| Restatement of Previously Issued Audited and Unaudited Financial Statements |
Note
11. Restatement of Previously Issued Audited and Unaudited Financial Statements
On
May 14, 2021, the Company concluded, with concurrence from the Audit Committee of our Board of Directors (the “Audit Committee”),
that the Affected Periods should no longer be relied upon because of errors in such financial statements addressed in the Financial
Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error
Corrections.
The errors relate to the treatment
under GAAP of the Warrants issued in connection with our Initial Public Offering. In the affected financial statements, the Warrants are
incorrectly classified as equity of the Company.
As previously disclosed in the Current
Report on Form 8-K filed with the SEC on May 17, 2021, on April 12, 2021, the Staff of the Securities and Exchange Commission (the “SEC”)
issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies (“SPACS”)” (the “SEC Statement”). The SEC Statement discussed certain features of
warrants similar to the Warrants issued in connection with the Initial Public Offering of the Company, specifically, settlement terms
and provisions related to certain tender offers following a business combination, as well as certain warrant instruments that do not meet
the criteria to be considered indexed to an entity’s own stock, and noted that entities must consider whether to classify contracts
that may be settled in its own stock, such as warrants, as equity or as an asset or liability. After considering the SEC Statement, the
Company re-evaluated its historical accounting for the Warrants and concluded it must amend the accounting treatment of the Warrants.
On May 14, 2021 management and the Audit Committee of the Board of Directors of the Company, in response to the SEC Statement and, after
discussion with the Company’s financial and legal advisors, concluded that the previously issued consolidated financial statements
of the Company (formerly known as LF Capital Acquisition Corp. or “LF Capital”) for the Affected Periods should no longer
be relied upon.
After
considering the SEC Statement, the Company re-evaluated its historical accounting for the Warrants and concluded it must amend the accounting
treatment of the Warrants issued in connection with the initial public offering of LFAC. The Warrants were presented within equity in
LFAC’s financial statements for the fiscal years ended December 31, 2020 and 2019. After reviewing the SEC Statement, the Company
concluded that the exercise and settlement features of the Private Placement Warrants may change with a change in the holder, which precludes
the Private Placement Warrants from being considered indexed to the Company’s own stock and therefore, precludes the Private Placement
Warrants from meeting the scope exception from derivative accounting prescribed by Accounting Standards Codification 815, Derivatives
and Hedging (“ASC 815”). In addition, the Company concluded that the Warrants may be settled in cash upon the occurrence
of a tender offer or exchange that involves 50% or more of the Company’s common stock, an event that is outside the control of
the Company. As such, the Warrants do not meet the conditions to be classified within equity under the SEC Statement and should be presented
as a liability. The material terms of the Warrants are more fully described in Note 7 – Stockholders’ equity. In the
process of evaluating the Warrants, the Company also considered the Convertible Note which is convertible into warrants identical to
the Private Placement Warrants. The Company determined to elect the fair value option for the convertible note. During the periods presented,
the carrying value of the Convertible Note approximated fair value and therefore no change in value was presented in the balance sheets
or statements of operations.
The
following presents a reconciliation of the balance sheets, statements of operations and cash flows as of and for the years ended December
31, 2020 and 2019. The restatement had no impact on net cash flows from operating, investing, or financing activities.
