TATTOOED CHEF, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q/A)

The following discussion and analysis should be read in conjunction with our
condensed consolidated financial statements and related notes (the "Financial
Statements") included elsewhere in this Quarterly Report on Form 10-Q/A (the
"Quarterly Report") and the section entitled "Risk Factors." Unless otherwise
indicated, the terms "Tattooed Chef," "the Company," "we," "us," or "our" refer
to Tattooed Chef, Inc., a Delaware corporation, together with its consolidated
subsidiaries. Management's Discussion and Analysis has been revised for the
effects of the restatement as discussed in Note 2 Basis of Presentation and
Significant Accounting Policies to the Financial Statements.

Special note regarding forward-looking statements

This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly
Report including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements.
Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek"
and variations and similar words and expressions are intended to identify such
forward-looking statements. Such forward-looking statements relate to future
events or future performance, but reflect management's current beliefs, based on
information currently available. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and
results discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's Annual Report on Form 10-K/A for the period
ending December 31, 2021 filed with the SEC and Part II, Item 1A. Risk Factors
herein. The Company's securities filings can be accessed on the EDGAR section of
the SEC's website at www.sec.gov. Except as expressly required by applicable
securities law, the Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise. Factors that could cause actual results to differ
materially from those in the forward-looking statements include, but are not
limited to, the following:

• our ability to maintain the listing of our common stock on the Nasdaq;

•our ability to raise capital in the future;

•our ability to successfully acquire and integrate new operations;

•market conditions and global and economic factors beyond our control, including
the potential adverse effects of the ongoing global coronavirus (COVID-19)
pandemic on capital markets, war (including the ongoing conflict in Ukraine),
climate change, general economic conditions, unemployment and our liquidity,
operations and personnel;

•our ability to obtain raw materials in a timely manner or in sufficient quantities to meet demand for our products;

•our ability to develop our customer base;

• our ability to forecast and maintain an adequate rate of revenue growth and plan expenses appropriately;

•our expectations regarding future expenditure;

• our ability to attract and retain qualified employees and key personnel;

• our ability to maintain relationships with third-party suppliers;

• our ability to compete effectively in the competitive packaged food industry;

• our ability to protect and enhance our company’s reputation and brand;

•the impact of inflation; and

•the impact of future regulatory, legal and legislative changes on our industry.

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Insight

We are a rapidly growing plant-based food company offering a broad portfolio of
innovative frozen foods. We supply plant-based products to leading retailers in
the United States, with signature products such as ready-to-cook bowls, zucchini
spirals, riced cauliflower, acai and smoothie bowls, cauliflower crust pizza,
handheld burritos, and quesadillas. Our products are available both in private
label and our "Tattooed Chef™" brand in the frozen food section of retail food
stores.

Both NMFD and BCI, our new entities that were acquired in the second and fourth
quarters of 2021 (see Note 9 Business Combinations), currently primarily
manufacture private label products. NMFD is expected to manufacture both private
label and Tattooed Chef branded products during 2022. Our Mexican-style
plant-based Tattooed Chef branded products, including burritos, enchiladas, and
quesadillas, total 18 new SKUs, were introduced to the market during the six
months ended June 30, 2022. The Karsten facility is not currently in operation
and is expected to become active during the third quarter of 2022. The Karsten
facility is expected to manufacture Tattooed Chef branded salty snacks and other
alternative Tattooed Chef branded and private label products. BCI is also
expected to start manufacturing Tattooed Chef branded products during the third
quarter of 2022. We anticipate continued growth in Tattooed Chef branded
products primarily due to new product introductions, further expansion with
current customers, and increased sales to new retail customers. While we are
primarily focused on growing our branded business, we will continue to support
our current private label business and will evaluate new opportunities with
private label customers as they arise.

Results of operations The following table (restated for the effects of the corrections of errors identified in note 2 of the summary financial statements) presents the key statistics for the three months ended March 31, 2022 and 2021:

Three months Completed March, 31st

                                                                                 % of                                           % of
(in thousands)                                         2022                   net revenue                2021                net revenue

Net revenue                                      $       67,688                       100.0  %       $  50,415                       100.0  %
Cost of goods sold                                       63,621                        94.0  %          45,408                        90.1  %
Gross profit                                     $        4,067                         6.0  %       $   5,007                         9.9  %
Net loss                                         $      (20,173)                      (29.8) %       $  (7,629)                      (15.1) %

Major operating expenses:

Marketing expenses                               $        7,960                        11.8  %       $   1,695                         3.4  %
Post-manufacture cold storage costs              $        1,801                         2.7  %       $     711                         1.4  %
Professional services                            $        2,726                         4.0  %       $     919                         1.8  %
Stock compensation expenses                      $        1,287                         1.9  %       $   3,185                         6.3  %
Payroll, benefits and recruiting expenses        $        2,628                         3.9  %       $   1,162                         2.3  %
Operating expenses of newly acquired
entities NMFD and BCI                            $        2,365                         3.5  %               -                           -  %


Net revenue

Net revenue increased by $17.3 million, or 34.3%, to $67.7 million for the three
months ended March 31, 2022 as compared to $50.4 million for the comparable
period in 2021. The revenue increase was due in part to an increase of $5.3
million for Tattooed Chef branded products. In addition, private label products
revenue increased by $8.8 million, primarily driven by the sales generated from
NMFD and BCI (see Note 9 Business Combinations). Other revenue increased by $3.2
million, mainly driven by the sales of salsa, tamales, meats and other products
by NMFD to its restaurant customers. Both NMFD and BCI currently primarily
manufacture private label products. In the aggregate, NMFD and BCI contributed
approximately $16.6 million to our net revenue during the three months ended
March 31, 2022. NMFD is expected to be fully operational and manufacturing both
private label and Tattooed Chef branded products during 2022. Our Mexican-style
plant-based Tattooed Chef branded products, burritos and quesadillas, were
introduced to the market during the three months ended March 31, 2022. The
Karsten facility is not currently in operation and is expected to become active
during the second quarter of 2022. The Karsten facility is expected to
manufacture Tattooed Chef branded salty snacks and other alternative Tattooed
Chef branded and private label products. Belmont is expected to start
manufacturing Tattooed Chef branded products during the second quarter of 2022.
We anticipate continued growth in Tattooed Chef
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branded products primarily due to new product introductions, further expansion
with current customers and increased sales to new retail customers. While we are
primarily focused on growing our branded business, we will continue to support
our current private label business and will evaluate new opportunities with
private label customers as they arise.

Cost of Goods Sold

Cost of goods sold increased $18.2 million, or 40.1%, to $63.6 million for the
three months ended March 31, 2022 as compared to $45.4 million for the
comparable period in 2021. Cost of goods sold as a percentage of net revenue,
increased to 94.0% for the three months ended March 31, 2022 from 90.1% for the
three months ended March 31, 2021. The increase of cost of goods sold in dollar
amount is primarily due to the increase in sales volume. The increase as a
percentage of net revenue is primarily due to the increases in cost of freight,
packaging, and labor due to inflation and the increase in fixed costs including
rent and depreciation expenses resulted from new leases assumed and fixed assets
acquired though the acquisitions completed during the second and fourth quarters
of 2021. As these new subsidiaries haven't operated at full capacity, our fixed
costs as a percentage of net revenue are higher than the comparable period in
2021.

Gross profit

Gross profit decreased $0.9 million, or 18.8%, to $4.1 million for the three
months ended March 31, 2022 as compared to $5.0 million for the comparable
period in 2021. Gross margin for the three months ended March 31, 2022 was 6.0%
as compared to 9.9% for the three months ended March 31, 2021. The decrease in
gross margin in 2022 is due to the increase of cost of sales and the increase in
the expense related to the multi-vendor mailer program previously in Note 2
Basis of Presentation and Significant Accounting Policies to the Financial
Statements. The acquisition (NMFD and Karsten) in New Mexico that was completed
in May 2021 and the acquisition (BCI) in Ohio that was completed in December
2021. Neither NMFD nor BCI are currently operating at full capacity, because we
are in the process to integrate both facilities into our strategic business
plans. We expect more new Tattooed Chef branded products to be manufactured by
both plants. Therefore, we believe our fixed costs as a percentage of new
revenue will decrease once the facilities operate at full capacity and achieve
economies scale.

We are negotiating different prices at our different club and retail customers
based on product quantity and packaging configuration. We regularly evaluate
pricing to ensure that the brand is competitive in pricing based on our
competitors. With the current economic conditions and inflation, we are
continuing to monitor raw materials, packaging, and freight costs to determine
our pricing strategy.

Operating expenses

Operating expenses increased $12.2 million, or 108.9%, to $23.3 million for the
three months ended March 31, 2022 as compared to $11.2 million for the
comparable period in 2021. As a percentage of net revenue, total operating
expenses increased to 34.5% for three months ended March 31, 2022 from 22.2% for
the same period in 2021. Compared to the three months ended March 31, 2021, the
increase in 2022 is primarily due to a $6.3 million increase in marketing
expenses, a $1.1 million increase in post-manufacture cold storage expenses, a
$1.8 million increase in professional expenses, a $1.5 million increase in
payroll and recruiting expenses, and $2.4 million operating expenses for
entities that were newly acquired during the second and fourth quarter of 2021,
offset by a $2.0 million decrease in stock compensation expense.

