenue		634			-			(634	)		-
Forward contract derivative liability		1,788			-			(136	)		1,652
Finance lease liabilities, current		2,863			-			(2,863	)		-
Operating lease liabilities, current		-			1,203			-			1,203
Other current liabilities		911			(67	)		-			844
TOTAL CURRENT LIABILITIES		38,441			1,136			(770	)		38,807
Operating lease, net of current portion		-			4,622			-			4,622
TOTAL LIABILITIES		42,411			5,758			(770	)		47,399
Additional paid in capital		233,223			-			4,024			237,247
Retained earnings		(6,332	)		(70	)		(4,568	)		(10,970	)
Total equity		225,991			(70	)		(544	)		225,377
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	268,402			5,688			(1,314	)	$	272,776

	Condensed consolidated statements of operations and comprehensive income (loss)
For Three Months Ended September 30, 2021 (in thousands except per share amounts, Unaudited)	As Reported			Adoption of ASC 842			Adjustments			As Restated
REVENUE	$	58,780			-			(425	)	$	58,355
GROSS PROFIT		5,944			-			(425	)		5,519
OPERATING EXPENSES		13,604			41			42			13,687
(LOSS) INCOME FROM OPERATIONS		(7,660	)		(41	)		(467	)		(8,168	)
Other (expense) income		(724	)		-			136			(588	)
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES		(8,429	)		(41	)		(331	)		(8,801	)
NET (LOSS) INCOME		(8,174	)		(41	)		(331	)		(8,546	)
NET (LOSS) INCOME ATTRIBUTABLE TO TATTOOED CHEF, INC.	$	(8,174	)		(41	)		(331	)	$	(8,546	)
NET (LOSS) INCOME PER SHARE
Basic		(0.10	)		-			-			(0.10	)
Diluted		(0.10	)		-			-			(0.10	)
Comprehensive (loss) income		(8,982	)		(41	)		(331	)		(9,354	)
Comprehensive (loss) income attributable to Tattooed Chef, Inc. stockholders	$	(8,982	)		(41	)		(331	)	$	(9,354	)

	Condensed consolidated statements of operations and comprehensive income (loss)
For Nine Months Ended September 30, 2021 (in thousands except per share amounts, Unaudited)	As Reported			Adoption of ASC 842			Adjustments			As Restated
REVENUE	$	161,972			-			(878	)	$	161,094
COST OF GOODS SOLD		140,304			-			(226	)		140,078
GROSS PROFIT		21,668			-			(652	)		21,016
OPERATING EXPENSES		44,853			70			(621	)		44,302
(LOSS) INCOME FROM OPERATIONS		(23,185	)		(70	)		(31	)		(23,286	)
Other (expense) income		(2,496	)		-			(40	)		(2,536	)
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES		(25,840	)		(70	)		(71	)		(25,981	)
INCOME TAX EXPENSE		(44,255	)		-			(4,024	)		(48,279	)
NET (LOSS) INCOME		(70,095	)		(70	)		(4,095	)		(74,260	)
(LOSS) INCOME ATTRIBUTABLE TO TATTOOED CHEF, INC.	$	(70,095	)		(70	)		(4,095	)	$	(74,260	)
NET (LOSS) INCOME PER SHARE
Basic		(0.86	)		-			(0.05	)		(0.91	)
Diluted		(0.86	)		-			(0.05	)		(0.91	)
Comprehensive (loss) income		(71,004	)		(70	)		(4,095	)		(75,169	)
Comprehensive (loss) income attributable to Tattooed Chef, Inc. stockholders	$	(71,004	)		(70	)		(4,095	)	$	(75,169	)

For Three Months Ended September 30, 2021	Condensed consolidated statements of stockholders’ equity
(in thousands, Unaudited)	As Reported			Adjustments			As Restated
Additional Paid-In Capital beginning balance	$	231,359			4,024		$	235,383
Additional Paid-In Capital ending balance		233,223			4,024			237,247
Retained earnings (Deficit) beginning balance		1,842			(4,266	)		(2,424	)
Net loss in retained earnings (Deficit)		(8,174	)		(372	)		(8,546	)
Retained earnings (Deficit) ending balance		(6,332	)		(4,638	)		(10,970	)
Total Stockholders’ equity beginning balance		233,109			(242	)		232,867
Total Stockholders’ equity ending balance		225,991			(614	)		225,377

For Nine Months Ended September 30, 2021	Condensed consolidated statements of stockholders’ equity
(in thousands, Unaudited)	As Reported			Adjustments			As Restated
Additional Paid-In Capital beginning balance	$	164,424			4,024		$	168,448
Additional Paid-In Capital ending balance		233,223			4,024			237,247
Retained earnings (Deficit) beginning balance		64,071			(473	)		63,598
Net loss in retained earnings (Deficit)		(70,095	)		(4,165	)		(74,260	)
Retained earnings (Deficit) ending balance		(6,332	)		(4,638	)		(10,970	)
Total Stockholders’ equity beginning balance		228,503			3,551			232,054
Total Stockholders’ equity ending balance		225,991			(614	)		225,377

	Condensed consolidated statements of cash flows
For Nine Months Ended September 30, 2021 (in thousands, Unaudited)	As Reported			Adoption of ASC 842			Adjustments			As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(70,095	)		(70	)		(4,095	)	$	(74,260	)
Adjustments to reconcile net (loss) income to net cash from operating activities:
Depreciation and amortization		2,514			39			-			2,553
Deferred taxes, net		43,525			-			4,024			47,549
Non-cash lease cost		-			59			-			59
Changes in operating assets and liabilities:
Accounts receivable		(3,450	)		-			(397	)		(3,847	)
Prepaid expenses and other assets		(3,090	)		39			-			(3,051	)
Accrued expenses		1,841			-			(649	)		1,192
Deferred revenue		(1,077	)		-			1,077			-
Other current liabilities		289			(67	)		40			262
Net cash used in operating activities		(33,125	)		-			-			(33,125	)

Reclassifications. Reclassifications of certain prior period amounts to conform to the current period presentation. Reclassifications have no impact on net income (loss) and do not relate to errors and are included here in order to conform the presentation across the periods presented.

Fair Value of Financial Instruments. Certain assets and liabilities are required to be recorded at fair value on a recurring basis. Fair value is determined based on the exchange price that would be received for an asset or transferred for a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying amounts of cash, accounts receivables, accounts payable and certain notes payable approximate fair value because of the short maturity and/or variable rates associated with these instruments. Long-term notes payable as of September 30, 2021 and December 31, 2020 approximate its fair value as the interest rates are indexed to market rates. The Company categorizes the inputs to the fair value measurements into three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1 -	Inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company is able to access at the measurement date.

Level 2 -	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and can reference interest rates, yield curves, implied volatilities and credit spreads.

Level 3 -	Inputs are unobservable data points for the asset or liability, and include situations where there is limited, if any, market activity for the asset or liability.

Cash. The Company’s cash may be in excess of amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in these accounts.

Foreign Currency. The Company’s functional currency is the United States dollar for its U.S. entities. Ittella Italy’s functional currency is the Euro. Transactions in currency other than the functional currency are recognized at the rates of exchange prevailing at the dates of the transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each entity are included in the results of operations in income from operations as incurred.

The accompanying condensed consolidated financial statements are expressed in United States dollars. Assets and liabilities of foreign operations are translated at period-end rates of exchange. Revenues, costs and expenses are translated at average rates of exchange prevailing during the period. Equity adjustments resulting from translating foreign currency financial statements are accumulated as a separate component of stockholders’ equity.

The Company conducts business globally and is therefore exposed to adverse movements in foreign currency exchange rates, specifically the Euro to US dollar. To limit the exposure related to foreign currency changes, the Company entered into foreign currency exchange forward contracts starting in 2020. The Company does not enter into contracts for speculative purposes.

In February 2020, the Company entered into a trading facility for derivative forward contracts. Under this facility, the Company has access to open foreign exchange forward contract instruments to purchase a specific amount of funds in Euros and to settle, on an agreed-upon future date, in a corresponding amount of funds in United States dollars. During the nine months ended September 30, 2021 and 2020, the Company entered into foreign currency exchange forward contracts to purchase 55.36 million Euros and 37.79 million Euros, respectively. The notional amounts of these derivatives are $66.80 million and $42.81 million for the nine months ended September 30, 2021 and 2020, respectively.

These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other income net, and substantially offset foreign exchange gains and losses from the short-term effects of foreign currency fluctuations on assets and liabilities, such as purchases, receivables and payables, which are denominated in currencies other than the functional currency of the reporting entity. These derivative instruments generally have maturities of up to nine months.

Accounts Receivable. Trade receivables are customer obligations due under normal trade terms requiring payment generally within 7 to 45 days from the invoice date. The Company’s allowance for doubtful receivables is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes assessing a default probability to customers’ receivable balances, which is influenced by several factors, including (i) current market conditions, (ii) periodic review of customer credit worthiness, and (iii) review of customer receivable aging and payment trends.

Inventory. Inventory consists of raw materials and packaging materials, work in process and finished goods. Inventories are carried at the lower of cost or net realizable value on a weighted average basis. Inventory is initially measured at cost and consists of the sum of the applicable expenditures and charges directly and indirectly incurred to bring products to their existing condition and location. These costs include purchase costs and any other charges necessary to prepare the items for production. For work in process and finished goods, these costs normally include those incurred directly or indirectly in the production of inventory (i.e., direct labor and production overheads or conversion costs), and other expenses (i.e., inbound freight, transportation and handling charges, taxes and duties).

Overhead costs are allocated to the units produced within the reporting period, while abnormal costs are charged to current operations as incurred. The Company monitors the remaining utility of its inventory and writes down inventory for excess or obsolescence as appropriate.

