UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2022~~2023

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)


Delaware						82-5457906
(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 class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

TTCF

The 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.

xo Large accelerated filer ox Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging 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 ~~November 11~~May 9, ~~2022~~2023, there were 83,658,357 shares of common stock, par value $0.0001, issued and outstanding.

TATTOOED CHEF, INC.

Quarterly Report on Form 10-Q

For the Quarter Ended ~~September~~March 3031, ~~2022~~2023

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION		1
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	1
	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021 (As Restated)	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2023 and 2022	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (As Restated)	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September, 2022 and 2021 (As Restated)	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	4
	Notes to Unaudited Condensed Consolidated Financial Statements	65
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3223
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3828
Item 4.	Control and Procedures	3930
PART II – OTHER INFORMATION		4030
Item 1.	Legal Proceedings	4030
Item 1A.	Risk Factors	4030
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4130
Item 3.	Defaults Upon Senior Securities	4130
Item 4.	Mine Safety Disclosures	4131
Item 5.	Other Information	4131
Item 6.	Exhibits	4232
SIGNATURES		4333

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

TATTOOED CHEF, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except for share information)

	September 30,2022		December 31,2021
	March 31,2023		December 31,2022
ASSETS
CURRENT ASSETS
Cash	$	143,~~220~~509	$	925,~~351~~782
Accounts receivable, net	2425,~~036~~128		2520,~~117~~976
Inventory	7659,~~824~~359		5677,~~256~~957
Prepaid expenses and other current assets	75,~~170~~051		74,~~027~~351
TOTAL CURRENT ASSETS	~~122~~93,~~250~~047		~~180~~109,~~751~~066
Property, plant and equipment, net	6871,~~115~~472		4673,~~476~~052
Operating lease right-of-use asset, net	1918,~~883~~462		819,~~039~~231
Finance lease right-of-use asset, net	5,~~511~~426		5,~~639~~468
Intangible assets, net	1,~~735~~565		~~151~~1,653
Deferred income taxes, net	242		266
Other assets	329		297
Goodwill	26,705		26,924
TOTAL ASSETS	$	190,301	$	208,767
Other assets	254		649
TOTAL ASSETS	$	244,695	$	268,895
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	4650,~~311~~728	$	2857,~~334~~235
Accrued expenses	710,~~200~~584		37,~~767~~615
Line of credit	1924,~~990~~329		120,~~200~~314
Notes payable, current portion	54,~~002~~996		5,~~019~~056
Forward contract derivative liability	~~4,556~~150		~~1,804~~447
Operating lease liabilities, current portion	2,~~446~~365		12,~~523~~437
Other current liabilities	~~356~~408		~~122~~269
TOTAL CURRENT LIABILITIES	8593,~~861~~560		4193,~~769~~373
Warrant liability	~~133~~9		~~814~~6
Operating lease liabilities, net of current portion	1615,~~082~~068		615,~~599~~604
Notes payable, net of current portion	1,~~207~~058		~~716~~1,183
TOTAL LIABILITIES	103,283		49,898
Notes payable of related parties, net of current portion	10,000		10,000
COMMITMENTS AND CONTINGENCIES (See Note 18)
TOTAL LIABILITIES	119,695		120,166
COMMITMENTS AND CONTINGENCIES (See Note 16)
STOCKHOLDERS’ EQUITY
Preferred stock - $0.0001 par value; 10,000,000 shares authorized, none issued and outstanding at September 30, 2022 and December 31, 2021	—		—
Preferred stock - $0.0001 par value; 10,000,000 shares authorized, none issued and outstanding at March 31, 2023 and December 31, 2022	—		—
Common stock- $0.0001 par value; 1,000,000,000 shares authorized; 83,658,357 shares and 82,237,813 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	8		8
Common stock- $0.0001 par value; 1,000,000,000 shares authorized; 83,658,357 shares and 83,658,357 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	8		8
Additional paid in capital	~~252~~255,~~885~~093		~~242~~254,~~362~~190
Accumulated other comprehensive loss	(21,~~304~~604)		(~~953~~1,674)
Accumulated deficit	(~~109~~183,~~177~~267)		(22164,~~420~~182)
TOTAL STOCKHOLDERS’ EQUITY	141,412		218,997
TOTAL STOCKHOLDERS’ EQUITY ATTRIBUTABLE TO TATTOOED CHEF, INC.	70,230		88,342
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	244,695	$	268,895
Noncontrolling interest	376		259
TOTAL STOCKHOLDERS’ EQUITY	70,606		88,601
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	190,301	$	208,767

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TATTOOED CHEF, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS (unaudited)

(in thousands, except for share and per share information)

	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
			Three Months EndedMarch 31,
	2022		2021		2022		2021
					2023		2022
			(As Restated)				(As Restated)
Net revenue					$	59,092	$	67,688
NET REVENUE	$	54,115	$	57,976	$	179,536	$	155,651
Cost of goods sold					63,239		63,621
COST OF GOODS SOLD	58,010		53,018		180,212		139,557
Gross (loss) profit					(4,147)		4,067
GROSS (LOSS) PROFIT	(3,895)		4,958		(676)		16,094
Operating expenses					14,706		23,332
OPERATING EXPENSES	31,572		12,793		79,313		40,810
Loss from operations					(18,853)		(19,265)
LOSS FROM OPERATIONS	(35,467)		(7,835)		(79,989)		(24,716)
Interest expense					(457)		(41)
Interest expense	(230)		(45)		(313)		(159)
Other income (expense), net					416		(611)
Other expense, net	(2,810)		(588)		(5,755)		(2,536)
Loss before provision for income taxes					(18,894)		(19,917)
LOSS BEFORE INCOME TAX BENEFIT (EXPENSE)	(38,507)		(8,468)		(86,057)		(27,411)
Income tax expense					134		256
INCOME TAX BENEFIT (EXPENSE)	11		255		(700)		(47,794)
Net loss					(19,028)		(20,173)
NET LOSS	$	(38,496)	$	(8,213)	$	(86,757)	$	(75,205)
Less: net income attributable to noncontrolling interests					57		—
NET LOSS PER SHARE
Net loss attributable to Tattooed Chef, Inc.					$	(19,085)	$	(20,173)
Basic	$	(0.46)	$	(0.10)	$	(1.05)	$	(0.92)
Net loss per common share
Diluted	$	(0.46)	$	(0.10)	$	(1.05)	$	(0.93)
Basic					$	(0.23)	$	(0.25)
WEIGHTED AVERAGE COMMON SHARES
Diluted					$	(0.23)	$	(0.25)
Basic	82,794,581		81,957,170		82,440,867		81,404,348
Weighted average common shares
Diluted	82,794,581		82,011,216		82,440,867		81,548,673
Basic					83,251,691		82,237,898
OTHER COMPREHENSIVE LOSS, NET OF TAX
Diluted					83,251,691		82,237,898
Foreign currency translation adjustments	(490)		(808)		(1,351)		(909)
Other comprehensive loss, net of tax
COMPREHENSIVE LOSS	$	(38,986)	$	(9,021)	$	(88,108)	$	(76,114)
Foreign currency translation adjustments					70		(430)
Comprehensive loss					(18,958)		(20,603)
Less: comprehensive income attributable to the noncontrolling interest					57		—
Comprehensive loss attributable to Tattooed Chef, Inc. stockholders					$	(19,015)	$	(20,603)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TATTOOED CHEF, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

(in thousands, except for share information)

	Common Stock			Additional Paid-InCapital		AccumulatedComprehensiveLoss		AccumulatedDeficit		~~Total~~Noncontrolling Interest		Total
	Shares	Amount
Balance as of January 1, 2022	82,237,813	$	8	$	242,362	$	(953)	$	(22,420)	$	218,997
Balance as of January 1, 2023	83,658,357	$	8	$	254,190	$	(1,674)	$	(164,182)	$	259	$	88,601
Foreign currency translation adjustment	—	—				~~(430)~~70		—		~~(430)~~—		70
Stock-based compensation	—	—		~~1,287~~903		—		—		~~1,287~~—		903
Issuance of restricted stock awards	203,828	—		—		—		—		—
Contribution to Ittella Properties	—	—		—		—		—		60		60
Net loss	—	—		—		—		(2019,~~173~~085)		~~(20,173)~~57		(19,028)
Balance as of March 31, 2022	82,441,641	$	8	$	243,649	$	(1,383)	$	(42,593)	$	199,681
Balance as of March 31, 2023	83,658,357	$	8	$	255,093	$	(1,604)	$	(183,267)	$	376	$	70,606
Foreign currency translation adjustment	—	—		—		(431)		—		(431)
Stock-based compensation	—	—		1,415		—		—		1,415
Issuance of restricted stock awards	18,162	—		—		—		—		—
Net loss	—	—		—		—		(28,088)		(28,088)
Balance as of June 30, 2022	82,459,803	$	8	$	245,064	$	(1,814)	$	(70,681)	$	172,577
Foreign currency translation adjustment	—	—		—		(490)		—		(490)
Stock-based compensation	—	—		7,821		—		—		7,821
Issuance of restricted stock awards	1,198,554	—		—		—		—		—
Net loss	—	—		—		—		(38,496)		(38,496)
Balance as of September 30, 2022	83,658,357	$	8	$	252,885	$	(2,304)	$	(109,177)	$	141,412

(continued on the next page)


	Common Stock			Additional Paid-In Capital		Accumulated Comprehensive Loss		Accumulated Deficit		Noncontrolling Interest		Total
	Shares	Amount
Balance as of January 1, 2022	82,237,813	$	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 awards	203,828	—		—		—		—		—		—
Net loss	—	—		—		—		(20,173)		—		(20,173)
Balance as of March 31, 2022	82,441,641	$	8	$	243,649	$	(1,383)	$	(42,593)	$	—	$	199,681

TATTOOED CHEF, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

(in thousands, except for share information)

	Common Stock			Treasury Shares	Additional Paid-In Capital		AccumulatedComprehensiveIncome (Loss)		Retained Earnings (Deficit)		Total
	Shares	Amount
									(As Restated)		(As Restated)
Balance as of January 1, 2021	71,551,067	$	7	(81,087)	$	168,448	$	1	$	64,846	$	233,302
Foreign currency translation adjustment	—	—		—	—		109		—		109
Distribution	—	—		—	—		—		(308)		(308)
Stock-based compensation	15,216	—		—	3,185		—		—		3,185
Forfeiture of stock-based awards	(95,084)	—		—	—		—		—		—
Cancellation of treasury shares	(81,087)	—		81,087	—		—		—		—
Exercise of warrants	10,010,087	1		—	63,361		—		—		63,362
Net loss	—	—		—	—		—		(7,629)		(7,629)
Balance as of March 31, 2021	81,400,199	$	8	—	$	234,994	$	110	$	56,909	$	292,021
Foreign currency translation adjustment	—	—		—	—		(210)		—		(210)
Stock-based compensation	835,000	—		—	763		—		—		763
Non-employee stock-based compensation	—	—		—	—		—		—		—
Forfeiture of stock-based awards	(300,000)	—		—	(445)		—		—		(445)
Exercise of warrants	3,469	—		—	71		—		—		71
Net loss	—	—		—	—		—		(59,363)		(59,363)
Balance as of June 30, 2021	81,938,668	$	8	—	$	235,383	$	(100)	$	(2,454)	$	232,837
Foreign currency translation adjustment	—	—		—	—		(808)		—		(808)
Stock-based compensation	4,918	—		—	842		—		—		842
Non-employee stock-based compensation	—	—		—	—		—		—		—
Exercise of warrants	38,806	—		—	1,022		—		—		1,022
Net loss	—	—		—	—		—		(8,213)		(8,213)
Balance as of September 30, 2021	81,982,392	$	8	—	$	237,247	$	(908)	$	(10,667)	$	225,680

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TATTOOED CHEF, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)

	Nine Months EndedSeptember 30,
	Three Months EndedMarch 31,
	2022		2021
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES			~~(As Restated)~~
Net loss	$	(8619,~~757~~028)	$	(7520,~~205~~173)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	42,~~772~~200		21,~~553~~507
Bad debt expense	~~859~~385		15226
Accretion of debt financing costs	—		4
Inventory obsolescence	116		—
Unrealized foreign currency losses	1,526		—
Unrealized foreign currency gains	(165)		—
Unrealized forward contract loss	~~2,751~~150		~~2,342~~156
Revaluation of warrant liability	~~(681)~~3		(~~158~~207)
Non-cash lease cost	~~256~~158		5945
Stock compensation expense	~~10,523~~903		41,~~344~~287
Deferred taxes, net	~~(14)~~—		~~47,064~~(300)
Changes in operating assets and liabilities:
Accounts receivable	~~130~~(4,531)		(320,~~323~~806)
Inventory	~~(21~~18,~~761)~~580		(3,~~600~~450)
Prepaid expenses and other assets	(5666)		(24,~~120)~~209
Accounts payable	17(6,~~259~~558)		(67,~~554)~~607
Accrued expenses	3,~~584~~057		12,~~192~~873
Other current liabilities	~~272~~(309)		~~262~~633
Net cash used in operating activities	(675,~~286~~705)		(3326,~~125~~393)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(~~26,924~~459)		(138,~~048~~807)
Acquisition of subsidiaries, net of cash acquired	—		(33,918)
Net cash used in investing activities	(459)		(8,807)
Acquisition price change from working capital adjustment	219		—
Acquisition of intangible asset	(1,693)		—
Acquisition of below-market lease asset	(1,685)		—
Net cash used in investing activities	(30,083)		(46,966)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on line of credit	31—		~~3,295~~2
Borrowings on line of credit	2722,~~969~~851		—
Repayments on line of credit	(918,~~057~~850)		—
Repayments of notes payable to related parties	—		(59)
Borrowings of notes payable	—		575
Borrowings of notes payable	1,080		1,168
Repayments of notes payable	(205)		(277)
Repayments of notes payable	(394)		(296)
Contribution to Ittella Properties	60		—
Proceeds from the exercise of warrants	—		74,316
Net cash provided by financing activities	3,856		300
Payment of distributions	—		(308)
NET DECREASE IN CASH	(2,308)		(34,900)
Net cash provided by financing activities	19,629		78,116
EFFECT OF EXCHANGE RATE ON CASH	35		(34)
NET DECREASE IN CASH	(77,740)		(1,975)
CASH AT BEGINNING OF PERIOD	5,782		92,351
EFFECT OF EXCHANGE RATE ON CASH	(391)		(128)
CASH AT END OF PERIOD	$	3,509	$	57,417
CASH AT BEGINNING OF PERIOD	92,351		131,579
CASH AT END OF PERIOD	$	14,220	$	129,476
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest	$	~~222~~304	$	~~145~~47
Income taxes	$	405	$	759
Income tax refund	$	—	$	(351)
Noncash investing and financing activities:
Capital expenditures included in accounts payable	$	3,190	$	1,049
Capital expenditures included in accounts payable and accrued expenses	$	4,638	$	1,299

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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 and Asset Acquisitions.~~

On September 28, 2021, Tattooed Chef formed BCI Acquisition, Inc. (“BCI”). On December 31 21, 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 and Asset Acquisitions.~~

On August 19, 2022, the Company through its subsidiary, TTCF-NM Holdings Inc., (“NM Holdings”) entered into an asset purchase agreement with Desert Premium Group, LLC (“DPG”) to acquire certain manufacturing, production, and storage assets, organized workforce as well as assumed a lease for a manufacturing facility located in Albuquerque for an aggregate purchase price of approximately $10.5 million (“DPG Acquisition”).

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

~~Basis~~A detailed description of ~~Consolidation.~~the ~~The~~Company's ~~condensed~~significant ~~consolidated~~accounting ~~financial~~policies ~~statements~~can ~~include~~be found in the ~~accounts~~Company's ofAnnual ~~Tattooed~~Report ~~Chef~~on ~~and~~Form ~~its~~10-K ~~subsidiaries~~for inthe ~~which~~fiscal ~~Tattooed~~year ~~Chef~~ended ~~has~~December a31, ~~controlling~~2022, ~~interest~~filed ~~directly~~with orthe ~~indirectly~~SEC on May 15, ~~and~~2023 ~~variable~~(the ~~interest~~“2022 ~~entities~~10-K”). ~~for~~There ~~which~~have ~~the~~been ~~Company~~no ismaterial ~~the~~changes ~~primary~~in ~~beneficiary.~~the ~~All~~Company’s ~~intercompany~~significant ~~accounts~~accounting ~~and~~policies ~~transactions~~from ~~have~~those ~~been~~that ~~eliminated~~were disclosed in ~~consolidation~~the 2022 10-K.

Basis of ~~Presentation~~Consolidation. The ~~accompanying unaudited~~ condensed consolidated financial statements ~~have~~include ~~been prepared in accordance with accounting principles generally accepted in~~ the ~~United~~accounts ~~States~~ of ~~America~~Tattooed ~~(“GAAP”)~~Chef ~~for interim financial information~~ and inits ~~accordance~~subsidiaries ~~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~~which ~~statements~~Tattooed ~~prepared~~Chef inhas ~~accordance~~a ~~with~~controlling ~~GAAP~~interest ~~have~~directly ~~been condensed~~ or ~~omitted~~indirectly, ~~pursuant to the rules~~ and ~~regulations~~variable ofinterest ~~the~~entities ~~SEC~~ for ~~interim~~which

~~financial~~the ~~reporting.~~Company ~~Accordingly,~~is ~~they do not include all~~ the ~~information~~primary ~~and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows~~beneficiary. InAll ~~the~~intercompany ~~opinion~~accounts 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~~transactions ~~flows~~have ~~for~~been ~~the~~eliminated ~~periods~~in ~~presented~~consolidation.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements ~~should~~have bebeen ~~read~~prepared in ~~conjunction~~accordance with ~~the~~accounting ~~Company’s~~principles ~~Annual~~generally ~~Report~~accepted onin ~~Form~~the ~~10-K/A~~United ~~for~~States ~~the~~of ~~year~~America ~~ended~~(“GAAP”) ~~December 31,~~for ~~2021~~interim asfinancial ~~filed~~information and in accordance with the ~~SEC~~instructions onto ~~November~~Form ~~16,~~10-Q ~~2022,~~and ~~which~~Regulation ~~contains~~S-X of the ~~audited~~Securities ~~financial statements~~ and ~~notes~~Exchange ~~thereto~~Commission (“SEC”). ~~The~~Certain ~~financial~~ information asor offootnote ~~December 31,~~disclosures ~~2021~~normally included in ~~the~~financial ~~accompanying~~statements ~~unaudited~~prepared in accordance with GAAP have been condensed ~~consolidated~~or ~~financial~~omitted, ~~statements~~pursuant isto ~~derived~~the ~~from~~rules and regulations of the ~~audited~~SEC for interim financial ~~statements~~reporting. ~~presented~~Accordingly, inthey ~~the~~do ~~Company’s~~not ~~Annual~~include ~~Report~~all onthe ~~Form~~information ~~10-K/A~~and footnotes necessary for ~~the~~a ~~year~~complete ~~ended~~presentation ~~December 31~~of financial position, ~~2021.~~results ~~The~~of ~~interim~~operations, ~~results~~or ~~for~~cash flows. In the ~~three~~opinion ~~and~~of ~~nine~~management, ~~months~~the ~~ended~~accompanying ~~September 30,~~unaudited ~~2022~~condensed ~~are~~consolidated ~~not~~financial ~~necessarily~~statements ~~indicative~~include all adjustments, consisting of ~~the~~a ~~results~~normal torecurring benature, ~~expected~~which are necessary for ~~the~~a ~~year~~fair ~~ending~~presentation ~~December 31~~of the financial position, ~~2022~~operating orresults ~~for~~and ~~any~~cash ~~future~~flows ~~interim~~for the periods presented.

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 September 30, 2021, included in the Form 10-Q/A filed with the Securities and Exchange Commission (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 overstated by $0.5 million for the three months ended September 30, 2021 and understated by $2.0 million for the nine months ended September 30, 2021.

