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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to
Commission File No. 001-38615
TATTOOED CHEF, INC.
(Exact name of registrant as specified in its charter)
Delaware82-5457906
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
6305 Alondra Blvd., Paramount, CA 90723
(Address of Principal Executive Offices, including zip code)
(562) 602-0822
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.0001 per shareTTCFThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
xLarge accelerated fileroAccelerated filer
oNon-accelerated fileroSmaller reporting company
oEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No x
As of August 3, 2022, there were 82,459,803 shares of common stock, par value $0.0001, issued and outstanding.

Explanatory Note

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 June 30, 2022, as originally filed with the Securities and Exchange Commission (the “SEC”) on August 9, 2022 (the “Original Filing”).

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.

The Company had previously identified material weaknesses in its internal control over financial reporting as of December 31, 2021 and its disclosure controls and procedures were not effective. For additional information about the nature of the Company’s material weaknesses which contributed to the financial statement restatement described herein, see Part II, Item 9A “Controls and Procedures” of Form 10-K/A for the year ended December 31, 2021 as filed with the SEC on November 16, 2022.

Items Amended in this Filing

For 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 Operations
-Part I, Item 4 – Controls and procedures

In 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 condensed 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.



TATTOOED CHEF, INC.
Quarterly Report on Form 10-Q/A
For the Quarter Ended June 30, 2022
TABLE OF CONTENTS
  Page
i


PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
TATTOOED CHEF, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except for share information)
June 30,
2022
December 31,
2021
(As Restated)
ASSETS
CURRENT ASSETS
Cash$27,729 $92,351 
Accounts receivable, net32,981 25,117 
Inventory62,356 56,256 
Prepaid expenses and other current assets8,234 7,027 
TOTAL CURRENT ASSETS131,300 180,751 
Property, plant and equipment, net57,687 46,476 
Operating lease right-of-use asset, net16,883 8,039 
Finance lease right-of-use asset, net5,554 5,639 
Intangible assets, net96 151 
Deferred income taxes, net259 266 
Goodwill26,705 26,924 
Other assets175 649 
TOTAL ASSETS$238,659 $268,895 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable$30,579 $28,334 
Accrued expenses6,913 3,767 
Line of credit1,510 1,200 
Notes payable, current portion5,028 5,019 
Forward contract derivative liability2,988 1,804 
Operating lease liabilities, current portion2,190 1,523 
Other current liabilities386 122 
TOTAL CURRENT LIABILITIES49,594 41,769 
Warrant liability146 814 
Operating lease liabilities, net of current portion14,910 6,599 
Notes payable, net of current portion1,432 716 
TOTAL LIABILITIES66,082 49,898 
COMMITMENTS AND CONTINGENCIES (See Note 18)
STOCKHOLDERS’ EQUITY
Preferred stock - $0.0001 par value; 10,000,000 shares authorized, none issued and outstanding at June 30, 2022 and December 31, 2021
  
Common stock- $0.0001 par value; 1,000,000,000 shares authorized; 82,459,803 shares and 82,237,813 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
8 8 
Additional paid in capital245,064 242,362 
Accumulated other comprehensive loss(1,814)(953)
Accumulated deficit(70,681)(22,420)
TOTAL STOCKHOLDERS’ EQUITY172,577 218,997 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$238,659 $268,895 
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
1


TATTOOED CHEF, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS (unaudited)
(in thousands, except for share and per share information)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
(As Restated)(As Restated)(As Restated)(As Restated)
NET REVENUE$57,733 $47,260 $125,421 $97,675 
COST OF GOODS SOLD58,581 41,131 122,202 86,539 
GROSS (LOSS) PROFIT(848)6,129 3,219 11,136 
OPERATING EXPENSES24,409 16,846 47,741 28,017 
LOSS FROM OPERATIONS(25,257)(10,717)(44,522)(16,881)
Interest expense(42)(94)(83)(114)
Other (expense) income(2,334)733 (2,945)(1,948)
LOSS BEFORE INCOME TAX EXPENSE(27,633)(10,078)(47,550)(18,943)
INCOME TAX EXPENSE(455)(49,285)(711)(48,049)
NET LOSS$(28,088)$(59,363)$(48,261)$(66,992)
NET LOSS PER SHARE
Basic$(0.34)$(0.72)$(0.59)$(0.83)
Diluted$(0.34)$(0.72)$(0.59)$(0.83)
WEIGHTED AVERAGE COMMON SHARES
Basic82,284,00581,981,42882,261,07981,121,795
Diluted82,284,00581,981,42882,261,07981,258,427
OTHER COMPREHENSIVE LOSS, NET OF TAX
Foreign currency translation adjustments(431)(210)(861)(101)
COMPREHENSIVE LOSS$(28,519)$(59,573)$(49,122)$(67,093)
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
2