Property, Plant and Equipment. Property, plant and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property, plant and equipment is calculated using the straight-line method over the useful lives of the assets, which range from 5 to 15 years for machinery and equipment, 5 to 7 years for furniture and fixtures, 20 to 33.5 years for buildings, and 3 to 10 years for computer equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. Repairs and maintenance are expensed as incurred. Renewals and enhancements are capitalized and depreciated over the remaining life of the specific property unit. When the Company retires or disposes of property, plant or equipment, the cost and accumulated depreciation are removed from the Company’s accounts and any resulting gain or loss is reflected in the condensed consolidated statements of operations and comprehensive income (loss).

Goodwill. The Company evaluates and tests the recoverability of goodwill for impairment at least annually, or more frequently if circumstances indicate that goodwill may not be recoverable. The Company performs the impairment testing by first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of its reporting unit (currently only one reporting unit) is less than its carrying amount (“Qualitative Assessment”). In assessing the qualitative factors, the Company considers the impact of certain key factors including macroeconomic conditions, industry and market considerations, management turnover, changes in regulation, litigation matters, changes in enterprise value, and overall financial performance. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than it’s carrying amount, the Company tests for impairment by comparing the estimated fair value of the reporting unit with its carrying amount. The Company estimates the fair value of the reporting unit using a “step one” analysis using a fair-value-based approach based on a discounted cash flow analysis of projected future results to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Any excess of the carrying amount of the reporting unit’s goodwill over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down. No goodwill impairment was recorded during the three and nine months ended September 30, 2021.

Long-Lived and Intangible Assets. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Intangible assets with indefinite lives are not amortized but instead, are reviewed for impairment. Intangible assets and long-lived assets are reviewed for impairment at the asset group level whenever events or changes in circumstances indicate that the carrying amount of such asset group may not be recoverable. Recoverability of assets within an asset group to be held and used is measured by a comparison of the carrying amount of an asset group to the future undiscounted net cash flows expected to be generated by the asset group. If such asset groups are considered to be impaired, an impairment is recognized to the extent that these assets are stated based upon their fair value. This analysis differs from the Company’s goodwill analysis in that the impairment for these assets is only deemed to have occurred if the sum of the forecasted undiscounted future cash flows of these intangible assets is less than their carrying values. The estimate of long-term undiscounted cash flows includes long-term forecasts of revenue growth, gross margins, and operating expenses, and requires significant judgment and assumptions. An impairment loss may exist when the estimated undiscounted cash flows attributable to the assets are less than the carrying amount of the assets. No impairment was recorded during the three and nine months ended September 30, 2021 and 2020.

Warrants. The Public Warrants are considered freestanding equity-classified instruments due to their detachable and separately exercisable features and meet the indexation criteria in ASC 815-40-15-7C. Accordingly, the Public Warrants are presented as a component of Stockholders’ Equity in accordance with ASC 815-40-25. All of the public warrants have been exercised as of September 30, 2021. See note 17. The agreements with respect to the Company’s Private Placement Warrants include provisions related to determining settlement amounts that preclude the Private Placement Warrants from being accounted for as components of equity. As these warrants meet the definition of a derivative as contemplated in ASC 815-40, the Private Placement Warrants are recorded as derivative liabilities on the condensed consolidated balance sheets and measured at fair value at inception (on the Closing Date) and at each reporting date in accordance with ASC 820, with changes in fair value recognized in the condensed consolidated statements of operations and other comprehensive income (loss) in the period of change.

Revenue Recognition (As Restated). The Company recognizes revenue in accordance with ASC Topic 606. The Company’s principal business is the manufacturing of plant-based foods including, but not limited to, acai and smoothie bowls, zucchini spirals, riced cauliflower, vegetable bowls and cauliflower crust pizza primarily in the United States and Italy. Revenue recognition is determined by (a) identifying the contract, or contracts, with a customer; (b) identifying the performance obligation in each contract; (c) determining the transaction price;(d) allocating the transaction price to the performance obligation in each contract; and (e) recognizing revenue when, or as, the Company satisfies performance obligations by transferring the promised goods or services. Each unit of product delivered is determined as a separate performance obligation and in the event there is more than one unit of a product ordered, there will be multiple performance obligations satisfied under the same contract. When control of the promised products and services are transferred to the Company’s customers, the Company recognizes revenue in the amount that reflects the consideration the Company expects to receive in exchange for these products and services.

Control generally transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms. Customer contracts generally do include more than one performance obligation and the performance obligations in the Company’s contracts are satisfied within one year. No payment terms beyond one year are granted at contract inception.

Some contracts also include some form of variable consideration. The most common forms of variable consideration include slotting fees, trade discounts, promotional programs, and demonstration costs. Variable consideration is treated as a reduction in revenue when product revenue is recognized. Depending on the specific type of variable consideration, the Company uses either the expected value or most likely amount method to determine the variable consideration. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience, and any recent changes in the market.

The Company generally does not have unbilled receivable balances arising from transactions with customers. The Company does not capitalize contract inception costs as contracts are generally one year or less and the Company does not incur significant fulfillment costs requiring capitalization.

The Company recognizes shipping and handling costs related to products transferred to the end customer as fulfillment cost and includes these costs in cost of goods sold upon delivery of the product to the customer.

The Company enters into certain arrangements with its customers to provide inventory for promotional purposes (“Promotional Items”). Such arrangements are not tied to immediate or future sales of any particular product. Instead, the Company will occasionally offer these Promotional Items in a targeted way to increase product awareness. Since a Promotional Item does not provide a material right, it is not considered a distinct performance obligation. As such, the cost of the Promotional Item is not presented within cost of goods sold and is instead treated as an operating expense.

Cost of Sales. Cost of sales consists of the costs of raw materials utilized in the manufacture process, co-packing or repacking fees, in-bound freight charges, internal transfer costs, cold storage expenses incurred prior to the manufacture of the Company’s finished products, and out-bound freight to transfer the finished goods to the end customers. In addition, the Company includes in costs of sales certain costs such as depreciation, amortization and payroll costs that relate to the direct manufacture by the Company.

Operating Expenses. Operating expenses include selling expenses, cold storage expenses after manufacture, as well as expenses for advertising, sampling costs, costs for merchandise displays, other marketing expenses and design expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees (including legal fees), depreciation and other general and administrative costs.

Sales and Marketing Expenses (As Restated). The Company expenses costs associated with sales and marketing as incurred. Sales and marketing expenses were $5.67 million and $1.59 million for the three months ended September 30, 2021 and 2020, respectively, and $20.50 million and $4.39 million for the nine months ended September 30, 2021 and 2020, respectively. Sales and marketing expenses are included in operating expenses in the condensed consolidated statements of operations and comprehensive income (loss).

Interest Expense. Interest expense includes interest primarily related to the amortization of deferred financing costs, the Company’s notes payable and line of credit.

Deferred Financing Costs. Deferred financing costs include fees associated with the Company’s line of credit agreement. Such fees are amortized on a straight-line basis over the term of the related line of credit agreement as a component of interest expense, which approximates the effective interest rate method, in accordance with the terms of the agreement. Deferred financing costs were $0.08 million at both September 30, 2021 and December 31, 2020 and are recorded as a component of other assets in the accompanying condensed consolidated balance sheets. Amortization expense of deferred financing costs were $0.00 million and $0.01 million during the three months ended September 30, 2021 and 2020, respectively. Amortization expense of deferred financing costs were $0.00 million and $0.03 million during the nine months ended September 30, 2021 and 2020, respectively.

Stock-based Compensation. The Company measures compensation expense for stock options and other stock awards in accordance with ASC 718, Compensation — Stock Compensation. Stock-based compensation is measured at fair value on the grant date and recognized as compensation expense over the requisite service period. The Company accounts for forfeitures when they occur. Generally, the Company issues stock options and other stock awards to employees with service-based and/or performance-based vesting conditions. For awards with only service-based vesting conditions, the Company records compensation cost for these awards using the straight-line method. For awards with performance-based vesting conditions, the Company recognizes compensation cost on a tranche-by-tranche basis (the accelerated attribution method) over the expected service period.

Under the provisions of ASC 718, Compensation—Stock Compensation, the Company measures stock-based awards granted to non-employees based on the fair value of the award on the date on which the related service is completed. Compensation expense is recognized over the period during which services are rendered by non-employees until service is completed.

Income Taxes. As part of the process of preparing its condensed interim consolidated financial statements, the Company is required to estimate its provision for income taxes in each of the tax jurisdictions in which it conducts business, in accordance with the Income Tax Topic 740 of the ASC (“ASC 740”). The Company computes its annual tax rate based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it earns income. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of the net deferred tax assets will not be realized. The factors used to assess the likelihood of realization include the Company’s forecast of the reversal of temporary differences, future taxable income, and available tax planning strategies that could be implemented to realize the net deferred tax assets. Failure to achieve forecasted taxable income in applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company’s effective tax rate on future earnings.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must first be determined to be more likely to be sustained based solely on its technical merits, and if so, then measured to be the largest benefit that has a greater than 50% likelihood of being sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2021 and December 31, 2020, respectively. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of September 30, 2021 or December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payment, accruals, or material deviation from its tax position. The Company is subject to income tax examinations by major taxing authorities since inception. See Note 15 for more information on the Company’s accounting for income taxes.

Accumulated Other Comprehensive Income (Loss). Accumulated other comprehensive loss is defined as the change in equity resulting from transactions from non-owner sources. Other comprehensive income consisted of gains and losses associated with changes in foreign currency as a result of the translation of the financial results of the Company’s Italian subsidiary.

Use of Estimates. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from these estimates.

Concentrations of Credit Risk (As Restated). The Company grants credit, generally without collateral, to customers primarily in the United States. Consequently, the Company is subject to potential credit risk related to changes in business and economic factors in this geographical area. No external suppliers accounted for more than 10% of the Company’s cost of goods sold during the period ended September 30, 2021 and 2020.

Three customers accounted for 64% and 87% of the Company’s revenue during the three months ended September 30, 2021 (as restated) and 2020, respectively.

