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Comparison of Restated Financial Statements to Financial Statements As Previously Reported | 6 Months Ended
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Jun. 30, 2020
Accounting Changes and Error Corrections [Abstract] |
COMPARISON OF RESTATED FINANCIAL STATEMENTS TO FINANCIAL STATEMENTS AS PREVIOUSLY REPORTED | 13. COMPARISON OF RESTATED FINANCIAL STATEMENTS TO FINANCIAL STATEMENTS AS PREVIOUSLY REPORTED In these restated financial statements and footnotes, we have added disclosure in Note 10 for previously undisclosed contingent liabilities. The following tables compare the Company's previously issued Balance Sheet, Statement of Operations and Statement of Cash Flows as of June 30, 2020 and for the three and six months then ended to the corresponding restated financial statements for that period end. The adjustments that relate to the restated financial statements are:
| ● | the recording of a liability for the $155,555 cash fee and the $96,011 value of the warrants due to A.G.P related to the placement of the Dominion and Kingsbrook convertible promissory notes and the related debt discount recorded against those convertible promissory notes as of June 30, 2020;
| ● | the recording of a $144,085 reduction of the beneficial conversion features associated with the convertible promissory notes and the related reduction of the debt discount;
| ● | the recording of a liability for the $500,000 cash fee due to the former Chief Executive Officer in connection with the Resignation Agreement as of June 30, 2020;
| ● | the recording of stock-based compensation during the three and six months ended June 30, 2020 of $2,625,000 and $2,625,000, respectively, for the value of the 500,000 shares of common stock that the Company is obligated to replace with the Escrow Agent after the Escrow Agent became obligated to return 500,000 Founder Shares to the Sponsor, both as a result of the Resignation Agreement; and
| ● | the recording of the transfer of $3,269,085 of common stock subject to redemption (temporary equity) to common stock (permanent equity), in order to maintain stockholders' equity in excess of $5,000,001 as of June 30, 2020.
The effects of the restatement on the line items within the Company's unaudited Condensed Consolidated Balance Sheet as of June 30, 2020 are as follows: CONDENSED CONSOLIDATED BALANCE SHEETS
|  | June 30, 2020 |
|  | As Originally Reported |  |  | Adjustments |  |  | As Restated |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 257,601 |  |  | $ | - |  |  | $ | 257,601 |
Restricted cash |  |  | 787,865 |  |  |  | - |  |  |  | 787,865 |
Prepaid income taxes |  |  | 21,806 |  |  |  | - |  |  |  | 21,806 |
Prepaid expenses |  |  | 118,645 |  |  |  | - |  |  |  | 118,645 |
Total current assets |  |  | 1,185,917 |  |  |  | - |  |  |  | 1,185,917 |
Other assets |  |  | 163,797 |  |  |  | - |  |  |  | 163,797 |
Marketable securities held in Trust Account |  |  | 11,276,350 |  |  |  | - |  |  |  | 11,276,350 |
Total Assets |  | $ | 12,626,064 |  |  | $ | - |  |  | $ | 12,626,064 |
Liabilities and Stockholders' Equity |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 339,497 |  |  | $ | 655,555 |  |  | $ | 995,052 |
Accrued issuable equity |  |  | - |  |  |  | 96,011 |  |  |  | 96,011 |
March promissory note – related party |  |  | 337,301 |  |  |  | - |  |  |  | 337,301 |
Due to related party |  |  | 795,003 |  |  |  | - |  |  |  | 795,003 |
Advances due - 180 |  |  | 1,379,815 |  |  |  | - |  |  |  | 1,379,815 |
Convertible promissory notes, net of debt discount |  |  | 431,745 |  |  |  | (107,481 | ) |  |  | 324,264 |
Derivative liability |  |  | 214,188 |  |  |  | - |  |  |  | 214,188 |