TATTOOED CHEF, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)
(in thousands, except for share information)
Common StockAdditional Paid-In
Capital
Accumulated
Comprehensive
Loss
Accumulated
Deficit
Total
SharesAmount
(As Restated)(As Restated)
Balance as of January 1, 202282,237,813$8 $242,362 $(953)$(22,420)$218,997 
Foreign currency translation adjustment (430)— (430)
Stock-based compensation 1,287   1,287 
Issuance of restricted stock awards203,828     
Net loss   (20,173)(20,173)
Balance as of March 31, 202282,441,641$8 $243,649 $(1,383)$(42,593)$199,681 
Foreign currency translation adjustment  (431) (431)
Stock-based compensation 1,415   1,415 
Issuance of restricted stock awards18,162     
Net loss   (28,088)(28,088)
Balance as of June 30, 202282,459,803$8 $245,064 $(1,814)$(70,681)$172,577 
Common StockTreasury
Shares
Additional Paid-In
Capital
Accumulated
Comprehensive
Income
(Loss)
Retained Earnings
(Deficit)
Total
Shares Amount
(As Restated)(As Restated)
Balance as of January 1, 202171,551,067$7 (81,087)$168,448 $1 $64,846 $233,302 
Foreign currency translation adjustment — 109 — 109 
Distributions   (308)(308)
Stock-based compensation15,216 3,185   3,185 
Forfeiture of stock-based awards(95,084)    — 
Cancellation of treasury shares(81,087) 81,087   — 
Exercise of warrants10,010,0871 63,361   63,362 
Net loss   (7,629)(7,629)
Balance as of March 31, 202181,400,199$8 $234,994 $110 $56,909 $292,021 
Foreign currency translation adjustment — (210)— (210)
Stock-based compensation835,000 763  — 763 
Forfeiture of stock-based awards(300,000)— (445)— — (445)
Exercise of warrants3,469— 71 — — 71 
Net loss— — — (59,363)(59,363)
Balance as of June 30, 202181,938,668$8 $235,383 $(100)$(2,454)$232,837 
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3


TATTOOED CHEF, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
Six Months Ended
June 30,
20222021
(As Restated)(As Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss$(48,261)$(66,992)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization3,043 1,462 
Bad debt expense117 122 
Accretion of debt financing costs 3 
Unrealized foreign currency losses626  
Revaluation of warrant liability(668)51 
Unrealized forward contract loss1,184 1,074 
Non-cash lease cost138 44 
Stock compensation expense2,702 3,502 
Deferred taxes, net(14)47,064 
Changes in operating assets and liabilities:
Accounts receivable(7,753)(2,131)
Inventory(6,743)(8,098)
Prepaid expenses and other assets(881)(2,167)
Accounts payable2,930 (664)
Accrued expenses3,227 1,922 
Other current liabilities289 436 
Net cash used in operating activities(50,064)(24,372)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment(15,568)(10,140)
Acquisition of subsidiaries, net of cash acquired(42)(33,918)
Net cash used in investing activities(15,610)(44,058)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings in credit facility31 2,093 
Borrowings on line of credit702  
Repayments on line of credit(314) 
Repayments of notes payable to related parties (42)
Borrowings of notes payable1,109 1,168 
Repayments of notes payable(267)(140)
Proceeds from the exercise of warrants 73,957 
Payment of distributions (308)
Net cash provided by financing activities1,261 76,728 
NET (DECREASE) INCREASE IN CASH(64,413)8,298 
EFFECT OF EXCHANGE RATE ON CASH(209)305 
CASH AT BEGINNING OF PERIOD$92,351 $131,579 
CASH AT END OF PERIOD$27,729 $140,182 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest$88 $100 
Income taxes$165 $249 
Noncash investing and financing activities:  
Capital expenditures included in accounts payable$1,415 $776 
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4