Customer	2021			2020
	(As Restated)
Customer A		20	%		36	%
Customer C		33	%		30	%
Customer B		11	%		21	%

Three customers accounted for 77% and 87% of the Company’s revenue during the nine months ended September 30, 2021 (as restated) and 2020, respectively.

Customer	2021			2020
	(As Restated)
Customer C		35	%		36	%
Customer A		31	%		34	%
Customer B		11	%		17	%

Customers accounting for more than 10% of the Company’s accounts receivable as of September 30, 2021 (as restated) and December 31, 2020 were:

	September 30,			December 31,
Customer	2021			2020
	(As Restated)
Customer A		21	%		24	%
Customer B		*			10	%
Customer C		28	%		53	%
Customer D		15	%		**

Customer B accounted for less than 10% of accounts receivable as of September 30, 2021. However, customer B accounted for 10% as of December 31, 2020 and as such was included in the disclosure above for comparison purposes.

Customer D is a new customer in 2021, accounted for 15% as of September 30, 2021 and as such was included in the disclosure above for comparison purposes.

Segment Information. The Company manages its operations on a company-wide basis as one operating segment, thereby making determinations as to the allocation of resources to the business as a whole rather than on a segment-level basis. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the Chief Operating Decision Maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company has determined that its Chief Executive Officer is the CODM. To date, the Company’s CODM has made such decisions and assessed performance at the Company-level.

Long-lived assets consist of property, plant and equipment, net of depreciation, and are categorized based on geographic location as follows:

	September 30,		December 31,
Definite Lived Intangible Assets (in thousands)	2021		2020
Italy	$	-	$	-
United States - tradenames		179		-
Total	$	179	$	-

	Remaining
Definite Lived Intangible Assets	useful life
Description:
Tradenames		1.75

	September 30,		December 31,
Long Lived Assets (in thousands)	2021		2020
	(As Restated)
Italy	$	15,744	$	9,113
United States		21,025		6,970
Total	$	36,769	$	16,083

COVID-19 Pandemic. The novel coronavirus (“COVID-19”), which was categorized by the World Health Organization as a pandemic in March 2020, continues to significantly impact the United States and the rest of the world and has altered the Company’s business environment and the overall working conditions.

Despite partial remote working conditions, the Company’s business activities have continued to operate with minimal interruptions.

However, the pandemic may adversely affect the Company’s suppliers and could impair its ability to obtain raw material inventory in the quantities or of a quality the Company desires. The Company currently sources a material amount of its raw materials from Italy. Though the Company is not dependent on any single Italian grower for its supply of a certain crop, events (including the pandemic) generally affecting these growers could adversely affect the Company’s business. If the Company is unable to manage its supply chain effectively and ensure that its products are available to meet consumer demand, operating costs could increase, and sales and profit margins could decrease.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified improvement property. It also appropriated funds for the Small Business Administration’s Paycheck Protection Programs that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19. The Company has elected not to apply for a Paycheck Protection Program loan. The Company has analyzed the provisions of the CARES Act and determined it did not have a material impact on the Company’s financial condition, results of operations or cash flows for the periods presented.

The extent to which this pandemic could adversely impact the Company’s future business, financial condition and results of operations is dependent upon various factors, many of which are highly uncertain and outside the control of the Company.

Earnings per share. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding during the period includes common stock but is exclusive of certain unvested stock awards that have no economic or participating rights. Diluted earnings per share is computed by dividing the net income by the weighted-average number of common shares and common share equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. The Company’s potentially dilutive securities which include outstanding stock options and restricted stock awards under the Company’s equity incentive plan and warrants have been considered in the computation of diluted earnings per share.

Emerging Growth Company (“EGC”). Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) exempts EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, as amended, registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an EGC, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of its financial statements with another public company, which is neither an EGC nor an EGC which has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used. As of December 31, 2021, the Company will lose EGC status and be required to adopt standards on the public company timeframe.

Recent Accounting Pronouncements (As restated for the adoption of ASC 842)

9 Months Ended

Sep. 30, 2021

Accounting Standards Update and Change in Accounting Principle [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS (As restated for the adoption of ASC 842)

2. RECENT ACCOUNTING PRONOUNCEMENTS (As restated for the adoption of ASC 842)

In December 2019, the FASB issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Amendments include removal of certain exceptions to the general principles of Topic 740, Income Taxes, and simplification in several other areas. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods therein. The Company adopted the new standard on January 1, 2021, the first day of the reporting year. One of the amendments eliminates a limitation on the amount of income tax benefit that can be recognized in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements for the nine months ended September 30, 2021.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. Interest on borrowings under the Company’s revolving credit facility is calculated based upon LIBOR. ASU 2020-04 was issued on March 12, 2020 and may be applied prospectively through December 31, 2022. This guidance has had no material effect on the Company’s condensed consolidated financial statements for the nine months ended September 30, 2021.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02” or “Topic 842”). The purpose of ASU 2016-02 is to provide financial statement users a better understanding of the amount, timing, and uncertainty of cash flows arising from leases. The adoption of ASU 2016-02 resulted in the recognition of a right-of-use asset and a lease liability for all leases. New disclosure requirements included qualitative and quantitative information about the amounts recorded in the financial statements. The original guidance required application on a modified retrospective basis with adjustments to the earliest comparative period presented. In August 2018, the FASB issued ASU No. 2018-11, “Targeted Improvements to ASC 842,” which included an option to not restate comparative periods in transition and elect to use the effective date of ASU No. 2016-02 as the date of initial application, which the Company elected. As the Company will lose EGC status as of December 31, 2021, the Company was required to apply the provisions of ASU 2016-02 beginning with the annual reporting period ended December 31, 2021 with an effective date as of January 1, 2021. Accordingly, these financial statements have been adjusted to reflect the adoption of Topic 842. See Note 13.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”) regarding ASC Topic 326, Financial Instruments - Credit Losses, which modifies the measurement of expected credit losses of certain financial instruments. The Company will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The amendments will become effective for the Company for periods beginning after December 15, 2021. Adoption of the standard will be applied using a modified retrospective approach. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its condensed consolidated financial statements.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for convertible instruments. ASU 2020-06 removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years and early adoption is permitted in annual reporting periods ending after December 15, 2020. The Company is currently evaluating the impact this guidance may have on its condensed consolidated financial statements and related disclosures.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-URI https://asc.fasb.org/topic&trid=2122394

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 105
-SubTopic 10
-Section 65
-Paragraph 6
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126987489&loc=SL124442142-165695

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (d)(1)
-URI https://asc.fasb.org/extlink&oid=126986314&loc=SL124402458-218513

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (g)(2)(iii)
-URI https://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (b)(4)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (g)(2)(ii)
-URI https://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (g)(2)(i)
-URI https://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 1
-Subparagraph (e)(1)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL123482106-238011

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (d)(2)
-URI https://asc.fasb.org/extlink&oid=126986314&loc=SL124402458-218513

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (g)(2)(iv)
-URI https://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section S99
-Paragraph 5
-Subparagraph (SAB Topic 11.M.Q2)
-URI https://asc.fasb.org/extlink&oid=122038215&loc=d3e31137-122693

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 10
-Section 65
-Paragraph 4
-Subparagraph (e)(1)
-URI https://asc.fasb.org/extlink&oid=122640432&loc=SL121648383-210437

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (h)(2)
-URI https://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 10
-Section 65
-Paragraph 4
-Subparagraph (e)(2)
-URI https://asc.fasb.org/extlink&oid=122640432&loc=SL121648383-210437

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 848
-SubTopic 10
-Section 65
-Paragraph 1
-Subparagraph (e)(1)
-URI https://asc.fasb.org/extlink&oid=125980421&loc=SL122150809-237846

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 65
-Paragraph 8
-Subparagraph (e)(2)
-URI https://asc.fasb.org/extlink&oid=126983759&loc=SL121830611-158277

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section S99
-Paragraph 6
-URI https://asc.fasb.org/extlink&oid=122038215&loc=SL108384541-122693

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 10
-Section 65
-Paragraph 5
-Subparagraph (f)(1)
-URI https://asc.fasb.org/extlink&oid=128293352&loc=SL126838806-209984

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 65
-Paragraph 6
-Subparagraph (e)(2)
-URI https://asc.fasb.org/extlink&oid=126983955&loc=SL121967933-165497

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (c)(2)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL126732908-238011

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 10
-Section 65
-Paragraph 5
-Subparagraph (f)(3)
-URI https://asc.fasb.org/extlink&oid=128293352&loc=SL126838806-209984

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (c)(1)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL126732908-238011

Reference 23: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 65
-Paragraph 6
-Subparagraph (e)(1)
-URI https://asc.fasb.org/extlink&oid=126983955&loc=SL121967933-165497

Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 65
-Paragraph 8
-Subparagraph (e)(1)
-URI https://asc.fasb.org/extlink&oid=126983759&loc=SL121830611-158277

Reference 25: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (c)(3)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL126732908-238011

Reference 26: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 926
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (f)(1)
-URI https://asc.fasb.org/extlink&oid=120154821&loc=SL120154904-197079

Reference 27: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 926
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (f)(2)
-URI https://asc.fasb.org/extlink&oid=120154821&loc=SL120154904-197079

Reference 28: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 29: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 926
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (f)(3)
-URI https://asc.fasb.org/extlink&oid=120154821&loc=SL120154904-197079

Reference 30: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 65
-Paragraph 6
-Subparagraph (e)(3)
-URI https://asc.fasb.org/extlink&oid=126983955&loc=SL121967933-165497

Reference 31: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 848
-SubTopic 10
-Section 65
-Paragraph 2
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=125980421&loc=SL125981372-237846

Reference 32: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (c)(1)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (b)(1)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 34: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 65
-Paragraph 8
-Subparagraph (e)(3)
-URI https://asc.fasb.org/extlink&oid=126983759&loc=SL121830611-158277

+ Details

Redeemable Noncontrolling Interest

9 Months Ended

Sep. 30, 2021

Redeemable Noncontrolling Interest [Abstract]

REDEEMABLE NONCONTROLLING INTEREST

3. REDEEMABLE NONCONTROLLING INTEREST

On April 15, 2019, UMB contributed $6.00 million to acquire 6,000 units for a 12.5% ownership interest in Ittella International. The Company incurred issuance costs of $0.13 million resulting in net consideration received of $5.87 million.

