Restatement

9 Months Ended

Sep. 30, 2022

Accounting Changes and Error Corrections [Abstract]

On July 11, 2023, the Company announced that the Audit Committee of the Company’s Board of Directors determined, based on the recommendation of management that the Company’s previously issued financial statements included in the 2022 Form 10-K for the period ended December 31, 2022 and Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and September 30, 2022 (the “Affected Periods”) should no longer be relied upon due to errors identified in the Affected Periods primarily due to an error stemming from a non-cash and non-operating item related to the change in the fair value upon conversion of the notes payable issued under the Company’s debt arrangements. The Company has determined that it is appropriate to correct the misstatements in the Company’s previously issued financial statements and related disclosures by amending the Original Filing, its Annual Report on Form 10-K for the year ended December 31, 2022, and its Quarterly Report on Form 10-Q for the period ended March 31, 2023.

In connection with remediating certain material weaknesses in the Company’s internal control over financial reporting previously disclosed in the Original Filing, the Company identified the error in its accounting for the conversion of the notes payable issued under its debt arrangements. The Company previously elected to measure such notes payable at fair value, as they contain embedded liquidation premiums with conversion rights that represent embedded derivatives (see Note 10, Notes Payable). Between the third quarter of 2022 and the first quarter of 2023 the purchasers converted certain of the notes into the Company’s Class A Common Stock. The Company historically erroneously applied debt conversion accounting guidance to the notes payable conversion transactions that is not applicable to debt accounted for under the Company’s fair value accounting policy election, which resulted in such conversions being incorrectly accounted for with a credit to Class A Common Stock and Additional paid-in capital equity equal to the fair value of the notes payable on each conversion date and no conversion gain or loss being recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss). The Company should have accounted for such conversions by applying debt extinguishment accounting with a credit to Class A Common Stock and Additional paid-in capital equal to the fair value of the Class A Common Stock issued on each conversion date. Under debt extinguishment accounting the difference between the fair value of the Class A Common Stock issued and the fair value of the debt at each conversion date represents a gain or loss on extinguishment. Accordingly, the Company should have recognized an

additional $22,764 Loss on settlement of notes payable in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 (and a corresponding $22,764 increase in Additional paid-in capital as of September 30, 2022) because the fair value of the Class A Common Stock issued significantly exceeded the fair value of the notes payable converted on each of the various conversion dates during the third quarter of 2022.

The restated financial information also includes adjustments to correct other immaterial errors, including errors that had previously been adjusted for as out of period corrections in the Affected Periods. The other immaterial errors impacting the Company’s financial statements as of September 30, 2022 and for the three and nine months then ended relate to Change in fair value measurement of notes payable, Interest expense, Stock-based compensation expense, Accrued interest, Additional paid-in capital, and Accumulated deficit. The restatement adjustments were tax effected and any tax adjustments reflected in the Affected Periods relate entirely to the tax effect on the restatement adjustments.

In addition to the restatement of the financial statements, certain information within the following notes to the financial statements has been restated to reflect the corrections of misstatements discussed above as well as to add disclosure language as appropriate: Note 8, Fair Value of Financial Instruments, Note 10, Notes Payable, and Note 14, Stock-Based Compensation.

Presented below is a reconciliation from the previously reported to the restated amounts as of and for the three and nine months ended September 30, 2022. The amounts labeled “As Previously Reported” were derived from the Original Filing. The impacts to the Condensed Consolidated Statements of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2022 as a result of the restatement were due to the changes in the Conversion of notes payable into Class A Common Stock, Stock-based compensation expense, and Net loss. In addition, there was no impact to net cash used in operating, investing or financing activities for the nine months ended September 30, 2022 as a result of the restatement.

The following tables present the effect of correcting these accounting errors on the Company’s previously issued financial statements (in thousands, except share and per share data):

Summary of Restatement - Condensed Consolidated Balance Sheet


	September 30, 2022
	As Previously Reported		Restatement Impacts		As Restated

Liabilities and stockholders’ equity
Current liabilities
Accrued interest	$	541	$	(418)	$	123
Total current liabilities	177,323		(418)		176,905
Total liabilities	253,361		(418)		252,943
Additional paid-in capital	3,603,368		16,913		3,620,281
Accumulated deficit	(3,322,685)		(16,495)		(3,339,180)
Total stockholders’ equity	287,323		418		287,741
Total liabilities and stockholders’ equity	$	540,684	$	—	$	540,684