TATTOOED CHEF, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. THE COMPANY
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 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”), 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 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 (the “Merger”), with Myjojo surviving the merger in accordance with the Delaware General Corporation Law. Immediately upon the completion of the Transaction, Myjojo became a direct wholly owned subsidiary of Forum. In connection with the closing of the Transaction (the “Closing”), 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 and its subsidiaries (collectively, the “Company”) are principally engaged in the manufacturing and sale of plant-based foods including, but not limited to, ready-to-cook bowls, zucchini spirals, riced cauliflower, acai and smoothie bowls, cauliflower crust pizza, wood-fired plant based pizzas, handheld burritos, tortillas, chips, bars and quesadillas primarily in the United States and Italy.
Ittella Properties LLC (“Ittella Properties”), the Company’s variable interest entity (“VIE”), owns a building located on Alondra Blvd., Paramount, California (“Alondra Building”), which is leased by Ittella International, LLC (“Ittella International”), a wholly owned subsidiary of Tattooed Chef, for 10 years from August 1, 2015 through August 1, 2025. Ittella Properties is wholly owned by Salvatore Galletti. The construction and acquisition of the Alondra building by Ittella Properties were funded by a loan agreement with unconditional guarantees by Ittella International and terms providing that 100% of the Alondra building must be leased to Ittella International throughout the term of the loan agreement. Accordingly, Ittella Properties is determined to be a consolidated VIE.
On May 14, 2021, the Company acquired New Mexico Food Distributors, Inc. (“NMFD”) and Karsten Tortilla Factory, LLC (“Karsten”) in an all-cash transaction for approximately $34.1 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 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 8 Business Combinations.
On September 28, 2021, Tattooed Chef formed BCI Acquisition, Inc. (“BCI”). On December 31, 2021, BCI acquired substantially all of the assets, and assumed certain specified liabilities, from Belmont Confections, Inc. (“Belmont”) for an aggregate purchase price of approximately $16.7 million. Belmont was a privately held company based in Youngstown, Ohio, and specialized in the development and manufacturing of private label nutritional bars. See Note 8 Business Combinations.
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
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 Regulation S-X of the Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim
5


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/A for the year ended December 31, 2021 as filed with the SEC on November 16, 2022, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2021 included in the accompanying unaudited condensed consolidated financial statements is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2021. The interim results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 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, the accounting acquirer, was assumed to have issued stock for the net assets of Forum, accompanied by a recapitalization.
The net assets of Forum are 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 are those of Myjojo. The shares and corresponding capital amounts and earnings per share available for common stockholders, prior to the Reverse Recapitalization, have been retroactively restated.
Restatement of Previously Issued Financial Statements
Subsequent to the issuance of the condensed consolidated financial statements as of and for the quarter ended June 30, 2021, included in the Form 10-Q/A filed with the SEC on May 2, 2022, the following errors were identified:
The Company incorrectly recorded expenses for advertising placement by a marketing services firm on a straight-line basis over the life of the contract rather than when the services were actually rendered. As a result, marketing expenses were understated by $3.4 million and $2.5 million for the three months and six months ended June 30, 2021, respectively.
The Company incorrectly recorded expenses related to a multi-vendor mailer program with a customer as operating expenses rather than as a reduction of revenue. As a result, revenue was overstated by $2.8 million and $4.8 million for the three and six months ended June 30, 2021, respectively. Operating expenses were overstated by $2.8 million and $4.8 million for the three and six months ended June 30, 2021, respectively.
The Company incorrectly recorded certain payments to customers as promotional and bad debt expenses within operating expenses rather than a reduction of revenue. As a result, both revenue and operating expenses were overstated by $0.2 million and $0.3 million for the three and six months ended June 30, 2021, respectively.
The Company identified errors related to the underlying data used in the inventory capitalization and inventory net realizable value assessment. As a result, cost of goods sold was overstated by $0.8 million and $0.7 million for the three and six months ended June 30, 2021, respectively.
The income tax impact of the errors identified above resulted in a decrease of deferred tax assets by $0.7 million as of June 30, 2021 and the $0.7 million was fully reserved during the three months ended June 30, 2021 due to the Company established a full valuation allowance starting the second quarter of 2021. As a result, the income tax expense was decreased by $0.7 million and $0.5 million for the three months and six months ended June 30, 2021, respectively.
The table below sets forth the condensed consolidated financial statements, including as reported, and the impacts resulting from the restatement, and the as restated balances for the quarterly period ended June 30, 2021 (in thousands):
6


