Blüm Holdings Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Note 2 - Restatement of Previously Issued Financial Statements

Note 2 - Restatement of Previously Issued Financial Statements

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Error Correction [Text Block]

NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Restatement Background

In connection with the preparation of the Company’s consolidated financial statements as of December 31, 2023, management determined it should restate its previously reported consolidated financial statements for the periods ended June 30, 2023, and September 30, 2023. The Company previously recorded a gain on the disposal of assets for the write-off of an uncertain tax position included in income taxes payable as part of the dissolution of UMBRLA. The need for the restatement arose out of analyzing the date the statute of limitation expires for uncertain tax positions. As a result of this analysis, the Company concluded that uncertain tax position should remain as a liability until the related statute of limitation expires. The error occurred as a result of the lack of certain financial analysis and management review in the course of preparing its consolidated financial statements during the periods previously identified above. As a result of the error, the income taxes liability recorded within the consolidated balance sheets was understated, and gain on disposal of assets recorded within the consolidated statements of operations was overstated for certain periods as identified above. This resulted in an adjustment to income tax payable and accumulated deficit on the balance sheet with the offset recorded to gain on disposal of assets on the statement of operations.

In connection with the changes listed above, the Company also restated its earnings per share.

The relevant unaudited interim financial information for the quarterly periods ended June 30, 2023, and September 30, 2023, and the categories of misstatements and their impact on the previously issued financial statements are described in the tables below.

As previously disclosed, the Company determined that its income taxes payable as of the aforementioned periods had been misstated. The Company concluded that the impact of applying the correction for these errors and misstatements on the aforementioned financial statements is material.

Description of Misstatements

(a) Income taxes payable

The Company previously incorrectly wrote off its uncertain tax position related to the dissolution of UMBRLA which is included in income taxes payable and offset by gain on disposal of assets.

(b) Accumulated deficit

The correction of the income taxes payable resulted in reduction in gain on disposal of assets for certain periods as identified above.

	*June 30, 2023*
	*As Previously Reported*			*Adjustment*				*As Restated*
ASSETS
Current Assets:
Cash and Cash Equivalents	$	588			—			$	588
Accounts Receivable, Net		862			—				862
Inventory		2,952			—				2,952
Prepaid Expenses & Other Assets		691			—				691
Notes Receivable		625			—				625
Total Current Assets		5,718							5,718

Property, Equipment and Leasehold Improvements, Net		12,577			—				12,577
Intangible Assets, Net		1,734			—				1,734
Goodwill		3,585			—				3,585
Other Assets		14,646			—				14,646
TOTAL ASSETS	$	38,260						$	38,260

LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES:
Current Liabilities:
Accounts Payable	$	10,425			—			$	10,425
Accrued Liabilities		5,608			—				5,608
Current Lease Liabilities		2,133			—				2,133
Current Portion of Notes Payable		25,879			—				25,879
Income Taxes Payable		8,771			1,806		(a)		10,577
Total Current Liabilities		52,816							54,622

Notes Payable, Net of Current Portion and Discounts		6,642			—				6,642
Deferred Tax Liabilities		—			—				—
Lease Liabilities		12,304			—				12,304
TOTAL LIABILITIES		71,762							73,568

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT:
Preferred Stock, Convertible Series V (par value $0.001): 25,000,000 shares authorized, 14,071,431 shares outstanding as of June 30, 2023		1			—				1
Common Stock (par value $0.001): 990,000,000 shares authorized, 7,724,834 shares outstanding as of June 30, 2023		8			—				8
Additional Paid-In Capital		407,570			—				407,570
Accumulated Deficit		(441,081	)		(1,806	)	(b)		(442,887	)
Total Equity Attributable to Stockholders of Unrivaled Brands, Inc.		(33,502	)						(35,308	)
Non-Controlling Interest		—			—				—
TOTAL STOCKHOLDERS’ DEFICIT		(33,502	)						(35,308	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	38,260						$	38,260

	September 30, 2023
	As Previously Reported			Adjustment				As Restated
ASSETS
Current Assets:
Cash and Cash Equivalents	$	2,013			—			$	2,013
Accounts Receivable, Net		1,277			—				1,277
Inventory		2,560			—				2,560
Prepaid Expenses & Other Assets		574			—				574
Notes Receivable		625			—				625
Total Current Assets		7,049							7,049

