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Restatement for Correction of an Error (FaceBank Group, Inc. Pre-Merger)

3 Months Ended

12 Months Ended

Mar. 31, 2020

Dec. 31, 2019

Note 2 – Restatement for Correction of an Error

In connection with the preparation of the Company’s condensed consolidated interim financial statements as of and for the quarter ended June 30, 2020, the Company identified an inadvertent error in the accounting for goodwill relating to the Company’s acquisition of Nexway and Facebank AG. Goodwill was inadvertently impaired at December 31, 2019. Upon further evaluation, the Company determined that goodwill amounting to $79.7 million should not have been impaired. Accordingly, the Company should have allocated $51.2 million towards the loss on deconsolidation of Nexway during the three months ended March 31, 2020, which would have resulted in a loss on deconsolidation of Nexway of $11.9 million. The Company is restating herein its previously issued condensed consolidated financial statements and the related disclosures for the three months ended March 31, 2020.

In addition to the restatement of the financial statements, certain information within the following notes to the financial statements have been restated to reflect the correction of a misstatement discussed above as well as to add disclosure language as appropriate:

Note 5 – Investments

The financial statement misstatements reflected in did not impact cash flows from operations, investing, or financing activities in the Company’s consolidated statements of cash flows for any period previously presented.

Comparison of restated financial statements to financial statements as previously reported

The following tables compare the Company’s previously issued Consolidated Balance Sheets and Consolidated Statement of Operations as of and for the three months ended March 31, 2020 to the corresponding restated consolidated financial statements for those respective years.

Restated consolidated balance sheets and consolidated statements of operations as of and for the three months ended March 31, 2020 are as follows:

	March 31, 2020 (unaudited) as Previously Reported			Effect of Restatement (unaudited)		March 31, 2020 (unaudited) as Restated
ASSETS
Total current assets		10,211			-		10,211
							-
Deposits		24			-		24
Investment in Nexway at fair value		2,374			-		2,374
Financial assets at fair value		1,965			-		1,965
Intangible assets		111,459			-		111,459
Goodwill		148,054			28,541		176,595
Right-of-use assets		37			-		37
Total assets	$	274,124		$	28,541	$	302,665
							-
LIABILITIES AND STOCKHOLDERS’ EQUITY							-
Total current liabilities		41,601			-		41,601
Total liabilities		125,411			-		125,411
							-
COMMITMENTS AND CONTINGENCIES (Note 15)							-
							-
Series D Convertible Preferred stock, par value $0.0001, 2,000,000 shares authorized, 461,839 shares issued and outstanding as of March 31, 2020; aggregate liquidation preference of $463 as of March 31, 2020		463			-		463
							-
Stockholders’ equity:							-
Common stock par value $0.0001: 400,000,000 shares authorized; 32,307,663 shares issued and outstanding at March 31, 2020		3			-		3
Additional paid-in capital		270,397			-		270,397
Accumulated deficit		(140,134	)		28,541		(111,593	)
Non-controlling interest		17,984			-		17,984
Total stockholders’ equity		148,250			28,541		176,791
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY	$	274,124		$	28,541	$	302,665

	For the Three Months Ended March 31, 2020 as Previously Reported (unaudited)			Effect of Restatement (unaudited)			For the Three Months Ended March 31, 2020 as Restated (unaudited)
Operating loss		(18,128	)		-			(18,128	)
								-
Other income (expense)								-
Interest expense and financing costs		(2,581	)		-			(2,581	)
Gain (loss) on deconsolidation of Neway		39,249			(51,168	)		(11,919	)
Loss of issuance of notes, bonds & warrants		(24,053	)		-			(24,053	)
Other expense		(436	)		-			(436	)
Change in fair value of warrant liability		(366	)		-			(366	)
Change in fair value of subsidiary warrant liability		(15	)		-			(15	)
Change in fair value of shares settled liability		(180	)		-			(180	)
Change in fair value of derivative liability		297			-			297
Total other income (expense)		11,915			(51,168	)		(39,253	)
Loss before income taxes		(6,213	)		(51,168	)		(57,381	)
Income tax benefit		(1,038	)		-			(1,038	)
Net loss		(5,175	)		(51,168	)		(56,343	)
Less: net loss attributable to non-controlling interest		873			-			873
Net loss attributable to controlling interest	$	(4,302	)	$	(51,168)		$	(55,470	)
Less: Deemed dividend - beneficial conversion feature on preferred stock		(171	)		-			(171	)
Net loss attributable to common stockholders	$	(4,473	)	$	(51,168)		$	(55,641	)

Net loss per share attributable to common stockholders
Basic and diluted	$	(0.15	)				$	(1.83	)

Weighted average shares outstanding:
Basic and diluted		30,338,073			-			30,338,073

Note 2 – Restatement for Correction of an Error

In connection with the preparation of the Company’s condensed consolidated interim financial statements as of and for the quarter ended June 30, 2020, the Company identified an inadvertent error in the accounting for goodwill relating to the Company’s acquisition of Nexway. Goodwill was inadvertently impaired at December 31, 2019. Upon further evaluation, the Company determined that goodwill amounting to $79.7 million should not have been impaired. Accordingly, the Company is restating herein its previously issued consolidated financial statements and the related disclosures for the year ended December 31, 2019.

Note 4 - Summary of Significant Accounting Policies

Note 5 – Acquisitions

Note 7 – Intangible Assets and Goodwill

The financial statement misstatements reflected in the table below did not impact cash flows from operations, investing, or financing activities in the Company’s consolidated statements of cash flows for any period previously presented.

