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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Schedule of Revision of Previously Issued Consolidated Financial Statements

The following table reflects the revisions to the previously issued condensed consolidated balance sheet as of September 30, 2023 (in thousands):

			As Previously Reported						Revision Adjustment						As Currently Reported
Liabilities and Stockholders' Equity
Deferred tax liability			$	15,009					$	338					$	15,347		(d)
Total liabilities			687,066						338						687,404
Stockholders’ Equity / Members’ Deficit
Additional paid-in capital			$	849,398					$	867					$	850,265		(a) (b)
Accumulated deficit			(646,242)						7,027						(639,215)			(a) (b) (d)
Accumulated other comprehensive loss			(435)						156						(279)			(d)
Total stockholders' equity attributable to System1, Inc.			$	202,732					$	8,050					$	210,782
Non-controlling interest			37,746						(8,388)						29,358			(b)
Total stockholders' equity			$	240,478					$	(338)					$	240,140
Total liabilities and stockholders' equity			$	927,544					$	—					$	927,544

The following tables reflect the revisions to the previously issued condensed consolidated statement of operations for the three and nine months ended September 30, 2023 (in thousands):

			Three Months Ended September 30, 2023
			As Previously Reported						Revision Adjustment						As Currently Reported
Salaries and benefits			$	26,689					$	6					$	26,695		(a)
Total operating expenses			108,666						6						108,672
Operating loss			(20,848)						(6)						(20,854)
Loss before income tax			$	(27,038)					$	(6)					$	(27,044)
Income tax expense (benefit)			(920)						(196)						(1,116)			(d)
Net loss from continuing operations			(26,118)						190						(25,928)
Net loss from discontinued operations, net of tax			(137,209)						—						(137,209)
Net loss			(163,327)						190						(163,137)
Less: Net loss from continuing operations attributable to non-controlling interest			(6,328)						247						(6,081)			(b)
Less: Net loss from discontinued operations attributable to non-controlling interest			(25,566)						—						(25,566)
Net loss attributable to System1, Inc.			$	(131,433)					$	(57)					$	(131,490)
Amounts attributable to System1, Inc.:
Net loss from continuing operations			$	(19,790)					$	(57)					$	(19,847)		(a) (b) (d)
Net loss from discontinued operations			(111,643)						—						(111,643)
Net loss attributable to System1, Inc.			$	(131,433)					$	(57)					$	(131,490)
Basic and diluted net loss per share:
Continuing operations			$	(0.21)					$	—					$	(0.21)
Discontinued operations			(1.19)						0.01						(1.18)			(b)
Basic and diluted net loss per share			$	(1.40)					$	0.01					$	(1.39)
Weighted average number of shares outstanding - basic and diluted			93,941						418						94,359			(b)

			Nine Months Ended September 30, 2023
			As Previously Reported						Revision Adjustment						As Currently Reported
Salaries and benefits			$	82,484					$	(588)					$	81,896		(a)
Total operating expenses			373,349						(588)						372,761
Operating loss			(67,498)						588						(66,910)
Loss before income tax			$	(98,033)					$	588					$	(97,445)
Income tax expense (benefit)			(10,626)						(988)						(11,614)			(d)
Net loss from continuing operations			(87,407)						1,576						(85,831)
Net loss from discontinued operations, net of tax			(163,222)						—						(163,222)
Net loss			(250,629)						1,576						(249,053)
Less: Net loss from continuing operations attributable to non-controlling interest			(19,543)						554						(18,989)			(b)
Less: Net loss from discontinued operations attributable to non-controlling interest			(30,472)						—						(30,472)
Net loss attributable to System1, Inc.			$	(200,614)					$	1,022					$	(199,592)
Amounts attributable to System1, Inc.:
Net loss from continuing operations			$	(67,864)					$	1,022					$	(66,842)		(a) (b) (d)
Net loss from discontinued operations			(132,750)						—						(132,750)
Net loss attributable to System1, Inc.			$	(200,614)					$	1,022					$	(199,592)
Basic and diluted net loss per share:
Continuing operations			$	(0.73)					$	0.02					$	(0.71)		(b)
Discontinued operations			(1.42)						—						(1.42)
Basic and diluted net loss per share			$	(2.15)					$	0.02					$	(2.13)
Weighted average number of shares outstanding - basic and diluted			93,281						368						93,649			(b)