Property, Equipment and Leasehold Improvements, Net		10,825			—				10,825
Intangible Assets, Net		1,359			—				1,359
Goodwill		3,585			—				3,585
Other Assets		12,380			—				12,380
Investments		1,333			—				1,333
TOTAL ASSETS	$	36,531						$	36,531

LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES:
Current Liabilities:
Accounts Payable	$	12,164			—			$	12,164
Accrued Liabilities		7,226			—				7,226
Current Lease Liabilities		2,051			—				2,051
Current Portion of Notes Payable		28,516			—				28,516
Income Taxes Payable		9,080			1,806		(a)		10,886
Total Current Liabilities		59,037							60,843

Notes Payable, Net of Current Portion and Discounts		4,071			—				4,071
Deferred Tax Liabilities		—			—				—
Lease Liabilities		10,202			—				10,202
TOTAL LIABILITIES		73,310							75,116

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT:
Preferred Stock, Convertible Series V (par value $0.001): 25,000,000 shares authorized, 14,071,431 shares outstanding as of September 30, 2023		1			—				1
Common Stock (par value $0.001): 990,000,000 shares authorized, 7,749,981 shares outstanding as of September 30, 2023		8			—				8
Additional Paid-In Capital		407,655			—				407,655
Accumulated Deficit		(444,443	)		(1,806	)	(b)		(446,249	)
Total Equity Attributable to Stockholders of Unrivaled Brands, Inc.		(36,779	)						(38,585	)
Non-Controlling Interest		—			—				—
TOTAL STOCKHOLDERS’ DEFICIT		(36,779	)						(38,585	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	36,531						$	36,531

	Three Months Ended June 30, 2023									Six Months Ended June 30, 2023
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated

Revenue	$	8,797			—		$	8,797		$	18,037			—		$	18,037
Cost of Goods Sold		4,197			—			4,197			8,742			—			8,742
Gross Profit		4,600						4,600			9,295						9,295

Operating Expenses (Income):
Selling, General & Administrative		8,071			—			8,071			13,668			—			13,668
Loss (Gain) on Disposal of Assets		(1,739	)		1,806	(a)		67			(1,739	)		1,806	(a)		67
Total Operating Expenses		6,332						8,138			11,929						13,735

Loss from Operations		(1,732	)					(3,538	)		(2,634	)					(4,440	)

Other Income (Expense):
Interest Expense, Net		(187	)		—			(187	)		(1,211	)		—			(1,211	)
Gain on Extinguishment of Debt		—			—			-			3,026			—			3,026
Gain on Settlement of Liabilities		110			—			110			110			—			110
Loss on Sale of Investments		—			—			-			(61	)		—			(61	)
Other Income		242			—			242			271			—			271
Total Other Income (Expense), Net		165						165			2,135						2,135

Loss from Operations Before Provision for Income Taxes		(1,567	)					(3,373	)		(499	)					(2,305	)
Provision for Income Tax (Expense) Benefit		125			—			125			(533	)		—			(533	)

NET LOSS	$	(1,442	)				$	(3,248	)	$	(1,032	)				$	(2,838	)

Net Loss per Common Share - Basic and Diluted	$	(0.17	)				$	(0.39	)	$	(0.12	)				$	(0.33	)
Weighted-Average Shares Outstanding - Basic and Diluted		8,352,745						8,352,745			8,516,196						8,516,196

	Three Months Ended September 30, 2023								Nine Months Ended September 30, 2023
	As Previously Reported			Adjustment		As Restated			As Previously Reported			Adjustment			As Restated

Revenue	$	8,612			—	$	8,612		$	26,649			—		$	26,649
Cost of Goods Sold		4,618			—		4,618			13,360			—			13,360
Gross Profit		3,994					3,994			13,289						13,289

Operating Expenses (Income):
Selling, General & Administrative		7,529			—		7,529			21,197			—			21,197
Loss (Gain) on Disposal of Assets		1,540			—		1,540			(199	)		1,806	(a)		1,607
Total Operating Expenses		9,069					9,069			20,998						22,804

Loss from Operations		(5,075	)				(5,075	)		(7,709	)					(9,515	)

