| Restatement of Previously Issued Quarterly Financial Statements (Unaudited) |
Note
2 – Restatement of Previously Issued Quarterly Financial Statements (Unaudited)
As
further described below, our unaudited financial statements for the quarter ended September 30, 2025 has been restated to reflect the
correction of material errors.
Restatement
Background
The
need for the restatement arose out of the results of certain financial analysis the Company performed in the course of preparing for
the audit of its December 31, 2025 financial statements. Upon reevaluation of Greenshoe Rights connected to the Series L Preferred
Stock issued in May 2025, management determined that the Greenshoe Rights met the criteria for liability classification in accordance
with ASC 480. Accordingly, the Greenshoe Rights required classification as a liability and marked to market at each reporting date as
required under GAAP
Restatement
Adjustments
The
Company inadvertently did not classify the Greenshoe Rights as a liability, which led to accounting adjustments to correct the errors
identified. The following table summarizes the effect of the errors on the Company’s balance sheet as of September 30, 2025, and
on the respective statement of operations and statement of cash flows.
The
restated balance sheet line items for the third fiscal quarter of 2025 is as follows:
Schedule
of Restated Balance Sheet
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|
|
|
|
|
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|
| |
|
September 30, 2025 (Unaudited) |
|
| |
|
As Previously Reported |
|
|
Restatement Adjustment |
|
|
As Restated |
|
| Total Assets |
|
$ |
4,321,000 |
|
|
$ |
— |
|
|
$ |
4,321,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Greenshoe Rights liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Total Liabilities |
|
|
1,321,000 |
|
|
|
— |
|
|
|
1,321,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Convertible Preferred stock |
|
|
1,000 |
|
|
|
— |
|
|
|
1,000 |
|
| Common stock |
|
|
3,000 |
|
|
|
— |
|
|
|
3,000 |
|
| Additional paid in capital |
|
|
703,772,000 |
|
|
|
17,323,000 |
|
|
|
721,095,000 |
|
| Accumulated deficit |
|
|
(700,779,000 |
) |
|
|
(17,323,000 |
) |
|
|
(718,102,000 |
) |
| Total Stockholders’ Equity (Deficit) |
|
|
3,000,000 |
|
|
|
— |
|
|
|
3,000,000 |
|
| Total Liabilities and Stockholders’ Equity (Deficit) |
|
$ |
4,321,000 |
|
|
$ |
— |
|
|
$ |
4,321,000 |
|
The
restated line items of the statement of operations for the three months ended September 30, 2025, is as follows:
Schedule
of Restated Statement of Operations
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|
|
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| |
|
Three Months Ended September 30, 2025 (Unaudited) |
|
| |
|
As Previously Reported |
|
|
Restatement Adjustment |
|
|
As Restated |
|
| Loss from Operations |
|
$ |
(3,382,000 |
) |
|
$ |
— |
|
|
$ |
(3,382,000 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Change in fair value of Greenshoe Rights liability |
|
|
— |
|
|
|
11,413,000 |
|
|
|
11,413,000 |
|
| Total Other Income (Expense) |
|
|
268,000 |
|
|
|
11,413,000 |
|
|
|
11,681,000 |
|
| Net Loss |
|
|
(3,114,000 |
) |
|
|
11,413,000 |
|
|
|
8,299,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Dividend on Series L Preferred Stock |
|
|
(144,000 |
) |
|
|
— |
|
|
|
(144,000 |
) |
| Deemed dividend |
|
|
— |
|
|
|
(4,058,000 |
) |
|
|
(4,058,000 |
) |
| Net Loss attributable to common stockholders’ |
|
|
(3,258,000 |
) |
|
|
7,355,000 |
|
|
|
4,097,000 |
|
| Net Loss Per Share - Basic and Diluted |
|
$ |
(0.83 |
) |
|
$ |
1.87 |
|
|
$ |
1.04 |
|
| Weighted average common shares outstanding - basic and diluted |
|
|
3,940,714 |
|
|
|
— |
|
|
|
3,940,714 |
|
The
restated line items of the statement of operations for the nine months ended September 30, 2025, is as follows:
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|
|
|
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|
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|
| |
|
Nine Months Ended September 30, 2025 (Unaudited) |
|
| |
|
As Previously Reported |
|
|
Restatement Adjustment |
|
|
As Restated |
|
| Loss from Operations |
|
$ |
(6,827,000 |
) |
|
$ |
— |
|
|
$ |
(6,827,000 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss on initial recognition of Greenshoe Rights liability |
|
|
|
|
|
|
(28,736,000 |
) |
|
|
(28,736,000 |
) |
| Change in fair value of Greenshoe Rights liability |
|
|
— |
|
|
|
11,413,000 |
|
|
|
11,413,000 |
|
| Total Other Income (Expense) |
|
|
1,504,000 |
|
|
|
(17,323,000 |
) |
|
|
(15,819,000 |
) |
| Net Loss |
|
|
(5,323,000 |
) |
|
|
(17,323,000 |
) |
|
|
(22,646,000 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Dividend on Series L Preferred Stock |
|
|
(229,000 |
) |
|
|
— |
|
|
|
(229,000 |
) |
| Deemed dividend |
|
|
— |
|
|
|
(4,058,000 |
) |
|
|
(4,058,000 |
) |
| Net Loss attributable to common stockholders’ |
|
|
(5,552,000 |
) |
|
|
(21,381,000 |
) |
|
|
(26,933,000 |
) |
| Net Loss Per Share - Basic and Diluted |
|
$ |
(1.84 |
) |
|
$ |
(7.06 |
) |
|
$ |
(8.90 |
) |
| Weighted average common shares outstanding - basic and diluted |
|
|
3,025,033 |
|
|
|
— |
|
|
|
3,025,033 |
|
While
the adjustments changed net loss and added a change in fair value of Greenshoe Rights in the statements of cash flow statements, they
did not have an impact on total net cash provided by operating activities, net cash used in investing activities, or net cash provided
by (used in) financing activities for any of the applicable periods.
The
restated line items of the statement of cash flows for the nine months ended September 30, 2025, is as follows:
Schedule
of Restated Statement of Cash Flows
| |
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|
Nine Months Ended September 30, 2025 (Unaudited) |
|
| |
|
As Previously Reported |
|
|
Restatement Adjustment |
|
|
As Restated |
|
| Net Loss |
|
$ |
(5,323,000 |
) |
|
$ |
(17,323,000 |
) |
|
$ |
(22,646,000 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss on initial recognition of Greenshoe Rights liability |
|
|
|
|
|
|
28,736,000 |
|
|
|
28,736,000 |
|
| Change in fair value of Greenshoe Rights liability |
|
|
— |
|
|
|
(11,413,000 |
) |
|
|
(11,413,000 |
) |
| Net cash used in operating activities |
|
$ |
(8,893,000 |
) |
|
$ |
— |
|
|
$ |
(8,893,000 |
) |
| |
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|
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| SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
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|
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|
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|
|
|
| Reclassification of Greenshoe Rights liability to equity |
|
|
— |
|
|
$ |
17,323,000 |
|
|
$ |
17,323,000 |
|
|