Note 2 - Revision of Previously Issued Consolidated Financial Statements

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Error Correction [Text Block]

2. Correction of immaterial errors

During the fourth quarter of 2022, we determined that an error existed in our previously issued consolidated financial statements. Specifically, we identified we had established nexus in several jurisdictions beginning in the year ended December 31, 2019 in which we were not collecting and remitting sales taxes appropriately. The error was evaluated under the U.S. Securities and Exchange Commission's ("SEC's") guidance on evaluating the materiality of prior period misstatements to the Company’s financial statements. We evaluated the error and concluded that it was not material to the previously issued consolidated financial statements. Although the error was not material to any period, we corrected the accompanying historical consolidated financial statements for the years ended December 31, 2021 and 2020 to reflect the sales tax liability and associated expenses owed within each period for comparative purposes.

The following tables represent the adjustments to our Consolidated Statements of Operations and Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020, as well as adjustments to our Consolidated Balance Sheet as of December 31, 2021 in accordance with ASC 250. The adjustments to our Consolidated Statements of Comprehensive (Loss) Income and Consolidated Statements of Shareholders’ Equity were limited to the net income (loss) adjustments outlined below.

The effect of the adjustments to our Consolidated Balance Sheet as of December 31, 2021 was as follows (in thousands):

	December 31, 2021
	As reported			Adjustment			As corrected
Prepaid expenses and other current assets	$	4,427		$	229		$	4,656
Total current assets		125,859			229			126,088
Total assets		554,057			229			554,286
Accrued expenses and other current liabilities(1)		7,142			(272	)		6,870
Sales taxes payable		-			2,591			2,591
Total current liabilities		40,381			2,319			42,700
Total liabilities		73,920			2,319			76,239
Accumulated deficit(2)		(105,020	)		(2,090	)		(107,110	)
Total shareholders’ equity		480,137			(2,090	)		478,047
Total liabilities and shareholders’ equity		554,057			229			554,286

(1) In the prior year Consolidated Balance Sheet as of the year ended December 31, 2021, accrued sales taxes in the amount of $272,000 were recorded within the Accrued expenses and other current liabilities line item on the consolidated balance sheets. These were reclassified to Sales tax payable in the current year.

(2) The impact of the error on Accumulated deficit in our Consolidated Balance Sheet as of the year ended December 31, 2019 was negative $133,000, adjusting the ending balance to be $100.2 million when previously reported as $100.1 million.  

The effect of the adjustments to our Consolidated Statements of Operations for the years ended December 31, 2021 and 2020 were as follows (in thousands, except per share data):

	Years Ended December 31, 2021 and 2020
2021	As reported			Adjustment			As corrected
General and administrative	$	32,448		$	1,220		$	33,668
Total operating expenses		153,096			1,220			154,316
Operating loss		(33,940	)		(1,220	)		(35,160	)
Interest expense		(432	)		(53	)		(485	)
Total other income, net		6,187			(53	)		6,134
Loss before income tax benefit		(27,753	)		(1,273	)		(29,026	)
Net loss(1)		(7,635	)		(1,273	)		(8,908	)
Net loss per basic share		(0.20	)		(0.03	)		(0.23	)
Net loss per diluted share		(0.20	)		(0.03	)		(0.23	)
2020
General and administrative		14,607			666			15,273
Total operating expenses		53,662			666			54,328
Operating loss		(5,575	)		(666	)		(6,241	)
Interest income		58			(18	)		40
Total other income, net		4,978			(18	)		4,960
Loss before income tax benefit		(597	)		(684	)		(1,281	)
Net income(1)		2,667			(684	)		1,983
Net income attributable to common shareholders - Basic		2,450			(628	)		1,822
Net loss attributable to common shareholders - Diluted		(954	)		(678	)		(1,632	)
Net income per basic share		0.09			(0.02	)		0.07
Net loss per diluted share		(0.03	)		(0.03	)		(0.06	)

(1) The Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2021 and 2020 were adjusted by the impact to net (loss) income noted here. Comprehensive loss for the year ended December 31, 2021 is now reported at $9.2 million, reflecting an adjustment of $1.3 million, and was previously reported as $7.9 million. Comprehensive income for the year ended December 31, 2020 is now reported at $1.9 million, reflecting an adjustment of negative $684,000, and was previously reported as $2.7 million.

The effect of the adjustments to our Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020 were as follows (in thousands):

	Years Ended December 31, 2021 and 2020
2021	As reported			Adjustment			As corrected
Net loss	$	(7,635	)	$	(1,273	)	$	(8,908	)
Prepaid expenses and other current assets		2,802			(139	)		2,663
Sales taxes payable		-			1,412			1,412
2020
Net income		2,667			(684	)		1,983
Prepaid expenses and other current assets		25			(75	)		(50	)
Sales taxes payable		-			759			759

All accompanying footnotes reflect corrected balances presented in the tables above.