Total liabilities |  |  | 3,497,549 |  |  |  | 644,085 |  |  |  | 4,141,634 |
Commitments and contingencies |  |  |  |  |  |  |  |  |  |  |  |
Common stock subject to possible redemption |  |  | 4,128,507 |  |  |  | (644,085 | ) |  |  | 3,484,422 |
Stockholders' Equity: |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock |  |  | - |  |  |  | - |  |  |  | - |
Common stock |  |  | 508 |  |  |  | 6 |  |  |  | 514 |
Additional paid-in capital |  |  | 6,458,398 |  |  |  | 3,124,994 |  |  |  | 9,583,392 |
(Accumulated deficit)/Retained earnings |  |  | (1,458,898 | ) |  |  | (3,125,000 | ) |  |  | (4,583,898 | )
Total Stockholders' Equity |  |  | 5,000,008 |  |  |  | - |  |  |  | 5,000,008 |
Total Liabilities and Stockholders' Equity |  | $ | 12,626,064 |  |  | $ | - |  |  | $ | 12,626,064 |
The effects of the restatement on the line items within the Company's unaudited Consolidated Statement of Operations for the three and six months ended June 30, 2020 are as follows: CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|  | For the Three Months Ended June 30, 2020 |  |  | For the Six Months Ended June 30, 2020 |
|  | As Originally Reported |  |  | Adjustments |  |  | As Restated |  |  | As Originally Reported |  |  | Adjustments |  |  | As Restated |
General and administrative expenses |  | $ | 388,039 |  |  | $ | 3,125,000 |  |  | $ | 3,513,039 |  |  | $ | 635,631 |  |  | $ | 3,125,000 |  |  | $ | 3,760,631 |
Loss from operations |  |  | 388,039 |  |  |  | 3,125,000 |  |  |  | 3,513,039 |  |  |  | 635,631 |  |  |  | 3,125,000 |  |  |  | 3,760,631 |
Other (expense) income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (270,257 | ) |  |  | - |  |  |  | (270,257 | ) |  |  | (270,257 | ) |  |  | - |  |  |  | (270,257 | )
Loss on issuance of convertible promissory note |  |  | (1,657,522 | ) |  |  | - |  |  |  | (1,657,522 | ) |  |  | (1,657,522 | ) |  |  | - |  |  |  | (1,657,522 | )
Interest income |  |  | 2,950 |  |  |  | - |  |  |  | 2,950 |  |  |  | 38,438 |  |  |  | - |  |  |  | 38,438 |
Other (expense) income, net |  |  | (1,924,829 | ) |  |  | - |  |  |  | (1,924,829 | ) |  |  | (1,889,341 | ) |  |  | - |  |  |  | (1,889,341 | )
(Loss) income before income taxes |  |  | (2,312,868 | ) |  |  | (3,125,000 | ) |  |  | (5,437,868 | ) |  |  | (2,524,972 | ) |  |  | (3,125,000 | ) |  |  | (5,649,972 | )
BBenefit (provision) from income taxes |  |  | 1,480 |  |  |  | - |  |  |  | 1,480 |  |  |  | (3,827 | ) |  |  | - |  |  |  | (3,827 | )
Net (loss) income |  | $ | (2,311,388 | ) |  | $ | (3,125,000 | ) |  | $ | (5,436,388 | ) |  | $ | (2,528,799 | ) |  | $ | (3,125,000 | ) |  | $ | (5,653,799 | )
Weighted average shares outstanding |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 4,479,278 |  |  |  | - |  |  |  | 4,479,278 |  |  |  | 4,468,714 |  |  |  | - |  |  |  | 4,468,714 |
Diluted |  |  | 4,479,278 |  |  |  | - |  |  |  | 4,479,278 |  |  |  | 4,468,714 |  |  |  | - |  |  |  | 4,468,714 |
Net (loss) income per common share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.52 | ) |  | $ | (0.69 | ) |  | $ | (1.21 | ) |  | $ | (0.57 | ) |  | $ | (0.70 | ) |  | $ | (1.27 | )
Diluted |  | $ | (0.52 | ) |  | $ | (0.69 | ) |  | $ | (1.21 | ) |  | $ | (0.57 | ) |  | $ | (0.70 | ) |  | $ | (1.27 | )
The effects of the restatement on the line items within the Company's unaudited Consolidated Statement of Cash Flows for the six months ended June 30, 2020 are as follows: CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|  | For the Six Months Ended June 30, 2020 |
|  | As Originally Reported |  |  | Adjustments |  |  | As Restated |
Cash Flows from Operating Activities: |  |  |  |  |  |  |  |  |  |  |  |
Net (loss) income |  | $ | (2,528,799 | ) |  | $ | (3,125,000 | ) |  | $ | (5,653,799 | )