–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 $0.04 million and $4.8 million for the three and nine months ended September 30, 2021, respectively. Operating expenses were overstated by $0.04 million and $4.8 million for the three and nine months ended September 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 $0.3 million and $0.6 million for the three and nine months ended September 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 understated by $0.2 million from inventory capitalization calculation net of $0.1 million from net realizable value write-downs for the three months ended September 30, 2021. Cost of goods sold was overstated by $0.5 million for the nine months ended September 30, 2021.

–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 million and $0.5 million for the three months and nine months ended September 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 September 30, 2021 (in thousands):

($ in thousands)	Condensed Consolidated Statements of Operations and Comprehensive Income
For the three months ended September 30, 2021	As Reported	Adjustments	As Restated
NET REVENUE	58,355	(379)	57,976
COST OF GOODS SOLD	52,836	182	53,018
GROSS (LOSS) PROFIT	5,519	(561)	4,958
OPERATING EXPENSES	13,687	(894)	12,793
LOSS FROM OPERATIONS	(8,168)	333	(7,835)
LOSS BEFORE INCOME TAX BENEFIT (EXPENSE)	(8,801)	333	(8,468)
NET LOSS	(8,546)	333	(8,213)
COMPREHENSIVE LOSS	(9,354)	333	(9,021)

($ in thousands except per share amounts)	Condensed Consolidated Statements of Operations and Comprehensive Income
For the nine months ended September 30, 2021	As Reported	Adjustments	As Restated
NET REVENUE	161,094	(5,443)	155,651
COST OF GOODS SOLD	140,078	(521)	139,557
GROSS (LOSS) PROFIT	21,016	(4,922)	16,094
OPERATING EXPENSES	44,302	(3,492)	40,810
LOSS FROM OPERATIONS	(23,286)	(1,430)	(24,716)
LOSS BEFORE INCOME TAX BENEFIT (EXPENSE)	(25,981)	(1,430)	(27,411)
INCOME TAX BENEFIT (EXPENSE)	(48,279)	485	(47,794)
NET LOSS	(74,260)	(945)	(75,205)
NET LOSS PER SHARE
Basic	(0.91)	(0.01)	(0.92)
Diluted	(0.91)	(0.02)	(0.93)
COMPREHENSIVE LOSS	(75,169)	(945)	(76,114)

($ in thousands)	Condensed Consolidated Statements of Stockholders’ Equity
For the three months ended September 30, 2021	As Reported	Adjustments	As Restated
Net loss in retained earnings (deficit)	(8,546)	333	(8,213)
Retained earnings (deficit) ending balance	(10,970)	303	(10,667)
Total stockholders’ equity ending balance	225,377	303	225,680

($ in thousands)	Condensed Consolidated Statements of Cash Flows
For the nine months ended September 30, 2021	As Reported	Adjustments	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	(74,260)	(945)	(75,205)
Adjustments to reconcile net loss to net cash from operating activities:
Bad debt expense	539	(524)	15
Deferred taxes, net	47,549	(485)	47,064
Changes in operating assets and liabilities:
Accounts receivable, net	(3,847)	524	(3,323)
Inventory	(4,099)	499	(3,600)
Prepaid expenses and other current assets	(3,051)	931	(2,120)

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~~2022.

Sales and Marketing Expenses. The Company expenses costs associated with sales and marketing as incurred. Sales and marketing expenses ~~were~~ $104.80 million and $511.1 2 million for the three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021, respectively, and $34.3 million and $17.6 million for the nine months ended September 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~~Going Concern. InAs ~~April~~of ~~2022~~March 31, 2023, the Company ~~commenced~~had ~~one~~total ~~operating~~cash ~~lease~~of ~~for~~$3.5 million aand ~~facility~~an inaccumulated ~~Vernon,~~deficit ~~California,~~of ~~with~~$183.3 million. 10For ~~years~~the ~~initial~~three ~~term~~months ~~with~~ended ~~option~~March 31, to2023, ~~extend~~the ~~two additional five-year terms. The~~ Company ~~determined~~had ~~the~~a ~~reasonably~~net ~~certain~~loss ~~lease~~of ~~term was 10 years. Approximately~~ $919.5 0 million ofand ~~operating~~net ~~lease~~cash ~~right~~used ofin ~~use~~operating ~~("ROU")~~activities ~~asset~~of ~~and~~ $95.4 7 million ~~of operating lease liabilities were recognized on the Company’s consolidated balance sheet upon the commencement date~~.

InThe ~~connection~~Company’s ~~with~~recent financial performance has been adversely impacted by the ~~asset~~inflationary ~~acquisition~~pressures ~~from~~on ~~Desert~~labor, ~~Premium~~freight ~~Group~~and material costs, ~~LLC~~as well as marketing expenditures on the Tattooed Chef brand investment to raise brand awareness. In addition, as disclosed in Note 12 Indebtedness, the Company expanded its primary line of credit (the “~~DPG~~Credit Facility”) from $25.0 million to $40.0 million in August 2022,. ~~see~~The ~~Note~~Credit 8Facility ~~Business~~contains ~~Combinations~~a ~~and~~financial ~~Asset~~covenant ~~Acquisitions,~~that requires the Company ~~assumed~~to ~~one~~maintain ~~operating~~a ~~lease~~minimum negative $35.0 million of consolidated adjusted EBITDA for athe ~~facility~~trailing in3-quarter ~~Albuquerque,~~period ~~New~~ended ~~Mexico~~March 31, ~~for~~2023. 2The ~~years~~Company ~~remaining~~was ~~lease~~not ~~term~~in compliance with ~~option~~the toadjusted ~~extend~~EBITDA ~~two~~minimum ~~additional~~requirement ~~five-year~~as ~~terms.~~of ~~The~~March ~~Company~~31, ~~determined~~2023 and as of the ~~reasonably~~date ~~certain~~these ~~lease~~condensed ~~term~~consolidated ~~was~~financial 7statements ~~years~~were issued. Further, ~~Approximately~~as disclosed in Note 12 Indebtedness, $32.5 6 million ofnote ~~operating~~payable ~~lease~~under ~~ROU~~NMFD ~~asset~~and ($1.7 8 million ofnote payable under Ittella Properties, were not in compliance with the ~~$3.5 million~~financial ~~recognized~~covenant ~~value~~as ~~from~~of ~~below-market~~March 31, ~~lease)~~2023 and ~~$1.8 million~~as of ~~operating~~the ~~lease~~date ~~liabilities~~these condensed consolidated financial statements were ~~recognized~~issued. onAs a result, the ~~Company's~~debt and notes payable have been classified as current liabilities within the consolidated balance sheet. ~~upon~~The Company does not have sufficient resources to meet obligations as they come due for the ~~lease~~12 ~~assumption~~months after the date the financial statements are issued.

~~Going~~In ~~Concern.~~order Asto alleviate these conditions and or events that may raise substantial doubt about the entities ability to continue as a going concern, management plans to continue to closely monitor its operating forecast and pursue additional sources of ~~September~~outside 30capital. If the Company is unable to (a) improve its operating results, ~~2022~~(b) obtain additional outside capital on terms that are acceptable to the Company to fund the Company’s operations, and/or (c) secure a waiver or avoid forbearance from the lender if the Company ~~had~~is ~~total~~continually ~~cash~~unable ofto ~~$14.2 million~~remain in compliance with the financial covenants required by Credit Facility and annote ~~accumulated~~payable ~~deficit~~in ofthe ~~$109.2 million.~~United ~~For~~States (see Note 12 Indebtedness), the ~~nine~~Company ~~months~~will ~~ended~~have ~~September~~to 30make significant changes to its operating plan, ~~2022~~such as delay and reduce marketing expenditures, reduce investments in new products, reduce its capital expenditures, reduce its sale and distribution infrastructure, reduce its workforce or otherwise significantly reduce the scope of its business. Moreover, if the Company ~~had~~fails to secure a ~~net~~waiver ~~loss~~or avoid forbearance from the lender, the failure could accelerate the repayment of ~~$86.8 million~~the ~~and~~outstanding ~~net~~borrowings ~~cash~~under ~~used~~the Credit Facility and note payable in ~~operating~~the ~~activities~~United States, or the exercise of ~~$67~~other rights or remedies the lender may have under the loan documents and applicable law.~~3 million~~ While management believes the Company will be able to secure additional outside capital, no assurances can be provided that such capital will be obtained or on terms that are acceptable to the Company. Furthermore, given the inherent uncertainties associated with the Company’s growth strategy and as the Company is currently not in compliance with the financial covenants required by the Credit Facility and note payable in the United States, management has concluded that

The Company has historically financed operations and capital expenditures through a combination of internally generated cash from operations, available cash on hand, the ability to draw on the line of credit, as well as the proceeds from the Reverse Recapitalization with Forum on October 15, 2020. The Company’s recent financial performance has been adversely impacted by the inflationary pressures on labor, freight and material costs, and its marketing expenditures on the Tattooed Chef brand investment to raise brand awareness, as well as a moderate impact from the conflict between Russia/Ukraine war. In addition, as disclosed in Note 14 Indebtedness, the Company expanded its primary line of credit (the “Credit Facility”) from $25.0 million to $40.0 million in August 2022. The Credit Facility contains a financial covenant that requires the Company to maintain a minimum negative $20.0 million of consolidated adjusted EBITDA for the trailing 1-quarter period ended September 30, 2022. The Company was not in compliance with the adjusted EBITDA minimum requirement as of the date these condensed consolidated financial statements were issued. Further, as disclosed in Note 14 Indebtedness, $2.7 million note payable under NMFD and $1.8 million note payable under Ittella Properties, were not in compliance with the financial covenant as of September 30, 2022. 6

9substantial doubt exists regarding the Company’s ability to continue as a going concern for 12 months from the date of issuance of these financial statements.

InThe ~~order~~accompanying toconsolidated ~~alleviate~~financial ~~these~~statements ~~conditions~~have ~~and~~been orprepared ~~events~~assuming ~~that may raise substantial doubt about~~ the ~~entities~~Company ~~ability~~will to continue as a going concern, ~~management~~which ~~plans~~contemplates tothe ~~continue~~realization toof ~~closely~~assets ~~monitor its operating forecast~~ and ~~pursue~~payments ~~additional sources~~ of ~~outside~~liabilities capital. If the Company is unable to (a) improve its operating results, (b) obtain additional outside capital on terms that are acceptable to the Company to fund the Company’s operations, and/or (c) secure a waiver or avoid forbearance from the lender if the Company is continually unable to remain in ~~compliance with~~ the ~~financial~~ordinary ~~covenants~~course required by the Credit Facility, the Company will have to make significant changes to its operating plan, such as delay and reduce marketing expenditures, reduce investments in new products, reduce its capital expenditures, reduce its sale and distribution infrastructure, or otherwise significantly reduce the scope of ~~its~~ business. ~~Moreover~~Accordingly, if the ~~Company~~consolidated ~~fails~~financial tostatements ~~secure~~do anot ~~waiver~~include orany ~~avoid~~adjustments ~~forbearance~~relating ~~from~~to the ~~lender,~~recoverability ~~the~~and ~~failure~~classification ~~could accelerate the repayment~~ of ~~the~~asset ~~outstanding~~carrying ~~borrowings~~amounts ~~under the Credit Facility~~ or the ~~exercise~~classification of ~~other~~liabilities ~~rights~~that ~~or remedies the lender~~ may ~~have~~result ~~under~~should the ~~loan documents and applicable law. While management believes the~~ Company ~~will~~ be ~~able~~unable to secure additional outside capital, no assurances can be provided that such capital will be obtained or on terms that are acceptable to the Company. Furthermore, given the inherent uncertainties associated with the Company’s growth strategy and as the Company is currently not in compliance with the financial covenants required by the Credit Facility, these uncertainties raise substantial doubt about the Company’s ability to continue as a going concern.

The accompanying interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and payments of liabilities in the ordinary course of business. Accordingly, the condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the classification of liabilities that may result should the Company be unable to continue as a going concern.

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 ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022. As such, the Company is not subject to significant concentration risk on suppliers.

~~Three~~Two customers accounted for 5258% of the Company’s revenue during the three months ended ~~September~~March 3031, ~~2022~~2023. ~~Three~~Two customers accounted for more than 6351% of the Company’s revenue during the three months ended ~~September~~March 3031, ~~2021~~2022.

Customer	~~2022~~2023		~~2021~~2022
Customer A	2346	%	1931	%
Customer B	1512	%	11*	%
Customer C	*		3320	%
Customer D	14	%	*

*Customer accounted for less than 10% of revenue in the period.

~~________________________________~~One customer and three customers accounting for more than 10% of the Company’s accounts receivable as of March 31, 2023 and December 31, 2022, respectively, were:

*Customer accounted for less than 10% of revenue in the period.


Customer	March 31, 2023		December 31, 2022
Customer A	39	%	16	%
Customer C	*		10	%
Customer D	*		15	%

Four customers accounted for 64% of the Company’s revenue during the nine months ended September 30, 2022. Three customers accounted for more than 76% of the Company’s revenue during the nine months ended September 30, 2021.

Customer	2022		2021
Customer A	29	%	29	%
Customer B	10	%	11	%
Customer C	14	%	36	%
Customer D	11	%	*

Three customers accounting for more than 10% of the Company’s accounts receivable as of September 30, 2022 and December 31, 2021 were:

Customer	September 30,2022		December 31,2021
Customer A	16	%	13	%
Customer C	*		38	%
Customer D	*		12	%

*Customer accounted for less than 10% of accounts receivable as of the date indicated.

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, in addition to 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. Recently, the surging of energy cost in Europe moderately adversely impacted on our growers and our manufacturing subsidiary in Italy. Therefore, the conflict between Russia and Ukraine has had a moderate adverse impact on the Company’s business, financial condition, and 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.

3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Recently ~~issued and~~ adopted accounting pronouncements

In ~~August~~October ~~2020~~2021, the Financial Accounting Standards Board (~~the~~ “FASB”) issued Accounting Standards Update (“ASU”) No. ~~2020~~2021-0608, ~~Debt—Debt~~Accounting ~~with~~for ~~Conversion~~Contract ~~and~~Assets ~~Other Options (Subtopic 470-20)~~ and ~~Derivatives~~Contract ~~and~~Liabilities ~~Hedging—~~from Contracts inwith ~~Entity’s~~Customers ~~Own~~(Topic ~~Equity~~805) (~~Subtopic~~“ASU ~~815~~2021-4008”):. ~~Accounting~~ASU ~~for~~2021-08 ~~Convertible~~requires ~~Instruments~~an ~~and~~acquirer ~~Contracts~~ in ana ~~Entity’s~~business ~~Own~~combination ~~Equity~~to ~~(“ASU~~recognize ~~2020-06”),~~and ~~which~~measure ~~simplifies~~contract ~~the~~assets ~~accounting~~and ~~for~~contract ~~convertible~~liabilities ~~instruments.~~(deferred ~~ASU~~revenue) ~~2020-06~~from ~~removes~~acquired ~~certain~~contracts ~~accounting~~using ~~models~~the ~~that~~revenue ~~separate~~recognition ~~the~~guidance ~~embedded~~in ~~conversion~~Topic ~~features~~606. ~~from~~At the ~~host~~acquisition ~~contract for convertible instruments~~date, ~~requiring~~the ~~bifurcation~~acquirer ~~only~~applies if the ~~convertible~~revenue ~~debt~~model ~~feature qualifies~~ as aif ~~derivative~~it ~~under~~had ~~ASC~~originated ~~815~~the oracquired ~~for convertible debt issued at a substantial premium~~contracts. ASU ~~2020~~2021-0608 is effective for ~~fiscal~~annual ~~years~~periods beginning after December 15, ~~2021~~2022, including interim periods within those fiscal years. Adoption of ASU 2021-08 should be applied prospectively. The Company adopted ~~the~~ASU ~~new~~2021-08 ~~standard~~as onof January 1, ~~2022~~2023. The ~~adoption~~Company ofdoes ~~this~~not ~~standard~~currently ~~did~~have ~~not~~any ~~have~~business acombinations. ~~material~~The adoption of ASU 2021-08 has no impact on ~~the~~its ~~Company’s~~ condensed consolidated financial statements ~~and related disclosures~~.

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.

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.

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 sold by NMFD, ~~acquired by the Company on May 2021 (see Note 8 Business Combinations and Asset Acquisitions),~~ to its restaurant customers onas anwell as co-~~needed~~manufacturing ~~basis~~contracts. All sales are recorded within net 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 September 30, 2022 and December 31, 2021.~~

~~Revenue streams for the three months and nine months ended September 30, 2022 and 2021 were as follows:~~7

	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands)	2022				2021				2022				2021
Revenue Streams	Revenue		% Total		Revenue		% Total		Revenue		% Total		Revenue		% Total
Tattooed Chef	$	24,403	45	%	$	34,655	60	%	$	97,117	54	%	$	98,240	63	%
Private Label	27,047		50	%	22,952		39	%	73,049		41	%	56,391		36	%
Other revenues	2,665		5	%	369		1	%	9,370		5	%	1,020		1	%
Total	$	54,115			$	57,976			$	179,536			$	155,651

condensed consolidated statements of operations and comprehensive loss. The Company does not have any contract assets or contract liabilities as of March 31, 2023 and December 31, 2022.

Revenue streams for the three months ended March 31, 2023 and 2022 were as follows:


	Three Months Ended March 31,
(in thousands)		2023	2022
Revenue Streams			Revenue		% Total		Revenue		% Total

Tattooed Chef			$	31,732	54	%	$	39,079	58	%
Private label			24,708		42	%	25,124		37	%
Other revenues			2,652		4	%	3,485		5	%
Total			$	59,092			$	67,688

Significant Judgments

Generally, the Company’s contracts with customers comprise of a written quote and customer purchase order which 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 stand-alone selling price. Contracts do not contain a significant financing component as payment terms on invoiced amounts are typically between 7 days to 45 days, based on the Company’s credit assessment of individual customers, as well as industry expectations. Product returns are not material. The contracts with customers do not include any additional performance obligations related to warranties and material rights.

~~From~~For ~~time~~certain tocustomers ~~time~~and products, the Company ~~may~~offers ~~offer~~ incentives to its customers and these incentives are 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.

5. ACCOUNTS RECEIVABLE, NET

The Company evaluates the creditworthiness of its customers regularly and, based on its analysis, the Company ~~has~~recorded ~~recognized~~an allowance for credit losses of $0.67 million as of ~~September~~March 3031, ~~2022~~2023 and $0.03 million as of December 31, ~~2021~~2022. 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.

InThe ~~2021, the~~ Company ~~began~~offers ~~offering new~~ promotional programs on sales of certain Tattooed Chef branded products to some new and existing customers. These programs constitute variable consideration and will reduce the transaction price on sales. In addition, the Company estimates variable consideration expected to reduce the related accounts receivables or record related accruals. In developing the estimate, the Company uses either the expected value or most likely amount method to determine the variable consideration. As a result, an ~~allowance~~accrual for ~~promotional~~variable ~~programs~~consideration of $04.8 0 million and $42.19 million is recorded and presented as a reduction of accounts receivable as well as a reduction of ~~September~~revenue to estimate at the time of related sale as of March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, respectively.

Additionally, the Company maintains product demonstration accruals with some of its customers. The product demonstration accruals represent variable consideration and are recorded as a reduction of revenue. The Company’s obligations to the customers are included within accrued expenses on the condensed consolidated balance sheets. The balances outstanding for accrued product demonstration were $1.04 million and $1.50 million as of ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, respectively (see Note 1210 Accrued Expenses).

6. INVENTORY

Inventory consists of the following as of (in thousands):

September 30,2022

December 31,2021

March 31,2023

December 31,2022

Raw materials

2925,~~009~~857

2232,~~724~~652

Work-in-process

74,~~486~~709

5,~~545~~303

Finished goods

3522,~~053~~195

2434,~~450~~328

Packaging

56,~~276~~598

35,~~537~~674

Total inventory

7659,~~824~~359

5677,~~256~~957

7. ~~PROPERTY~~INTANGIBLE ASSETS, ~~PLANT AND EQUIPMENT~~NET

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

	September 30,2022		December 31,2021
Land	$	635	$	738
Buildings	4,727		4,766
Leasehold improvements	5,733		5,336
Machinery and equipment	43,011		33,975
Computer equipment	557		549
Furniture and fixtures	423		169
Construction in progress	23,865		7,986
Property, plant and equipment at cost	78,951		53,519
Less: accumulated depreciation	(10,836)		(7,043)
Property, plant and equipment, net	$	68,115	$	46,476

The Company recorded depreciation expense for the three months ended September 30, 2022 and 2021 of $1.7 million and $1.1 million, respectively. The Company recorded depreciation expense for the nine months ended September 30, 2022 and 2021 of $4.7 million and $2.5 million, respectively.

8. BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

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

On May 14, 2021, the Company entered into a stock purchase agreement to acquire all outstanding stock of NMFD, a distributor and manufacturer of frozen and ready-to-eat Mexican food products for a total purchase price of $28.9 million. In addition, the Company entered into a membership interests purchase agreement to acquire all of the membership interest of Karsten for a total purchase price of $5.2 million. The primary reason for the purchase of NMFD and Karsten was to expand the Company’s manufacturing capacity to develop more ambient and refrigerated products. 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. The contribution of revenue from NMFD and Karsten was $8.4 million and $12.7 million for the three and nine months ended September 30, 2021, respectively. During the three and nine months ended September 30, 2021, the contribution of net operating loss from NMFD and Karsten were $1.1 million and $1.1 million, respectively.

Though the purchase agreements for each of NMFD and Karsten were executed as legally separate transactions, each was entered into contemporaneously and in contemplation of the other and involved the same group of sellers. 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 excess of the purchase price over the fair value of assets acquired and liabilities assumed of approximately $18.0 million was recorded as goodwill.

Transaction costs of $0.5 million were incurred in relation to the acquisition and were recorded to operating expense within the condensed consolidated statement of operations for the three months and the nine months ended September 30, 2021.

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

	Amount
Purchase consideration, net of cash acquired	$	33,988
Assets acquired and liabilities assumed
Accounts receivable	3,567
Inventory	2,270
Prepaid expenses and other current assets	122
Operating lease, ROU asset	207
Property, plant and equipment	9,819
Finance lease, ROU assets (1)	5,749
Other noncurrent assets	29
Intangible assets – tradenames	220
Accounts payable	(2,834)
Accrued expenses	(78)
Operating lease liability	(207)
Note payable (1)	(2,917)
Goodwill	18,041
Total assets acquired and liabilities assumed	$	33,988

(1)In December 2015 (prior to the NMFD Transaction), 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 construction, renovation and equipment of the manufacturing plant used by NMFD and Karsten 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 (“Bernalillo Lease”). The Bernalillo Lease provides NMFD the option to purchase the Property for $1 following the payoff of the Bernalillo 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 Bernalillo 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 Bernalillo Lease.

On May 14, 2021, the balance of the IRB asset and the lease obligation to Bernalillo was each $2.9 million. Upon the acquisition of NMFD and Karsten, the Company received all rights and assumed obligations related to the IRB, the Property and the Bernalillo Lease. Under business combination accounting literature and prior to the adoption of ASC 842, Leases ("ASC 842"), the transaction involving the IRB and the Bernalillo 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 was 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 were accounted for as a ROU asset under ASC 842 and the fair value of the ROU asset was determined to be $5.7 million and as such was presented on the consolidated balance sheet as an ROU asset of $5.7 million. In connection with the NMFD Transaction in May 2021, the Company assumed a note payable in the amount of $2.9 million (see Note 14 Indebtedness). The Company recognized the entire balance as a current liability due to noncompliance with certain financing covenants.

In September 2022, the Company paid the sellers a post-closing adjustment of approximately $42,000, which resulted in a corresponding increase in the total purchase consideration. This purchase consideration change has no impact on condensed consolidated statement of operations and only increased the balance of goodwill by the same amount.

The excess of purchase consideration over the fair value of the assets acquired and liabilities assumed was recorded as goodwill, which was primarily attributable to the assembled workforce and expanded market opportunities. Goodwill was assigned to the Company’s single reporting unit.

Belmont Acquisition

On September 28, 2021, Tattooed Chef formed BCI as a wholly-owned subsidiary. On December 21, 2021, BCI acquired substantially all of the assets, and assumed certain specified liabilities, from Belmont for an aggregate purchase price of $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. The primary reason for the purchase of Belmont’s assets and assumption of liabilities was to expand the Company’s manufacturing capacity into a nutritional bars and other ambient products. Approximately $4.0 million of the purchase price was paid by issuing 241,546 shares of Tattooed Chef’s common stock to Belmont’s sole shareholder. The number of shares payable at closing was determined based on the average closing price of the Company’s common stock over the three days preceding the closing date of the acquisition (December 21, 2021). The closing price of Tattooed Chef’s common stock was $16.90 per share at the acquisition date.

Under the acquisition method of accounting, the assets acquired and liabilities assumed by the Company in connection with the Belmont Acquisition were initially recorded at their respective fair values. The excess of the purchase price over the fair value of assets acquired and liabilities assumed of approximately $8.7 million was recorded as goodwill, which was primarily attributable to the assembled workforce and expanded market opportunities. The recognized goodwill is tax deductible and amortized over a 15-year statutory life. 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.

In relation to the acquisition, transaction costs of $0.2 million incurred by the Company were recorded to operating expense within the consolidated statement of operations for the year ended December 31, 2021. An immaterial amount of seller’s transaction costs were paid by the Company and included in the purchase price consideration. The following table summarizes the preliminary fair value of assets acquired and liabilities assumed in the Belmont Acquisition as of the date of acquisition (in thousands):

	Amount
Cash consideration	$	12,739
Equity consideration – common stock	4,000
Total purchase consideration	$	16,739
Assets acquired and liabilities assumed
Accounts receivable	$	1,630
Inventory	4,130
Prepaid expenses and other current assets	38
Operating lease ROU asset	870
Property, plant and equipment	6,477
Accounts payable	(3,477)
Accrued expenses	(723)
Operating lease liability	(870)
Goodwill	8,664
Total assets acquired and liabilities assumed	$	16,739

On May 11, 2022, the Company received an escrow joint release letter to receive a refund of $0.3 million from the escrow agent in relation to the acquisition purchase price adjustment. With this refund of payments, total purchase consideration decreased by $0.3 million. This purchase consideration change has no impact on the income statement line items and only decreased the balance of goodwill by the same amount.

The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and all 2021 acquisitions as if both the NMFD Transaction and the Belmont Acquisition had occurred as of January 1, 2021. There were no business combinations during the three and nine months ended September 30, 2022. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had occurred on the dates indicated.

	Three months ended September 30,				Nine months ended September 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
Net revenue	$	54,115	$	66,121	$	179,536	$	192,101
Net loss	$	(38,496)	$	(7,922)	$	(86,757)	$	(75,999)
Net loss per share
Basic	$	(0.46)	$	(0.10)	$	(1.05)	$	(0.93)
Diluted	$	(0.46)	$	(0.10)	$	(1.05)	$	(0.93)

Desert Premium Group, LLC (“DPG”) Acquisition

On August 19, 2022, the Company through its subsidiary, TTCF-NM Holdings Inc., entered into an asset purchase agreement with DPG. DPG is engaged in the business of manufacturing and selling a variety of frozen Mexican snacks and entrees.

Under the terms of the purchase agreement, the Company acquired certain manufacturing, production, and storage assets, organized workforce and assumed a lease for an 80,000 square foot manufacturing facility located in Albuquerque, New Mexico (“NM Lease”) at which the acquired assets currently operate, for a purchase price of approximately $10.4 million in cash. The facility is located near the Company’s Karsten and New Mexico Food production facilities. The NM Lease expires on November 30, 2024 and is subject to two options to extend the term of the lease, each for an additional five year term.

The Company determined that the DPG acquisition did not meet the definition of a business by considering various factors. Specifically, the Company determined that the integrated assets of the acquired set does not contain a substantive process

that, when integrated with the inputs the Company acquired, significantly contribute to the ability for a market participant to manage a business and create an output. Therefore, the Company accounted for the transaction as an asset acquisition. The Company allocated the $0.1 million of third-party transaction costs to the tangible assets acquired using their percentage of the fair value.

The following table summarizes the fair value of assets acquired and liabilities assumed in the DPG Acquisition as of the date of acquisition (in thousands):

	Amount
Purchase consideration	$	10,404
Add: Third-party transaction costs	93
Total purchase consideration	$	10,497
Assets acquired and liabilities assumed
Inventory	$	250
Intangible assets - favorable market lease	1,685
Operating lease ROU asset	1,845
Property, plant and equipment	6,819
Other assets (lease deposit)	50
Intangible assets - organized workforce	1,693
Operating lease liability	(1,845)
Total assets acquired and liabilities assumed	$	10,497

9. INTANGIBLE ASSETS, NET AND GOODWILL

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

	September 30,2022		December 31,2021
	March 31,2023		December 31,2022
Amortizable tradenames	$	220	$	220
Organized workforce	1,693		—1,693
Less: accumulated amortization	(~~178~~348)		(69260)
Intangible assets, net	$	1,~~735~~565	$	~~151~~1,653

The ~~estimated~~Company ~~useful~~recorded ~~lives~~amortization expense of the identifiable definite-lived intangible assets, ~~acquired~~approximately in$88,000 ~~the NMFD Acquisition (see Note 8 Business Combinations~~ and ~~Asset Acquisitions) in May 2021~~$27,000 ~~were~~for ~~determined to be two years. The estimated useful lives of~~ the ~~identifiable~~three ~~definite-lived~~months ~~intangible~~ended ~~assets~~March 31, ~~acquired~~2023 ~~in the DPG Acquisition (see Note 8 Business Combinations~~ and ~~Asset Acquisitions) in August~~ 2022, ~~were determined to be seven years~~respectively.

The Company recorded amortization expense of the identifiable definite-lived intangible assets, approximately $54,000 and $109,000 for the three and nine months ended September 30, 2022, respectively. The Company recorded amortization expense of approximately $27,000 and $41,000 for the three and nine months ended September 30, 2021, respectively.

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

Remainder of 2022	$	88
Remainder of 2023	$	195
2023	283
2024	181
2024	242
2025	181
2025	242
2026	181
2026	242
2027	181
2027 and thereafter	638
Thereafter	646
Total	$	1,~~735~~565

178. DERIVATIVE INSTRUMENTS

The following table sets forth the change in the carrying amount of goodwill for the nine months ended September 30, 2022 (in thousands):

Balance as of January 1, 2022	$	26,924
Measurement period adjustment (change in consideration) (see Note 8 Business Combinations and Asset Acquisitions)	(219)
Balance as of September 30, 2022	$	26,705

Goodwill is tested annually on September 30. No goodwill impairment was recorded during the three and nine months ended September 30, 2022.

10. 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. Management does not expect material losses as a result of defaults by counterparties.

Starting 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 US dollars. ~~During~~The ~~the~~Company ~~three~~did ~~months~~not ~~ended~~enter ~~September 30,~~into ~~2022~~any ~~and~~new ~~2021, the Company entered into~~ foreign currency exchange forward contracts toduring ~~purchase €10.2 million and €19.0 million, respectively. The notional amounts of these derivatives were $10.8 million and $22.6 million for~~ the three~~-month~~ ~~period ended September 30, 2022 and 2021, respectively. During the nine~~ months ended ~~September 30,~~March ~~2022 and 2021~~31, ~~the~~2023 ~~Company entered into foreign currency exchange forward contracts to purchase €30.1 million~~ and ~~€55.4 million, respectively. The notional amounts of these derivatives were $33.0 million and $66.8 million for the nine-month period ended September 30,~~ 2022 ~~and 2021, respectively~~.

These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other expense 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, of which are denominated in currencies other than the functional currency of the reporting entity.

The fair values of the Company’s derivative instruments classified as Level 2 financial instruments (see Note 11 Fair Value Measurements) and the line items within the accompanying condensed consolidated balance sheets to which they were recorded are summarized as follows (in thousands):9

	Balance Sheet Line Item	As of September 30, 2022		As of December 31,2021
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Forward contract derivative liability	$	4,556	$	1,804
Total		$	4,556	$	1,804

The fair values of the Company’s derivative instruments classified as Level 2 financial instruments (see Note 9 Fair Value Measurements) and the line items within the accompanying condensed consolidated balance sheets to which they were recorded are summarized as follows (in thousands):


	Balance Sheet Line Item	As of March 31, 2023		As of December 31, 2022
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Forward contract derivative liability	$	150	$	447
Total		$	150	$	447

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

Three Months EndedSeptember 30,

Three Months EndedMarch 31,

Line Item in Statements of Operations

~~2022~~2023

~~2021~~2022

Derivatives not designated as hedging instruments:

Foreign currency derivatives

Other income (expense), net

~~(1,939)~~255

(~~717~~1,023)

Total

~~(1,939)~~255

(~~717~~1,023)

		Nine Months EndedSeptember 30,
	Line Item in Statements of Operations	2022		2021
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other expense, net	$	(5,011)	$	(2,694)
Total		$	(5,011)	$	(2,694)

Unrealized losses on forward currency derivatives for the three months ended March 31, 2023 and 2022 were $0.2 million and $0.2 million, respectively. The Company has notional amounts of $24.7 million and $33.7 million on outstanding derivatives as of March 31, 2023 and December 31, 2022, respectively.

~~Unrealized losses on forward currency derivatives for the three and nine months ended September 30, 2022 were $1~~9.6 ~~million~~FAIR ~~and~~VALUE $2.8 million, respectively. Unrealized losses on forward currency derivatives for the three and nine months ended September 30, 2021 were $1.2 million and $2.3 million, respectively. The Company has notional amounts of $43.7 million and $43.5 million on outstanding derivatives as of September 30, 2022 and December 31, 2021, respectively.MEASUREMENTS

11The carrying amounts of cash, accounts receivables, accounts payable and certain notes payable approximate fair value because of the short maturity and/or variable rates generally associated with these instruments. ~~FAIR~~Long-term ~~VALUE~~debt ~~MEASUREMENTS~~as of March 31, 2023 and December 31, 2022 approximates its fair value as the interest rates are indexed to market rates (Level 2 inputs). 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.

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 generally associated with these instruments. Long-term debt as of September 30, 2022 and December 31, 2021 approximates its fair value as the interest rates are indexed to market rates (Level 2 inputs). 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.

Warrant Liabilities

In connection with Forum’s IPO and issuance of Private Placement Units in August 2018, Forum issued Units consisting of common stock with attached Public Warrants and Private Placement Warrants (together, the “Warrants”). All Public Warrants were exercised during ~~2020~~2021 and ~~2021~~2020.

Each Private Placement Warrant entitled or entitles the holder to purchase one share of the Company’s common stock at an exercise price of $11.50.

The Private Placement Warrants 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 loss.

Initial Measurement

The 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 Warrants, the Company remeasures the Private Placement Warrants at their fair values with the change in fair value reported to current operations within the condensed consolidated statements of operations and comprehensive loss. During the three months ended March 31, 2023 and 2022, no Private Placement Warrants were settled.

19For the three months ended March 31, 2023 and 2022, change in the fair value of the warrant liabilities charged to current operations amounted to a loss of approximately $3,000 and a gain of approximately $0.2 million, respectively.

of operations and comprehensive loss. During the three and nine months ended September 30, 2022, no Private Placement Warrants were settled.

For the three and nine months ended September 30, 2022, change in the fair value of the warrant liabilities charged to current operations amounted to a gain of $0.01 million and a gain of $0.7 million, respectively.

Fair Value Measurement

The fair value of the Private Placement Warrants was determined to be $10.1508 per Warrant as of ~~September~~March 3031, ~~2022~~2023 using Monte Carlo simulations and using 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 similar expected term of the 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 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:

Input	~~September~~March 3031,~~2022~~2023			December 31,~~2021~~2022
Risk-free interest rate	43.2581%		%	14.0822%		%
Expected term (years)	32.0455			32.79
Expected volatility	6375.8026%		%	4570.0019%		%
Exercise price	$	11.50		$	11.50
Fair value per Warrant	$	10.1508		$	70.0705

As of ~~September~~March 3031, ~~2022~~2023, the fair value of the Private Placement Warrants was determined to be $10.1508 per warrant, or an aggregate value of approximately $~~0.1~~9,000 ~~million~~ for 115,160 outstanding warrants. As of December 31, ~~2021~~2022, the fair value of the Private Placement Warrants was determined to be $70.0705 per warrant, or an aggregate value of approximately $~~0.8~~6,000 ~~million~~ for 115,160 outstanding warrants.

The following table presents the changes in the fair value of private placement warrant liabilities (in thousands):

	Nine Months Ended September 30, 2022
	Three Months Ended March 31, 2023
Fair value as of December 31, 2021	$	814
Fair value as of December 31, 2022	$	6
Change in fair value(1)	~~(681)~~3
Fair value as of September 30, 2022	$	133
Fair value as of March 31, 2023	$	9

	Nine Months Ended September 30, 2021
	Three Months Ended March 31, 2022
Fair value as of December 31, 2020	$	5,184
Fair value as of December 31, 2021	$	814
Exercise of Private Placement Warrants	(3,674)
Change in fair value(1)	(207)
Change in fair value(1)	(167)
Fair value as of March 31, 2022	$	607
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 condensed consolidated statements of operations and comprehensive loss.

2011

Derivative Instruments

Derivative contracts are valued using quoted market prices and significant other observable inputs. The Company uses derivative instruments to minimize its exposure to fluctuations in foreign currency exchange rates. The Company’s derivative instruments primarily include foreign currency forward contracts related to certain intercompany loans and intercompany trading balances. The fair values for the majority of the Company’s foreign currency derivative contracts are evaluated by comparing the contract rate to a published forward price of the underlying market rates, which is based on market rates of comparable transactions. The valuation approach is classified within Level 2 of the fair value hierarchy. See Note 108 Derivative Instruments.

Business Combination and Asset Acquisitions

Business combinations are accounted for using the acquisition method of accounting. The Company recognizes the assets acquired and the liabilities assumed at the acquisition date measured at their fair values as of that date. Fair value determinations are based on a variety of valuation techniques based on the facts and circumstances surrounding the transaction and the nature of the assets. In determining the fair value of the assets acquired and liabilities assumed in a material acquisition, the Company may utilize from the assistance of third party valuation firms to determine fair values of some or all of the assets acquired, and liabilities assumed, or may complete some or all of the valuations internally. Fair value of property plant and equipment were determined by a market approach or a cost approach to calculate the replacement or reproduction cost. Fair value of the below-market lease was estimated based on discounted cash flow of below market rent. Fair value of inventories was based on replacement cost to estimate the value of raw materials and the comparative sales method to estimate the value of work in process and finished goods. Under business combination accounting, the value of goodwill reflects the excess of the fair value of the consideration conveyed to the seller over the fair value of the net assets received. Under asset acquisitions accounting, fair value of assembled workforce was based on a cost approach (assemblage cost avoided method) to estimate the value of workforce obtained. ~~See~~ ~~Note~~There 8were ~~Business~~no ~~Combinations~~business ~~and~~combinations ~~Asset~~or ~~Acquisitions~~asset acquisitions in the three months ended March 31, 2023 or 2022.

~~12.~~Assets ~~ACCRUED~~and ~~EXPENSES~~Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Assets that are measured at fair value on a nonrecurring basis primarily relate to property, plant and equipment, net, operating lease right-of-use assets, net, finance lease right-of-use assets, net, and intangible assets, net. The Company does not periodically adjust carrying value to fair value for these assets; rather, the carrying value of the asset is reduced to its fair value when the Company determines that impairment has occurred. In the three months ended March 31, 2023 and 2022, no impairment charges have been recognized.