The following tables reflect the revisions related to the previously issued condensed consolidated statement of comprehensive loss for the three and nine months ended September 30, 2023 (in thousands):

			Three Months Ended September 30, 2023
			As Previously Reported						Revision Adjustment						As Currently Reported
Net loss			$	(163,327)					$	190					$	(163,137)		(a) (d)
Other comprehensive loss:
Foreign currency translation loss			(188)						—						(188)
Comprehensive loss			(163,515)						190						(163,325)
Comprehensive loss attributable to non-controlling interest			(31,932)						247						(31,685)			(b)
Comprehensive loss attributable to System1, Inc.			$	(131,583)					$	(57)					$	(131,640)

			Nine Months Ended September 30, 2023
			As Previously Reported						Revision Adjustment						As Currently Reported
Net loss			$	(250,629)					$	1,576					$	(249,053)		(a) (d)
Other comprehensive loss:
Foreign currency translation loss			(109)						(1)						(110)			(c)
Comprehensive loss			(250,738)						1,575						(249,163)
Comprehensive loss attributable to non-controlling interest			(50,019)						554						(49,465)			(b)
Comprehensive loss attributable to System1, Inc.			$	(200,719)					$	1,021					$	(199,698)

The following tables reflect the revisions to the previously issued condensed consolidated statement of changes in stockholders' equity for the nine months ended September 30, 2023 (in thousands). Although the impact of such revisions is pervasive throughout the condensed consolidated statement of changes in stockholders' equity as a result of the errors described above, the most significant revisions include a reduction of net loss of $1.6 million, an increase of non-controlling interest of $1.8 million, a reduction in accumulated deficit of $1.0 million and a reduction in additional paid-in-capital of $1.0 million.

			Class A Common Stock									Class C Common Stock
			Shares			Amount						Shares			Amount						Additional Paid-In-Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss						Non-Controlling Interest						Total Stockholders’ Equity
As Previously Reported
Balance at December 31, 2022			91,674			$	9					21,747			$	2					$	831,566					$	(439,296)					$	(260)					$	78,650					$	470,671
Net loss			—			—						—			—						—						(33,952)						—						(9,174)						(43,126)
Cumulative-effect of adoption of ASU 2016-13			—			—						—			—						—						(326)						—						—						(326)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			832			—						—			—						(1,730)						—						—						—						(1,730)
Issuance of common stock in connection with settlement of incentive plan			407			—						—			—						1,659						—						—						—						1,659
Conversion of Class C shares to Class A shares			234			—						(234)			—						955						—						—						(955)						—
Increase in tax receivable agreement liability			—			—						—			—						(441)						—						—						—						(441)
Other comprehensive loss			—			—						—			—						—						—						(62)						(47)						(109)
Stock-based compensation			—			—						—			—						6,963						—						—						—						6,963
Balance at March 31, 2023			93,147			$	9					21,513			$	2					$	838,972					$	(473,574)					$	(322)					$	68,474					$	433,561
Net loss			—			—						—			—						—						(35,230)						—						(8,947)						(44,177)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			455			—						—			—						(314)						—						—						—						(314)
Other comprehensive income (loss)			—			—						—			—						—						—						209						(22)						187
Stock-based compensation			—			—						—			—						5,571						—						—						—						5,571
Balance at June 30, 2023			93,602			$	9					21,513			$	2					$	844,229					$	(508,804)					$	(113)					$	59,505					$	394,828
Net loss			—			—						—			—						—						(131,433)						—						(31,894)						(163,327)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			656			—						—			—						(54)						—						—						—						(54)