The significant increase in advertising, marketing, promotional and
post-manufacture cold storage expenses are due to our heavy investment in the
Tattooed Chef brand, in order to increase distribution, raise brand awareness,
and drive sales in the new stores that are launching our products. The increase
in professional expenses is mainly due to the legal, accounting and auditing
fees attributable to services performed during the three months ended March 31,
2022 in relation to 2021 year-end audit and reviews (including the filing of
amendments to our Form of 10-Qs for the quarterly periods ended March 31, 2021,
June 30, 2021 and September 30, 2021), as well as proxy statements to comply as
a public reporting company. The increase in payroll and recruiting expense is
primarily due to temporary employee cost for marketing activities and our
efforts to recruit and retain key employees needed to meet the additional
compliance requirements of being a public company. The decrease of stock
compensation expense was mainly driven by one restricted stock grant to a
marketing consultant during the three months ended March 31, 2021, which grant
vested immediately. We expect operating expenses to decrease over time as a
percentage of revenue as certain relatively fixed operating expenses will be
spread over increasing revenue.
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Net loss

For the three months ended March 31, 2022, we had net losses of $20.2 million,
compared to a net loss of $7.6 million for the three months ended March 31,
2021. The increase of net loss was mainly driven by the decrease in gross margin
and the increase in operating expenses, as discussed above.

Non-GAAP Financial Measures

We use non-GAAP financial information and believe it is useful to investors as
it provides additional information to facilitate comparisons of historical
operating results, identify trends in operating results, and provide additional
insight on how the management team evaluates the business. Our management team
uses Adjusted EBITDA to make operating and strategic decisions, evaluate
performance and comply with indebtedness related reporting requirements. Below
are details on this non-GAAP measure and the non-GAAP adjustments that the
management team makes in the definition of Adjusted EBITDA. The adjustments
generally fall within the categories of non-cash items, acquisition and
integration costs, business transformation initiatives, including ERP related
expenses for initial ERP implementation, and infrequent or unusual losses and
gains in a non-recurring nature. We believe this non-GAAP measure should be
considered along with net income, the most closely related GAAP financial
measure. Reconciliations between Adjusted EBITDA and net income are below, and
discussion regarding underlying GAAP results throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations.

As new events or circumstances arise, the definition of Adjusted EBITDA could
change. When the definitions change, we will provide the updated definition and
present the related non-GAAP historical results on a comparable basis.

We define EBITDA as net income before interest, taxes, depreciation. Adjusted
EBITDA further adjust EBITDA by adding back non-cash compensation expenses,
non-recurring expenses, and other non-operational charges. Adjusted EBITDA is
one of the key performance indicators we use in evaluating our operating
performance and in making financial, operating, and planning decisions. We
believe Adjusted EBITDA is useful to the readers of this quarterly report on
Form 10-Q/A in the evaluation of our operating performance.

The following table provides a reconciliation between net earnings and adjusted EBITDA for the three months ended March 31, 2022 and 2021:

                                                    Three Months Ended
                                                 March 31,       March 31,
(in thousands)                                      2022           2021

Net loss                                        $  (20,173)     $  (7,629)
Interest                                                41             20
Income tax expense (benefit)                           256         (1,236)
Depreciation                                         1,507            552
EBITDA                                             (18,369)        (8,293)
Adjustments
Stock compensation expense                           1,287          3,185
Loss on foreign currency forward contracts           1,023          3,001
Gain on warrant remeasurement                         (207)          (320)
Acquisition expenses                                   105              -
ERP related expenses                                   159              -
Total Adjustments                                    2,367          5,866
Adjusted EBITDA                                 $  (16,002)     $  (2,427)

Cash and capital resources

As of March 31, 2022, we had $57.4 million in cash and cash equivalents. The
cash outflow during the three months ended March 31, 2022 is primarily
attributable to a $20.8 million increase in accounts receivable mainly
reflecting a higher volume of sales, $4.2 million promotional and marketing
spending to continually raise our brand awareness, and $8.8 million capital
expenditures. The capital expenditures are for automation and robotic machinery
to improve our production efficiency and reduce labor cost. By evaluating our
business projections and expenditure budgets for 2022 and 2023, we
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believe our cash on hand is sufficient to meet our current working capital and
capital expenditure requirements for a period of at least twelve months from the
date of this filing.