10. ACCRUED EXPENSES

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

	September 30,2022		December 31,2021
	March 31,2023		December 31,2022
Accrued product demonstration	$	1,~~041~~417	$	1,~~471~~048
Accrued payroll	4,~~107~~170		14,~~600~~115
Accrued commission	12,~~071~~390		~~607~~1,158
Other accrued expenses	~~981~~2,607		891,294
Total	$	710,~~200~~584	$	37,~~767~~615

1311. INCOME TAXES

The following table presents the provision for income taxes and the effective tax rate for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022 (in thousands):

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
				Three Months EndedMarch 31,
	2022			2021			2022			2021
							2023			2022
Income tax benefit (expense)	$	11		$	255		$	(700)		$	(47,794)
Income tax expense							$	134		$	256
Effective tax rate	—		%	3		%	(1)		%	(~~174~~1)		%

The income tax benefit (expense) for the three and nine months ended September 30, 2022 was primarily attributable to foreign income tax expenses for the Company’s activities in Italy as well as state minimum taxes.12

The income tax ~~benefit (~~expense) for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2021~~2023 and 2022 was primarily attributable to ~~the Company’s establishment of a full valuation allowance on its deferred tax assets in the United States, and~~ foreign income tax expenses onfor the Company’s ~~foreign~~activities ~~income~~ in Italy as well as state minimum taxes.

21The Company’s quarterly effective tax rate varies from the fiscal year 2023 statutory rate as a result of taxes imposed on the Italian income, tax amounts associated with foreign earnings at rates different from the United States federal statutory rate, and changes in valuation allowance amount. The Company’s foreign earnings on Italian operations are subject to foreign taxes applicable to its income derived in Italy.

The Company’s ~~also believes that~~ quarterly effective tax ~~rates~~rate ~~will~~varies ~~vary~~ from the fiscal ~~2022~~year 2023 statutory rate as a result of taxes imposed on the Italian income, tax amounts associated with foreign earnings at rates different from the United States federal statutory rate, and changes in valuation allowance. The Company’s foreign earnings on Italian operations are subject to foreign taxes applicable to its income derived in Italy.

As of ~~September~~March ~~30, 2022 and December~~ 31, ~~2021~~2023, 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, the California Franchise Tax Board and the Agenzia delle Entrate (the Revenue Agency in Italy). The statute of limitations for which the Company’s tax returns are subject to examination are as follows: Federal ~~2018~~2019-~~2021~~2022, California ~~2017~~2018-~~2021~~2022, and Italy ~~2017~~2018-~~2021~~2022.

1412. INDEBTEDNESS

Debt consisted of the following as of (in thousands):

	September 30,2022		December 31,2021
	March 31,2023		December 31,2022
Notes payable	$	6,~~209~~054	$	56,~~735~~239
Line of credit	19,990		1,200
Notes payable to related parties (Note 15)	10,000		10,000
Total debt	26,199		6,935
Line of credit	24,329		20,314
Less current debt	(24,992)		(6,219)
Total debt	40,383		36,553
Total long-term debt	$	1,207	$	716
Less current debt	(29,325)		(25,370)
Total long-term debt	$	11,058	$	11,183

Lines of Credit

~~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 September 30, 2023~~ (~~the “Credit Facility”). The Credit Facility provides the Company with up to $25.0 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) $10.0 million; or (iii) 50% of the aggregate amount of revolving loans outstanding, minus (c) the sum of all reserves. Under the Credit Facility amended and effected on June 30, 2022, the fixed charge coverage ratio was replaced by liquidity requirement. The Company is required to maintain minimum liquidity of not less than $10.0 million. Not less often than monthly (or weekly during a trigger period), the Company shall furnish to lender a borrowing base certificate as of the close of business on the last business day of such week. Trigger period means the period following any date on which (a) an event of default has occurred, or (b) the Company’s liquidity is less than $20.0 million. On August 5, 2022, the Company entered into a Joinder and First Amendment to Amended and Restated Loan and Security Agreement (the “First Amendment”) with the financial institution whereby the Company expanded the Credit Facility to $40.0 million from $25.0 million, and extended the Credit Facility so that it now has a three-year term set to mature in September 2025. Under the First Amendment, the Company may borrow up to (a) 85% (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the net amount of eligible accounts; plus, (b) the lesser of: (i) 50% of the net amount of eligible inventory (ii) $25.0 million; minus (c) the sum of all reserves. Beginning with the quarter ending September 30, 2022, the Company must meet new minimum EBITDA tests: trailing 1-quarter period ended September 30, 2022, consolidated adjusted EBITDA should not be less than negative $20.0 million; trailing 2-quarter period ended December 31, 2022, consolidated adjusted EBITDA should not be less than negative $30.0 million; trailing 3-quarter period ended March 31, 2023, consolidated adjusted EBITDA should not be less than negative $35.0 million; trailing 4-quarter period ended June 30, 2023, consolidated adjusted EBITDA should not be less than negative $40.0 million; trailing 5-quarter period ended September 30, 2023, consolidated adjusted EBITDA should not be less than negative $40.0 million; and the Company is required to achieve positive EBITDA by the two trailing quarters ending December 31, 2023. In ~~addition, commencing with~~ the ~~quarter~~United ending December 31, 2024, the Company must achieve a fixed charge coverage ratio of not less than 1.00 to 1.00 each quarter. As of September 30, 2022, the Company was not in compliance with all of the financial covenants under the Credit Facility.States

The Company is party to a revolving line of credit agreement (the “Credit Facility”), ~~bears~~which ~~interest~~has atbeen anamended ~~annual~~from ~~rate~~time ~~equal~~to time. On August 5, 2022, the Company entered into a Joinder and First Amendment to Amended and Restated Loan and Security Agreement (the ~~sum~~“First ofAmendment”) with the ~~Daily~~financial ~~Adjusting~~institution ~~Term~~whereby ~~SOFR~~the ~~Rate~~Company expanded the Credit Facility to $40.0 million from $25.0 million, and extended the Credit Facility so that it now has a three-year term set to mature in ~~effect~~September 2025. Under the First Amendment, the Company may borrow up to (a) 85% (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the net amount of eligible accounts; plus, ~~3.00~~(b) the lesser of: (i) 50% of the net amount of eligible inventory (ii) $25.0 million; ~~“Daily~~minus ~~Adjusting~~(c) ~~Term~~the ~~SOFR~~sum ~~Rate”~~of ~~means,~~all ~~for~~reserves. ~~any~~Beginning ~~day,~~with the ~~rate~~quarter ~~per~~ending ~~annum~~September ~~equal~~30, to2022, the ~~Term~~Company ~~SOFR~~must meet new minimum EBITDA tests: trailing 1-quarter period ended September 30, 2022, consolidated adjusted EBITDA should not be less than negative $20.0 million; trailing ~~The~~2-quarter ~~Daily~~period ~~Adjusting~~ended ~~Term~~December ~~SOFR~~31, ~~Rate~~2022, ~~shall~~consolidated adjusted EBITDA should not be less than negative $30.0 million; trailing 3-quarter period ended March 31, 2023, consolidated adjusted onEBITDA ashould ~~daily~~not ~~basis~~be less than negative $35.0 million; trailing ~~provided~~4-quarter ~~that~~period ended June 30, if2023, ~~such~~consolidated ~~rate~~adjusted isEBITDA should not ~~published~~be onless ~~such~~than ~~determination~~negative ~~date~~$40.0 million; ~~then~~trailing ~~the~~5-quarter ~~rate~~period ~~will~~ended September 30, 2023, consolidated adjusted EBITDA should not be less than negative $40.0 million; and the ~~Term~~Company ~~SOFR~~is ~~Rate~~required onto achieve positive EBITDA by the ~~first~~two ~~business~~trailing ~~day~~quarters ~~immediately~~ending ~~prior~~December ~~thereto~~31, 2023. In addition, commencing with the quarter ending December 31, 2024, the Company must achieve a fixed charge coverage ratio of not less than 1.00 to 1.00 each quarter. As of March 31, 2023, the Company was not in compliance with all of the financial covenants under the Credit Facility.

22The Credit Facility bears interest at an annual rate equal to the sum of the Daily Adjusting Term SOFR Rate in effect from time to time plus 3.00%. “Daily Adjusting Term SOFR Rate” means, for any day, the rate per annum equal to the Term

~~The actual interest rates on outstanding borrowings were 5.04% and 4.25% as of September 30, 2022 and December 31, 2021, respectively.~~13

SOFR. The ~~Credit~~Daily ~~Facility~~Adjusting ~~has~~Term anSOFR ~~arrangement~~Rate ~~associated~~shall ~~with~~be itadjusted ~~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~~provided ~~funds~~that, inif ~~the~~such ~~collection~~rate ~~account~~is ~~are~~not ~~earmarked~~published ~~for~~on ~~payment~~such ~~towards~~determination ~~the~~date ~~outstanding~~then ~~line of credit and given~~ the ~~Company’s~~rate ~~obligation~~will tobe ~~pay off~~ the ~~outstanding~~Term ~~balance~~SOFR onRate ~~a daily basis, the balance was classified as a current liability~~ on the ~~Company’s~~first ~~condensed~~business ~~consolidated~~day ~~balance~~immediately ~~sheets~~prior ~~as of September 30, 2022 and December 31, 2021~~thereto. The ~~balance~~actual oninterest ~~the~~rates ~~Credit~~on ~~Facility~~outstanding ~~was~~borrowings ~~$19~~were 6.181% ~~million~~ and $06.036% ~~million~~ as of ~~September 30~~March 31, ~~2022~~2023 and December 31, ~~2021~~2022, respectively. As of September 30, 2022, up to the full $40.0 million was available for borrowing under the Credit Facility, of which $19.1 million has been borrowed and $0.6 million has been utilized for the letter of credit issuance as described below.

The Credit Facility ~~includes~~has aan ~~letter~~arrangement ofassociated ~~credit~~with ~~subfacility~~it inwherein ~~the~~all ~~amount~~collections offrom upcollateralized toreceivables ~~$1.0~~are ~~million.~~deposited ~~The~~into ~~Company~~a ~~agrees~~collection toaccount ~~pay~~and ~~(i)~~applied to the ~~lender~~outstanding ~~for~~balance ~~each letter~~ of ~~credit, a per annum fee (~~the ~~“Letter~~line of ~~Credit~~credit ~~Fee”)~~on ~~equal~~a todaily 1basis.~~00%~~ ofThe ~~the~~funds ~~outstanding letter of credit obligations, which fee shall be payable monthly~~ in ~~arrears on~~ the ~~first~~collection ~~day~~account ofare ~~each~~earmarked ~~calendar month, (ii) to the letter of credit issuer,~~ for ~~its~~payment ~~own~~towards ~~account, all customary charges and commissions associated with~~ the ~~issuance,~~outstanding ~~amending,~~line ~~negotiating, payment, processing, renewal, transfer and administration~~ of ~~letters of~~ credit, ~~which charges shall be paid as~~ and ~~when~~given ~~incurred,~~the ~~and~~Company’s ~~(iii)~~obligation to ~~the~~pay ~~lender,~~off ~~all customary charges of~~ the ~~letter~~outstanding ofbalance ~~credit~~on ~~issuer~~a ~~referenced~~daily inbasis, ~~clause~~the ~~(ii)~~balance ~~above~~was ~~paid~~classified byas ~~the~~a ~~lender~~current liability on ~~behalf of~~ the Company.’s ~~The~~condensed ~~Letter~~consolidated ofbalance ~~Credit~~sheets ~~Fee~~as ~~shall be payable when the letter~~ of ~~credit~~March 31, is2023 ~~issued~~ and onDecember 31, ~~each anniversary thereof and on the Credit Facility maturity date~~2022. As of ~~September~~March 3031, ~~2022~~2023, ~~the~~$23.2 ~~Company~~million ~~had~~has been borrowed and $0.6 million ~~outstanding~~has onbeen ~~its~~utilized for the letter of credit ~~under~~issuance ~~the~~as ~~subfacility~~described below.

InThe ~~March~~Credit ~~2021,~~Facility ~~Ittella~~includes ~~Italy entered into~~ a ~~line~~letter of credit ~~with~~subfacility ~~a financial institution~~ in the amount of up to €0$1.6 0 million. The ~~balance~~Company onagrees to pay (i) to the lender for each letter of credit, ~~facility~~a ~~was~~per ~~€0.6 million~~annum fee (~~$0.6 million~~the “Letter of Credit Fee”) ~~and~~equal €0to 1.~~6 million~~00% of the outstanding letter of credit obligations, which fee shall be payable monthly in arrears on the first day of each calendar month, (~~$0.7 million~~ii) asto the letter of ~~September 30~~credit issuer, ~~2022~~for its own account, all customary charges and ~~December 31~~commissions associated with the issuance, ~~2021~~amending, ~~respectively.~~negotiating, ~~The~~payment, processing, renewal, transfer and administration of letters of credit, ~~facility~~which ~~bears~~charges ashall ~~one-time~~be ~~commission~~paid ~~fee~~as atand ~~0.40%~~when incurred, and ~~interest~~(iii) atto ~~1.50%~~the ~~per~~lender, ~~annum.~~all ~~Under~~customary ~~this~~charges of the letter of credit ~~facility,~~issuer ~~Ittella~~referenced ~~Italy~~in ~~borrows~~clause ~~the~~(ii) ~~amount~~above ~~based~~paid onby the ~~sales~~lender ~~invoices~~on ~~presented~~behalf toof the ~~financial~~Company. ~~institution~~The ~~and~~Letter ~~pays~~of ~~back~~Credit ~~within~~Fee 60shall ~~days.~~be ~~This~~payable ~~line~~when the letter of credit ~~does~~is ~~not~~issued ~~have~~and anon ~~expiration~~each ~~date~~anniversary thereof and ~~does~~on ~~not~~the ~~contain~~Credit ~~financial~~Facility ~~covenants~~maturity date. As of March 31, 2023, the Company had $0.6 million outstanding on its letter of credit under the subfacility.

~~In September 2021, Ittella Italy entered into a line of credit with a financial institution in the amount of up to €1.4 million. The balance on the line of credit was €0.3 million~~ (~~$0.3 million~~b) ~~and~~In €0.5 million ($0.5 million) as of September 30, 2022, and December 31, 2021, respectively. The Line of Credit bears a one-time commission fee at 0.40% and interest at 0.85% per annum. Under this line of credit, the financial institution advances suppliers based on purchase invoices presented and Ittella Italy ~~pays back the amounts borrowed within 180 days. This line of credit does not have an expiration date and does not contain financial covenants.~~

In March 2021, Ittella Italy entered into a line of credit with a financial institution in the amount of up to €0.6 million. The balance on the credit facility was €0.6 million ($0.7 million) and €0.6 million ($0.6 million) as of March 31, 2023, and December 31, 2022, respectively. The credit facility bears a one-time commission fee at 0.40% and interest at 1.50% per annum. Under this credit facility, Ittella Italy borrows the amount based on the sales invoices presented to the financial institution and pays back within 60 days. This line of credit does not have an expiration date and does not contain financial covenants.

In September 2021, Ittella Italy entered into a line of credit with a financial institution in the amount of up to €1.4 million. The balance on the line of credit was €0.5 million ($0.5 million) and €0.2 million ($0.2 million) as of March 31, 2023, and December 31, 2022, respectively. The Line of Credit bears a one-time commission fee at 0.40% and interest at 0.85% per annum. Under this line of credit, the financial institution advances suppliers based on purchase invoices presented and Ittella Italy pays back the amounts borrowed within 180 days. This line of credit does not have an expiration date and does not contain financial covenants.

For the lines of credit with original maturities on borrowings greater than 90 days, the Company presents the borrowing and repayment amounts at gross in the condensed consolidated statements of cash flows. For the lines of credit with original maturities on borrowings shorter than 90 days, the Company presents the borrowing and repayment amounts at net in the condensed consolidated statements of cash flows.

Notes payable

~~In connection with the NMFD Transaction in May 2021~~ (~~see Note 8 Business Combinations and Asset Acquisitions~~a), ~~the~~In ~~Company assumed a note payable in~~ the ~~amount~~United of $2.9 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 30 and December 31 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 4.00 to 1.00, tested semi-annually as of June 30 and December 31 of each calendar year beginning June 30, 2022. The outstanding balance of the note payable was $2.7 million and $2.8 million as of September 30, 2022, and December 31, 2021, respectively. The balance was classified as a current liability due to noncompliance with the above financing covenants.States

InOn ~~May~~January 6, ~~2021~~2020, Ittella ~~Italy~~Properties, ~~entered~~the ~~into~~VIE, arefinanced ~~promissory~~all ~~note~~of its existing debt with a financial institution in the amount of €1$2.01 million. The note accrues interest at 13.~~014~~60% per annum and has a maturity date of ~~May~~January 2831, ~~2025,~~2035. ~~when~~Financial ~~the~~covenants ~~full~~of ~~principal~~the ~~and~~note ~~interest~~include ~~are~~a ~~due.~~minimum ~~The~~fixed ~~promissory~~charge ~~note~~coverage ~~does~~ratio ~~not~~of ~~contain~~1.20 ato ~~financial covenant~~1.00. The outstanding balance on the ~~promissory~~ note was ~~€0.7 million (~~$01.78 million) and ~~€0.9 million (~~$1.08 million) asat ~~of September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, respectively. As of ~~September~~March 3031, ~~2022~~2023, the ~~balance~~VIE ofwas ~~the~~not ~~note~~ in compliance with the ~~amount~~fixed ofcharge ~~approximately~~coverage ~~€0.4~~ratio ~~million~~and ~~($0.4~~the ~~million)~~full balance of the note was classified as ~~long~~a ~~term~~current liability.

23In connection with the NMFD Transaction in May 2021, the Company assumed a note payable in the amount of $2.9 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 to 1.00, assessed semi-annually as of June 30 and December 31 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

In April 2022, Ittella Italy entered into a promissory note with a financial institution in the amount of €1.0 million. The note accrues interest at 1.9% per annum and has a maturity date of April 7, 2026, when the full principal and interest are due. The promissory note does not contain a financial covenant. The balance on the promissory note was €1.0 million ($1.0 million) as of September 30, 2022. As of September 30, 2022, the balance of the note in the amount of approximately€0.9 million ($0.8 million) was classified as long term liability.14

~~On January 6~~31, ~~2020,~~each ~~Ittella~~calendar ~~Properties,~~year ~~the~~beginning ~~VIE,~~December ~~refinanced all of its existing debt with a financial institution in the amount of $2.1 million. The note accrues interest at 3.60% per annum and has a maturity date of January~~ 31, ~~2035~~2021. ~~Financial covenants of the note include a minimum fixed charge coverage ratio of 1.20 to 1.00.~~ The outstanding balance onof the note payable was $12.86 million and $12.97 million atas ~~September~~of March 3031, ~~2022~~2023, and December 31, ~~2021~~2022, respectively. ~~Commencing~~The ~~with~~balance ~~the~~was ~~fiscal~~classified ~~quarter~~as ~~ending September 30, 2022, the VIE should meet~~ a ~~minimum~~current ~~fixed~~liability ~~charge~~due ~~coverage ratio of 1.20~~ to ~~1.00. As~~noncompliance ~~of September 30, 2022, the VIE was not in compliance~~ with the ~~fixed~~above ~~charge~~financial ~~coverage ratio and the full balance of the note was classified as a current liability~~covenants.

~~Future~~On ~~minimum~~November ~~principal~~23, ~~payments~~2022, ~~due~~the onCompany entered a Subordination Agreement with the ~~notes~~financial ~~payable~~institution (“Senior Creditor”), ~~for~~the ~~periods~~Senior ~~subsequent~~Creditor tohas ~~September~~provided the Credit Facility. On November 23, 2022 and December 29, 2022, the Company borrowed $5.0 30million unsecured loan each from Salvatore Galletti. Total loan made by Mr. Galletti was $10.0 million as of March 31, 2023 and December 31, 2022, ~~are~~respectively. The loan from Mr. Galletti is evidenced by a Promissory Note that bears interest at the same rate as ~~follows~~the Credit Facility (ini.e., ~~thousands~~the daily adjusting term SOFR rate + 3.0% per annum):, matures on September 30, 2025, and is payable interest only, monthly, until the Maturity Date. The Note is subordinated in right of payment to obligations to the Senior Creditor pursuant to the terms of the Subordination Agreement between the Company and the Senior Creditor. As of March 31, 2023, $0.2 million interest is payable to Mr. Galletti, included in accrued expenses in the condensed consolidated balance sheet. As of December 31, 2022, the interest payable to Mr. Galletti is not material.