Per the terms of Ittella International’s operating agreement, UMB was provided with a put right which could have caused Ittella International to purchase all, but not less than all of UMB units upon notice (“Put Notice”). UMB could have provided the Put Notice to Ittella International at any time for any reason after April 15, 2024. If Ittella International did not accept the price proposed in the Put Notice, the consideration to be paid by Ittella International to UMB for the units that were the subject of the Put Notice will be the fair market value of the units as established by a third party appraisal, subject to a floor for the fair value at 85%. If the fair value was less than 85% of the consideration proposed by UMB in their Put Notice, UMB may have chosen to abandon the transfer. The put right constituted a redemption feature and therefore UMB’s noncontrolling interest (the “Redeemable Noncontrolling Interest”) was classified as temporary equity (mezzanine) in the accompanying condensed consolidated financial statements.

The Redeemable Noncontrolling Interest was initially measured at fair value, which has been determined by the Company to equal the consideration received from UMB, net of transaction costs.

The Redeemable Noncontrolling Interest was not redeemable until April 2024; however, it was probable of becoming redeemable with the passage of time. Therefore, the subsequent measurement of the Redeemable Noncontrolling Interest at each reporting date was determined as the higher of (1) the initial carrying amount, increased or decreased for the Redeemable Noncontrolling Interest’s share of net income and other comprehensive income, or (2) the redemption value, which was determined to be fair value per the terms of Ittella International’s operating agreement above. In determining the measurement method of redemption value, the Company elected to accrete changes in the redemption value over the period from the date of issuance to the earliest redemption date (i.e. April 2024) of the instrument using the effective interest method. Changes in the redemption value are considered to be changes in accounting estimates. Redemption value was determined using a combination of the market approach and income approach. Under the market approach, the Company estimated fair value based on market multiples of EBITDA of comparable companies. Under the income approach, the Company measured fair value based on a projected cash flow method using a discount rate determined by its management to be commensurate with the risk inherent in its then-current business model.

There was no Redeemable Noncontrolling Interest for the three and nine months ended September 30, 2021. Changes in the carrying value of the Redeemable Noncontrolling Interest were as follows for the three months ended September 30, 2020:

	Amount
Redeemable Noncontrolling Interest as of July 1, 2020	$	43,815
Net loss attributable to redeemable noncontrolling interest		(440	)
Accretion to redeemable noncontrolling interest		442
Redeemable Noncontrolling Interest as of September 30, 2020	$	43,817

Changes in the carrying value of the Redeemable Noncontrolling Interest were as follows for the nine months ended September 30, 2020:

	Amount
Redeemable Noncontrolling Interest as of January 1, 2020	$	6,900
Net income attributable to redeemable noncontrolling interest		198
Accretion to redeemable noncontrolling interest		36,719
Redeemable Noncontrolling Interest as of September 30, 2020	$	43,817

All Redeemable Noncontrolling Interest classified as mezzanine equity were reclassified to permanent equity in connection with the contribution of UMB’s 12.5% equity interests in Ittella International to Myjojo (Delaware) in exchange for Myjojo (Delaware)’s common stock and were subsequently exchanged for Forum Class A common stock upon consummation of the Transaction (see Note 1).

Revenue Recognition

9 Months Ended

Sep. 30, 2021

Revenue Recognition [Abstract]

REVENUE RECOGNITION

4. REVENUE RECOGNITION

Nature of Revenues

Substantially all of the Company’s revenue from contracts with customers consist of the sale of plant-based foods including, but not limited to, acai and smoothie bowls, zucchini spirals, riced cauliflower, vegetable bowls and cauliflower crust pizza in the United States and is recognized at a point in time in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Each unit of food product sold to the customer is the performance obligation. Revenue from the sale of frozen food products is recognized upon the transfer of control to the customer. Control generally transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms.

The Company disaggregates revenue based on the type of products sold to its customers – private label, Tattooed Chef and other. The other revenue stream constitutes sale of similar food products directly to customers through third-party vendors and the Company acts as a principal in these transactions. All sales are recorded within revenue on the accompanying condensed consolidated statements of operations and comprehensive income (loss). The Company does not have any contract assets or contract liabilities as of September 30, 2021 and 2020.

Revenue streams for the three months ended September 30, 2021 (as restated) and 2020 were as follows:

	2021					2020
Revenue Streams (in thousands)	Revenue		% Total			Revenue		% Total
	(As Restated)
Tattooed Chef	$	35,034		60	%	$	22,629		55	%
Private Label		22,952		39	%		18,106		44	%
Other revenues		369		1	%		229		1	%
Total	$	58,355				$	40,964

Revenue streams for the nine months ended September 30, 2021 (as restated) and 2020 were as follows:

	2021					2020
Revenue Streams (in thousands)	Revenue		% Total			Revenue		% Total
	(As Restated)
Tattooed Chef	$	103,683		64	%	$	60,643		55	%
Private Label		56,391		35	%		47,495		44	%
Other revenues		1,020		1	%		765		1	%
Total	$	161,094				$	108,903

Significant Judgments

Generally, the Company’s contracts with customers comprise a written quote and customer purchase order or statement of work and are governed by the Company’s trade terms and conditions. In certain instances, it may be further supplemented by separate pricing agreements. All products are sold on a standalone basis; therefore, when more than one product is included in a purchase order, the Company has observable evidence of the stand-alone selling price. Contracts do not contain a significant financing component as payment terms on invoiced amounts are typically between 7 to 45 days, based on the Company’s credit assessment of individual customers, as well as industry expectations. Product returns are not significant. The contracts with customers do not include any additional performance obligations related to warranties and material rights.

From time to time, the Company may offer incentives to its customers considered to be variable consideration including discounts and demonstration costs. Customer incentives considered to be variable consideration are recorded as a reduction to revenue as part of the transaction price based on the agreement at the time of the transaction. Customer incentives are allocated entirely to the single performance obligation of transferring product to the customer.

Accounts Receivable, Net

9 Months Ended

Sep. 30, 2021

Payables and Accruals [Abstract]

ACCOUNTS RECEIVABLE, NET

ACCOUNTS RECEIVABLE, NET

Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. The Company’s receivables are significantly derived from customers in the United States. The Company extends credit to its customers based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The Company does not require its customers to post a deposit or supply collateral. The Company’s allowance for doubtful receivables is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes assessing a default probability to customers’ receivable balances, which is influenced by several factors, including (i) current market conditions, (ii) periodic review of customer credit worthiness, and (iii) review of customer receivable aging and payment trends.

The Company evaluates the creditworthiness of its customers regularly and estimates the collectability of current and non-current accounts receivable based on historical bad debt experience, current market conditions, and reasonable and supportable forecasts of future economic conditions. In times of economic turmoil, including during the ongoing COVID-19 pandemic, the Company’s estimates and judgments with respect to the collectability of its receivables are subject to greater uncertainty than in more stable periods. The Company writes off accounts receivable whenever they become uncollectible, and any payments subsequently received on such receivables are recorded as bad debt recoveries in the period the payment is received. Credit losses from continuing operations have consistently been within management’s expectations. The allowance for doubtful accounts was $0.42 million and $0 million as of September 30, 2021 and December 31, 2020, respectively.

Inventory

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

INVENTORY

6. INVENTORY

Inventory consists of the following (in thousands):

	September 30,		December 31,
	2021		2020

Raw materials	$	16,327	$	16,534
Work-in-process		3,993		5,040
Finished goods		21,001		13,424
Packaging		3,950		3,004
Total	$	45,271	$	38,002

Prepaid Expenses and Other Current Assets

9 Months Ended

Sep. 30, 2021

Prepaid Expenses And Other Current Assets [Abstract]

PREPAID EXPENSES AND OTHER CURRENT ASSETS

PREPAID EXPENSES AND OTHER CURRENT ASSETS

The following table provides additional information related to the Company’s prepaid expenses and other current assets (in thousands):

	September 30,		December 31,
	2021		2020
	(As Restated)
Prepaid advertising expenses	$	4,406	$	-
Prepaid expenses, other		2,471		1,897
Tax credits		1,275		1,884
Warrants receivable (see Note 17)		-		13,542
Other current assets		65		1,093
Total	$	8,217	$	18,416

Property, Plant, and Equipment, Net

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT, AND EQUIPMENT, NET

8. PROPERTY, PLANT, AND EQUIPMENT, NET

Property, plant and equipment consists of the following (in thousands) :

	September 30,			December 31,
	2021			2020
	(As Restated)
Building	$	4,836		$	2,574
Leasehold improvements		3,915			2,106
Machinery and equipment		27,122			12,526
Computer equipment		536			187
Furniture and fixtures		161			109
Land		752			-
Construction in progress		5,478			1,533
		42,800			19,035
Less: accumulated depreciation		(6,031	)		(2,952	)
Property, plant, and equipment, net	$	36,769		$	16,083

Approximately $4.0 million out of the $5.5 million construction in progress is the manufacturing equipment for the newly acquired entity, NMFD (see note 10). The Company expects to have the equipment installed and used for production by the end of March 2022.

The Company recorded depreciation expense for the three months ended September 30, 2021 and 2020 of $1.07 million and $0.22 million, respectively. The Company recorded depreciation expense for the nine months ended September 30, 2021 and 2020 of $2.51 million and $0.69 million, respectively.