($ in thousands except per share amounts)Condensed Consolidated Statements of Operations and
Comprehensive Income (Loss)
For the three months ended June 30, 2021As ReportedAdjustmentAs Restated
REVENUE50,270 (3,010)47,260 
COST OF GOODS SOLD41,953 (822)41,131 
GROSS PROFIT8,317 (2,188)6,129 
OPERATING EXPENSES16,419 427 16,846 
LOSS FROM OPERATIONS(8,102)(2,615)(10,717)
LOSS BEFORE PROVISION FOR INCOME TAXES(7,463)(2,615)(10,078)
INCOME TAX EXPENSE(50,009)724 (49,285)
NET LOSS(57,472)(1,891)(59,363)
NET LOSS PER SHARE
Basic(0.70)(0.02)(0.72)
Diluted(0.70)(0.02)(0.72)
COMPREHENSIVE LOSS(57,682)(1,891)(59,573)
($ in thousands except per share amounts)Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
For the six months ended June 30, 2021As ReportedAdjustmentAs Restated
REVENUE102,739 (5,064)97,675 
COST OF GOODS SOLD87,242 (703)86,539 
GROSS PROFIT15,497 (4,361)11,136 
OPERATING EXPENSES30,615 (2,598)28,017 
LOSS FROM OPERATIONS(15,118)(1,763)(16,881)
LOSS INCOME BEFORE PROVISION FOR INCOME TAXES(17,180)(1,763)(18,943)
INCOME TAX EXPENSE(48,534)485 (48,049)
NET LOSS(65,714)(1,278)(66,992)
NET LOSS PER SHARE
Basic(0.81)(0.02)(0.83)
Diluted(0.81)(0.02)(0.83)
COMPREHENSIVE LOSS(65,815)(1,278)(67,093)
($ in thousands)Condensed Consolidated Statements of
Stockholders’ Equity
For the three months ended June 30, 2021As ReportedAdjustmentAs Restated
Net loss in accumulated deficit for the three months ended June 30, 2021(57,472)(1,891)(59,363)
Retained earnings (Deficit) ending balance(2,424)(30)(2,454)
Total Stockholders’ equity ending balance232,867 (30)232,837 

7


($ in thousands)Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2021As
Reported
AdjustmentAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss(65,714)$(1,278)(66,992)
Adjustments to reconcile net loss to net cash from operating activities:
Bad debt expense311 (189)122 
Deferred taxes, net47,549 (485)47,064 
Changes in operating assets and liabilities:
Accounts receivable(2,320)189 (2,131)
Inventory(8,415)317 (8,098)
Prepaid expenses and other assets(3,613)1,446 (2,167)
Subsequent to the issuance of the condensed consolidated financial statements as of and for the three and six months ended June 30, 2022, included in the Form 10-Q filed with the SEC on August 9, 2022, the following errors were identified:
The Company incorrectly recorded expenses for advertising placement by a marketing services firm on a straight-line basis over the life of the contract rather than when the services were actually rendered. As a result, the marketing expenses were understated by $1.1 million and $2.2 million for the three and six months ended June 30, 2022, respectively. Prepaid expense was overstated by $2.2 million as of June 30 , 2022.
The Company incorrectly recorded expenses related to a multi-vendor mailer program with a large customer as operating expenses rather than as a reduction of revenue, and some of reductions were recognized during the second quarter instead of during the first quarter when the revenue was recognized. As a result, the operating expenses were overstated by $1.5 million and $4.4 million for the three and six months ended June 30, 2022, respectively, and revenue was overstated by $0 and $4.4 million for the three and six months ended June 30, 2022, respectively.
The Company under accrued marketing expense for one marketing service firm for the services rendered. The marketing expenses were understated by $0.4 million and $0.8 million for the three and six months ended June 30, 2022, respectively. Prepaid expense was overstated by $0.4 million and accrued expense was understated by $0.4 million as of June 30, 2022.
The Company incorrectly recognized twice for several orders which have been shipped but not invoiced. As a result, revenue was overstated for $0.4 million and $0.4 million for the three and six months ended June 30, 2022. Accounts receivable was overstated by $0.4 million as of June 30, 2022.
Due to unit measurement error for several inventory items, the Company understated cost of good sold for $0.9 million and $0.9 million for the three and six months ended June 30, 2022, respectively. Inventory was overstated by $0.9 million as of June 30, 2022.
The Company identified errors during the inventory capitalization process and inventory net realizable value assessment. As a result, the Company understated cost of goods sold by $0.4 million and $0.1 million for the three months and six months ended June 30, 2022. Inventory was understated by $1.6 million as of June 30, 2022.
The Company identified errors due to an improper general ledger account grouping and mapping process. As a result, the Company understated accounts receivable and overstated inventory by $1.0 million as of June 30, 2022.
The table below sets forth the condensed consolidated financial statements, including as originally reported, the impacts resulting from the restatement, and the as restated balances for the quarterly period ended June 30, 2022 (in thousands):