Remainder of 2022	$	4,615
2023	518
2024	525
2025	408
2026	143
Total	$	6,209

(b) In Italy

15In May 2021, Ittella Italy entered into a promissory note with a financial institution in the amount of €1.0 ~~STOCKHOLDERS’~~million. ~~EQUITY~~The note accrues interest at 1.014% per annum and has a maturity date of May 28, 2025, when the full principal and interest are due. The promissory note does not contain any financial covenants. The balance on the promissory note was €0.6 million ($0.6 million) and €0.6 million ($0.7 million) as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023, approximately €0.3 million ($0.3 million) was due within 12 months and classified as current liability, the remaining amount of €0.3 million ($0.3 million) was classified as long term liability.

~~The~~In ~~condensed~~April ~~consolidated~~2022, ~~statements~~Ittella ofItaly ~~changes~~entered ininto ~~stockholders’~~a ~~equity~~promissory ~~reflect~~note ~~the~~with ~~Reverse~~a ~~Recapitalization~~financial asinstitution in the amount of ~~October~~€1.0 ~~15,~~million. ~~2020~~The asnote ~~discussed~~accrues ininterest ~~Note~~at 21.9% ~~Basis~~per annum and has a maturity date of ~~Presentation~~April 7, 2026, when the full principal and ~~Significant~~interest ~~Accounting~~are ~~Policies~~due. ~~Since~~The ~~Myjojo~~promissory ~~was~~note ~~determined~~does tonot becontain ~~the~~any ~~accounting~~financial ~~acquirer~~covenants. inThe balance on the ~~Reverse~~promissory ~~Recapitalization,~~note ~~all~~was ~~periods~~€0.9 ~~prior~~million to($1.0 ~~the~~million) ~~consummation~~and of€1.0 ~~the~~million ~~Transaction~~($1.1 ~~reflect~~million) as ~~the~~of ~~balances~~March 31, 2023 and ~~activity~~December 31, 2022, respectively. As of ~~Myjojo~~March 31, 2023, approximately €0.2 million (~~other~~$0.3 million) ~~than~~was ~~shares~~due ~~which~~within ~~were~~12 ~~retroactively~~months ~~restated~~and inclassified ~~connection~~as ~~with~~current liability, the ~~Transaction~~remaining €0.7 million ($0.7 million) was classified as long term liability.

~~Further,~~Future ~~the~~minimum ~~Company~~principal ~~issued~~payments ~~awards~~due toon ~~certain~~the ~~officers~~notes ~~and~~payable, ~~all~~for ofperiods ~~the~~subsequent ~~directors pursuant~~ to ~~the Tattooed Chef~~March 31, ~~Inc.~~2023 ~~2020~~are ~~Incentive~~as ~~Award~~follows ~~Plan~~ (~~the~~in ~~“Plan”~~thousands) ~~on December 17, 2020 (see Note 16 Equity Incentive Plan).~~:


Remainder of 2023	$	4,851
2024	583
2025	10,453
2026	167
2027	—
Total	$	16,054

13. STOCKHOLDERS’ EQUITY

The Company issued awards to certain officers and all of the directors pursuant to the Tattooed Chef, Inc. 2020 Incentive Award Plan (the “Plan”) (see Note 14 Equity Incentive Plan).

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, 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~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, 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, par value of $0.0001 per share. Holders of common stock are entitled to one vote for each share. ~~As of September 30, 2022 and December 31, 2021, there were~~ 83,658,357 ~~and 82,237,813~~ shares of common stock were issued and outstanding at both of March 31, ~~respectively~~2023 and December 31, 2022.

Warrants

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


1.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 and one Public Warrant.


2.Private Placement Warrants – Forum issued 655,000 Private Placement Units, each consisting of one share of common stock and one Private Placement Warrant.

Each Warrant entitles the holder to purchase one share of the Company’s 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 was met, and to require that any Public Warrant holder who desires 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), including the completion of the Transaction. Once the Public Warrants became exercisable, the Company was able to 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 original holders 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 Closing Date 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 Forum’s 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, (z) the redemption date, subject to any applicable conditions as set forth in the warrant agreement governing the Warrants. 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.

The consummation of the Transaction triggered 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
Issued and outstanding as of December 31, 2021	14,459,684	407,577
Exercised	(14,459,684)	(292,417)
Issued and outstanding as of December 31, 2021	—	115,160
Issued and outstanding as of December 31, 2022	—	115,160
Exercised	—	—
Redeemed	—	—
Issued and outstanding as of March 31, 2023	—	115,160
Issued and outstanding as of September 30, 2022	—	115,160

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 119 Fair Value Measurements, the Private Placement Warrants are considered freestanding liability-classified instruments under ASC 815-40-25.

1614. EQUITY INCENTIVE PLAN

On October 15, 2020, 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 $0.1 million in total value to any non-employee director or $0.1 million in total value to any non-employee director who serves as the chairperson of a duly formed and authorized committee of the Company’s board of directors. Awards available for grant under the Plan include incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), 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.

$0.125 million in total value to any non-employee director who serves as the chairperson of a duly formed and authorized committee of the Company’s board of directors. Awards available for grant under the Plan include incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), 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.

Stock Options

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

The table below summarizes the share-based activity under the Plan:

	Number of AwardsOutstanding	Weighted- AverageExercisePrice		Weighted- Average RemainingContractual Terms (Years)	IntrinsicValue(in thousands)
Balance at December 31, 2021	1,593,800	$	21.30	9.26	$	—
Balance at December 31, 2022	2,027,501	$	18.11	8.45	$	—
Granted 01/01/2022 - 03/31/2022	45,000	13.06
Granted	—	—
Granted 04/01/2022 - 06/30/2022	—	—
Cancelled and forfeited	(390,846)	17.86
Granted 07/01/2022 - 09/30/2022	656,501	6.74
Cancelled and forfeited	(212,339)	19.72
Exercised	—	—
Balance at September 30, 2022	2,082,962	$	17.82	8.68	$	—
Balance at March 31, 2023	1,636,655	$	18.17	5.74	$	—
Vested and Exercisable at September 30, 2022	551,128	$	20.54	8.04	$	—
Vested and Exercisable at March 31, 2023	790,536	$	22.26	4.93	$	—

	Number ofAwardsOutstanding	Weighted- Average ExercisePrice		Weighted- Average RemainingContractual Terms (Years)	IntrinsicValue(in thousands)
Balance at December 31, 2020	773,300	$	24.64	9.98	$	—
Balance at December 31, 2021	1,593,800	$	21.30	9.26	$	—
Granted 01/01/2021 - 03/31/2021	—	—
Granted	45,000	13.06
Granted 04/01/2021 - 06/30/2021	270,000	17.82
Cancelled and forfeited	—	—
Granted 07/01/2021 - 09/30/2021	555,000	18.31
Cancelled and forfeited	(4,500)	24.69
Exercised	—	—
Balance at September 30, 2021	1,593,800	$	21.30	9.51	$	—
Balance at March 31, 2022	1,638,800	$	21.08	9.04	$	—
Vested and Exercisable at September 30, 2021	—	$	—	—	$	—
Vested and Exercisable at March 31, 2022	336,267	$	22.73	8.89	$	—

There were no options exercised during the three months ~~and nine months~~ ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022.

Compensation expense is recorded on a straight-line basis over the vesting period, which is the requisite service period, beginning on the grant date. The compensation expense is based on the fair value of each option grant using the Black-Scholes option pricing model. During the three and nine months ended September 30, 2022, the Company recorded $1.1 million and $2.7 million, respectively, of share-based compensation expense related to stock options, which is included in operating expenses in the Company’s condensed consolidated statements of operations and comprehensive loss. During the three and nine months ended September 30, 2021, the Company recorded $0.7 million and $1.8 million, respectively, of share-based compensation expense related to stock options, which is included in operating expenses in the Company’s condensed consolidated statements of operations. As of September 30, 2022, the Company had stock-based compensation of $6.2 million related to stock options not yet recognized that are expected to be recognized over an estimated weighted average period of approximately 1.9 years.

2617

Scholes ~~The~~option ~~fair~~pricing ~~value~~model. ofDuring ~~each~~the ~~option~~three ~~grant~~months ~~was~~ended ~~estimated~~March 31, on2023, the ~~grant~~Company ~~date~~recorded ~~using~~$0.2 ~~the~~million ~~Black~~of share-~~Scholes~~based ~~option~~compensation ~~pricing~~expense ~~model~~related ~~with~~to ~~the~~stock ~~following~~options, ~~assumptions~~which ~~during~~is included in operating expenses in the ~~three~~Company’s condensed consolidated statements of operations and ~~nine~~comprehensive loss. During the three months ended ~~September~~March 3031, 2022:, the Company recorded $0.9 million of share-based compensation expense related to stock options, which is included in operating expenses in the Company’s condensed consolidated statements of operations and comprehensive loss. As of March 31, 2023, the Company had stock-based compensation of $2.8 million related to stock options not yet recognized that are expected to be recognized over an estimated weighted average period of approximately 1.6 years.

	September 30, 2022
	Three Months Ended		Nine Months Ended
Equity volatility	41.35	%	40.77	%
Risk-free interest rate	3.16	%	3.10	%
Expected term (in years)	6		6
Expected dividend	0.00	%	0.00	%

No options were granted during three months ended March 31, 2023. The fair value of each option grant was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions for the three months ended March 31, 2022:

The fair value of each option grant was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions for the three and nine months ended September 30, 2021:


	March 31, 2022
		Three Months Ended
Equity volatility		32.37	%
Risk-free interest rate		2.50	%
Expected term (in years)		6
Expected dividend		0.00	%

	September 30, 2021
	Three Months Ended		Nine Months Ended
Equity volatility	34.01	%	33.99	%
Risk-free interest rate	1.04	%	1.11	%
Expected term (in years)	6		6
Expected dividend	0.00	%	0.00	%

The grant date fair value of granted stock options was $0.2 million for the three months ended March 31, 2022.

~~The~~Any ~~grant~~option ~~date~~granted ~~fair~~under ~~value~~the ofPlan ~~granted~~may ~~stock~~include ~~options~~tandem ~~was~~Stock $2Appreciation Rights (“SARs”).1 ~~million~~SARs ~~and~~may $2also be awarded to eligible persons independent of any option.3 ~~million~~The strike price for ~~the~~common ~~three~~share ~~and~~for ~~nine~~each ~~months~~SAR ~~ended~~shall ~~September 30,~~not ~~2022,~~be ~~respectively.~~less ~~The~~than ~~grant~~100% ~~date~~of the fair value of ~~granted~~the ~~stock~~shares ~~options~~determined ~~was~~as ~~$3.5~~of ~~million~~the ~~and~~date $5of grant.2 ~~million~~There ~~for~~were ~~the~~no ~~three~~SARs ~~and~~outstanding ~~nine~~as ~~months~~of ~~ended September~~March 3031, ~~2021~~2023 and December 31, ~~respectively~~2022.

Any option granted under the Plan may include tandem Stock Appreciation Rights (“SARs”). SARs may also be awarded to eligible persons independent of any option. The strike price for common share for each SAR shall not be less than 100% of the fair value of the shares determined as of the date of grant. There were no SARs outstanding as of September 30, 2022 and December 31, 2021.

Restricted Stock Awards and Restricted Stock Units

RSUs are convertible into shares of Company common stock upon vesting on a one-to-one basis. RSAs have the same rights as other issued and outstanding shares of Company common stock except they are not entitled to dividends until the awards vest. Restrictions also limit the sale or transfer of the shares during the vesting period. Any unvested portion of restricted stock and RSUs shall typically be terminated and forfeited upon termination of employment or service of the grantee. As of ~~September 30~~March 31, ~~2022~~2023, no RSUs have been granted. All below restricted stock activities are related to RSAs.

~~Director~~No restricted stock ~~activity~~activities under the ~~Plan~~plan were related to the Company's board of directors for the ~~nine~~three months ~~period~~ ended ~~September~~March 3031, ~~2022~~2023 ~~was~~and ~~as follows:~~2022.

	Non-Employee Director Awards
	Number ofShares	Weighted-AverageFair Value
Balance at December 31, 2021	—	$	—
Granted 01/01/2022 - 03/31/2022	—	—
Granted 04/01/2022 - 06/30/2022	18,162	12.25
Granted 07/01/2022 - 09/30/2022	38,554	6.16
Vested	(56,716)	8.11
Forfeited	—	—
Non-vested restricted stock at September 30, 2022	—	$	—

Non-director employee and consultant restricted stock activity under the Plan for the three months period ended March 31, 2023 was as follows:


	Employee Awards			Consultant (Non-Employee) Awards
	Number of Shares	Weighted- Average Fair Value		Number of Shares	Weighted- Average Fair Value
Balance at December 31, 2022	306,666	$	7.04	100,000	$	15.54
Granted	—	—		—	—


Vested	—	—		—	—
Forfeited	—	—		—	—
Non-vested restricted stock at March 31, 2023	306,666	$	7.04	100,000	$	15.54

~~Director restricted stock activity under the Plan for the nine months period ended September 30, 2021 was as follows:~~18

	Non-Employee Director Awards
	Number ofShares	Weighted-AverageFair Value
Balance at December 31, 2020	—	$	—
Granted 01/01/2021 - 03/31/2021	15,216	18.93
Granted 04/01/2021 - 06/30/2021	—	—
Granted 07/01/2021 - 09/30/2021	4,918	22.08
Vested	(20,134)	19.70
Forfeited	—	—
Non-vested restricted stock at September 30, 2021	—	$	—

Non-director employee and consultant restricted stock activity under the Plan for the three months period ended March 31, 2022 was as follows:

Non-director employee and consultant restricted stock activity under the Plan for the nine months period ended September 30, 2022 was as follows:


	Employee Awards			Consultant (Non-Employee) Awards
	Number of Shares	Weighted- Average Fair Value		Number of Shares	Weighted- Average Fair Value
Balance at December 31, 2021	—	$	—	—	$	—
Granted	3,828	13.06		200,000	15.54


Vested	(3,828)	13.06		(25,000)	15.54
Forfeited	—	—		—	—
Non-vested restricted stock at March 31, 2022	—	$	—	175,000	$	15.54

	Employee Awards			Consultant (Non-Employee) Awards
	Number ofShares	Weighted-AverageFair Value		Number ofShares	Weighted-AverageFair Value
Balance at December 31, 2021	—	$	—	—	$	—
Granted 01/01/2022 - 03/31/2022	3,828	13.06		200,000	15.54
Granted 04/01/2022 - 06/30/2022	—	—		—	—
Granted 07/01/2022 - 09/30/2022	1,160,000	7.02		—	—
Vested	(857,162)	7.04		(75,000)	15.54
Forfeited	—	—		—	—
Non-vested restricted stock at September 30, 2022	306,666	$	7.02	125,000	$	15.54

During the three months ended March 31, 2023, the Company recorded share-based compensation expense related to RSAs of $0.7 million. During the three months ended March 31, 2022, the Company recorded share-based compensation expense related to RSAs of $0.4 million. Share-based compensation expense is included in operating expenses in the Company’s condensed consolidated statements of operations and comprehensive loss.

~~Non-director~~No ~~employee~~RSAs ~~and~~was ~~consultant~~granted ~~restricted~~for ~~stock~~the ~~activity~~three ~~under~~months ~~the~~ended ~~Plan~~March 31, 2023. The fair value of granted RSAs was $3.2 million for the ~~nine~~three months ~~period~~ ended ~~September~~March 3031, ~~2021was as follows:~~2022.

	Employee Awards			Consultant (Non-Employee) Awards
	Number ofShares	Weighted-AverageFair Value		Number ofShares	Weighted-AverageFair Value
Balance at December 31, 2020	400,000	$	24.28	100,000	$	24.69
Granted 01/01/2021 - 03/31/2021	30,416	23.65		100,000	18.96
Granted 04/01/2021 - 06/30/2021	—	—		10,000	18.15
Granted 07/01/2021 - 09/30/2021	—	—		—	—
Vested	(4,916)	24.28		(110,000)	18.89
Forfeited	(425,500)	24.62		(100,000)	24.69
Non-vested restricted stock at September 30, 2021	—	$	—	—	$	—

As of March 31, 2023, unrecognized compensation costs related to the RSAs was $2.6 million and is expected to be recognized over a remaining period of 1.2 years.

~~During the three and nine months ended September 30, 2022, the Company recorded share-based compensation expense related to RSAs of $6~~15.8 ~~million~~RELATED ~~and~~PARTY $7.8 million, respectively. During the three and nine months ended September 30, 2021, the Company recorded share-based compensation expense related to RSAs of $0.1 million and $2.6 million, respectively. Share-based compensation expense is included in operating expenses in the Company’s condensed consolidated statements of operations and comprehensive loss.TRANSACTIONS

28The Company leases office property in San Pedro, California from Deluna Properties, Inc., a company owned by the Company’s CEO, Salvatore Galletti. The amount of rent paid was approximately $46,000 and approximately $45,000 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the Company recorded $1.9 million of operating lease right-of-use asset (“ROU”) and $2.0 million of operating lease liabilities in relation to this lease.

~~The~~In ~~fair~~addition, ~~value~~the ofCompany ~~granted~~leased ~~RSAs~~a ~~was~~building ~~$8.4~~from ~~million~~Ittella ~~and~~Properties, ~~$11.8~~an ~~million~~entity ~~for~~owned ~~the~~by ~~three~~Salvatore ~~and nine months ended September 30, 2022, respectively~~Galletti. ~~The~~Ittella ~~fair~~Properties ~~value~~is ofconsidered ~~granted~~as ~~RSAs~~the ~~was~~Company’s ~~$0.1~~VIE ~~million~~ and ~~$3.2~~consolidated ~~million~~to ~~for~~ the ~~three~~Company’s ~~and~~financial ~~nine~~statements. ~~months~~See ~~ended~~Note ~~September 30,~~17 ~~2021,~~Consolidated ~~respectively~~Variable Interest Entity.

AsIn ofconnection ~~September 30~~with Belmont acquisition in December 2021, ~~2022~~the Company entered into a lease agreement with Penhurst Realty, ~~unrecognized~~LLC, ~~compensation~~owned ~~costs~~by ~~related~~Belmont’s toprior owner who is currently serving as the ~~RSAs~~president ~~was~~of BCI. The amounts of rent paid were $30.91 million and is$0.1 ~~expected~~million tofor bethe ~~recognized~~three ~~over~~months aended ~~remaining~~March 31, ~~period~~2023 and 2022, respectively. As of 1March 31, 2023, the Company recorded $0.74 ~~years~~million each for the operating lease ROU asset and operating lease liabilities in relation to this lease.

17A company affiliated with one of the Company’s non-employee directors has been contracted to provide marketing assistance to the Company. ~~RELATED~~No ~~PARTY~~service ~~TRANSACTIONS~~has been provided during the three months ended March 31, 2023. The Company paid $0.1 million to this company for the services provided during the three months ended March 31, 2022.

The Company ~~leases~~borrowed ~~office~~two ~~property~~unsecured inloans ~~San Pedro, California~~ from ~~Deluna Properties, Inc., a company owned by the Company’s CEO,~~ Salvatore Galletti~~. The amount of rent paid was approximately $45~~,~~000~~ ~~and~~ $~~134,000~~5.0 ~~for~~million ~~the~~on ~~three~~November ~~and nine months ended September 30~~23, 2022, ~~respectively. The amount of rent paid was approximately $60,000~~ and $~~150,000 for the three and nine months ended September 30, 2021, respectively~~5. ~~As of September 30, 2022, under the adoption of ASC 842, the Company recorded $2.~~0 million ofon ~~operating~~December ~~lease~~29, ~~right-of-use asset and $2~~2022.1 ~~million~~See ofNote ~~operating~~12 ~~lease liabilities in relation to this lease~~Indebtedness.