December 31,
2020 balance sheet:
| Schedule of Restatement of financial statements |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As
of December 31, 2020 |
| |
|
As
Previously Reported |
|
Restatement
Adjustment |
|
As
Restated |
| Total
assets |
|
$ |
109,812,830 |
|
|
$ |
— |
|
|
$ |
109,812,830 |
|
| Liabilities
and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Total current
liabilities |
|
|
4,501,627 |
|
|
|
— |
|
|
|
4,501,627 |
|
| Deferred underwriting
commissions |
|
|
5,433,750 |
|
|
|
— |
|
|
|
5,433,750 |
|
| Warrant liability |
|
|
— |
|
|
|
45,483,300 |
|
|
|
45,483,300 |
|
| Total
liabilities |
|
|
9,935,377 |
|
|
|
45,483,300 |
|
|
|
55,418,677 |
|
| Stockholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock, $0.0001 par
value |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Class A common
stock, $0.0001 par value |
|
|
1,039 |
|
|
|
— |
|
|
|
1,039 |
|
| Convertible
Class B common stock, $0.0001 par value |
|
|
388 |
|
|
|
— |
|
|
|
388 |
|
| Additional
paid-in capital |
|
|
99,730,418 |
|
|
|
(10,711,100 |
) |
|
|
89,019,318 |
|
| Accumulated
deficit |
|
|
145,608 |
|
|
|
(34,772,200 |
) |
|
|
(34,626,592 |
) |
| Total
stockholders’ equity (deficit) |
|
|
99,877,453 |
|
|
|
(45,483,300 |
) |
|
|
54,394,153 |
|
| Total
Liabilities and Stockholders’ Equity |
|
$ |
109,812,830 |
|
|
$ |
— |
|
|
$ |
109,812,830 |
|
Year
ended December 31, 2020 statement of operations:
| |
|
For
the Year Ended December 31, 2020 |
| |
|
As
Previously Reported |
|
Restatement
Adjustment |
|
As
Restated |
| General
and administrative expenses |
|
$ |
2,470,314 |
|
|
$ |
— |
|
|
$ |
2,470,314 |
|
| Franchise tax
expense |
|
|
200,051 |
|
|
|
— |
|
|
|
200,051 |
|
| Loss from
operations |
|
|
(2,670,365 |
) |
|
|
— |
|
|
|
(2,670,365 |
) |
| Interest earned
on investments and marketable securities |
|
|
694,319 |
|
|
|
— |
|
|
|
694,319 |
|
| Loss on remeasurement
of warrant liability |
|
|
— |
|
|
|
(34,539,350 |
) |
|
|
(34,539,350 |
) |
| Loss before
income tax expense |
|
|
) |
|
|
) |
|
|
) |
| Income tax expense |
|
|
120,449 |
|
|
|
— |
|
|
|
120,449 |
|
| Net
loss |
|
$ |
(2,096,495 |
) |
|
$ |
(34,539,350 |
) |
|
$ |
(36,635,845 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding
of Class A common stock |
|
|
14,006,380 |
|
|
|
— |
|
|
|
14,006,380 |
|
| Basic and diluted
net income per share, Class A |
|
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.03 |
|
| Weighted average shares outstanding
of Class B common stock |
|
|
3,881,250 |
|
|
|
— |
|
|
|
3,881,250 |
|
| Basic and diluted
net loss per share, Class B |
|
$ |
(0.64 |
) |
|
$ |
(8.90 |
) |
|
$ |
(9.54 |
) |
Year
ended December 31, 2020 statement of cash flows:
| |
|
For
the Year Ended December 31, 2020 |
| |
|
As
Previously Reported |
|
Restatement
Adjustment |
|
As
Restated |
| Cash Flows from
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net
loss |
|
$ |
(2,096,495 |
) |
|
$ |
(34,539,350 |
) |
|
$ |
(36,635,845 |
) |
| Adjustments
to reconcile net loss to net cash used in operating activities: |
|
|
(822,416 |
) |
|
|
34,539,350 |
|
|
|
33,716,934 |
|
| Changes in operating assets and liabilities |
|
|
2,111,980 |
|
|
|
— |
|
|
|
2,111,980 |
|
| Net cash used
in operating activities |
|
|
(806,931 |
) |
|
|
— |
|
|
|
(806,931 |
) |
| Net cash provided
by investing activities |
|
|
52,971,974 |
|
|
|
— |
|
|
|
52,971,974 |
|
| Net cash used
in financing activities |
|
|
(52,257,462 |
) |
|
|
— |
|
|
|
(52,257,462 |
) |
| Net change in
cash |
|
$ |
(92,419 |
) |
|
$ |
— |
|
|
$ |
(92,419 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Supplemental
disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Change in
Class A common stock subject to possible redemption |
|
$ |
(96,973,939 |
)
|
|
$ |
10,944,778 |
|
|
$ |
(86,029,161 |
)
|
December 31,
2019 balance sheet:
| |
|
As
of December 31, 2019 |
| |
|
As
Previously Reported |
|
Restatement
Adjustment |
|
As
Restated |
| Total
assets |
|
$ |
162,485,391 |
|
|
$ |
— |
|
|
$ |
162,485,391 |
|
| Liabilities
and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Total current
liabilities |
|
|
942,126 |
|
|
|
— |
|
|
|
942,126 |
|
| Deferred tax
liabilities |
|
|
128,105 |
|
|
|
— |
|
|
|
128,105 |
|
| Deferred underwriting
commissions |
|
|
5,433,750 |
|
|
|
— |
|
|
|
5,433,750 |
|
| Warrant liability |
|
|
— |
|
|
|
10,943,950 |
|
|
|
10,943,950 |
|
| Total
liabilities |
|
|
6,503,981 |
|
|
|
10,943,950 |
|
|
|
17,447,931 |
|
| Class A
ordinary shares, $0.0001 par value; shares subject to possible redemption |
|
|
150,981,401 |
|
|
|
(10,943,950 |
)
|
|
|
140,037,451 |
|
| Stockholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock, $0.0001 par
value |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Class A common
stock, $0.0001 par value |
|
|
106 |
|
|
|
105 |
|
|
|
211 |
|
| Convertible
Class B common stock, $0.0001 par value |
|
|
388 |
|
|
|
— |
|
|
|
388 |
|
| Additional
paid-in capital |
|
|
2,757,412 |
|
|
|
232,745 |
|
|
|
2,990,157 |
|
| Retained earnings
(Accumulated deficit) |
|
|
2,242,103 |
|
|
|
(232,850 |
) |
|
|
2,009,253 |
|
| Total
stockholders’ equity (deficit) |
|
|
5,000,009 |
|
|
|
— |
|
|
|
5,000,009 |
|
| Total
Liabilities and Stockholders’ Equity |
|
$ |
162,485,391 |
|
|
$ |
— |
|
|
$ |
162,485,391 |
|
Year
ended December 31, 2019 statement of operations:
| |
|
For
the Year Ended December 31, 2019 |
| |
|
As
Previously Reported |
|
Restatement
Adjustment |
|
As
Restated |
| General
and administrative expenses |
|
$ |
826,307 |
|
|
$ |
— |
|
|
$ |
826,307 |
|
| Franchise tax
expense |
|
|
200,000 |
|
|
|
— |
|
|
|
200,000 |
|
| Loss from
operations |
|
|
(1,026,307 |
) |
|
|
— |
|
|
|
(1,026,307 |
) |
| Interest earned
on investments and marketable securities |
|
|
3,473,997 |
|
|
|
— |
|
|
|
3,473,997 |
|
| Loss on remeasurement
of warrant liability |
|
|
— |
|
|
|
(931,400 |
) |
|
|
(931,400 |
) |
| Loss before
income tax expense |
|
|
|
|
|
) |
|
|
|
| Income tax expense |
|
|
675,854 |
|
|
|
— |
|
|
|
675,854 |
|
| Net
loss |
|
$ |
1,771,836 |
|
|
$ |
(931,400 |
) |
|
$ |
840,436 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding
of Class A common stock |
|
|
15,525,000 |
|
|
|
— |
|
|
|
15,525,000 |
|
| Basic and diluted
net income per share, Class A |
|
$ |
0.17 |
|
|
$ |
— |
|
|
$ |
0.17 |
|
| Weighted average shares outstanding
of Class B common stock |
|
|
3,881,250 |
|
|
|
— |
|
|
|
3,881,250 |
|
| Basic and diluted
net loss per share, Class B |
|
$ |
(0.21 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.45 |
) |
Year
ended December 31, 2019 statement of cash flows:
| |
|
For
the Year Ended December 31, 2019 |
| |
|
As
Previously Reported |
|
Restatement
Adjustment |
|
As
Restated |
| Cash Flows from
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net
loss |
|
$ |
1,771,836 |
|
|
$ |
(931,400 |
) |
|
$ |
840,436 |
|
| Adjustments
to reconcile net loss to net cash used in operating activities: |
|
|
(3,345,423 |
) |
|
|
931,400 |
|
|
|
(2,414,023 |
) |
| Changes in operating assets and liabilities |
|
|
(383,529 |
) |
|
|
— |
|
|
|
(383,529 |
) |
| Net cash used
in operating activities |
|
|
(1,957,116 |
) |
|
|
— |
|
|
|
(1,957,116 |
) |
| Net cash provided
by investing activities |
|
|
1,171,717 |
|
|
|
— |
|
|
|
1,171,717 |
|
| Net cash used
in financing activities |
|
|
750,000 |
|
|
|
— |
|
|
|
750,000 |
|
| Net change in
cash |
|
$ |
(35,399 |
) |
|
$ |
— |
|
|
$ |
(35,399 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Supplemental
disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Change in
Class A common stock subject to possible redemption |
|
$ |
1,771,832 |
|
|
$ |
(931,400 |
)
|
|
$ |
840,432 |
|
|