Other Income (Expense):
Interest Expense, Net		(944	)		—		(944	)		(2,155	)		—			(2,155	)
Gain on Extinguishment of Debt		—			—		—			3,026			—			3,026
Gain on Settlement of Liabilities		(41	)		—		(41	)		69			—			69
Employer Retention Credit		1,232			—		1,232			1,232			—			1,232
Realized Loss on Sale of Investments		—			—		—			(61	)		—			(61	)
Unrealized Gain on Investments		1,333			—		1,333			1,333			—			1,333
Other Income		442			—		442			713			—			713
Total Other Income (Expense), Net		2,022					2,022			4,157						4,157

Loss from Operations Before Provision for Income Taxes		(3,053	)				(3,053	)		(3,552	)					(5,358	)
Provision for Income Tax (Expense) Benefit		(309	)		—		(309	)		(842	)		—			(842	)

NET LOSS	$	(3,362	)			$	(3,362	)	$	(4,394	)				$	(6,200	)

Net Loss per Common Share - Basic and Diluted	$	(0.35	)			$	(0.35	)	$	(0.51	)				$	(0.72	)
Weighted-Average Shares Outstanding - Basic and Diluted		9,664,672					9,664,672			8,565,753						8,565,753

As Restated	*Convertible Series V Preferred Stock*				*Common Stock*					*Treasury Stock*			*Additional*			*Accumulated*			*Non-Controlling*
	*Shares*		*Amount*		*Shares*			*Amount*		*Amount*			*Paid-In Capital*			*Deficit*			*Interest*		*Total*
Balance at March 31, 2023		14,071,431	$	1		6,956,948		$	7	$	(810	)	$	406,739		$	(439,639	)	$	—	$	(33,702	)
Net Loss Attributable to Unrivaled Brands, Inc.		—		—		—			—		—			—			(3,248	)		—		(3,248	)
Stock Compensation - Services Expense		—		—		799,971			1		—			1,552			—			—		1,553
Stock Option Exercise		—		—		—			—		—			89			—			—		89
Forfeiture and Cancellation of Treasury Stock		—		—		(32,084	)		—		810			(810	)		—			—		—
Balance at June 30, 2023		14,071,431	$	1		7,724,835		$	8	$	—		$	407,570		$	(442,887	)	$	—	$	(35,308	)
Net Loss Attributable to Unrivaled Brands, Inc.		—		—		—			—		—			—			(3,362	)		—		(3,362	)
Stock Option Exercise		—		—		—			—		—			85			—			—		85
Cashless Warrants Exercise		—		—		25,146			—		—			—			—			—		—
Balance at September 30, 2023		14,071,431	$	1		7,749,981		$	8	$	—		$	407,655		$	(446,249	)	$	—	$	(38,585	)

As Restated	Six Months Ended			Nine Months Ended
	June 30, 2023			September 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(2,838	)	$	(6,200	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Bad Debt Expense		(7	)		(7	)
Gain from Settlement of Liabilities		(110	)		(69	)
Loss on Sale of Investments		61			61
Gain on Extinguishment of Debt		(3,026	)		(3,026	)
Non-Cash Interest Expense		193			360
Gain on Disposal of Assets		67			1,607
Depreciation and Amortization		1,558			2,137
Amortization of Operating Lease Right-of-Use Asset		999			1,507
Stock-Based Compensation		2,097			2,182
Unrealized Gain on Investments		—			(1,333	)
Change in Operating Assets and Liabilities:
Accounts Receivable		(542	)		(957	)
Inventory		(1,013	)		(621	)
Prepaid Expenses and Other Current Assets		(193	)		(76	)
Other Assets		—			(6	)
Accounts Payable and Accrued Expenses		1,256			4,881
Operating Lease Liabilities		(647	)		(991	)
NET CASH USED IN OPERATING ACTIVITIES		(2,145	)		(551	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment		(91	)		(159	)
Proceeds from Notes Receivable		634			634
Proceeds from Sale of Investments		149			149
NET CASH PROVIDED BY INVESTING ACTIVITIES		692			624

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of Debt Principal		(1,129	)		(1,230	)
Proceeds from Issuance of Preferred Stock		1,970			1,970
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		841			740

NET CHANGE IN CASH		(612	)		813
Cash at Beginning of Period		1,200			1,200
CASH AT END OF PERIOD	$	588		$	2,013