~~In addition, the Company leased a building from Ittella Properties, an entity owned by Salvatore Galletti~~16. ~~Ittella~~COMMITMENTS ~~Properties~~AND ~~is considered as the Company’s VIE and consolidated to the Company’s financial statements. See Note 19 Consolidated Variable Interest Entity.~~CONTINGENCIES

In Connection with Belmont acquisition in December 2021, the Company entered into a lease agreement with Penhurst Realty, LLC, owned by Belmont’s prior owner who is currently serving as the president of BCI. The amounts of rent paid were $60,000 and $180,000 for the three and nine months ended September 30, 2022, respectively. As of September 30, 2022, under the adoption of ASC 842, the Company recorded $0.5 million each for the operating lease ROU asset and operating lease liabilities in relation to this lease.

A company affiliated with one of the Company’s non-employee directors has been contracted to provide marketing assistance to the Company. The Company paid $0.1 million and $0.3 million to this company for the services provided during the three and nine months ended September 30, 2022, respectively.

18. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Company also enters into leases, which require the Company as lessee to indemnify the lessor from liabilities arising out of the Company’s occupancy of the properties. The Company’s indemnification obligations are generally covered under the Company’s general insurance policies.

From time to time, the Company is involved in various litigation matters arising in the ordinary course of business. The Company does not believe the disposition of any current matter will have a material effect on its condensed consolidated financial position or results of operations and cash flows.

A subsidiary of the Company, Ittella Italy, is involved in certain litigation related to the death of an independent contractor who fell off of the roof of Ittella Italy’s premises while performing pest control services. The case was brought by five relatives of the deceased worker. The five plaintiffs were originally seeking collectively €1.9 million from the defendants. In addition to Ittella Italy, the pest control company for which the deceased was working at the time of the accident is co-defendant. Furthermore, under Italian law, the president of an Italian company is automatically criminally charged if a workplace death occurs on site. Ittella Italy has engaged local counsel, and while local counsel does not believe it is probable that Ittella Italy or its president will be found culpable, Ittella Italy cannot predict the ultimate outcome of the litigation. Procedurally, the case remains in a very early stage of the litigation. Ultimately, a trial will be required to determine if the defendants are liable, and if they are liable, a second separate proceeding will be required to establish the amount of damages owed by each of the co-defendants. As of the reporting date, the insurance company paid 0.2 million Euros to settle the civil portion of the case and the criminal portion is outstanding. Based on local counsel's professional estimation, the remaining liability exposure for the Company could be from zero to 0.4 million Euros. Ittella Italy believes any required payments could be covered by its insurance policy; however, it is not probable to determine the amount at which the insurance company will reimburse Ittella Italy or whether any reimbursement will be received at all. Based on information received from its Italian lawyers, Ittella Italy believes that the litigation may continue for a number of years before it is finally resolved. Based on the assessment by management together with the independent assessment from its local legal counsel, the Company believes that a loss is currently not probable and an estimate cannot be made. Therefore, no accrual has been made as of September 30, 2022 nor December 31, 2021.19

29A subsidiary of the Company, Ittella Italy, is involved in certain litigation related to the death of an independent contractor who fell off of the roof of Ittella Italy’s premises while performing pest control services. The case was brought by five relatives of the deceased worker. The five plaintiffs were originally seeking collectively €1.9 million from the defendants. In addition to Ittella Italy, the pest control company for which the deceased was working at the time of the accident is co-defendant. Furthermore, under Italian law, the president of an Italian company is automatically criminally charged if a workplace death occurs on site. Ittella Italy has engaged local counsel, and while local counsel does not believe it is probable that Ittella Italy or its president will be found culpable, Ittella Italy cannot predict the ultimate outcome of the litigation. Procedurally, the case remains in a very early stage of the litigation. Ultimately, a trial will be required to determine if the defendants are liable, and if they are liable, a second separate proceeding will be required to establish the amount of damages owed by each of the co-defendants. As of the reporting date, the insurance company paid 0.2 million Euros to settle the civil portion of the case and the criminal portion is outstanding. Based on local counsel's professional estimation, the remaining liability exposure for the Company could be from zero to 0.4 million Euros. Ittella Italy believes any required payments could be covered by its insurance policy; however, it is not probable to determine the amount at which the insurance company will reimburse Ittella Italy or whether any reimbursement will be received at all. Based on information received from its Italian lawyers, Ittella Italy believes that the litigation may continue for a number of years before it is finally resolved. Based on the assessment by management together with the independent assessment from its local legal counsel, the Company believes that a loss is currently not probable and an estimate cannot be made. Therefore, no accrual has been made as of March 31, 2023 nor December 31, 2022.

19On December 23, 2022, a purported class action lawsuit was filed in the United States District Court for the Central District of California against us, our Chief Executive Officer, Salvatore Galletti, and our Chief Financial Officer, Stephanie Dieckmann. ~~CONSOLIDATED~~The ~~VARIABLE~~complaint ~~INTEREST~~alleges ~~ENTITY~~generally that during the purported class period between March 20, 2021 and October 12, 2022, we and the named executive officers made misleading statements and/or failed to disclose material facts about our business and operations due to alleged material weaknesses in our financial reporting internal controls. The complaint seeks to assert claims for violations of Section 10(b) (and Rule 10b-5 promulgated thereunder) and Section 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, and seeks unspecified damages. The Court has appointed a lead plaintiff and lead plaintiff's counsel and has set a deadline for the lead plaintiff to file an amended complaint. At this time, it is not possible to estimate any potential material losses or predict the outcome of the Company's anticipated motion to dismiss.

~~Ittella~~On ~~Properties~~March 17, ~~the~~2023, ~~Company’s~~a ~~consolidated~~verified ~~VIE,~~derivative ~~owns~~complaint ~~the~~was ~~Alondra~~filed ~~Building,~~in ~~which~~the isUnited ~~leased~~States byDistrict ~~Ittella~~Court ~~International~~ for 10the ~~years~~Central ~~from~~District ~~August~~of 1,California ~~2015~~against ~~through~~certain ~~August~~of 1,our ~~2025~~officers and directors. ~~Ittella~~The ~~Properties~~complaint isalleges: ~~wholly~~(1) ~~owned~~breach byof ~~Salvatore~~fiduciary ~~Galletti.~~duty, ~~The~~(2) ~~construction~~unjust ~~and~~enrichment, ~~acquisition~~(3) abuse of ~~the~~control, ~~Alondra~~(4) ~~building~~gross bymismanagement, ~~Ittella~~(5) ~~Properties~~waste ~~were~~of ~~funded~~corporate byassets, a(6) ~~loan~~violations ~~agreement~~of ~~with~~Section ~~unconditional~~14(a) ~~guarantees~~of bythe ~~Ittella~~Exchange ~~International~~Act, and ~~terms~~(7) ~~providing~~contribution ~~that~~under ~~100%~~sections 10(b) and 21D of the ~~Alondra~~Exchange ~~building~~Act. ~~must~~At bethis ~~leased~~time, it is not possible to ~~Ittella~~estimate ~~International~~any ~~throughout~~potential material losses or predict the ~~term~~outcome of the ~~loan~~Company's ~~agreement~~anticipated motion to dismiss.

~~Ittella~~On ~~International~~April ~~guarantees~~3, ~~the~~2023, ~~loan~~a ~~for~~second ~~Ittella~~and ~~Properties~~related ~~and~~verified ~~substantially~~derivative ~~all~~complaint ofwas ~~Ittella~~filed ~~Properties’~~in ~~transactions~~the ~~occur~~United ~~with~~States ~~the~~District ~~Ittella~~Court ~~International.~~for ~~Thus,~~the ~~Ittella~~Central ~~Properties’~~District ~~equity~~of atCalifornia ~~risk~~against iscertain ~~considered~~of toour beofficers ~~insufficient~~and todirectors. ~~finance~~The ~~its~~complaint ~~activities~~alleges: ~~without~~(1) ~~additional~~violations ~~support~~of ~~from~~Section ~~Ittella~~14(a) ~~International.~~of ~~Therefore~~the Exchange Act, ~~Ittella~~(2) ~~Properties~~breach ~~was~~of ~~designed~~fiduciary induty, aand ~~way~~(3) ~~such~~unjust ~~that~~enrichment, ~~substantially~~(4) ~~all~~aiding and abetting breaches of ~~the~~fiduciary ~~assets~~duty, ~~benefit~~(5) ~~the~~waste ~~Company~~of corporate assets, and ~~substantially~~(6) ~~all~~violations of ~~the~~sections ~~obligations~~10(b) ~~are~~and ~~absorbed~~21D byof the ~~Company~~Exchange Act. ~~Given~~The ~~the~~Court ~~Company~~consolidated ~~has~~this ~~control~~action ~~over~~with the ~~assets~~other ~~that~~related ~~most~~derivative ~~significantly~~action ~~affect~~and appointed lead counsel and the ~~economic~~parties ~~performance~~are ofentering ~~Ittella~~stay ~~Properties~~discussions. Generally, ~~the~~while ~~Company~~we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is ~~determined~~subject to beself-insured ~~the~~retentions, ~~primary~~various ~~beneficiary~~exclusions ofas ~~Ittella~~well ~~Properties~~as caps on amounts recoverable. AsEven if we believe a ~~result~~claim is covered by insurance, ~~Ittella~~insurers ~~Properties~~may isdispute ~~considered~~our entitlement to recovery for a ~~VIE~~variety of potential reasons, which may affect the ~~Company~~timing and, if the insurers prevail, the amount of our recovery. At this time, it is ~~required~~not possible to beestimate ~~consolidated~~any potential material losses or predict the outcome of the Company's anticipated motion to dismiss.

~~The~~Based ~~assets~~on ~~and~~the ~~liabilities~~assessment ofby ~~Ittella~~management ~~Properties~~together ~~are~~with ~~included~~the inindependent ~~the~~assessment ~~condensed~~from ~~consolidated~~its ~~financial~~legal ~~statements.~~counsel Asrelated ofto ~~September 30,~~the ~~2022~~above matters, ~~Itella~~the ~~Properties~~Company ~~contributed~~believes ~~assets~~that ofa ~~$2.3 million~~loss ~~and~~is ~~liabilities~~unable ofto ~~$1.8 million.~~estimate Asa range of ~~December 31,~~reasonably ~~2021~~possible loss. Therefore, ~~Itella~~ ~~Properties~~no ~~contributed~~accrual ~~assets~~has been made as of ~~$2.3~~March ~~million~~31, ~~and~~2023 ~~liabilities~~nor ofDecember 31, $22022.~~0 million.~~

~~The results of operations and cash flows of Ittella Properties are included in the Company’s condensed consolidated financial statements~~17. ~~For~~CONSOLIDATED ~~each~~VARIABLE ofINTEREST the three and nine month periods ended September 30, 2022 and 2021, 100% of the revenue of Ittella Properties, approximately $0.1 million and $0.3 million of lease income, respectively, received from Ittella International, was intercompany and eliminated in consolidation. Ittella Properties contributed expenses of approximately $50,000 for each of the three month periods ended September 30, 2022 and 2021. Ittella Properties contributed expenses of approximately $150,000 and $160,000 for the nine month periods ended September 30, 2022 and 2021, respectively.ENTITY

20Ittella Properties, the Company’s consolidated VIE, owns the Alondra Building, which is leased by Ittella International for 10 years from August 1, 2015 through August 1, 2025. ~~LOSS~~Ittella ~~PER~~Properties ~~SHARE~~is wholly owned by Salvatore Galletti. The net equity of Ittella Properties is recognized as noncontrolling interest on the Company’s consolidated financial statements. The noncontrolling interest within the consolidated financial statements is used to reflect the portion of a VIE that the

~~The following is the summary of basic and diluted loss per share for the three and nine months ended September 30, 2022 and 2021 (in thousands):~~20

	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Numerator
Net loss	$	(38,496)	$	(8,213)	$	(86,757)	$	(75,205)
Gain on fair value remeasurement related to warrants	$	—	$	(235)	$	—	$	(333)
Dilutive net loss	$	(38,496)	$	(8,448)	$	(86,757)	$	(75,538)
Denominator
Weighted average common shares outstanding	82,794,581		81,957,170		82,440,867		81,404,348
Effect of potentially dilutive securities related to warrants	—		54,046		—		144,325
Weighted average diluted shares outstanding	82,794,581		82,011,216		82,440,867		81,548,673
Loss per share
Basic	$	(0.46)	$	(0.10)	$	(1.05)	$	(0.92)
Diluted	$	(0.46)	$	(0.10)	$	(1.05)	$	(0.93)

Company consolidates, but does not own. The change in noncontrolling interest within the consolidated balance sheets during the three months ended March 31, 2023, was primarily due to a contribution of $0.1 million from the owner and a net income attributable to noncontrolling interests of $0.1 million. The construction and acquisition of the Alondra building by Ittella Properties were funded by a loan agreement with unconditional guarantees by Ittella International. The loan agreement was subsequently refinanced during fiscal 2020 and there is no longer any unconditional guarantees by Ittella International.

30Substantially all of Ittella Properties’ transactions occur with the Ittella International. Ittella Properties was designed in a way such that substantially all of the assets benefit the Company, and substantially all of the obligations are absorbed by the Company. The Company has a variable interest in Properties through an implicit guarantee because Salvatore Galletti, the CEO of the Company who wholly owns Properties, has the ability to exert its significant influence on the Company and thereby require the Company to absorb any significant losses incurred by Ittella Properties. Ittella Properties represents a variable interest entity because the equity investors of Ittella Properties lack the characteristics of a controlling financial interest. Given the Company has control over the decisions related to the assets that most significantly affect the economic performance of Ittella Properties, and the Company has the obligation to absorb losses of the VIE that could potentially be significant to the VIE, the Company is determined to be the primary beneficiary of Ittella Properties. As a result, Ittella Properties is considered a VIE of the Company and is required to be consolidated. Other than lease payments to Ittella Properties of $0.1 million during the three months ended March 31, 2023, the Company did not provide any other financial support to Ittella Properties during the three months ended March 31, 2023.

The ~~following~~assets ~~have~~and ~~been~~liabilities ~~excluded~~of ~~from~~Ittella ~~the~~Properties ~~calculation~~are ofincluded ~~diluted~~in ~~loss~~the ~~per~~condensed ~~share~~consolidated asfinancial ~~the~~statements. ~~effect~~As of ~~including~~March 31, ~~them~~2023, ~~would~~Ittella ~~have~~Properties ~~been~~contributed ~~anti-dilutive~~assets ~~for~~of ~~the~~$2.2 million ~~three~~ and ~~nine~~liabilities ~~months~~of ~~ended~~$1.8 million. ~~September~~As of December 3031, 2022, Ittella Properties contributed assets of $2.1 million and ~~2021~~liabilities ~~(in~~of ~~thousands):~~$1.8 million.

	Three months ended September 30,		Nine months ended September 30,
	2022	2021	2022	2021
Warrants	115	—	115	—
Stock options	2,182	279	1,784	385
Restricted stock awards	324	—	220	30
Total	2,621	279	2,119	415

The results of operations and cash flows of Ittella Properties are included in the Company’s condensed consolidated financial statements. For each of the three month periods ended March 31, 2023 and 2022, 100% of the revenue of Ittella Properties, $0.1 million and $0.1 million, respectively, of lease income, received from Ittella International, was intercompany and eliminated in consolidation. Ittella Properties contributed expenses of approximately $48,000 and $50,000 for the three month periods ended March 31, 2023 and 2022, respectively.

2118. ~~SUBSEQUENT~~LOSS ~~EVENTS~~PER SHARE

The ~~Company~~following ~~evaluates~~is ~~subsequent~~the ~~events~~summary ~~and~~of ~~transactions~~basic ~~that~~and ~~occur~~diluted ~~after~~loss ~~the~~per ~~balance~~share ~~sheet~~for ~~date up to~~ the ~~date~~three ~~that~~months ~~the~~ended ~~condensed~~March 31, ~~consolidated~~2023 ~~financial~~and ~~statements~~2022 ~~were issued. Other than as described~~ (in ~~these financial statements~~thousands, ~~the~~except ~~Company~~for ~~did~~shares ~~not~~and ~~identify~~per ~~any~~share ~~subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.~~amounts):


	Three months ended March 31,
		2023		2022
Numerator
Net loss attributable to Tattooed Chef, Inc.		$	(19,085)	$	(20,173)

Denominator
Weighted average common shares outstanding		83,251,691		82,237,898
Weighted average diluted shares outstanding		83,251,691		82,237,898

Loss per share
Basic		$	(0.23)	$	(0.25)
Diluted		$	(0.23)	$	(0.25)

The following have been excluded from the calculation of diluted loss per share as the effect of including them would have been anti-dilutive for the three months ended March 31, 2023 and 2022 (in thousands):


	Three months ended March 31,
		2023	2022
Warrants		115	115
Stock options		1,832	1,639
Restricted stock awards		407	175
Total		2,354	1,929

19. SUBSEQUENT EVENTS

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the condensed consolidated financial statements are issued. Other than the following, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

Additional loan from Mr. Galletti to the Company

Subsequent to the quarter ended March 31, 2023, on April 7, 2023, the Company received a $2.0 million unsecured loan from the Company’s CEO and Chairman of the Board, Salvatore Galletti. The Company, in turn, loaned that $2.0 million on an unsecured basis to its operating subsidiary, Ittella International. This loan is in addition to (i) the $5.0 million loan made by Mr. Galletti in November 2022, and (ii) the $5.0 million loan made by Mr. Galletti in December 2022, that are reflected in the Company’s consolidated balance sheets as of March 31, 2023 and December 31, 2022. The loan is subordinated in right of payment to obligations to the Senior Creditor pursuant to the terms of the Subordination Agreement between the Company and the Senior Creditor.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and related notes (the “Financial Statements”) included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”) and the section entitled “Risk Factors.” Unless otherwise indicated, the terms “Tattooed Chef,” “the Company,” “we,” “us,” or “our” refer to Tattooed Chef, Inc., a Delaware corporation, together with its consolidated subsidiaries. ~~Management's Discussion and Analysis has been revised for the effects of the restatement as discussed in Note 2 Basis of Presentation and Significant Accounting Policies to the financial statements.~~

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding ~~the~~our ~~Company’s~~ financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek”, “expand” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of ~~the~~our ~~Company’s~~ Annual Report on Form 10-K for the period ending December 31, ~~2021~~2022 filed with the Securities and Exchange Commission (“SEC”) and Part II, Item 1A. Risk Factors herein. ~~The~~Our ~~Company’s~~ securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, ~~the~~we ~~Company~~disclaim ~~disclaims~~ any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the following:

•our ability to continue as a going concern;

•our ability to maintain the listing of our common stock on Nasdaq;

•our ability to raise capital in the future;

•our ability to acquire and integrate new operations successfully;

•market conditions, ~~and~~ global and economic factors beyond our control, including the potential adverse effects of the ongoing global coronavirus (COVID-19) pandemic on capital markets, war (including the ongoing conflict in Ukraine), climate change, general economic conditions, unemployment and our liquidity, operations and personnel;

•our ability to obtain raw materials on a timely basis or in quantities sufficient to meet the demand for our products;

•our ability to grow our customer base;

•our ability to forecast and maintain an adequate rate of revenue growth and appropriately plan its expenses;

•our expectations regarding future expenditures;

•our ability to attract and retain qualified employees and key personnel;

•our ability to retain relationship with third party suppliers;

•our ability to compete effectively in the competitive packaged food industry;

•our ability to protect and enhance our corporate reputation and brand;

•the impact of inflation; and

•the impact of future regulatory, judicial, and legislative changes on our industry.

Overview

We are a rapidly growing plant-based food company offering a broad portfolio of innovative frozen foods. We supply plant-based products to leading retailers in the United States, with signature products such as ready-to-cook bowls, zucchini spirals, riced cauliflower, acai and smoothie bowls, cauliflower crust pizza, wood fire crusted pizza, handheld burritos, ~~tortillas, chips,~~ bars and quesadillas. Our products are available both in private label and our Tattooed Chef™ brand mainly in the frozen food section of retail food stores.

