| 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. Basis of Presentation. 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.
1) Immaterial errors identified and revised in prior periods. 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. During the quarter ended
March 31, 2021, the Company revised the accompanying condensed consolidated balance sheet as of December 31, 2020, and the consolidated
statements of operations and comprehensive income, stockholders’ equity and cash flows for the year ended December
31, 2020 (not included herein) to reflect the correction of an immaterial error related to the classification of Private
Placement Warrants. These warrants are now classified as liabilities with the related changes in the fair value of these
warrants recorded in the statement of operations and comprehensive income. This revision has an immaterial impact
on the Company’s previously reported net income, earnings per share, total liabilities and stockholders’
equity. In further consideration
of the guidance in Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging — Contracts in
Entity’s Own Equity Fair Value Measurement The revised classification
and reported values of the Private Placement Warrants as accounted for under ASC 815-40 are included in the condensed consolidated financial
statements herein. The Company revised the accompanying condensed
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.
2) Immaterial errors identified and revised in current quarter. The Company revised the accompanying condensed 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 17). 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 of these items are included within the Company’s
additional paid-in capital for the year ended December 31, 2020. This 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, and had no impact on the balance sheet, total additional
paid-in capital and total stockholders’ equity as of December 31, 2020. During the period ended
September 30, 2021, the Company identified additional immaterial errors in its previously issued financial statements related to inventoriable
costs and the classification of certain accounts that primarily impact cost of goods sold and operating expenses. The Company assessed
the cumulative effect of all the errors on the prior quarterly and annual financial statements, both quantitatively and qualitatively,
in accordance with the SEC’s 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,” and concluded the
errors were not material to any of the previously issued financial statements. Consequently, these errors will be corrected prospectively
and financial statements will be revised in the future when the consolidated balance sheets, statements of operations and comprehensive
income and cash flows for such prior periods are included in future filings.
3) Accumulated effect of revisions on each financial statement line item The Company revised the
condensed consolidated balance sheets as of December 31, 2019 and 2020, the condensed consolidated statements of stockholders’ equity
(deficit) for the years ended December 31, 2019 and 2020, the condensed consolidated statements of operations and comprehensive income
for years ended December 31, 2019 and 2020, the condensed consolidated statements of cash flows for the years ended December 31, 2019 and
2020, the condensed consolidated statements of cash flows for the nine months ended September 30, 2020, the condensed consolidated statements
of operations and comprehensive income for the three and six months ended June 30, 2021, three months ended March 31, 2021, three months
and nine months ended September 30, 2020, three and six months ended June 30, 2020 and three months ended March 31, 2020 to reflect the
correction of aforementioned immaterial errors.
(In thousands) Condensed Consolidated Balance Sheet
As of December 31, 2019 As Previously Current Re-classification* As Revised
Inventory $ 17,960 $ - $ (239 ) $ - $ 17,721
TOTAL CURRENT ASSETS 34,950 - (239 ) - 34,711
TOTAL ASSETS 43,896 - (239 ) - 43,657
Accounts payable 17,037 - - (358 ) 16,679
Other current liabilities 65 - - 358 423
TOTAL CURRENT LIABILITIES 30,715 - - - 30,715
TOTAL LIABILITIES 33,820 - - - 33,820
REDEEMABLE NONCONTROLLING INTEREST 6,930 - (30 ) - 6,900
Retained earnings 1,265 - (209 ) - 1,056