Adjustments to reconcile net (loss) income to net cash used in operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Interest income earned on investments held in Trust Account |  |  | (38,438 | ) |  |  | - |  |  |  | (38,438 | )
Stock-based compensation |  |  | - |  |  |  | 2,625,000 |  |  |  | 2,625,000 |
Amortization of debt discount |  |  | 252,493 |  |  |  | - |  |  |  | 252,493 |
Loss on issuance of convertible promissory notes |  |  | 1,657,522 |  |  |  | - |  |  |  | 1,657,522 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Prepaid income taxes |  |  | 3,827 |  |  |  | - |  |  |  | 3,827 |
Prepaid expenses |  |  | (66,855 | ) |  |  | - |  |  |  | (66,855 | )
Other asset |  |  | (163,797 | ) |  |  | - |  |  |  | (163,797 | )
Accounts payable and accrued expenses |  |  | 71,074 |  |  |  | 500,000 |  |  |  | 571,074 |
Net cash and restricted cash used in operating activities |  |  | (812,973 | ) |  |  | - |  |  |  | (812,973 | )
Cash Flows from Investing Activities: |  |  |  |  |  |  |  |  |  |  |  |
Cash withdrawn from Trust Account for redemptions |  |  | 728,884 |  |  |  | - |  |  |  | 728,884 |
Investment of cash in Trust Account |  |  | (89,142 | ) |  |  | - |  |  |  | (89,142 | )
Net cash and restricted cash provided by investing activities |  |  | 639,742 |  |  |  | - |  |  |  | 639,742 |
Cash Flows from Financing Activities: |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from promissory note – CannBioRx |  |  | 9,990 |  |  |  | - |  |  |  | 9,990 |
Repayment of promissory note - CannBioRx |  |  | (330,000 | ) |  |  | - |  |  |  | (330,000 | )
Proceeds from convertible promissory note – related party |  |  | 33,877 |  |  |  | - |  |  |  | 33,877 |
Repayment of convertible promissory note – related party |  |  | (62,922 | ) |  |  | - |  |  |  | (62,922 | )
Proceeds from convertible promissory notes |  |  | 1,750,000 |  |  |  | - |  |  |  | 1,750,000 |
Redemptions of common stock |  |  | (728,884 | ) |  |  | - |  |  |  | (728,884 | )
Net cash and restricted cash provided by (used in) financing activities |  |  | 672,061 |  |  |  | - |  |  |  | 672,061 |
Net Change in Cash and Restricted Cash |  |  | 498,830 |  |  |  | - |  |  |  | 498,830 |
Cash and Restricted Cash – Beginning of period |  |  | 546,636 |  |  |  | - |  |  |  | 546,636 |
Cash and Restricted Cash – Ending of period |  | $ | 1,045,466 |  |  | $ | - |  |  | $ | 1,045,466 |
Supplementary cash flow information: |  |  |  |  |  |  |  |  |  |  |  |
Non-cash investing and financing activities: |  |  |  |  |  |  |  |  |  |  |  |
Change in value of common stock subject to possible redemption |  | $ | 4,510,285 |  |  | $ | (644,085 | ) |  | $ | 3,866,200 |
Waiver of deferred underwriting fee |  | $ | 4,025,000 |  |  | $ | - |  |  | $ | 4,025,000 |
Accrual of debt issuance costs |  | $ | - |  |  | $ | 251,566 |  |  | $ | 251,566 |
Initial classification of debt discount in connection with issuance of convertible promissory note |  | $ | 3,208,527 |  |  | $ | 107,481 |  |  | $ | 3,316,008 |
Initial classification of derivative liability in connection with issuance of convertible promissory note |  | $ | 214,188 |  |  | $ | - |  |  | $ | 214,188 |
Original issue discount in connection with issuance of convertible promissory note |  | $ | 194,445 |  |  | $ | - |  |  | $ | 194,445 |
Initial classification of debt discount and issuance of commitment shares and leak-out shares in connection with convertible promissory note |  | $ | 3,014,082 |  |  | $ | 107,481 |  |  | $ | 3,121,563 |

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22644-107794 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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