Comparison of restated financial statements to financial statements as previously reported

The following tables compare the Company’s previously issued Consolidated Balance Sheets and Consolidated Statement of Operations as of and for the year ended December 31, 2019 to the corresponding restated consolidated financial statements for that year end.

Restated consolidated balance sheets and consolidated statements of operations as of and for the year ended December 31, 2019 are as follows:

	December 31, 2019 as Previously Reported			Effect of Restatement		December 31, 2019 as Restated
ASSETS
Current assets
Cash	$	7,624		$	-	$	7,624
Accounts receivable, net		8,904			-		8,904
Inventory		49			-		49
Prepaid expenses		1,396			-		1,396
Total current assets		17,973			-		17,973
							-
Property and equipment, net		335			-		335
Deposits		24			-		24
Financial assets at fair value		1,965			-		1,965
Intangible assets		116,646			-		116,646
Goodwill		148,054			79,709		227,763
Right-of-use assets		3,519			-		3,519
Total assets	$	288,516		$	79,709	$	368,225
							-
LIABILITIES AND STOCKHOLDERS’ EQUITY							-
Current liabilities							-
Accounts payable		36,373			-		36,373
Accrued expenses		20,402			-		20,402
Due to related parties		665			-		665
Note payable		4,090			-		4,090
Notes payable - related parties		368			-		368
Convertible notes, net of $710 and $456 discount as of December 31, 2019 and 2018, respectively		1,358			-		1,358
Convertible notes - related parties		-			-		-
Shares settled liability for intangible asset		1,000			-		1,000
Profit share liability		1,971			-		1,971
Warrant liability - subsidiary		24			-		24
Derivative liability		376			-		376
Current portion of lease liability		815			-		815
Total current liabilities		67,442			-		67,442
							-
Deferred income taxes		30,879			-		30,879
Other long-term liabilities		41			-		41
Lease liability		2,705			-		2,705
Long term borrowings		43,982			-		43,982
Total liabilities		145,049			-		145,049
							-
COMMITMENTS AND CONTINGENCIES (Note 15)							-
							-
Series D Convertible Preferred stock, par value $0.0001, 2,000,000 shares authorized, 461,839 shares issued and outstanding as of December 31, 2019; aggregate liquidation preference of $462 as of December 31, 2019		462			-		462
							-
Stockholders’ equity:							-
Series A Preferred stock, par value $0.0001, 5,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2019 and 2018, respectively		-			-		-
Series B Convertible Preferred stock, par value $0.0001, 1,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2019 and 2018, respectively		-			-		-
Series C Convertible Preferred stock, par value $0.0001, 41,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2019 and 2018, respectively		-			-		-
Series X Convertible Preferred stock, par value $0.0001, 1,000,000 shares authorized, 0 and 1,000,000 shares issued and outstanding as of December 31, 2019 and 2018, respectively		-			-		-
Common stock par value $0.0001: 400,000,000 shares authorized; 28,912,500 shares issued and 7,532,776 shares outstanding at December 31, 2019 and 2018, respectively		3			-		3
Additional paid-in capital		257,002			-		257,002
Accumulated deficit		(135,832	)		79,709		(56,123	)
Non-controlling interest		22,602			-		22,602
Accumulated other comprehensive loss		(770	)		-		(770	)
Total stockholders’ equity		143,005			79,709		222,714
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY	$	288,516		$	79,709	$	368,225

	For the Year Ended December 31, 2019 as Previously Reported			Effect of Restatement			For the Year Ended December 31, 2019 as Restated
Revenues
Revenues, net	$	4,271		$	-		$	4,271
Total revenues		4,271			-			4,271
Operating expenses								-
General and administrative		13,793			-			13,793
Amortization of intangible assets		20,682			-			20,682
Impairment of intangible assets		8,598			-			8,598
Impairment of goodwill		74,441			(74,441	)		-
Depreciation		83			-			83
Total operating expenses		117,597			(74,441	)		43,156
Operating loss		(113,326	)		74,441			(38,885	)
								-
Other income (expense)								-
Interest expense and financing costs		(2,062	)		-			(2,062	)
Gain on extinguishment of convertible notes		-			-			-
Loss on investments		(13,549	)		5,268			(8,281	)
Foreign currency loss		(18	)		-			(18	)
Other expense		726			-			726
Change in fair value of subsidiary warrant liability		4,504			-			4,504
Change in fair value of derivative liability		815			-			815
Change in fair value of Panda interests		(198	)		-			(198	)
Total other income (expense)		(9,782	)		5,268			(4,514	)
Loss before income taxes		(123,108	)		79,709			(43,399	)
Income tax benefit		(5,272	)		-			(5,272	)
Net loss		(117,836	)		79,709			(38,127	)
Less: net loss attributable to non-controlling interest		3,767			-			3,767
Net loss attributable to controlling interest	$	(114,069	)	$	79,709		$	(34,360	)
Less: Deemed dividend on Series D Preferred stock		(9	)		-			(9	)
Less: Deemed dividend - beneficial conversion feature on preferred stock		(589	)		-			(589	)
Net loss attributable to common stockholders	$	(114,667	)	$	79,709		$	(34,958	)

Other comprehensive income (loss)
Foreign currency translation adjustment		(770	)		-			(770	)
Comprehensive loss	$	(115,437	)	$	79,709		$	(35,728	)

Net loss per share attributable to common stockholders
Basic and diluted	$	(5.15	)				$	(1.57	)

Weighted average shares outstanding:
Basic and diluted		22,286,060			-			22,286,060