Total equity attributable to Myjojo, Inc. 2,890 - (209 ) - 2,681
Noncontrolling interest 256 - - - 256
TOTAL STOCKHOLDER’S EQUITY (DEFICIT) 3,146 - (209 ) - 2,937
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 43,896 - (239 ) - 43,657
(In thousands) Condensed Consolidated Balance Sheet
As of December 31, 2020 As Previously Current Re-classification* As Revised
Accounts receivable $ 17,991 $ - $ 1 $ - $ 17,992
Inventory 38,660 - (658 ) - 38,002
TOTAL CURRENT ASSETS 206,470 - (657 ) - 205,813
TOTAL ASSETS 266,683 - (657 ) - 266,026
Accounts payable 25,391 - - (1,316 ) 24,075
Other current liabilities 87 - - 1,316 1,403
TOTAL CURRENT LIABILITIES 30,349 - - - 30,349
Warrant liabilities - 5,184 - - 5,184
TOTAL LIABILITIES 32,339 5,184 - - 37,523
Additional paid-in capital 170,799 (6,376 ) 1 - 164,424
Retained earnings 63,537 1,192 (658 ) - 64,071
TOTAL STOCKHOLDER’S EQUITY (DEFICIT) 234,344 (5,184 ) (657 ) - 228,503
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 266,683 - (657 ) - 266,026
(In thousands) Condensed Consolidated Balance Sheet
As of March 31, 2021 As Previously Current Re-classification* As Revised
Inventory $ 38,701 $ - $ (662 ) $ - $ 38,039
TOTAL CURRENT ASSETS 267,397 - (662 ) - 266,735
TOTAL ASSETS 332,905 - (662 ) - 332,243
Accounts payable 31,252 - - (46 ) 31,206
Other current liabilities 1,188 - - 46 1,234
TOTAL CURRENT LIABILITIES 41,770 - - - 41,770
TOTAL LIABILITIES 45,548 - - - 45,548
Retained earnings 56,269 - (662 ) - 55,607
TOTAL STOCKHOLDER’S EQUITY (DEFICIT) 287,357 - (662 ) - 286,695
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 332,905 - (662 ) - 332,243
(In thousands) Condensed Consolidated Balance Sheet
As of June 30, 2021 As Previously Current Re-classification* As Revised
Inventory $ 50,818 $ - $ (1,232 ) $ - $ 49,586
TOTAL CURRENT ASSETS 222,610 - (1,232 ) - 221,378
TOTAL ASSETS 283,345 - (1,232 ) - 282,113
Accounts payable 29,269 - - (19 ) 29,250
Other current liabilities 1,840 - (1 ) 19 1,858
TOTAL CURRENT LIABILITIES 44,066 - (1 ) - 44,065
TOTAL LIABILITIES 49,005 - (1 ) - 49,004
Retained earnings 3,073 - (1,231 ) - 1,842
TOTAL STOCKHOLDER’S EQUITY (DEFICIT) 234,340 - (1,231 ) - 233,109
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 283,345 - (1,232 ) - 282,113
(In thousands) Condensed Consolidated
For the year ended December 31, 2019 As Previously Current As revised
REDEEMABLE NONCONTROLLING INTEREST $ 6,930 $ - $ (30 ) $ 6,900
Retained earnings ending balance 1,265 - (209 ) 1,056
(In thousands) Condensed Consolidated
For the year ended December 31, 2020 As Previously Current As revised
Additional paid in capital from exercise of warrants $ 66,559 $ 2,696 $ - $ 69,255
Additional paid in capital from reverse recapitalization 91,920 (9,072 ) 20,542 103,390
Additional paid in capital, Transaction costs, net of tax (7,227 ) - (20,542 ) (27,769 )
Additional paid in capital ending balance 170,799 (6,375 ) - 164,424
Retained earnings ending balance 63,537 1,192 (658 ) 64,071
(In thousands) Condensed Consolidated
For the year ended December 31, 2019 As Previously Current As revised
Cash Flows from Operating Activities:
Net income $ 5,608 $ - $ (198 ) $ 5,410
Changes in operating assets and liabilities:
Inventory (6,757 ) - 198 (6,559 )
Net cash (used in) provided by operating activities (1,076 ) - - (1,076 )
(In thousands) Condensed Consolidated
For the year ended December 31, 2020 As Previously Current As revised
Cash Flows from Operating Activities:
Net income $ 68,724 $ 1,192 $ (419 ) $ 69,497
Adjustments to reconcile net income to net provided by (cash used in) operating activities:
Revaluation of common stock warrant liability to estimated fair value - (1,192 ) - (1,192 )
Changes in operating assets and liabilities: -
Inventory (20,700 ) - 419 (20,281 )
Net cash (used in) provided by operating activities (13,367 ) - - (13,367 )
(In thousands) Condensed Consolidated
For the nine months ended September 30, 2020 As Previously Current 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 (used in) provided by operating activities 1,820 - - 1,820
(In thousands, except EPS) Condensed Consolidated
For the year ended December 31, 2019 As Previously Current As Revised
Revenue $ 84,919 $ - $ (1 ) $ 84,918
Cost of goods sold 71,209 - 524 71,733
Gross profit 13,710 - (525 ) 13,185
Operating expense 7,454 - (327 ) 7,127