Intangible assets, net

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS, NET

9. INTANGIBLE ASSETS, NET

Intangible assets consist of the following as of (in thousands):

	September 30,			December 31,
	2021			2020
Tradenames	$	220		$	-
Less: accumulated amortization		(41	)		-
Net	$	179		$	-

The estimated useful lives of the identifiable definite-lived intangible assets acquired in the NMFD Transaction were determined to be two years.

The Company recorded amortization expense of $0.03 million and $0 million, respectively, for the three months ended September 30, 2021 and 2020. The Company recorded amortization expense of $0.04 million and $0 million, respectively, for the nine months ended September 30, 2021 and 2020.

Estimated future amortization expense for the definite-lived intangible assets is as follows (in thousands):

Three months ended December 31, 2021	$	28
2022		110
2023		41
Total	$	179

Business Combination and Asset Purchases (As Restated)

9 Months Ended

Sep. 30, 2021

Business Combinations [Abstract]

BUSINESS COMBINATION AND ASSET PURCHASES (As Restated)

10. BUSINESS COMBINATION AND ASSET PURCHASES (As Restated)

New Mexico Food Distributors, Inc. (NMFD) and Karsten Acquisition

On May 14, 2021, the Company acquired all outstanding stock of NMFD, a distributor and manufacturer of frozen and ready-to-eat New Mexico food products for a total purchase price amounting to $28.91 million. In addition, the Company acquired all of the membership interests of Karsten for a total purchase price of $5.18 million. The NMFD Transaction met the definition of an acquisition of a business in accordance with ASC 805, Business Combinations, and is accounted for under the acquisition method of accounting.

Though the purchase agreements for each of NMFD and Karsten were executed as legally separate transactions, each were entered into contemporaneously and in contemplation of the other. As such, the transactions noted above were accounted for on a combined basis and were viewed to represent a single integrated event.

Under the acquisition method of accounting, the assets acquired and liabilities assumed by the Company in connection with the NMFD Transaction were initially recorded at their respective fair values. The Company made an election under Section 338(h)(10) to treat the NMFD Transaction as an asset acquisition for income tax purposes, which allows for any goodwill recognized to be tax deductible and amortized over a 15-year statutory life. The Company considered the potential impact to the depreciation and amortization expense as a result of the fair values assigned to the acquired assets. The excess of the purchase price over the fair value of assets acquired and liabilities assumed of approximately $17.97 million was recorded as goodwill.

Transaction costs of $0.47 million were incurred in relation to the acquisition of which $0.07 million pertained to reimbursement of costs incurred by the sellers and included as part of the purchase consideration. The remaining $0.40 million was recorded to operating expense within the consolidated condensed statement of operations for the nine months ended September 30, 2021. The Company did not record any operating expense related to the transaction costs for the three months ended September 30, 2021.

The following table summarizes the provisional fair value of assets acquired and liabilities assumed in the NMFD Transaction as of the date of acquisition:

	Amount
	(As Restated)
Purchase consideration	$	34,091
Assets acquired and liabilities assumed
Cash	$	173
Accounts receivable		3,567
Inventory		2,267
Prepaid expenses and other current assets		122
Operating lease, ROU asset		207
Property, plant and equipment		9,819
Finance lease, ROU assets *		5,749
Other noncurrent assets		29
Intangible assets – tradenames		220
Accounts payable		(2,833	)
Accrued expenses		(78	)
Operating lease liability		(207	)
Note payable *		(2,917	)
Goodwill		17,973
Total assets acquired and liabilities assumed	$	34,091

In December 2015 (prior to the NMFD and Karsten Acquisition), NMFD and Karsten entered into an agreement to purchase an industrial revenue bond (“IRB”) issued by Bernalillo County, New Mexico (“Bernalillo”) to be used to finance the costs of the constructing, renovating and equipping of the manufacturing plant and concurrently, assigned ownership of the manufacturing plant including building and land (“Property”) to Bernalillo as consideration for the purchase of the IRB, as well as entered into a lease agreement to lease the Property from Bernalillo (“Lease”). The Lease provides NMFD the option to purchase the Property for $1 following the payoff of the Lease. The sale of the Property to Bernalillo and concurrent leaseback of the Property in December 2015 did not meet the sale-leaseback accounting requirements as a result of NMFD’s and Karsten’s continuous involvement with the Property and thus, the IRB was not recorded as a sale but as a financing obligation, with the Property remaining on NMFD’s financial statements. The Lease and the IRB have the same counterparty, therefore a right of offset exists so long as NMFD continues to make rent payments under the terms of the Lease.

On May 14, 2021, the balance of the IRB asset and the lease obligation to Bernalillo were $2.92 million and $2.92 million, respectively. Upon the acquisition of NMFD and Karsten, the Company received all rights and assumed obligations related to the IRB, the Property and the Lease. Under business combination accounting literature and prior to the adoption of ASC 842, the transaction involving the IRB and the Lease should not be reassessed and, therefore, the failed sale-leaseback accounting should be reflected in the Company’s purchase accounting. There were no changes to the right of offset as a result of the acquisition and, thus, the lease obligation was offset against the IRB asset and is presented net on the Company’s consolidated balance sheet with no impact to the consolidated operations of income or consolidated cash flow statements. The leased assets are accounted for as a right of use (“ROU”) asset under ASC 842 and the fair value of the ROU asset was determined to be $5.7 million. As such, the lease for the land and the building will be presented on the consolidated balance sheet as an ROU asset of $5.7 million. The Note payable bears interest at 3.8% and has a maturity date of December 29, 2025. The note payable balance is reflected at the present value of future principal payments. The Company recognized the entire balance as a current liability due to noncompliance with certain financing covenants. See Note 16.

The excess of purchase consideration over the fair value of the assets acquired and liabilities assumed was recorded as goodwill, which is primarily attributable to the assembled workforce and expanded market opportunities. Goodwill was assigned to the Company’s single reporting unit. The fair value assigned to the assets acquired and liabilities assumed are based on management’s estimates and assumptions, which are preliminary, are based on provisional amounts and may be subject to change as additional information is received. The Company expects to finalize the valuation of these assets not later than one year from the acquisition date.

The estimated useful lives of the identifiable definite-lived intangible assets acquired in the NMFD Transaction were determined to be two years.

The following unaudited pro forma financial information presents the combined results of operations for each of the periods presented as if the NMFD Transaction had occurred as of January 1, 2020.

(in thousands except share and per share amounts)	Three Months Ended						Nine Months Ended
(Unaudited)	September 30,						September 30,
	2021			2020			2021			2020
	(As Restated)						(As Restated)
Net Revenue - pro forma combined	$	58,355		$	49,141		$	173,935		$	129,512
Net (Loss) Income - pro forma combined		(8,546	)		(3,336	)		(74,362	)		1,907
Weighted Average Shares:
Basic		81,957,170			28,324,038			81,404,348			28,324,038
Diluted		82,011,216			28,324,038			81,548,673			28,324,038
Net Income (Loss) per Share:
Basic	$	(0.10	)	$	(0.12	)	$	(0.91	)	$	0.07
Diluted	$	(0.10	)	$	(0.12	)	$	(0.91	)	$	0.07

Esogel S.R.L. and Ferdifin S.p.A. Asset Acquisitions

In April 2021, the Company entered into asset purchase agreements with Esogel S.R.L. (“Esogel”) and Ferdifin S.p.A. (“Ferdifin”) in Italy to purchase the machinery and equipment owned by Esogel for $2.71 million and the land and building owned by Ferdifin for $2.17 million. The allocation of the total costs (including related transaction costs) relating to these assets acquisitions is as follows:

Assets acquired – Esogel
Specialized machinery – facility	$	2,168
Machinery and equipment		534
Other		10
Total assets acquired – Esogel	$	2,712

Assets acquired – Ferdifin
Building	$	1,396
Land		776
Total assets acquired – Ferdifin	$	2,172

Derivative Instruments

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

11. DERIVATIVE INSTRUMENTS

The Company enters into foreign currency exchange forward contracts to reduce the short-term effects of foreign currency fluctuations on assets and liabilities such as foreign currency inventory purchases, receivables and payables. The Company’s primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The Company’s derivatives expose the Company to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement. The Company does, however, seek to mitigate such risks by limiting its counterparties to major financial institutions, and management does not expect material losses as a result of defaults by counterparties.

The fair values of the Company’s derivative instruments classified as Level 2 financial instruments and the line items within the accompanying condensed consolidated balance sheets to which they were recorded are summarized as of September 30, 2021 (as restated) and December 31, 2020, follows (in thousands):

		September 30,		December 31,
	Balance Sheet Line Item	2021		2020
Derivatives not designated as hedging instruments:			(As Restated)
Foreign currency derivatives	Prepaid expenses and other current assets	$	-	$	1,042
Foreign currency derivatives	Forward contract derivative liability		1,652		-
Total		$	1,652	$	1,042

The effect on the accompanying condensed consolidated statements of operations and comprehensive income (loss) of derivative instruments not designated as hedges is summarized as follows (in thousands):

		Three months			Nine months
		ended			ended
	Line Item in Statements	September 30,			September 30,
	of Operations	2021			2021
Derivatives not designated as hedging instruments:		(As Restated)			(As Restated)
Foreign currency derivatives	Other income (expense)	$	(717	)	$	(2,694	)
Total		$	(717	)	$	(2,694	)

		Three months			Nine months
		ended			ended
	Line Item in Statements	September 30,			September 30,
	of Operations	2020			2020
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other income (expense)	$	825	$		1,113
Total		$	825	$		1,113

Unrealized and realized (losses) gains on forward currency derivatives for the three months ended September 30, 2021 and 2020 were $(0.72) million and $0.83 million, respectively. Unrealized and realized (losses) gains on forward currency derivatives for the nine months ended September 30, 2021 and 2020 were $(2.69) million and $1.11 million, respectively. The Company has notional amounts of $55.19 million and $45.60 million on outstanding derivatives as of September 30, 2021 and December 31, 2020, respectively.

Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

12. FAIR VALUE MEASUREMENTS

Contingent Consideration Liabilities – Holdback Shares

As part of the Transaction (Note 1), an additional 5,000,000 shares of Forum’s common stock (the “Holdback Shares”) were placed into escrow, to be released to certain Myjojo (Delaware) stockholders upon satisfaction, within the first three years after the Closing Date, of the following conditions: (i) if the trading price of the Company’s common stock equaled or exceeded $12.00 on any 20 trading days in any 30-day trading period (the “$12.00 Share Price Trigger”), then 2,500,000 additional Holdback Shares were to be released to certain Myjojo (Delaware) stockholders or (ii) if the trading price of the Company’s common stock equaled or exceeded $14.00 on any 20 trading days in any 30-day trading period (each of such $14.00 trigger and the $12.00 Share Price Trigger, a “Share Price Trigger”), then 2,500,000 Holdback Shares were to be released to certain Myjojo (Delaware) stockholders. If a change in control occurred within the first three years after the Closing, all Holdback Shares not previously released were to be released to certain Myjojo (Delaware) stockholders. If the conditions to release of the Holdback Shares were not satisfied within the first three years following the Closing Date, the Holdback Shares would be forfeited. On November 16, 2020, both Share Price Trigger events for the issuance of the Holdback Shares occurred and, accordingly, the Company released from escrow and delivered the 5,000,000 Holdback Shares to the Myjojo (Delaware) stockholders (other than Pizzo Food Srls (“Pizzo”) and Myjojo (Delaware)’s Chief Operating Officer).

The Company recognized and measured a contingent consideration liability associated with Holdback Shares at a fair value of $120.35 million, determined using a probability-weighted discounted cash flow model. Significant inputs used in the model includes certain financial metric growth rates, volatility rates, projections associated with the applicable contingency, the interest rate, and the related probabilities and payment structure in the Merger Agreement, which are not observable in the market and are therefore considered to be Level 3 inputs.

On November 16, 2020, the contingencies were met and accordingly the Holdback Shares were released. The remeasured fair value of the liability was $83.15 million based on the public share price on release date and was charged against additional paid-in capital. The change in fair value during the period resulted in a gain on settlement of the contingent consideration derivative of $37.20 million and was recorded within “other income” in the condensed consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2020.

Sponsor Earnout Shares Subject to Transfer Restrictions

In accordance with the Sponsor Earnout Letter entered into by and among Forum Investor II, LLC (the “Sponsor”), Forum and the Holder Representative, the Sponsor agreed that at the Closing Date, the Sponsor placed 2,500,000 Founder Shares (as that term is defined in the Sponsor Earnout Letter) held by it (the “Sponsor Earnout Shares”) into escrow. The vesting, release and forfeiture terms of the Sponsor Earnout Shares were the same as the vesting, release and forfeiture terms applicable to the Holdback Shares, with 50% of the Sponsor Earnout Shares vesting at each Share Price Trigger, and all Sponsor Earnout Shares released if a change of control occurred, in each case, within the first three years after the Closing. If the conditions to the release of any Sponsor Earnout Shares were not satisfied on or prior to the date that it is finally determined that the Myjojo (Delaware) stockholders are not entitled to or eligible to receive any further Holdback Releases (as that term is defined in the Sponsor Earnout Letter) pursuant to the Merger Agreement, the Sponsor Earnout Shares were to be forfeited by the Sponsor after such date, and returned to the Company for immediate cancellation. In November 2020, both Share Price Trigger events for the issuance of the Holdback Shares occurred and, accordingly, the Company released from escrow and returned the 2,500,000 Sponsor Earnout Shares to the Sponsor.

The multiple settlement provisions of the Holdback Shares and Sponsor Earnout Shares constituted derivative instruments under ASC 815, which must be classified as asset or liability instruments at their fair value at the Closing Date, and subsequently remeasured with changes in fair value recognized in earnings. At the Closing Date, the fair value of the contingent consideration relating to the Holdback Shares amounted to $120.35 million. The derivative liability was remeasured with changes in fair value recognized in earnings of $37.20 million upon release of the Holdback Shares to the certain stockholders in November 2020. The fair value of the Sponsor Earnout Shares was $0 at the Closing Date and $0 upon the release date.

The Company recognized and measured an asset associated with the Sponsor Earnout Shares at a fair value of $0 at the Closing Date, determined using a probability-weighted discounted cash flow model. Significant inputs used in the models includes certain financial metric growth rates, volatility rates, projections associated with the applicable contingency, the interest rate, and the related probabilities and payment structure in the contingent consideration arrangement, which are not observable in the market and are therefore considered to be Level 3 inputs.

The Sponsor Earnout Shares were released on November 16, 2020 based on the remeasured fair value on the release date of $0, as none of the Sponsor Earnout Shares were forfeited on that date. No gain or loss was recorded by the Company in connection with the Sponsor Earnout Shares.

Warrant Liabilities

The Private Placement Warrants (see Note 1) are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception (“initial measurement”), which is at the Closing Date, and on a recurring basis (“subsequent remeasurement”), with changes in fair value presented within change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive income (loss).

Initial Measurement

The fair value of the Private Placement Warrants was initially measured at fair value on October 15, 2020, the Closing Date.

Subsequent Measurement

At each reporting period or upon exercise of the Private Placement Warrants, the Company remeasures the Private Placement Warrants at their fair values with the change in fair value reported to current operations within the statements of operations and other comprehensive income (loss). During the nine months ended September 30, 2021, Private Placement Warrants totaling 278,542 were settled, resulting in an aggregate loss on settlements of $0.17 million.

For the three months and the nine months ended September 30, 2021, the change in the fair value of the warrant liabilities charged to current operations resulted in a gain of $0.21 million and $0.16 million, respectively.

Fair Value Measurement

The fair value of the Private Placement Warrants was determined to be $10.41 per warrant as of September 30, 2021, using Monte Carlo simulations and certain Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock warrants based on implied volatility from its traded warrants and historical volatility of select peers’ common stock with a similar expected term of the Private Placement Warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield on the grant date with a maturity similar to the expected remaining term of the warrants. The expected term of the Private Placement Warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company estimated to remain at zero.

The following table provides quantitative information regarding the inputs to the fair value measurement of the Private Placement Warrants as of each measurement date:

	October 15,
	2020
	(Initial			December 31,			September 30,
Input	Measurement)			2020			2021

Risk-free interest rate		0.32	%		0.34	%		0.79	%
Expected term (years)		5			4.79			4.04
Expected volatility		35.00	%		35.00	%		55.00	%
Exercise price	$	11.50		$	11.50		$	11.50
Fair value of warrants	$	13.85		$	12.72		$	10.41

On October 15, 2020, the fair value of the Private Placement Warrants was determined to be $13.85 per warrant, or an aggregate value of $9.07 million for 655,000 outstanding warrants.

On December 31, 2020, the fair value of the Private Placement Warrants was determined to be $12.72 per warrant, or an aggregate value of $5.18 million for 407,577 outstanding warrants.

On September 30, 2021, the fair value of the Private Placement Warrants was determined to be $10.41 per warrant, or an aggregate value of $1.34 million for 129,035 outstanding warrants.

The following table presents the changes in the fair value of warrant liabilities:

	Private Placement

Fair value at initial measurement on October 15, 2020	$	9,072
Exercise of Private Placement Warrants		(2,696	)
Change in fair value ⁽¹⁾		(1,192	)
Fair value as of December 31, 2020	$	5,184
Exercise of Private Placement Warrants		(3,674	)
Change in fair value ⁽¹⁾		(167	)
Fair value as of September 30, 2021	$	1,343

⁽¹⁾

Changes in fair value are recognized in change in fair value of warrant liabilities in the consolidated statements of operations and comprehensive income (loss).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Leases

9 Months Ended

Sep. 30, 2021

Disclosure of Leases [Abstract]

LEASES

13. LEASES

As of September 30, 2021, the Company’s primary leasing activities were related to office space, production and storage facilities and certain Company vehicles and equipment. In connection with the NMFD acquisition in May 2021, the Company assumed several operating leases and a finance lease (the “Karsten Lease”) (see Note 10). The Karsten Lease provides the Company the option to purchase the leased facility for $1.00 (one dollar) following the payoff of the lease obligation balance. The leased facility was accounted for as a finance lease ROU asset in connection with the NMFD Transaction under ASC 842 (see Note 10).

Significant assumptions and judgments were made in the application of GAAP for leases, including those related to the lease discount rate. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate, when the interest rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms of the lease payments at commencement date, and in similar economic environments.

Upon adoption, ASC 842, Leases had an impact in the Company’s consolidated balance sheet and in its consolidated statement of operations. As part of the transition, the Company elected the following practical expedients:

●

Package of practical expedients which eliminates the need to reassess (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) the initial direct costs for any existing leases.

●

The practical expedient whereby the lease and non-lease components will not be separated for all classes of assets.

●

Not to recognize ROU assets and corresponding lease liabilities with a lease term of 12 months or less from the lease commencement date for all class of assets.

For existing leases, the Company did not elect the use of hindsight and did not reassess lease term upon adoption. The Company leases office and manufacturing facilities, equipment and vehicles under various operating arrangements. Certain of the leases are subject to escalation clauses and renewal periods. The Company recognizes lease expense, including predetermined fixed escalations, on a straight-line basis over the initial term of the lease from the time that the Company controls the leased property.

The Company adjusted the adoption date opening ROU asset balance by $0.04 million and $0.03 million previously recorded as deferred rent liabilities and prepaid expenses, respectively. On January 1, 2021, the Company recorded $4.16 million in operating lease ROU assets and $4.17 million in operating lease liabilities. The adoption of ASC 842 had no significant impact on the Company’s statement of operations.