~~Both~~We ~~NMFD~~have ~~and~~completed ~~BCI,~~two ~~entities~~business ~~acquired~~acquisitions ~~in the second~~ and ~~fourth~~one ~~quarters~~asset ofacquisition ~~2021~~during ~~(Refer~~the topast ~~Note~~two 8years. ~~Business~~NMFD ~~Combinations~~ and ~~Asset~~BCI ~~Acquisitions for additional information),~~ primarily manufacture private label products. The Karsten facility, which was acquired together with NMFD in the second quarter of 2021, isstarted ~~not currently in~~ operations ~~and is expected to become active~~ during the ~~fourth~~first quarter of ~~2022~~2023. In the third quarter of 2022, we ~~also~~ entered into an ~~asset~~equipment purchase agreement, ~~which~~whereby ~~included~~we acquired certain manufacturing and production assets and assumed the lease for an 80,000 square foot manufacturing facility in Albuquerque, New Mexico. The New Mexico manufacturing facilities are expected to manufacture Tattooed Chef branded salty snacks, Mexican entrees, traditional entree bowls and private label products. BCI ~~has~~began ~~begun~~ manufacturing Tattooed Chef branded products during the third quarter of 2022 in addition to ~~their~~ legacy private label products. We anticipate continued growth in Tattooed Chef branded products primarily due to new product introductions and further stock keeping units ("SKUs") and store count expansion with current customers. While we are primarily focused on growing our branded business, we will continue to support our private label channel and evaluate new private label opportunities as they arise.

Results of Operations

~~The~~Three ~~following~~Months ~~table~~Ended ~~sets~~March ~~forth~~31, ~~key~~2023 ~~statistics~~Compared ~~for~~to ~~the~~Three ~~three~~Months ~~and~~Ended ~~nine~~March ~~months ended September 30~~31, 2022 ~~and 2021:~~

	Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
(in thousands)	2022		% of revenue		2021		% of revenue		2022		% of revenue		2021		% of revenue
Net revenue	$	54,115	100.0	%	$	57,976	100.0	%	$	179,536	100.0	%	$	155,651	100.0	%
Cost of goods sold	58,010		107.2	%	53,018		91.4	%	180,212		100.4	%	139,557		89.7	%
Gross (loss) profit	(3,895)		(7.2)	%	4,958		8.6	%	(676)		(0.4)	%	16,094		10.3	%
Operating expenses	31,572		58.3	%	12,793		22.1	%	79,313		44.2	%	40,810		26.2	%
Loss from operations	(35,467)		(65.5)	%	(7,835)		(13.5)	%	(79,989)		(44.6)	%	(24,716)		(15.9)	%
Interest expense	(230)		(0.4)	%	(45)		(0.1)	%	(313)		(0.2)	%	(159)		(0.1)	%
Other expense	(2,810)		(5.2)	%	(588)		(1.0)	%	(5,755)		(3.2)	%	(2,536)		(1.6)	%
Loss before income tax benefit (expense)	(38,507)		(71.2)	%	(8,468)		(14.6)	%	(86,057)		(47.9)	%	(27,411)		(17.6)	%
Income tax benefit (expense)	11		—	%	255		0.4	%	(700)		(0.4)	%	(47,794)		(30.7)	%
Net loss	(38,496)		(71.1)	%	(8,213)		(14.2)	%	(86,757)		(48.3)	%	(75,205)		(48.3)	%

The following table sets forth key statistics for the three months ended March 31, 2023 and 2022:

Results of Operations for the Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021.


	Three Months Ended March 31,
(in thousands)		2023		% of revenue		2022		% of revenue
Net revenue		$	59,092	100.0	%	$	67,688	100.0	%
Cost of goods sold		63,239		107.0	%	63,621		94.0	%
Gross (loss) profit		(4,147)		(7.0)	%	4,067		6.0	%
Operating expenses		14,706		24.9	%	23,332		34.5	%
Loss from operations		(18,853)		(31.9)	%	(19,265)		(28.5)	%
Interest expense		(457)		(0.8)	%	(41)		(0.1)	%
Other income (expense)		416		0.7	%	(611)		(0.9)	%
Loss before income tax expense		(18,894)		(32.0)	%	(19,917)		(29.4)	%
Income tax expense		134		0.2	%	256		0.4	%
Net loss		(19,028)		(32.2)	%	(20,173)		(29.8)	%

Net revenue

Net revenue decreased by $38.96 million, or 612.7%, to $5459.1 million for the three months ended ~~September~~March 3031, ~~2022~~2023 as compared to $5867.07 million for the comparable period in ~~2021~~2022. The decrease was driven by a $107.3 million ~~decline~~decrease in Tattooed Chef branded product revenue, ~~partially~~a ~~offset~~$0.4 bymillion ~~growth~~decrease in private label ~~and~~product ~~other~~revenue, ~~revenues~~and ofa $60.48 million decrease in other revenue. ~~Branded~~The decline in branded product revenue was ~~impacted~~driven by a $65.27 million ~~trade spend~~ increase, ~~which~~in ~~consisted~~trade ofspend and a $1.26 million ~~increase~~decrease in ~~slotting~~branded ~~fees~~product sales. Trade spend was elevated in the three months ended March 31, 2023 as wecompared ~~focused~~to onthe ~~brand~~prior ~~expansion~~year ofdue ~~Tattooed~~to ~~Chef~~the ~~branded~~expansion ~~products~~of product into ~~additional~~the conventional retail ~~stores~~space ~~across~~that ~~the~~occurred ~~country~~throughout 2022. InSince ~~addition,~~many ~~branded~~of ~~revenue~~our ~~was~~customers ~~impacted~~focus byon ~~lower~~healthier ~~revenue~~eating in athe ~~tier-1~~first ~~club~~quarter, ~~and~~we ~~retail~~support ~~account,~~that ~~which~~by ~~has~~spending ~~declined~~more ~~$15.0~~on ~~million~~promotions asin ~~compared~~store toduring the ~~prior~~first ~~year~~quarter ~~period~~than in other quarters throughout the year. ~~Private~~The ~~label~~decrease ~~and~~in ~~other~~branded ~~revenues~~product ~~revenue~~sales ~~growth~~was ismainly ~~primarily~~due ~~driven~~to bytwo ~~full~~items ~~quarter~~that ~~contribution~~were ~~from~~discontinued ~~BCI,~~at ~~which~~one ~~was~~retailer ~~not~~during ~~part~~the second quarter of ~~the~~2022 ~~Company~~and inpartially offset by the ~~year~~addition ~~ago~~of ~~period~~new customers throughout later quarters in 2022.

3324

Cost of goods sold

Cost of goods sold ~~increased~~slightly decreased $5.0.4 million, or 90.46%, to $5863.02 million for the three months ended ~~September~~March 3031, ~~2022~~2023 as compared to $5363.06 million for the comparable period in ~~2021~~2022. Cost of goods sold, as a percentage of net revenue, increased to 107.20% for the three months ended ~~September~~March 3031, ~~2022~~2023 from 9194.40% for the three months ended ~~September~~March 3031, ~~2021~~2022. The increase inwas ~~cost of goods sold is~~ primarily ~~due~~driven toby ~~continued~~an ~~inflationary~~approximately ~~pressures pushing labor and freight to 34.1~~10% ofincrease ~~net revenue~~ from ~~24.9% of net revenue as compared to~~ the ~~prior~~inflationary ~~year~~pressure ~~three~~on ~~month period. We have seen increases as a percentage of revenue spanning freight, packaging,~~ raw materials, and ~~labor. This was compounded during the three months ended September 30~~packaging, ~~2022~~a by1% ~~the~~increase ~~acquisition of the new manufacturing facility, which is expected to be accretive~~ in ~~the~~labor ~~fourth quarter of 2022, but increased our fixed costs including rent~~ and ~~depreciation expenses in the~~ third ~~quarter.~~party Asservices ~~these~~and ~~new~~another ~~facilities~~2% ~~are~~increase ~~not~~from ~~yet~~open ~~operating~~capacity at ~~full~~the ~~capacity,~~manufacturing ~~our~~sites. ~~fixed~~We ~~cost~~continue asto afocus ~~percentage~~on ofbuilding ~~net~~more ~~revenue~~efficient isdistribution ~~higher~~networks ~~than~~and ~~the~~production ~~comparable~~lines ~~period~~through ~~in 2021~~automation.

Gross ~~(Loss) Profit~~loss

Gross (loss) ~~profit decreased $8.9 million, or 178.6%, to $(3.9) million~~ for the three months ended ~~September~~March 3031, ~~2022~~2023 was $4.1 million as compared to gross profit of $54.01 million for the comparable period in ~~2021~~2022. Gross margin for the three months ended ~~September~~March 3031, ~~2022~~2023 was (7.20)%, as compared to 8.6.0% for the three months ended ~~September~~March 3031, ~~2021~~2022. The decrease in gross margin is primarily driven by the previously noted inflationary pressures on raw materials and packaging and the increase in trade spend.

Operating expenses

Operating expenses ~~increased~~decreased $~~18.~~8.6 million, or ~~146~~37.80%, to $3114.67 million for the three months ended ~~September~~March 3031, ~~2022~~2023 as compared to $1223.83 million for the comparable period in ~~2021~~2022. The ~~increase~~decrease iswas primarily ~~due~~driven toby a $76.09 million ~~increase~~decrease in ~~stock based compensation, a $4.6 million increase in~~ marketing and advertising ~~expenses~~expense, a $20.57 million ~~increase~~decrease in outside ~~services~~service ~~expense~~expenses, a $2.0.4 million ~~increase~~decrease in ~~payroll~~stock ~~related~~based ~~expenses~~compensation and a $0.74 million ~~increase~~decrease in ~~facility expenses~~supplies.

The ~~increase~~decrease in ~~stock based compensation is driven by shares issued under our employee equity incentive plan. Investments in~~ marketing and advertising expenses ~~continue~~are topart ~~grow~~of ~~brand~~the ~~awareness~~cost ~~and~~savings ~~accelerate~~that ~~Tattooed~~we ~~Chef~~have ~~brand~~planned ~~growth~~for 2023. ~~Increases~~We inpaused ~~outside~~our ~~services~~primary ~~and~~marketing ~~payroll~~programs ~~related~~with ~~expenses~~one ~~is primarily driven by the Sarbanes-Oxley Act~~ of ~~2002~~our ~~("SOX")~~main ~~and~~marketing ~~public~~service ~~company reporting requirements~~providers.

Income ~~tax~~Tax ~~benefit~~Expense

Income tax ~~benefit~~expense decreased $0.2 million, or 9547.7%, to $0.011 million for the three months ended ~~September~~March 3031, ~~2022~~2023 as compared to $0.3 million for the comparable period in ~~2021~~2022.

Net Loss

For the three months ended ~~September~~March 3031, ~~2022~~2023, we had a net loss of $3819.50 million, compared to a net loss of $820.2 million for the three months ended ~~September~~March 3031, ~~2021~~2022. The ~~increase~~decrease in net loss was mainly driven by ~~increased~~reduced operating expenses ~~and~~due ~~inflationary~~to ~~impacts~~our onbudget ~~cost~~control of ~~goods~~operational ~~sold~~cost.

Results of Operations for the Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021.

Net revenue

Net revenue increased by $23.9 million, or 15.3%, to $179.5 million for the nine months ended September 30, 2022 as compared to $155.7 million for the comparable period in 2021. The increase was driven by $16.7 million increase in private label product revenue, and a $8.4 million increase in other revenues, both primarily driven by the sales generated from NMFD and BCI, partially offset by a $1.1 million decline in Tattooed Chef branded product revenue. The decline in branded product net revenue was driven by a $8.2 million increase in trade spend related to those same products partially offset by a $7.1 million increase in branded product sales. Trade is elevated in the nine months ended September 30, 2022 as compared to the prior year results due to higher slotting fees as our revenue mix has shifted towards retail and the reclassification of the multi-vender mailer program from operating expenses into trade spend.

Cost of goods sold

Cost of goods sold increased $40.7 million, or 29.1%, to $180.2 million for the nine months ended September 30, 2022 as compared to $139.6 million for the comparable period in 2021. Cost of goods sold, as a percentage of revenue, increased to 100.4% for the nine months ended September 30, 2022 from 89.7% for the nine months ended September 30, 2021. The

increase in cost of goods sold is primarily driven by continued inflationary pressures on freight and labor costs as well as increases in fixed costs including facility and depreciation expenses resulting from new manufacturing and storage facilities and fixed assets acquired in 2021 and 2022. As these new facilities are not yet operating at full capacity, the fixed cost as a percentage of revenue is higher than the comparable period in 2021.

Gross Profit

Gross profit decreased $16.8 million, or 104.2%, to $(0.7) million for the nine months ended September 30, 2022 as compared to $16.1 million for the comparable period in 2021. Gross margin for the nine months ended September 30, 2022 was (0.4)%, as compared to 10.3% for the nine months ended September 30, 2021.

Operating expenses

Operating expenses increased $38.5 million, or 94.3%, to $79.3 million for the nine months ended September 30, 2022 as compared to $40.8 million for the comparable period in 2021. The increase is primarily driven by a $12.7 million increase in marketing and advertising expense, a $7.2 million increase in outside service expenses, a $6.2 million increase in stock based compensation, a $4.5 million increase in payroll related expenses, a $2.5 million increase in outside cold storage expenses, a $1.6 million increase in equipment and supplies and a $1.0 million increase in facility related expenses.

The increase in marketing and advertising expenses are driven by continued focus on building brand awareness and accelerating Tattooed Chef brand growth. Higher outside service and payroll related expenses are primarily driven by public company cost, specifically costs associated with the filing of restated financials and preparations for SOX compliance. The increase in stock based compensation is driven by shares issued under our employee equity incentive plan. Increases in post-manufacture cold storage expenses is due to elevated levels of finished good inventory as compared to the prior year period. The increase in facility related expenses is driven by new facilities consummated in 2022 as compared to 2021.

Income tax expense

Income tax expense decreased $47.1 million, or 98.5%, to $0.7 million for the nine months ended September 30, 2022 as compared to $47.8 million for the comparable period in 2021. The decrease was mainly driven by $47.8 million income tax expense recognized during the comparable period of 2021, which resulted from a full valuation allowance recognition with respect to our deferred tax assets. We continue to use a full valuation allowance established against our net deferred tax assets in the U.S.

Net Loss

For the nine months ended September 30, 2022, we had a net loss of $86.8 million, compared to a net loss of $75.2 million for the nine months ended September 30, 2021. The increase in net loss was mainly driven by increased operating expenses and inflationary impacts on cost of goods sold.

Non-GAAP Financial Measures

We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, identify trends in operating results, and provide additional insight on how the management team evaluates the business. Our management team uses Adjusted EBITDA to make operating and strategic decisions, evaluate performance and comply with indebtedness related reporting requirements. Below are details on this non-GAAP measure and the non-GAAP adjustments that the management team makes in the definition of Adjusted EBITDA. The adjustments generally fall within the categories of non-cash items, acquisition and integration costs, ~~business transformation initiatives,~~ and infrequent or unusual losses and gains in a non-recurring nature. We believe this non-GAAP measure should be considered along with net income, the most closely related GAAP financial measure. Reconciliations between Adjusted EBITDA and net income are below, and discussion regarding underlying GAAP results throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As new events or circumstances arise, the definition of Adjusted EBITDA could change. When the definitions change, we will provide the updated definition and present the related non-GAAP historical results on a comparable basis.

We define EBITDA as net income before interest, taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by adding back non-cash compensation expenses, non-recurring expenses, and other non-operational charges. Adjusted EBITDA is one of the key performance indicators we use in evaluating our operating performance and in making financial, operating, and planning decisions. We believe Adjusted EBITDA is useful to the readers of this quarterly report on Form 10-Q in the evaluation of our operating performance.

3525

~~financial,~~The ~~operating,~~following ~~and~~table ~~planning~~provides ~~decisions.~~a Wereconciliation ~~believe~~from ~~Adjusted~~net ~~EBITDA~~income ~~is useful~~ to ~~the~~Adjusted ~~readers~~EBITDA offor ~~this~~the ~~quarterly~~three ~~report~~months onended ~~Form~~March 31, ~~10-Q~~2023, inand ~~the evaluation of our operating performance.~~2022:

The following table provides a reconciliation from net income to Adjusted EBITDA for the three and nine months ended September 30, 2022, and 2021:


	Three Months Ended March 31,
(in thousands)		2023		2022

Net loss		$	(19,028)	$	(20,173)
Interest expense		457		41
Income tax expense		134		256
Depreciation and amortization		2,200		1,507
EBITDA		(16,237)		(18,369)
Adjustments
Stock compensation expense		903		1,287
Loss on foreign currency forward contracts		150		1,023
Loss (gain) on warrant remeasurement		3		(207)
Unrealized foreign currency gains		(165)		—
Acquisition expenses		—		105
Implementation of Enterprise Resource Planning (“ERP”) system		—		159
Total adjustments		891		2,367
Adjusted EBITDA		$	(15,346)	$	(16,002)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net loss	$	(38,496)	$	(8,213)	$	(86,757)	$	(75,205)
Interest expense	230		45		313		159
Income tax expense	(11)		(255)		700		47,794
Depreciation and amortization	1,729		1,066		4,772		2,553
EBITDA	(36,548)		(7,357)		(80,972)		(24,699)
Adjustments
Stock compensation expense	7,821		842		10,523		4,344
Loss on foreign currency forward contracts	1,939		717		5,011		2,694
Gain on warrant remeasurement	(13)		(218)		(681)		(167)
Unrealized foreign currency losses	900		—		1,526		—
Acquisition expenses	113		281		337		1,007
UMB ATM transaction	—		126		—		148
Enterprise resource planning (“ERP”) related expenses	137		—		475		—
Dispute resolution and related fees	147		465		147		465
Total adjustments	11,044		2,213		17,338		8,491
Adjusted EBITDA	$	(25,504)	$	(5,144)	$	(63,634)	$	(16,208)

Our Adjusted EBITDA loss was $15.3 million for the three months ended March 31, 2023, compared to Adjusted EBITDA loss of $16.0 million for the three months ended March 31, 2022. The decrease in Adjusted EBITDA loss was primarily due to the reduction in operating expenses driven by our commitment to reduce spending and drive the Company towards profitability.

Our Adjusted EBITDA loss was $25.5 million and $63.6 million for the three and nine months ended September 30, 2022, respectively, compared to Adjusted EBITDA loss of $5.1 million and $16.2 million for the three and nine months ended September 30, 2021, respectively. The increase in Adjusted EBITDA loss was primarily driven by higher operating expenses, inflationary impacts on cost of sales leading to lower profitability and higher fixed operating costs as compared to the prior year periods.

Liquidity, Capital Resources and Going Concern

As of ~~September~~March 3031, ~~2022~~2023, we had $143.25 million in cash ~~and cash equivalents~~. The cash outflow during the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023 is primarily attributable to ~~$20.0 million in marketing and promotional spend to raise our brand awareness, $26.9 million capital expenditures and~~ continued losses from operating activities. ~~The capital expenditures are for automation and robotic machinery that is intended to improve our production efficiency and reduce labor cost.~~

As of March 31, 2023, we had current liabilities of $93.6 million, including the outstanding balance on our line of credit $23.2 million and notes payable of $4.4 million in the United States. We are not in compliance with our financial covenants.

We may opportunistically raise debt capital, subject to market and other conditions. Additionally, as part of our growth strategies, we may also raise debt capital for strategic alternatives and general corporate purposes. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition may be adversely affected.

Indebtedness

See Note 1412 Indebtedness to the Financial Statements for details regarding our indebtedness. For our primary Credit Facility, we must meet a minimum EBITDA test where for the trailing 3-quarter period ended March 31, 2023, consolidated adjusted EBITDA should not be less than negative $35.0 million. As of March 31, 2023, we were not in compliance with our financial covenants under our Credit Facility. In addition, as of March 31, 2023, we were not in compliance with our financial covenants under our notes payable. The non-compliance may cause the lender to accelerate the debt repayment process.

Liquidity and going concern

We generally fund our short-term and long-term liquidity needs through a combination of cash on hand, cash flows generated from operations, and available borrowings under our Credit Facility (See “— Indebtedness” above). Our management regularly reviews certain liquidity measures to monitor performance.