Income from operations 6,256 - (198 ) 6,058
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 5,762 - (198 ) 5,564
Net income (loss) 5,608 - (198 ) 5,410
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1,082 - (25 ) 1,057
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC. 4,526 - (173 ) 4,353
Basic net income (loss) per share 0.16 - (0.01 ) 0.15
Diluted net income (loss) per share 0.16 - (0.01 ) 0.15
(In thousands, except EPS) Condensed Consolidated
For the three months ended March 31, 2020 As Previously Current As Revised
Revenue $ 33,170 $ - $ 2 $ 33,172
Cost of goods sold 23,927 - 109 24,036
Gross profit 9,243 - (107 ) 9,136
Operating expense 2,390 - (30 ) 2,360
Income from operations 6,853 - (77 ) 6,776
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 6,629 - (77 ) 6,552
Net income (loss) 5,899 - (77 ) 5,822
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1,022 - (10 ) 1,012
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC. 4,877 - (67 ) 4,810
Basic net income (loss) per share 0.17 (0.00 ) 0.17
Diluted net income (loss) per share 0.17 - (0.00 ) 0.17
(In thousands, except EPS) Condensed Consolidated
For the three months ended June 30, 2020 As Previously Current As Revised
Revenue $ 34,764 $ - $ 3 $ 34,767
Cost of goods sold 31,019 - (169 ) 30,850
Gross profit 3,745 - 172 3,917
Operating expense 2,068 - 541 2,609
Income from operations 1,677 - (369 ) 1,308
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 1,808 - (369 ) 1,439
Net income (loss) 1,255 - (369 ) 886
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 339 - (46 ) 293
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC. 916 - (323 ) 593
Basic net income (loss) per share 0.03 - (0.01 ) 0.02
Diluted net income (loss) per share 0.03 - (0.01 ) 0.02
(In thousands, except EPS) Condensed Consolidated
For the six months ended June 30, 2020 As Previously Current As Revised
Revenue $ 67,934 $ - $ 5 $ 67,939
Cost of goods sold 54,946 - (60 ) 54,886
Gross profit 12,988 - 65 13,053
Operating expense 4,458 - 511 4,969
Income from operations 8,530 - (446 ) 8,084
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 8,437 - (446 ) 7,991
Net income (loss) 7,154 - (446 ) 6,708
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1,361 - (56 ) 1,305
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC. 5,793 - (390 ) 5,403
Basic net income (loss) per share 0.20 - (0.01 ) 0.19
Diluted net income (loss) per share 0.20 - (0.01 ) 0.19
(In thousands, except EPS) Condensed Consolidated
For the three months ended September 30, 2020 As Previously Current 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 - 434 7,621
Loss from operations (3,405 ) - 15 (3,390 )
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (2,768 ) - 15 (2,753 )
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 ) - 0.00 (0.11 )
Diluted net loss per share (0.11 ) - 0.00 (0.11 )
Comprehensive income (3,844 ) - 15 (3,829 )
Less: income (loss) attributable to the noncontrolling interest 57 (160 ) 2 (101 )
Comprehensive income attributable to Tattooed Chef, Inc. stockholders (3,901 ) 160 13 (3,728 )
(In thousands, except EPS) Condensed Consolidated
For the nine months ended September 30, 2020 As Previously Current 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 1,201 (53 ) 1,239
Comprehensive income attributable to Tattooed Chef, Inc. stockholders 3,602 (1,201 ) (379 ) 2,022
(In thousands, except EPS and shares) Condensed Consolidated
For the year ended December 31, 2020 As Previously Current As Revised
Revenue $ 148,492 $ - $ 6 $ 148,498
Cost of goods sold 124,836 - 1,756 126,592
Gross profit 23,656 - (1,750 ) 21,906
Operating expense 32,541 - (1,331 ) 31,210
Loss from operations (8,885 ) - (419 ) (9,304 )
Other income 38,066 1,192 - 39,258
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 28,446 1,192 (419 ) 29,219
Net income (loss) 68,724 1,192 (419 ) 69,497
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1,475 - (53 ) 1,422
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC. 67,249 1,192 (366 ) 68,075
Basic net income per share 1.85 0.03 (0.01 ) 1.87
Diluted net income per share 1.69 0.03 (0.02 ) 1.70
Basic 36,313,821 - 174,041 36,487,862
Diluted 39,903,147 - 174,041 40,077,188
(In thousands, except EPS and
shares) Condensed Consolidated
For the three months ended March 31, 2021 As Previously Current As Revised
