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Comparison of Restated Financial Statements to Financial Statements As Previously Reported

6 Months Ended

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

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