See Note 2 Basis of Presentation and Significant Accounting Policies under “--Going Concern Consideration” to the Financial Statements for details regarding our going concern consideration. We have historically incurred losses and expect to continue to generate operating losses and consume cash resources in the near term. These conditions raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the date the Financial Statements are issued and may cause us continue to be unable to maintain compliance with our financial covenants giving the lender 26

36See Note 2 Basis of Presentation and Significant Accounting Policies under “--Going Concern Consideration” to the Financial Statements for details regarding our going concern consideration. We have historically incurred losses and expect to continue to generate operating losses and consume cash resources in the near term. These conditions raise substantial doubt about our ability to continue as a going concern for a period of 12 months from the date the Financial Statements are issued. The Company does not have sufficient resources to meet obligations as they come due for the 12 months after the date the financial statements are issued.

~~the~~In ~~right~~order to ~~accelerate~~alleviate ~~repayment~~these conditions and events that may raise substantial doubt about our ability to continue as a going concern, management plans to continue to closely monitor our operating forecast and pursue additional sources of ~~the~~outside ~~debt~~capital. If Wewe ~~have~~are ~~implemented~~unable to (a) improve our operating results, (b) obtain additional outside capital on terms that are acceptable to us to fund our operations, and/or ~~continue~~(c) secure a waiver or avoid forbearance from our lender if we are continually unable to ~~implement~~remain ~~plans~~in compliance with the financial covenants required by our Credit Facility and notes payable in the United States (see Note 12 Indebtedness in the Financial Statements), we will have to ~~achieve~~make significant changes to our operating ~~profitability~~plan, such as delay and ~~positive~~reduce ~~cash~~marketing ~~flow~~expenditures, ~~including~~reduce ~~various~~investments ~~margin~~in ~~improvement~~new ~~initiatives~~products, reduce our capital expenditures, reduce our sale and distribution infrastructure, reduce our workforce or otherwise significantly reduce the ~~optimization~~scope of our ~~pricing~~business. ~~strategy~~Moreover, if we fail to secure a waiver or avoid forbearance from our lender, the failure could accelerate the repayment of the outstanding borrowings under our Credit Facility and ~~new~~notes ~~product~~payable ~~innovation~~in the United States, or the exercise of other rights or remedies our lender may have under the loan documents and applicable law. While management believes we will be able to secure additional outside capital, no assurances can be provided that such capital will be obtained or on terms that are acceptable to us. Furthermore, given the inherent uncertainties associated with our growth strategy and as we are currently not in compliance with the financial covenants required by the Credit Facility and notes payable in the United States, management has concluded that substantial doubt exists regarding our ability to continue as a going concern for 12 months from the date of issuance of the Financial Statements.

We will seek outside capital for the foreseeable future until ~~such time that~~ we ~~can~~ begin generating positive cash flow. However, there can be no assurances that we will be able to obtain additional capital on terms acceptable to us or at all. Our ability to raise additional capital may be adversely impacted by the potential worsening of global economic conditions, including, banking crisis, interest rate environment, inflationary pressures, and the recent disruptions to, and volatility in, the credit and financial markets in the United States.

Cash Flows

The following section presents the major components of net cash flows from and used in operating, investing and financing activities for the ~~nine~~three months ended ~~September 30~~March 31, ~~2022~~2023 and ~~2021~~2022:

Nine Months Ended September 30,

Change

Three Months Ended March 31,

Change

(in thousands)

~~2022~~2023

~~2021~~2022

Amount

Cash (used in) provided by:

Operating activities

(675,~~286~~705)

(3326,~~125~~393)

~~(34~~20,~~161)~~688

~~103~~(78)

Investing activities

(~~30,083~~459)

(468,~~966~~807)

168,~~883~~348

(3695)

Financing activities

193,~~629~~856

~~78,116~~300

~~(58~~3,~~487)~~556

~~(75)~~1185

Net decrease in cash

(772,~~740~~308)

(134,~~975~~900)

~~(75~~32,~~765)~~592

~~3836~~(93)

Operating Activities

For the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, net cash used in operating activities was $675.37 million, ~~primarily~~as ~~driven~~compared byto ~~the net loss of~~ $8626.84 million, ~~partially~~for ~~offset~~the bythree ~~non-cash~~months ~~items,~~ended ~~which~~March ~~included stock compensation expense of $10.5 million~~31, ~~depreciation and amortization expense of $4~~2022.8 ~~million,~~The ~~unrealized~~change ~~forward~~was ~~contract~~primarily ~~loss~~attributable ofto ~~$2.8~~a ~~million and unrealized foreign currency losses of~~ $1.51 million. ~~Working~~decrease ~~capital consumed cash of $0.5 million driven by a $21.8 million increase~~ in ~~inventory,~~net ~~partially~~loss ~~offset~~and by a $2118.15 million ~~increase~~decrease in ~~accounts~~working ~~payable,~~capital ~~accrued expenses and other current liabilities~~consumption.

For the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2023, net cash used in operating activities was $335.17 million, primarily driven by the net loss of $7519.20 million, partially offset by non-cash items, which ~~include~~mainly aincluded ~~net~~depreciation ~~change~~and inamortization ~~deferred taxes of $47.1 million, stock compensation~~ expense of $~~4.3 million, depreciation expense of $~~2.62 million, and ~~unrealized~~stock ~~forward~~compensation ~~contract~~expense ~~loss~~ of $20.39 million. Working capital ~~consumed~~provided cash of $149.16 million, which was primarily driven by ana $318.6 million ~~increase~~decrease in inventory, that was partially offset by a $34.35 million increase in ~~accounts~~account receivable ~~due~~and ~~to increased revenue,~~ a $23.18 million ~~increase~~decrease in ~~prepaid~~accounts payable, accrued expenses and other current ~~assets, and a $5~~liabilities.1 ~~million~~The decrease in ~~accounts~~inventory ~~payable,~~was ~~accrued~~primarily ~~expenses~~through ~~and~~the ~~other~~increased ~~current~~sales ~~liabilities~~that converted inventory into cash.

For the three months ended March 31, 2022, net cash used in operating activities was $26.4 million, primarily driven by the net loss of $20.2 million, partially offset by non-cash items which include a net change in deferred taxes of $0.3 million, stock compensation expense of $1.3 million, depreciation expense of $1.5 million, and unrealized forward contract loss of $0.2 million. Working capital consumed cash of $8.9 million driven by a $20.8 million increase in accounts receivable and an $3.5 million increase in inventory, partially offset by a $11.1 million decrease in accounts payable, accrued expenses and other current liabilities and a $4.2 million decrease in prepaid expenses and other current assets. The increase in accounts receivable during the three months ended March 31, 2022 primarily resulted from the increased revenue and some invoice transmission interruption during system conversion. We solved the system transmission issues during the second quarter of 2022.

Investing Activities

Net cash used in investing activities relates to capital expenditures to support growth and investment in property, plant and equipment to expand production capacity, tenant improvements, and to a lesser extent, replacement of existing equipment.

For the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, net cash used in investing activities was $300.15 million as compared to $478.08 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022. ~~Cash~~The significant decrease in cash used in ~~both~~investing ~~periods~~activities ~~consisted~~was primarily ofattributable ~~capital~~to ~~expenditures~~our tolow ~~improve~~budget ~~efficiency~~of ~~and~~capital ~~output~~expenditures ~~from~~in ~~our~~2023. ~~current~~During ~~facilities~~past ~~and~~two years, ~~included~~we ~~the~~substantially ~~expansion~~expanded ofour ~~existing~~ production capacity through ~~the~~business ~~acquisition~~and ofasset ~~NMFD~~acquisitions. ~~and~~Currently, ~~Karsten~~we ~~and~~are ~~assets~~focusing ~~acquisitions~~on inintegrating ~~both~~our ofcurrent ~~the~~facilities ~~2021~~and ~~period~~assets, and ~~2022~~improving ~~period~~efficiencies.

Financing Activities

For the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, net cash provided by financing activities was $193.69 million, primarily from $184.90 million of net borrowings under our line of credit to support working capital requirements. For the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022, net cash provided by financing activities was $780.13 million, ~~primarily~~ from ~~$74.3~~notes ~~million due to warrant exercises and net borrowings under the line of credit of $3~~payable.~~3 million to support working capital requirements to fund continued growth.~~

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, ~~2021~~2022 (“Form 10-K/A”).

Recent Accounting Pronouncements

The information required by this Item is incorporated herein by reference to Note 3 Recently Issued Accounting Pronouncements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks in the ordinary course of our business, including fluctuations in interest rates, raw material prices, foreign currency exchange fluctuations and inflation as follows:

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our cash that consists of amounts held by third-party financial institutions and our long-term debt. Our treasury policy has as its primary objective to preserve principal without significantly increasing risk. We generally held our cash with financial institutions without investment activities, therefore we are not exposed to increasing interest rate risk. Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt obligations to increase along with the interest rate increase. ~~Our~~Some of long-term debt is carried at amortized cost and thus fluctuations in interest rates do not impact our ~~condensed~~ consolidated financial statements. However, the fair value of our long term debt, which pays interest at a fixed rate, will generally fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest.

Ingredient Risk

We are exposed to risk related to the price and availability of our ingredients because our profitability is dependent on, among other things, our ability to anticipate and react to raw material and food costs. We manage the impact of the ~~ingredients costs through select raw material contracts with growers and cooperatives in Italy that allow us to better control ingredient costs.~~

ingredients costs through select raw material contracts with growers and cooperatives in Italy that allow us to better control ingredient costs.

We source many of our vegetables from Italy, which is one of the largest organic crop areas in the European Union. We engage the services of an agronomist to help with forecasting and scheduling. Based in part on these forecasts, we obtain written commitments from a number of growers and cooperatives to grow certain crops in specified amounts for agreed upon prices, confirmed by purchase orders issued closer to the start of each harvesting season. In addition, we utilize multiple growers across various regions in Italy and are not dependent on any single grower for any single commodity. These commitments provide us with consistent supply throughout the growing season to support our year-round production schedule.

We source strawberries and certain other crops in the United States but are not bound by purchase agreements for the crops sourced in the United States. Acai purée was primarily sourced from Brazil through an American supplier and we buy, at one time, all of our organic Acai that we need for the whole year. We have secured our source of organic Acai for ~~2022~~2023. While we substantially single source this ingredient, we believe there to be ample supply in the market. ~~In 2021, we engaged two additional suppliers to supply Acai purée and we are currently in process to contract another supplier, which would be our fourth supplier, in 2022.~~

We rely on a sole supplier for liquid nitrogen, Messer LLC, which is used to freeze products during the manufacturing process. We have entered into an agreement that expires in 2025 with Messer LLC to provide up to 120% of our monthly requirements of liquid nitrogen.

During the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, a hypothetical 10% increase or 10% decrease in the weighted-average cost of our primary ingredients, would have resulted in a corresponding increase or decrease of approximately $94.50 million to cost of goods sold. We are working to expand our supply chain to ensure the certainty of supply of the highest quality raw materials that meet our demanding requirements for quality and intend to enter into long-term contracts to better ensure stability of prices of our ingredients.

Foreign Currency Risk

We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances of foreign subsidiary, transaction gains and losses associated with intercompany loans with foreign subsidiary and transactions denominated in currencies other than a location’s functional currency. Our foreign entity, Ittella Italy, uses its local currency as the functional currency. We translate net assets into U.S. dollars at period end exchange rates, while revenue and expense accounts are translated at average exchange rates prevailing during the periods being reported. Resulting currency translation adjustments are included in “Accumulated other comprehensive income” and foreign currency transaction gains and losses are included in “Other income (expense)”. Transaction gains and losses on long-term intra-entity transactions are recorded as a component of “Other comprehensive income (loss)” in the condensed consolidated statements of operations and comprehensive loss. Transactions denominated in a currency other than the reporting entity’s functional currency may give rise to transaction gains and losses that impact our results of operations.

Translation losses, net of tax, reported as ~~cumulative~~foreign currency translation adjustments through “Other comprehensive income (loss)” were $0.~~5 million and $~~1.4 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022, respectively~~2023. Foreign currency transaction losses included in “Other income (expense)” were $20.84 million ~~and $6.5 million~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022, respectively~~2023.

Based on the intercompany balances and outstanding forward contracts as of March 31, 2023, an assumed 5% or 10% adverse change to foreign exchange rates would result in a loss of approximately $1.4 million or $2.6 million, respectively, recorded in other (expense) income, net.

Inflation Risk

Historically, inflation did not have a material effect on our business, results of operations, or financial condition. Starting in fiscal 2021, some of our ingredient, packaging, freight and storage costs have increased at a rapid rate. We expect the pressures of cost inflation to continue into ~~the remaining of~~ fiscal ~~2022~~2023. In addition, the ~~escalation~~ongoing ofwar ~~the conflict~~ between Russia and Ukraine, including international sanctions in response to that conflict, could result in further inflationary pressures and increase disruption to supply chains, all of which could result in additional increases in the cost of our ingredients, packaging, freight and storage.

We use a variety of strategies to offset inflation costs. However, we may not be able to generate sufficient productivity improvements or implement price increases to fully offset these cost increases or do so on an acceptable timeline. Our inability or failure to do so could harm our business, results of operations and financial condition.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~March 3031, ~~2022~~2023 and, based on this evaluation, have concluded that due to the material weaknesses in our internal control over financial reporting previously identified in Part II, Item 9A of our Annual Report on Form 10-K/A for the year ended December 31, ~~2021~~2022, our disclosure controls and procedures were not effective as of ~~September~~March ~~30, 2022. These material weaknesses resulted in the restatements of our financial statements as described herein and in Amendment No. 1 to our Annual Report on Form 10-K/A for the year ended December~~ 31, ~~2021, Amendment No~~2023. 1 to our Quarterly Report on Form 10-Q/A for the three months ended March 31, 2022 and 2021, Amendment No. 1 to our Quarterly Report on Form 10-Q/A for the three and six months ended June 30, 2022 and 2021, and this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2021.

Remediation of Material Weaknesses

Our remediation efforts previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K/A for the year ended December 31, ~~2021~~2022 to address the identified material weaknesses are ongoing. ~~In the quarter ended September 30, 2022, we continued our hiring of additional finance~~ and ~~accounting leaders and external resources to segregate key functions within our financial and information technology processes and improve our management review controls. In addition,~~ we ~~established~~have anot ~~Disclosure~~completed ~~Committee~~all ~~whose~~remediation ~~purpose is to discuss the completeness and accuracy of the disclosures in our~~ efforts.

consolidated financial statements and manage our certification process pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. While we believe the steps taken to date and those planned for future implementation will improve the effectiveness of our internal control over financial reporting, we have not completed all remediation efforts.

The material weaknesses cannot be considered remediated until applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

InOther ~~2021,~~than we began a multi-year implementation of a new ERP system, which replaced our existing core financial system at our Paramount location in January 2022, and will replace our existing core financial systems at certain other locations and acquired locations in the ~~future.~~ongoing ~~The~~steps ~~ERP~~being ~~system~~taken ~~is designed~~ to ~~accurately~~implement ~~maintain~~ the ~~Company’s~~remediation ~~financial~~plan ~~records,~~described ~~enhance~~above ~~the~~and ~~flow~~under ofPart ~~financial information~~II, ~~improve~~Item ~~data~~9A ~~management~~in ~~and provide timely information to~~ our ~~management~~Annual ~~team.~~Report Ason ~~the~~Form ~~phased~~10-K ~~implementation~~for of the ~~new~~year ~~ERP~~ended ~~system progresses~~December 31, ~~we may change our processes and procedures which~~2022, inthere ~~turn,~~have ~~could~~been ~~result~~no inother changes toin ~~our~~ internal control over financial reporting. Asthat ~~such~~occurred ~~changes~~during ~~occur~~the quarter ended March 31, we2023 ~~will~~that ~~evaluate~~have ~~quarterly~~materially ~~whether~~affected, ~~such~~or ~~changes~~are reasonably likely to materially affect, our internal control over financial reporting.

Other than the ongoing steps being taken to implement the remediation plan described above and under Part II, Item 9A in our Annual Report on Form 10-K for the year ended December 31, 2021, and the ERP system implementation described above, there have been no other changes in internal control over financial reporting that occurred during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The information required by this Item is incorporated herein by reference to Note 1816 Commitments and Contingencies in Part I, Item 1, of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our ~~2021~~2022 Form 10-K~~, as updated and supplemented below~~. These risk factors could materially harm our business, operating results and financial condition. Additional factors and uncertainties not currently known to us or that we currently consider immaterial also may materially adversely affect our business, financial condition or future results.

Our recurring losses and significant accumulated deficit have raised substantial doubt regarding our ability to continue as a going concern.

See Note 2 Basis of Presentation and Significant Accounting Policies under “--Going Concern Consideration” to the Financial Statements for details regarding our going concern consideration. We have historically incurred losses and expect to continue to generate operating losses and consume cash resources in the near term. These conditions raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the date the Financial Statements are issued and may cause us to continue to be unable to maintain compliance with our financial covenant giving the lender the right to accelerate repayment of the debt. We have implemented and continue to implement plans to achieve operating profitability, including various margin improvement initiatives, the optimization of our pricing strategy, and new product innovation.

We will seek outside capital for the foreseeable future until such time that we can begin generating positive cash flow. However, there can be no assurances that we will be able to obtain additional capital on terms acceptable to us or at all. Our ability to raise additional capital may be adversely impacted by the potential worsening of global economic conditions, including inflationary pressures, and the recent disruptions to, and volatility in, the credit and financial markets in the United States.

Increasing tensions between the United States and Russia, and other effects of the ongoing conflict in Ukraine, could negatively impact our business, results of operations, and financial condition.

While we do not operate in Russia or Ukraine, the increasing tensions between the United States and Russia and the other effects of the ongoing conflict in Ukraine, have resulted in many broader economic impacts such as the United States imposing sanctions and bans against Russia and Russian products imported into the United States. Such sanctions and bans have and may continue to impact commodity pricing such as fuel and energy costs, making it more expensive for us and our carriers to deliver products to our customers. Recently, the surging of energy cost in Europe adversely impacted our growers and our manufacturing subsidiary in Italy. Further sanctions, bans or other economic actions in response to the ongoing conflict in Ukraine could result in a further increase in costs, disruptions to our supply chain, or a lack of consumer confidence resulting in reduced demand. Any of them could further negatively impact our business, results of operations, and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

4131

ITEM 6. EXHIBITS.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.

No.

Description of Exhibit

Incorporated by Reference

Schedule/Form

Exhibits

Filing Date

2.1

Agreement and Plan of Merger, dated as of June 11, 2020, entered into by and among Forum, Sprout Merger Sub, Inc., Myjojo, Inc., a Delaware corporation, and Salvatore Galletti, in his capacity as the holder representative on August 10, 2020

8-K

2.1

6/12/2020

2.2

First Amendment to the Merger Agreement entered into by and among Forum, Sprout Merger Sub, Inc., Myjojo, Inc., a Delaware corporation, and Salvatore Galletti, in his capacity as the holder representative on August 10, 2020

8-K

2.1

8/11/2020

3.1

Amended and Restated Certificate of Incorporation

8-A12B/A

3.1

10/15/2020

3.2

Amended and Restated Bylaws

8-A12B/A

3.2

10/15/2020

4.1

Form of Warrant Agreement between Continental Stock Transfer & Trust Company, LLC and Forum

S-1/A

4.4

7/18/2018

4.2

Amended Form of Warrant Agreement between Continental Stock Transfer & Trust Company, LLC and Forum

S-3

4.4

10/27/2021

10.1

Amended and Restated loan and security agreement loan between UMB Bank N.A and Ittella International, LLC and each Affiliate, effective as of June 30,2022.

10-Q

10.1

08/09/2022

31.1*

Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). 36

* Filed herewith.

**Furnished herewith.

4232

SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TATTOOED CHEF, INC.
Date: November 16, 2022	By:	/s/ Salvatore Galletti
Date: May 15, 2023	By:	/s/ Salvatore Galletti
	Name:	Salvatore Galletti
	Title:	Chief Executive Officer
		(Principal Executive Officer)
Date: November 16, 2022	By:	/s/ Stephanie Dieckmann
Date: May 15, 2023	By:	/s/ Stephanie Dieckmann
	Name:	Stephanie Dieckmann
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

4333

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