LegalZoom identifies error within income tax provision

According to a regulatory filing, LegalZoom identified an error within its income tax provision relating to the identification of named executive officers subject to limitation on the deductibility of executive compensation under Internal Revenue Code Section 162(m). As a result of this error, deferred tax assets as of March 31, 2022 were understated and the provision for income taxes for the three months then ended was overstated by $3.9M, reflecting a discrete impact of $2.4M and a $1.5M impact of the error in the annual effective tax rate. The correction of this error will reduce the company’s net loss for the quarter ended March 31, 2022. As a result, on February 16, 2023, management and the Audit Committee of the Board of Directors concluded that the previously issued unaudited condensed consolidated financial statements of the company as of and for Q1 2022 included in the company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 16, 2022 were materially misstated. As a result, the quarterly financial statements included in the Q1 2022 Form 10-Q require restatement and should no longer be relied upon. In addition, any previously issued or filed earnings releases, investor presentations or other communications describing the company’s quarterly financial statements and other related financial information covering Q1 2022 should no longer be relied upon. The impact of the restatement and the other immaterial revisions will reduce net loss by $4.9M for Q1 2022. The restatement of the quarterly financial statements does not impact the Company’s reported cash flows or its cash position.