8


($ in thousands)CONDENSED CONSOLIDATED BALANCE SHEET
As of June 30, 2022As ReportedAdjustmentsAs Restated
Accounts receivable32,316 665 32,981 
Inventory62,622 (266)62,356 
Prepaid expenses and other current assets10,824 (2,590)8,234 
TOTAL CURRENT ASSETS133,491 (2,191)131,300 
TOTAL ASSETS240,850 (2,191)238,659 
Accrued expenses6,525 388 6,913 
TOTAL CURRENT LIABILITIES49,206 388 49,594 
TOTAL LIABILITIES65,694 388 66,082 
Accumulated deficit(68,102)(2,579)(70,681)
TOTAL STOCKHOLDERS’ EQUITY175,156 (2,579)172,577 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY240,850 (2,191)238,659 

($ in thousands except per share amounts)CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended June 30, 2022As ReportedAdjustmentsAs Restated
REVENUE58,110 (377)57,733 
COST OF GOODS SOLD57,370 1,211 58,581 
GROSS PROFIT (LOSS)740 (1,588)(848)
OPERATING EXPENSES24,346 63 24,409 
LOSS FROM OPERATIONS(23,606)(1,651)(25,257)
LOSS BEFORE INCOME TAX EXPENSE(25,982)(1,651)(27,633)
NET LOSS(26,437)(1,651)(28,088)
NET LOSS PER SHARE
Basic(0.32)(0.02)(0.34)
Diluted(0.32)(0.02)(0.34)
COMPREHENSIVE LOSS(26,868)(1,651)(28,519)

($ in thousands except per share amounts)CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Six Months Ended June 30, 2022As ReportedAdjustmentsAs Restated
REVENUE130,174 (4,753)125,421 
COST OF GOODS SOLD121,284 918 122,202 
GROSS PROFIT8,890 (5,671)3,219 
OPERATING EXPENSES49,139 (1,398)47,741 
LOSS FROM OPERATIONS(40,249)(4,273)(44,522)
LOSS BEFORE INCOME TAX EXPENSE(43,277)(4,273)(47,550)
NET LOSS(43,988)(4,273)(48,261)
NET LOSS PER SHARE
Basic(0.53)(0.06)(0.59)
Diluted(0.53)(0.06)(0.59)
COMPREHENSIVE LOSS(44,849)(4,273)(49,122)

9


($ in thousands)CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the Three Months Ended June 30, 2022As ReportedAdjustmentsAs Restated
Net loss in accumulated deficit for the three months ended June 30, 2022(26,437)(1,651)(28,088)
Accumulated deficit ending balance(68,102)(2,579)(70,681)
Total stockholders’ equity ending balance175,156 (2,579)172,577 

($ in thousands)CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 2022As ReportedAdjustmentsAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss(43,988)(4,273)(48,261)
Changes in operating assets and liabilities:
Accounts receivable(7,088)(665)(7,753)
Inventory(8,703)1,960 (6,743)
Prepaid expenses and other assets(3,471)2,590 (881)
Accrued expenses2,839 388 3,227 

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 differ from these estimates.
Significant Accounting Policies. There have been no material changes to the Company’s significant accounting policies from its Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021.
Sales and Marketing Expenses. The Company expenses costs associated with sales and marketing as incurred. Sales and marketing expenses were $12.3 million and $8.7 million for the three months ended June 30, 2022 and 2021, respectively, and $23.5 million and $12.4 million for the six months ended June 30, 2022 and 2021, respectively. Sales and marketing expenses are included in operating expenses in the condensed consolidated statements of operations and comprehensive loss.
Leases. In April 2022, the Company commenced one operating lease for a facility in Vernon, California, for 10 years with option to extend two additional five years. Approximately $9.5 million of operating lease ROU asset and $9.4 million of operating lease liabilities were recognized on the Company’s consolidated balance sheet upon the commencement date.
Concentrations Risk. 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 single external suppliers accounted for more than 10% of the Company’s cost of goods sold during the periods ended June 30, 2022 and 2021. As such, the Company is not subject to significant concentration risk on suppliers.
Four customers accounted for 68% of the Company’s revenue during the three months ended June 30, 2022. Three customers accounted for 77% of the Company’s revenue during the three months ended June 30, 2021.
Customer20222021
Customer A32 %34 %
Customer B10 %12 %
Customer C14 %31 %
Customer D12 %
*
10