The components of lease costs are as follows:

		Three months		Nine months
(in thousands)	Statement of Operations Location	Ended September 30, 2021
Operating leases:
Lease cost	Cost of goods sold	$	280	$	671
Lease cost	Operating expenses		76		211
Operating lease cost			356		882
Finance leases:
Amortization of right-of use assets	Operating expenses		43		66
Interest on IRB lease note payable	Interest expenses		28		41
Finance lease cost			71		107
Other:
Variable lease cost	Cost of goods sold		447		1,290
Variable lease cost	Operating expenses		6		10
Variable lease cost*			453		1,300
Total lease cost		$	880	$	2,289

Variable lease cost primarily consists of month to month rent, charges based on usage and maintenance.

The Company’s rent expense amounted to $0.53 million and $1.48 million for the three months and nine months ended September 30, 2020, respectively.

Supplemental balance sheet information as of September 30, 2021 related to leases are as follows:

		September 30,
(in thousands)		2021
Assets	Balance Sheet Location
ROU assets-Finance lease**	Finance lease right-of-use asset, net	$	5,749
Less: accumulated amortization	Finance lease right-of-use asset, net		(66	)
Finance lease right-of-use assets, net	Finance lease right-of-use asset, net		5,683
ROU assets-Operating lease	Operating lease right-of-use assets		6,476
Less: accumulated amortization	Operating lease right-of-use assets		(710	)
Operating lease right-of-use assets, net	Operating lease right-of-use assets		5,766
Total Lease ROU assets		$	11,449
Liabilities
Current:
Operating lease liabilities, current	Operating lease liabilities, current	$	(1,203	)
Finance lease liability**	**		(2,851	)
Long term:
Operating lease liabilities, noncurrent	Operating lease liabilities, noncurrent		(4,622	)
Total Lease liabilities		$	(8,676	)

The finance lease ROU asset and liability under an IRB arrangement were acquired and assumed through NMFD acquisition (see Note 11). The finance lease liability was offset with IRB assets. The amounts of the finance lease liability and IRB assets were the same as the balance of note payable (see Note 16).

Supplemental cash flow information related to leases was as follows:

	Nine months ended
	September 30,
(in thousands)	2021
Operating cash flows paid for operating leases	$	(660	)
Financing cash flows paid for note payable related to IRB lease		(66	)

Non-cash investing and financing activities:
ROU assets obtained in exchange for lease obligations:
Operating lease		2,313

The following table represents the weighted-average remaining lease term and discount rates for operating lease as of September 30, 2021:

	Operating Leases		Finance Leases
Weighted-average remaining lease term (years)		7.66		4.00
Weighted-average discount rate		4.0%-5.3%		3.8	%

The following table reconciles the undiscounted future lease payments for operating leases to the operating leases recorded in the condensed consolidated balance sheet at September 30, 2021:

(in thousands)	Operating Leases
Three months ended December 31, 2021	$	355
2022		1,363
2023		1,144
2024		856
2025		820
2026 and thereafter		2,581
Total lease payments	$	7,119
Less imputed interest		1,294
Present value of future lease payments	$	5,825
Current Lease liabilities		1,203
Noncurrent Lease liabilities		4,622

Accrued Expenses

9 Months Ended

Sep. 30, 2021

Accrued Expenses [Abstract]

ACCRUED EXPENSES

14. ACCRUED EXPENSES

The following table provides additional information related to the Company’s accrued expenses as of (in thousands):

	September 30,		December 31,
	2021		2020
Accrued customer incentives	$	1,345	$	1,524
Accrued payroll		1,601		1,471
Accrued commission		1,450		108
Other accrued expenses		484		507
Total	$	4,880	$	3,610

Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

15. INCOME TAXES

The following table presents the provision for income taxes and the effective tax rate for the three months ended September 30, 2021 (as restated) and September 30, 2020 in thousands:

	September 30,			September 30,
	2021			2020
	(As Restated)
Income tax benefit (expense)	$	255		$	(493	)
Effective tax rate		(2.9	)%		17.9	%

The following table presents the provision for income taxes and the effective tax rate for the nine months ended September 30, 2021 (as restated) and September 30, 2020 in thousands:

	September 30,			September 30,
	2021			2020
	(As Restated)
Income tax benefit (expense)	$	(48,279	)	$	(1,776	)
Effective tax rate		185.8	%		(33.9	)%

As of each reporting period, management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year periods ended June 30 and September 30, 2021. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

Based on this evaluation, a full valuation allowance was recorded on the net deferred tax asset of $51.24 million as of June 30, 2021. Management has determined that there is sufficient negative evidence to conclude that it is more likely than not that the net deferred tax asset will not be realizable. The Company therefore continues to maintain a full valuation allowance for the period ended September 30, 2021.

The income tax (benefit) expense for the three and nine months ended September 30, 2021 was primarily attributable to foreign income tax expenses on the Company’s foreign income in Italy and the expense recorded in the second quarter relating to a full valuation allowance on the net deferred tax asset.

The Company also believes that quarterly effective tax rates will vary from the fiscal 2021 effective tax rate as a result of recording a full valuation allowance, recognizing the income tax effects of items that the Company cannot anticipate such as the changes in tax laws, tax amounts associated with foreign earnings at rates different from the United States federal statutory rate, the tax impact of stock-based compensation. The Company’s foreign earnings on Italian operations are subject to foreign taxes applicable to its income derived in Italy.

As of September 30, 2021, the Company had no open tax examinations by any taxing jurisdiction in which it operates. The taxing authorities of the most significant jurisdictions are the United States Internal Revenue Service and the California Franchise Tax Board and the Agenzia delle Entrate. The statute of limitations for which the Company’s tax returns are subject to examination are as follows: Federal 2017-2020, California 2016-2020, and Italy 2016-2020.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Indebtedness

9 Months Ended

Sep. 30, 2021

Indebtedness [Abstract]

INDEBTEDNESS

16. INDEBTEDNESS

Debt consisted of the following (in thousands):

	September 30, 2021			December 31, 2020
	(As Restated)
Notes payable	$	5,890		$	2,101
Notes payable to related parties (Note 19)		7			66
Revolving credit facilities		3,317			22
Total debt		9,214			2,189
Less: current portion		(6,587	)		(199	)

Total long-term portion – net	$	2,627		$	1,990

Revolving credit facility

The Company is party to a revolving line of credit agreement, which has been amended from time to time, pursuant to which a credit facility has been extended to the Company until January 25, 2022 (the “Credit Facility”). The Credit Facility provides the Company with up to $25.00 million in revolving credit. Under the Credit Facility, the Company may borrow up to (a) 90% of the net amount of eligible accounts receivable; plus, (b) the lower of: (i) sum of: (1) 50% of the net amount of eligible inventory; plus (2) 45% of the net amount of eligible in-transit inventory; (ii) $10.00 million; or (iii) 50% of the aggregate amount of revolving loans outstanding, minus (c) the sum of all reserves. Under the Credit Facility: (i) the Company’s fixed charge coverage ratio may not be less than 1.10:1.00, and (ii) the Company may make dividends or distributions in shares of stock of the same class and also distributions for the payment of taxes. As of December 31, 2020, the Company was in compliance with all terms and conditions of its Credit Facility. As of September 30, 2021, the Company was not in compliance with the fixed charge coverage ratio term of the credit facility. This noncompliance has no impact on the Company’s borrowing capacity and financial condition.

The revolving line of credit bears interest at the sum of (i) the greater of (a) the daily Prime Rate, or (b) LIBOR plus 2%; and (ii) 1%.

The revolving line of credit has an arrangement associated with it wherein all collections from collateralized receivables are deposited into a collection account and applied to the outstanding balance of the line of credit on a daily basis. The funds in the collection account are earmarked for payment towards the outstanding line of credit and given the Company’s obligation to pay off the outstanding balance on a daily basis, the balance is classified as a current liability on the Company’s condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020. The balance on the credit facility was $2.62 million and $0.02 million as of September 30, 2021 and December 31, 2020, respectively.

The Credit Facility included a capital expenditure loan (“Capex Loan”) in the amount of up to $1.89 million that functions to reimburse the Company for certain qualified expenses related to the Company’s purchase of capital equipment. All borrowings against this loan are payable on a straight-line basis over 5 years and accrue interest at the greater of (a) the daily Prime Rate or (b) the daily LIBOR Rate plus 4%. The loan was paid off in full with the proceeds from the Transaction. The balance on the Capex Loan was $0 million as of both September 30, 2021 and December 31, 2020.

In March 2021, Ittella Italy entered into a line of credit with a financial institution in the amount of 0.60 million Euros. The balance on the credit facility was $0.69 million (0.60 million Euro) as of September 30, 2021.

Notes payable

In May 2021, Ittella Italy entered into a promissory note with a financial institution in the amount of 1.00 million Euros. The note accrues interest at 1.014% and has a maturity date of May 28, 2025, when the full principal and interest are due. The balance on the promissory note was 0.94 million Euro ($1.09 million USD) and 0 million Euro ($0 million USD) as of September 30, 2021 and December 31, 2020, respectively.

On January 6, 2020, Ittella Properties, LLC, a variable interest entity (“VIE”) (see Note 21), refinanced all of its existing debt with a financial institution in the amount of $2.10 million (the “Note”). The Note accrues interest at 3.60% and has a maturity date of January 31, 2035. Financial covenants of the Note include a minimum fixed charge coverage ratio of 1.20 to 1.00. As of September 30, 2021, the Company was in compliance with all terms and conditions of the Note. The outstanding balance on the Note was $1.94 million and $2.02 million as of September 30, 2021 and December 31, 2020, respectively.