Revenue $ 52,682 $ - $ - $ 52,682
Cost of goods sold 45,905 - (390 ) 45,515
Gross profit 6,777 - 390 7,167
Operating expense 13,795 - 394 14,189
Loss from operations (7,018 ) - (4 ) (7,022 )
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (9,627 ) - (4 ) (9,631 )
Net income (loss) (8,152 ) - (4 ) (8,156 )
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC. (8,152 ) - (4 ) (8,156 )
Basic net loss per share (0.10 ) - (0.00 ) (0.10 )
Diluted net loss per share (0.11 ) - (0.00 ) (0.11 )
Basic 79,415,105 - 825,000 80,240,105
Diluted 79,719,129 - 825,000 80,544,129
(In thousands, except EPS) Condensed Consolidated
For the three months ended June 30, 2021 As Previously Current As Revised
Revenue $ 50,716 $ - $ (206 ) $ 50,510
Cost of goods sold 42,750 - (797 ) 41,953
Gross profit 7,966 - 591 8,557
Operating expense 15,900 - 1,160 17,060
Loss from operations (7,934 ) - (569 ) (8,503 )
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (7,211 ) - (569 ) (7,780 )
Net income (loss) (53,196 ) - (569 ) (53,765 )
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC. (53,196 ) - (569 ) (53,765 )
Basic net loss per share (0.65 ) - (0.01 ) (0.66 )
Diluted net loss per share (0.65 ) - (0.01 ) (0.66 )
(In thousands, except EPS) Condensed Consolidated
For the six months ended June 30, 2021 As Previously Current As Revised
Revenue $ 103,398 $ - $ (206 ) $ 103,192
Cost of goods sold 89,534 - (2,066 ) 87,468
Gross profit 13,864 - 1,860 15,724
Operating expense 28,816 - 2,433 31,249
Loss from operations (14,952 ) - (573 ) (15,525 )
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (16,838 ) - (573 ) (17,411 )
Net income (loss) (61,348 ) - (573 ) (61,921 )
NET INCOME (LOSS) ATTRIBUTABLE TO TATTOOED CHEF, INC. (61,348 ) - (573 ) (61,921 )
Basic net loss per share (0.76 ) - (0.00 ) (0.76 )
Diluted net loss per share (0.76 ) - (0.00 ) (0.76 )
* The adjustment columns above represent the following: Previously
Revised: Immaterial errors were identified and revised in prior periods. Current Revisions:
Immaterial errors were identified and revised in current quarter. Reclassifications:
Certain prior period amounts related to taxes payable were reclassified from Accounts Payable to Other Current Liabilities. Fair Value of Financial Instruments.
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. Foreign Currency. 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. Inventory. 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 Goodwill. Long-Lived and Intangible Assets. Warrants. 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. 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. 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 a third-party vendor and the Company acts as a principal in these transactions. Most contracts also include some form of variable
consideration, most commonly in the form of discounts 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 does not have significant 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’s
deferred revenue balance is primarily comprised of sales to customers whose contractual shipping terms are FOB destination. Deferred revenue
was $0.63 million and $1.71 million as of September 30, 2021 and December 31, 2020, respectively. The Company recognizes shipping and handling costs
related to products transferred to the end customer as fulfillment cost. 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. Operating Expenses. Sales and Marketing Expenses. Interest Expense. Deferred Financing Costs. Stock-based Compensation. Compensation — Stock Compensation Under the provisions of ASC 718, Compensation—Stock
Compensation Income Taxes. 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). Use of Estimates. Concentrations of Credit Risk. Three customers accounted for 63% and 87% of the
Company’s revenue during the three months ended September 30, 2021 and 2020, respectively.
Customer 2021 2020
Customer A 19 % 36 %
Customer C 33 % 30 %
Customer B 11 % 21 % Three customers accounted for 76% and 87% of the
Company’s revenue during the nine months ended September 30, 2021 and 2020, respectively.
Customer 2021 2020
Customer C 34 % 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 and December 31, 2020 were:
Customer September 30, December 31,
Customer A 19 % 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 |