			Class A Common Stock									Class C Common Stock
			Shares			Amount						Shares			Amount						Additional Paid-In-Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss						Non-Controlling Interest						Total Stockholders’ Equity
Other comprehensive loss			—			—						—			—						—						—						(165)						(23)						(188)
Stock-based compensation			—			—						—			—						7,102						—						—						—						7,102
Balance at September 30, 2023			94,258			$	9					21,513			$	2					$	851,277					$	(640,237)					$	(278)					$	27,588					$	238,361
Revision Adjustments
Net loss			—			$	—					—			$	—					$	—					$	150					$	—					$	50					$	200		(a) (b) (d)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			—			—						—			—						281						—						—						(281)						—			(a) (b)
Issuance of common stock in connection with settlement of incentive plan			—			—						—			—						160						—						—						(160)						—			(b)
Conversion of Class C shares to Class A shares			—			—						—			—						92						—						—						(92)						—			(b)
Stock-based compensation			—			—						—			—						(760)						—						—						958						198			(a) (b)
Balance at March 31, 2023			—			$	—					—			$	—					$	(227)					$	150					$	—					$	475					$	398
Net loss			—			—						—			—						—						929						—						257						1,186			(a) (b) (d)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			—			—						—			—						181						—						—						(181)						—			(a) (b)
Other comprehensive loss			—			—						—			—						—						—						(1)						—						(1)			(c)
Stock-based compensation			—			—						—			—						(615)						—						—						615						—			(a) (b)
Balance at June 30, 2023			—			$	—					—			$	—					$	(661)					$	1,079					$	(1)					$	1,166					$	1,583
Net loss			—			—						—			—						—						(57)						—						247						190			(a) (b) (d)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			—			—						—			—						258						—						—						(258)						—			(a) (b)
Stock-based compensation			—			—						—			—						(609)						—						—						615						6			(a) (b)
Balance at September 30, 2023			—			$	—					—			$	—					$	(1,012)					$	1,022					$	(1)					$	1,770					$	1,779
As Revised
Net loss			—			$	—					—			$	—					$	—					$	(33,802)					$	—					$	(9,124)					$	(42,926)
Cumulative-effect of adoption of ASU 2016-13			—			—						—			—						—						(326)						—						—						(326)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			832			—						—			—						(1,449)						—						—						(281)						(1,730)
Issuance of common stock in connection with settlement of incentive plan			407			—						—			—						1,819						—						—						(160)						1,659

			Class A Common Stock									Class C Common Stock
			Shares			Amount						Shares			Amount						Additional Paid-In-Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss						Non-Controlling Interest						Total Stockholders’ Equity
Conversion of Class C shares to Class A shares			234			—						(234)			—						1,047						—						—						(1,047)						—
Increase in tax receivable agreement liability			—			—						—			—						(441)						—						—						—						(441)
Other comprehensive loss			—			—						—			—						—						—						(62)						(47)						(109)
Stock-based compensation			—			—						—			—						6,203						—						—						958						7,161
Balance at March 31, 2023			93,147			$	9					21,513			$	2					$	838,745					$	(473,424)					$	(322)					$	68,949					$	433,959
Net loss			—			—						—			—						—						(34,301)						—						(8,690)						(42,991)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			455			—						—			—						(133)						—						—						(181)						(314)
Other comprehensive income (loss)			—			—						—			—						—						—						208						(22)						186
Stock-based compensation			—			—						—			—						4,956						—						—						615						5,571
Balance at June 30, 2023			93,602			$	9					21,513			$	2					$	843,568					$	(507,725)					$	(114)					$	60,671					$	396,411
Net loss			—			—						—			—						—						(131,490)						—						(31,647)						(163,137)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			656			—						—			—						204						—						—						(258)						(54)
Other comprehensive loss			—			—						—			—						—						—						(165)						(23)						(188)
Stock-based compensation			—			—						—			—						6,493						—						—						615						7,108
Balance at September 30, 2023			94,258			$	9					21,513			$	2					$	850,265					$	(639,215)					$	(279)					$	29,358					$	240,140

The following table reflects the revisions to the previously issued condensed consolidated statement of cash flows for the nine months ended September 30, 2023 (in thousands):

			As Previously Reported						Revision Adjustment						As Currently Reported
Cash Flows from Operating Activities
Net loss			$	(250,629)					$	1,576					$	(249,053)		(a) (d)
Stock-based compensation			43,909						203						44,112			(a)
Deferred tax benefits			(18,397)						(988)						(19,385)			(d)
Changes in operating assets and liabilities:
Accrued expenses and other current liabilities			1,708						(1,779)						(71)			(c)
Other non-current liabilities			(4,510)						988						(3,522)			(d)
Net cash used by operating activities			(5,908)						—						(5,908)

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Tabular disclosure of prior period adjustments to previously issued financial statements including (1) the effect of the correction on each financial statement line item and any per-share amounts affected for each prior period presented (2) the cumulative effect of the change on retained earnings or other appropriate components of equity or net assets in the statement of financial position, as of the beginning of the earliest period presented, and (3) the effect of the prior period adjustments (both gross and net of applicable income tax) on the net income of each prior period presented in the entity's annual report for the year in which the adjustments are made.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 8
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-8

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 7
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-7

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-9

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