In connection with the NMFD Transaction in May 2021 (see Note 10), the Company assumed a note payable in the amount of $2.92 million. The note payable bears interest at 3.8% per annum and has a maturity date of December 29, 2025. Under the note payable, NMFD must maintain a minimum fixed charge coverage ratio of 1.20:1.00, assessed semi-annually as of June 30th and December 31st of each calendar year beginning December 31, 2021, and the Company must, on a consolidated basis, maintain a funded debt to EBITDA ratio not to exceed four to one, tested semi-annually as of June 30 and December 31, with the first test to begin June 30, 2021. The outstanding balance of the note payable was $2.86 million and classified as a current liability due to noncompliance with above financing covenants as of September 30, 2021.

Future minimum principal payments due on the notes payable, including notes payable to related parties, for periods subsequent to September 30, 2021 are as follows (in thousands) (As Restated):

Three months ended December 31, 2021	$	3,475
2022		3,214
2023		408
2024		415
2025		275
2026		132
Thereafter		1,295
Total	$	9,214

Stockholders' Equity

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

STOCKHOLDERS' EQUITY

17. STOCKHOLDERS’ EQUITY

The condensed consolidated statements of changes in equity reflect the Reverse Recapitalization as of October 15, 2020. Since Myjojo (Delaware) was determined to be the accounting acquirer in the Reverse Recapitalization, all periods prior to the consummation of the Transaction reflect the balances and activity of Myjojo (Delaware) (other than shares which were retroactively restated in connection with the Transaction).

Further, the Company issued awards to certain officers and all of its directors pursuant to the Tattooed Chef, Inc. 2020 Incentive Award Plan (“Director Awards”) on December 17, 2020 (see Note 18). Salvatore Galletti received 4,935 shares of common stock of the Company as part of the Director Awards. Such shares together with the shares that Salvatore Galletti received as a result of the Transaction and the release of the Holdback Shares from escrow, resulted in Salvatore Galletti having approximately 38.33% (including the shares of Company common stock held by Project Lily LLC, which is controlled by Mr. Galletti) of the voting power of the capital stock of the Company as of September 30, 2021.

On June 1, 2021, the Company issued 825,000 shares of common stock of the Company to the principals of Harrison & Co (“Harrison”) as consideration for advisory services provided by Harrison to facilitate the successful completion of the Transaction (see Note 1). The total consideration to Harrison included a $4.00 million success fee that was paid in cash upon closing of the Transaction and the right to 825,000 shares of common stock of the Company to be issued between May 1, 2021 and June 30, 2021. The shares were considered share-based compensation to non-employees and were classified as equity instruments as of October 15, 2020 (and therefore, not subject to remeasurement). The fair value of the share-based consideration on the date of the Transaction amounted to $20.73 million. The share-based consideration was fully vested upon consummation of the Transaction and there were no future service conditions. The fair value of the shares is also included as Transaction costs and recognized within additional paid-in capital as a reduction to the total amount of equity raised on the Closing Date.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.

Common Stock

The Company is authorized to issue 1,000,000,000 shares of common stock with a par value of $0.0001 per share. Holders of common stock are entitled to one vote for each share. As of September 30, 2021, there were 81,982,392 shares issued and outstanding.

Noncontrolling Interest

Prior to the consummation of the Transaction, noncontrolling interest in Ittella Italy was included as a component of stockholders’ equity on the accompanying condensed consolidated balance sheets. Noncontrolling interest in Ittella International contained a redemption feature and was included as mezzanine equity on the accompanying condensed consolidated balance sheets (Note 3). The share of income attributable to noncontrolling interest was included as a component of net income in the accompanying consolidation statements of operations and comprehensive income prior to the Transaction.

As discussed in Note 3, all noncontrolling interest were converted into Myjojo (Delaware)’s common shares, which were subsequently exchanged for the Company’s common shares in the Transaction.

The following schedule discloses the components of the Company’s changes in other comprehensive income attributable to noncontrolling interest for the three months ended September 30, 2020 (in thousands):

	2020
Net income attributable to noncontrolling interest in Ittella Italy	$	282
Net loss attributable to noncontrolling interest in Ittella International		(440	)
Increase in noncontrolling interest due to foreign currency translation		57
Change in net comprehensive income attributable to noncontrolling interest for the three months ended September 30	$	(101	)

The following schedule discloses the components of the Company’s changes in other comprehensive income attributable to noncontrolling interest for the nine months ended September 30, 2020 (in thousands):

	2020
Net income attributable to noncontrolling interest in Ittella Italy	$	950
Net income attributable to noncontrolling interest in Ittella International		198
Increase in noncontrolling interest due to foreign currency translation		91

Change in net comprehensive income attributable to noncontrolling interest for the nine months ended September 30	$	1,239

Warrants

In connection with Forum’s initial public offering (IPO) and issuance of Private Placement Units in August 2018, Forum issued Units consisting of common stock with attached warrants as follows:

Public Warrants – Forum issued 20,000,000 Units at a price of $10.00 per Unit, each Unit consisting of one share of common stock of Forum and one redeemable warrant.

Private Placement Warrants – Forum issued 655,000 Private Placement Units, each consisting of one share of common stock and one warrant to the Sponsor, Jefferies LLC and EarlyBirdCapital, Inc.

Each Public Warrant and Private Placement Warrant (together, the “Warrants”) entitled the holder to purchase one share of common stock at an exercise price of $11.50.

The Public Warrants contained a redemption feature that provided the Company the option to call the Public Warrants for redemption 30 days after notice to the holder when any of conditions described in the following paragraph were met, and to require that any Public Warrant holder who desired to exercise his, her or its Public Warrant prior to the redemption date do so on a “cashless basis,” by converting each Public Warrant for an equivalent number of shares of common stock, determined by dividing (i) the product of the number of shares of common stock underlying the Warrants, multiplied by the difference between the exercise price and the “Fair Market Value”, and (ii) the Fair Market Value (defined as the average last sale price of the common stock for the ten trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of the Public Warrants).

The Public Warrants became exercisable upon the occurrence of certain events (“trigger events”), which included the completion of the Transaction. Once the Public Warrants became exercisable, the Company could redeem the Public Warrants in whole, at a price of $0.01 per warrant within 30 days after a written notice of redemption, and if, and only if, the reported last sale price of the Company’s common stock equaled or exceeded $18.00 per share for any 20 trading days within a 30-trading day period ending three business days before the Company sent the notice of redemption to the holder.

The Private Placement Warrants are identical to the Public Warrants, except that so long as they are held by the Sponsor, an underwriter of Forum’s IPO, or any of their permitted transferees, the Private Placement Warrants: (i) may be exercised for cash or on a cashless basis; (ii) may not be transferred, assigned, or sold 30 days after the completion of a defined business combination except to a permitted transferee who enters into a written agreement with the Company agreeing to be bound by the transfer restrictions, and (iii) are not redeemable by the Company.

A Warrant may be exercised only during the “Exercise Period” commencing on the later of: (i) the date that is 30 days after the first date on which Forum completes its initial business combination; or (ii) 12 months from the date of the closing of the IPO, and terminating on the earlier to occur (x) five years after Forum completes its initial business combination; (y) the liquidation of the Company or, the Redemption Date (as that term is defined in the Warrant Agreement), subject to any applicable conditions as set forth in the Warrant Agreement. The Company in its sole discretion may extend the duration of the Warrants by delaying the expiration date, provided it give at least 20 days prior written notice of any such extension to the registered holders of the Warrants.

As discussed in Note 1, Forum completed a business combination, which is one of the trigger events for exercisability of the Warrants.

Warrant activity is as follows:

	Public Warrants			Private Placement Warrants
Issued and outstanding as of October 15, 2020		20,000,000			655,000
Exercised		(5,540,316	)		(247,423	)
Issued and outstanding as of December 31, 2020		14,459,684			407,577
Exercised		(14,459,684	)		(278,542	)
Issued and outstanding as of September 30, 2021		-			129,035

The Public Warrants were considered freestanding equity-classified instruments due to their detachable and separately exercisable features. Accordingly, the Public Warrants were presented as a component of Stockholders’ Equity in accordance with ASC 815-40-25.

As discussed in Note 12, the Private Placement Warrants are considered freestanding liability-classified instruments under ASC 815-40-25.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 6
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

Equity Incentive Plan

9 Months Ended

Sep. 30, 2021

Equity Incentive Plan [Abstract]

EQUITY INCENTIVE PLAN

18. EQUITY INCENTIVE PLAN

On October 15, 2020, the Company’s Tattooed Chef, Inc. 2020 Incentive Plan (the “Plan”) became effective and permits the granting of equity awards of up to 5,200,000 common shares to executives, employees and non-employee directors, with the maximum number of common shares to be granted in a single fiscal year, when taken together with any cash fees paid to the non-employee director during that year in respect of his or her service as a non-employee director, not exceeding $100,000 in total value to any non-employee director. Awards available for grant under the Plan include Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Share-based Awards, Other Cash-based Awards and Dividend Equivalents. Shares issued under the Plan may be newly issued shares or reissued treasury shares.

Options maybe granted at a price per share not less than 100% of the fair market value at the date of grant. Options granted generally vest over a period of three years, subject to the grantee’s continued service with the Company through the scheduled vested date and expire no later than 10 years from the grant date.

Stock Options

Stock options under the Plan are generally granted with a strike price equal to 100% of the fair market value of the stock on the date of grant, with a three-year vesting period and a grant life of 10 years. The strike price may be higher than the fair value of the stock on the date of the grant but cannot be lower.

The table below summarizes the stock option activity in the Plan for the three months ended September 30, 2021:

						Weighted
						Average
				Weighted		Remaining
	Number of			Average		Contractual		Intrinsic
	Awards			Exercise		Terms		Value
	Outstanding			Price		(Years)		(in thousands)
Balance at June 30, 2021		1,040,300		$	22.88		9.57	$	-
Granted		555,000			18.31
Cancelled and forfeited		(1,500	)		24.69
Exercised		-			-
Balance at September 30, 2021		1,593,800		$	21.30		9.51	$	-
Exercisable at September 30, 2021		-		$	-		-	$	- </