________________________________
*Customer accounted for less than 10% of revenue in the period.
Three customers accounted for 59% of the Company’s revenue during the six months ended June 30, 2022. Three customers accounted for more than 83% of the Company’s revenue during the six months ended June 30, 2021.
Customer20222021
Customer A32 %35 %
Customer B
*
11 %
Customer C17 %37 %
Customer D10 %
*
________________________________
*Customer accounted for less than 10% of revenue in the period.
Three customers accounting for more than 10% of the Company’s accounts receivable as of June 30, 2022 and December 31, 2021 were:
CustomerJune 30,
2022
December 31,
2021
Customer A17 %13 %
Customer C31 %38 %
Customer D11 %12 %
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 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 COVID-19) generally affecting these growers could adversely affect the Company’s business.
The Company has experienced and is experiencing varying levels of inflation resulting in part from increased shipping and transportation costs, increased raw material and labor costs caused by the COVID-19 pandemic and general global economic conditions. The inflationary impact on the Company’s cost structure has been considered in its product pricing adjustment, which will be beginning in the fourth quarter of 2022, despite a continued focus on reducing manufacturing costs where possible.
The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact on the financial statements and presents material uncertainty and risk with respect to our business, operations, financial condition and liquidity.
Russia-Ukraine Conflict. Although the Company does not have direct exposure to Russia and Ukraine, the Company is monitoring the geopolitical situation following Russia’s invasion of Ukraine. The Company may experience shortages in materials and increased costs for transportation, energy, and raw materials due in part to the negative impact of the Russia-Ukraine military conflict on the global economy. To date, the conflict between Russia and Ukraine has not had a material negative impact on the Company’s business, financial condition, or results of operations. However, the full impact of the conflict on the Company’s business operations and financial performance remains uncertain and will depend largely on the nature and duration of uncertain and unpredictable events, such as the severity and duration of further military action and its impact on regional and global economic conditions.
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3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Recently issued and adopted accounting pronouncements
In August 2020, Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“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. The Company adopted the new standard on January 1, 2022. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
In December 2019, the FASB issued 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. 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.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal – Use Software (ASC Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 became effective for fiscal years beginning after December 15, 2020 and interim periods therein. Early adoption of ASU 2018-15 was permitted, including adoption in any interim period. The Company adopted this standard on January 1, 2021. The adoption of the new standard did not have a material impact on the Company’s condensed consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, 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 Company adopted the new standard on January 1, 2022. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02” or “ASC 842”). The FASB has subsequently issued several related ASUs that clarified the implementation guidance for certain aspects of ASU 2016-02, which were effective upon the adoption of ASU 2016-02. 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 Company adopted ASU 2016-02 as of January 1, 2021, using the effective date transition method to recognize the cumulative effect of initially applying Topic 842, if any, as an adjustment to retained earnings. The adoption of ASU 2016-12 resulted in an increase of $4.2 million and $4.2 million to total assets and total liabilities from the recording of operating lease right-of-use (“ROU”) assets and operating lease liabilities, respectively, and did not have any impact on the Company’s retained earnings as of January 1, 2021. Finance leases were not impacted by the adoption of ASC 842. The adoption did not materially impact the Company’s condensed consolidated statements of operations or cash flows.
Recently issued but not yet adopted accounting pronouncements
In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805) (“ASU 2021-08”). ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts. ASU 2021-08 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of ASU 2021-08 should be applied prospectively. Early adoption is also permitted, including adoption in an interim period. If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption. The Company is currently evaluating the impact of ASU 2021-08 on its condensed consolidated financial statements.
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4. REVENUE RECOGNITION
Nature of Revenues
Substantially all of the Company’s revenue from contracts with customers consists of the sale of plant-based foods 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.
The Company disaggregates revenue based on the type of products sold to its customers – private label, Tattooed Chef and other. Other revenues primarily consist of burritos, enchiladas and quesadillas and other products by NMFD, acquired by the Company on May 2021 (see Note 8 Business Combinations), to its restaurant customers on an as-needed basis. All sales are recorded within revenue on the accompanying condensed consolidated statements of operations and comprehensive loss. The Company does not have any contract assets or contract liabilities as of June 30, 2022 and December 31, 2021.
Revenue streams for the three months ended June 30, 2022 and 2021 were as follows:
20222021
Revenue Streams (in thousands)Revenue% Total Revenue% Total
Tattooed Chef$33,635 58 %$29,788 63 %
Private Label20,878 36 %17,136