Condensed Consolidated Statements of Operations and Comprehensive Loss


	Three Months Ended September 30, 2022
	As Previously Reported		Restatement Impacts		As Restated
Operating expenses
Research and development	$	48,062	$	(480)	$	47,582
Sales and marketing	3,888		(65)		3,823
General and administrative	28,655		(104)		28,551
Loss on disposal of property and equipment	—		—		—
Total operating expenses	80,605		(649)		79,956

Loss from operations	(80,605)		649		(79,956)
Change in fair value measurements	(6,966)		5,202		(1,764)
Interest expense	(663)		418		(245)
Related party interest expense	(996)		—		(996)
Other (expense) income, net	(6,457)		—		(6,457)
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	(7,690)		(22,764)		(30,454)
Loss before income taxes	(103,377)		(16,495)		(119,872)
Income tax provision	—		—		—
Net loss	$	(103,377)	$	(16,495)	$	(119,872)

Per share information:
Net loss per Common Stock – Class A and Class B – basic and diluted	$	(0.30)	$	(0.05)	$	(0.35)
Weighted average Common shares outstanding – Class A and Class B – basic and diluted	346,575,508		—		346,575,508

Total comprehensive loss:
Net loss	$	(103,377)	$	(16,495)	$	(119,872)
Change in foreign currency translation adjustment	9,864		—		9,864
Total comprehensive loss	$	(93,513)	$	(16,495)	$	(110,008)


	Nine Months Ended September 30, 2022
	As Previously Reported		Restatement Impacts		As Restated
Operating expenses
Research and development	$	260,221	$	(480)	$	259,741
Sales and marketing	16,272		(65)		16,207
General and administrative	89,173		(104)		89,069
Loss on disposal of property and equipment	1,407		—		1,407
Total operating expenses	367,073		(649)		366,424

Loss from operations	(367,073)		649		(366,424)
Change in fair value measurements	(622)		5,202		4,580
Interest expense	(5,537)		418		(5,119)
Related party interest expense	(2,931)		—		(2,931)
Other (expense) income, net	(14,307)		—		(14,307)
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	(7,690)		(22,764)		(30,454)
Loss before income taxes	(398,160)		(16,495)		(414,655)
Income tax provision	(9)		—		(9)
Net loss	$	(398,169)	$	(16,495)	$	(414,664)

Per share information:
Net loss per Common Stock – Class A and Class B – basic and diluted	$	(1.20)	$	(0.05)	$	(1.25)
Weighted average Common shares outstanding – Class A and Class B – basic and diluted	330,878,677		—		330,878,677

Total comprehensive loss:
Net loss	$	(398,169)	$	(16,495)	$	(414,664)
Change in foreign currency translation adjustment	13,548		—		13,548
Total comprehensive loss	$	(384,621)	$	(16,495)	$	(401,116)

Summary of Restatement - Condensed Consolidated Statement of Cash Flows


	Nine Months Ended September 30, 2022
	As Previously Reported		Restatement Impacts		As Restated
Cash flows from operating activities
Net loss	$	(398,169)	$	(16,495)	$	(414,664)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense	15,323		—		15,323
Stock-based compensation	9,793		(649)		9,144
Vesting of restricted stock awards for employee bonus	—		—		—
Loss on disposal of property and equipment	1,407		—		1,407
Change in fair value measurement of related party notes payable and notes payable	622		(5,202)		(4,580)
Loss (gain) on foreign exchange	2,484		—		2,484
Loss on write-off of vendor deposits, net and (gain) on write-off of accounts payable	2,992		—		2,992
Non-cash interest expense	8,468		(418)		8,050
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	7,690		22,764		30,454
Gain on forgiveness of vendor payables in trust	—		—		—
Reserve for unrecoverable value added taxes	—		—		—
Other	324		—		324
Changes in operating assets and liabilities:
Deposits	13,364		—		13,364
Other current and non-current assets	(16,011)		—		(16,011)
Accounts payable	27,467		—		27,467
Accrued payroll and benefits	9,372		—		9,372
Accrued expenses and other current liabilities	(24,628)		—		(24,628)
Operating lease liabilities	(2,886)		—		(2,886)
Accrued interest expense	(12,721)		—		(12,721)
Transfers between vendor payables in trust and accounts payable	—		—		—
Net cash used in operating activities	$	(355,109)	$	—	$	(355,109)


Supplemental disclosure of noncash investing and financing activities
Conversion of convertible note to equity	$	67,218	$	17,562	$	84,780