Indebtedness

We have a revolving line of credit agreement, which has been amended from time
to time, pursuant to which a credit facility has been extended to the Company
until May 31, 2022 (the "Credit Facility"). The Credit Facility provides us with
up to $25.0 million in revolving credit. Under the Credit Facility, we may
borrow up to (a) 90% of the net amount of eligible accounts receivable; plus,
(b) the lower of: (i) sum of: (1) 50% of the net amount of eligible inventory;
plus (2) 45% of the net amount of eligible in-transit inventory; (ii) $10.0
million; or (iii) 50% of the aggregate amount of revolving loans outstanding,
minus (c) the sum of all reserves. Under the Credit Facility, our fixed charge
coverage ratio may not be less than 1.10:1.00. As of March 31, 2022, we were not
in compliance with the fixed charge coverage ratio term of the Credit Facility.
Currently, this noncompliance does not impact our borrowing capacity or
accelerate any repayment terms. The revolving line of credit bears interest at
the sum of (i) the greater of (a) the daily Prime Rate, or (b) LIBOR plus 2%;
and (ii) 1%. The balance on the Credit Facility was $0 million as of March 31,
2022. We are currently working with the financial institution for a new facility
but have no assurance that our negotiations in this regard will be successful
(See Part II, Item 1A, Risk Factors). See Note 14 Indebtedness to the Financial
Statements, for details of our debt disclosure.

Liquidity

We generally fund our short-term and long-term liquidity needs through a combination of cash on hand, cash flow generated from operations and borrowings available under our credit facility (see “- Indebtedness” below). above). Our management regularly reviews certain liquidity measures to monitor performance.

Cash flow

The following section presents the major components of net cash flows from and
used in operating, investing and financing activities for the three months ended
March 31, 2022 and the three months ended March 31, 2021:

                                            Three months ended March 31,
(in thousands)                                  2022                   2021
Cash (used in) provided by:
Operating activities                 $       (26,393)               $ (17,574)
Investing activities                          (8,807)                  (2,852)
Financing activities                             300                   73,502
Net (decrease) increase in cash      $       (34,900)               $  53,076


Operating Activities

For three months ended March 31, 2022, net cash used in operations was $26.4
million, driven primarily by the net loss of $20.2 million, a $20.8 million
increase in accounts receivable and a $3.5 million increase in inventory,
partially offset by non-cash items, which included depreciation and amortization
expense of $1.5 million, stock compensation expense of $1.3 million, unrealized
forward contract loss of $0.2 million, bad debt expense of $0.2 million, offset
by a $4.2 million decrease in prepaid expenses and a $11.1 million increase in
accounts payable, accrued expenses and other current liabilities. The increase
in accounts receivable is primarily resulting from the increased revenue and
some invoice transmission interruption during system conversion. We are actively
working with customers to solve the system transmission issues and expect the
issue to be resolved during May 2022.

For three months ended March 31, 2021, net cash used in operations was $17.6
million, driven in part by the net loss of $7.6 million, adjusted for non-cash
items which included stock compensation expense of $3.2 million, unrealized
forward contract loss of $2.2 million, net change in deferred taxes of $1.5
million, depreciation and amortization expense of $0.6 million, warrant
liability revaluation gain of $0.3 million. Working capital usage has also
increased largely due to a $12.9 million increase in accounts receivable
resulting from increased revenue, a $9.3 million increase in prepaid expenses
mainly due to the increase in prepaid advertising expenses, a $0.2 million
increase in inventory, and offset by a $8.0 million increase in accounts
payable, accrued expenses and other current liabilities.
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Investing activities

Net cash used in investing activities relates to capital expenditures to support
growth and investment in property, plant and equipment to expand production
capacity, tenant improvements, and to a lesser extent, replacement of existing
equipment.

For the three months ended March 31, 2022, net cash used in investing activities
was $8.8 million as compared to $2.9 million for the three months ended March
31, 2021. Cash used in both periods consisted primarily of capital expenditures
to improve efficiency and output from our current facilities.

Fundraising activities

For the three months ended March 31, 2022net cash provided by financing activities was $0.3 millionmainly borrowings, offset by debt repayments.

For the three months ended March 31, 2021net cash provided by financing activities was $73.5 million mainly attributable to the exercise of warrants.

Critical accounting policies

There have been no material changes to our critical accounting policies from the
information provided in Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations", included in our Annual Report on
Form 10-K/A for the fiscal year ended December 31, 2021 ("Form 10-K/A").

Recent accounting pronouncements

The disclosures required by this section are incorporated herein by reference in Note 3. Recent Accounting Pronouncements to the Financial Statements.

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