| Restatement of Prior Financial Information |
Note 18 – Restatement of Prior Financial Information
In connection with the preparation of its unaudited condensed consolidated financial statements for the three months ended December 31, 2023, the Company identified errors related to the accounting for research and development expenses associated with the Company’s projects with third-party service providers. The Company records estimated costs of research and development activities conducted by third-party service providers based on information such as estimates of the work completed and in accordance with agreements established with third-party service providers. The Company inaccurately estimated the work completed by the third-party service providers because it did not evaluate all of the information that was known or knowable at the time. The errors resulted in a misstatement of research and development costs for the years ended September 30, 2023 and September 30, 2022, and corresponding misstatements of accounts payable, accrued research and development costs, and prepaid research and development costs as of September 30, 2023 and September 30, 2022. In addition to the errors summarized below, the Company also recorded a cumulative adjustment to decrease accumulated deficit by $2.2 million at September 30, 2021.
The Company has restated herein its consolidated financial statements as of and for the years ended September 30, 2023 and 2022 in accordance with ASC Topic 250, Accounting Changes and Error Corrections, for the matters discussed above.
The effect of the error corrections on the consolidated balance sheets are as follows:
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As of September 30, 2023 |
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As Reported |
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Adjustment |
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As Restated |
Assets |
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Prepaid research and development costs |
$ |
1,579,086 |
|
$ |
(572,834) |
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$ |
1,006,252 |
Total current assets |
$ |
23,506,056 |
|
$ |
(572,834) |
|
$ |
22,933,222 |
Total assets |
$ |
50,595,925 |
|
$ |
(572,834) |
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$ |
50,023,091 |
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Liabilities and Stockholders' Equity |
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Accounts payable |
$ |
14,576,624 |
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$ |
(1,645,452) |
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$ |
12,931,172 |
Accrued research and development costs |
$ |
853,987 |
|
$ |
(822,324) |
|
$ |
31,663 |
Total current liabilities |
$ |
20,278,508 |
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$ |
(2,467,776) |
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$ |
17,810,732 |
Total liabilities |
$ |
32,812,706 |
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$ |
(2,467,776) |
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$ |
30,344,930 |
Accumulated deficit |
$ |
(258,663,151) |
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$ |
1,894,942 |
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$ |
(256,768,209) |
Total stockholders' equity |
$ |
17,783,219 |
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$ |
1,894,942 |
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$ |
19,678,161 |
Total liabilities and stockholders' equity |
$ |
50,595,925 |
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$ |
(572,834) |
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$ |
50,023,091 |
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As of September 30, 2022 |
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As Reported |
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Adjustment |
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As Restated |
Assets |
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Prepaid research and development costs |
$ |
10,444,587 |
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$ |
(767,567) |
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$ |
9,677,020 |
Total current assets |
$ |
104,769,474 |
|
$ |
(767,567) |
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$ |
104,001,907 |
Total assets |
$ |
136,126,017 |
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$ |
(767,567) |
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$ |
135,358,450 |
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Liabilities and Stockholders' Equity |
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Accrued research and development costs |
$ |
9,071,503 |
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$ |
(2,726,248) |
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$ |
6,345,255 |
Total current liabilities |
$ |
41,437,629 |
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$ |
(2,726,248) |
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$ |
38,711,381 |
Total liabilities |
$ |
55,287,381 |
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$ |
(2,726,248) |
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$ |
52,561,133 |
Accumulated deficit |
$ |
(165,574,198) |
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$ |
1,958,681 |
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$ |
(163,615,517) |
Total stockholders' equity |
$ |
80,838,636 |
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$ |
1,958,681 |
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$ |
82,797,317 |
Total liabilities and stockholders' equity |
$ |
136,126,017 |
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$ |
(767,567) |
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$ |
135,358,450 |
The effect of the error corrections on the consolidated statements of operations are as follows:
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Year Ended September 30, 2023 |
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As Reported |
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Adjustment |
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As Restated |
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Research and development |
$ |
51,138,480 |
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$ |
63,739 |
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$ |
51,202,219 |
Total operating expenses |
$ |
107,008,028 |
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$ |
63,739 |
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$ |
107,071,767 |
Operating loss |
$ |
(93,718,477) |
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$ |
(63,739) |
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$ |
(93,782,216) |
Loss before income taxes |
$ |
(92,608,747) |
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$ |
(63,739) |
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$ |
(92,672,486) |
Net loss |
$ |
(93,088,953) |
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$ |
(63,739) |
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$ |
(93,152,692) |
Net loss per basic and diluted common shares outstanding |
$ |
(1.10) |
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$ |
— |
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$ |
(1.10) |
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Year Ended September 30, 2022 |
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As Reported |
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Adjustment |
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As Revised |
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Research and development |
$ |
70,646,103 |
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$ |
264,598 |
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$ |
70,910,701 |
Total operating expenses |
$ |
113,814,948 |
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$ |
264,598 |
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$ |
114,079,546 |
Operating loss |
$ |
(83,223,560) |
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$ |
(264,598) |
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$ |
(83,488,158) |
Loss before income taxes |
$ |
(83,539,623) |
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$ |
(264,598) |
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$ |
(83,804,221) |
Net loss |
$ |
(83,776,020) |
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$ |
(264,598) |
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$ |
(84,040,618) |
Net loss per basic and diluted common shares outstanding |
$ |
(1.05) |
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$ |
- |
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$ |
(1.05) |
With respect to the consolidated statements of cash flows, all adjustments are to line items within operating cash flows and there was no impact to the subtotal of operating, investing, or financial cash flows for each period. The effect of the error corrections on the consolidated statements of cash flows are as follows:
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Year Ended September 30, 2023 |
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As Reported |
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Adjustment |
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As Restated |
OPERATING ACTIVITIES |
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Net loss |
$ |
(93,088,953) |
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$ |
(63,739) |
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$ |
(93,152,692) |
Decrease (increase) in prepaid expenses and other assets |
$ |
10,004,978 |
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$ |
(194,733) |
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$ |
9,810,245 |
(Decrease) increase in accounts payable |
$ |
(7,426,770) |
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$ |
(1,645,452) |
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$ |
(9,072,222) |
(Decrease) increase in accrued expenses and other current liabilities |
$ |
(13,621,843) |
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$ |
1,903,924 |
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$ |
(11,717,919) |
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Year Ended September 30, 2022 |
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As Reported |
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Adjustment |
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As Revised |
OPERATING ACTIVITIES |
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Net loss |
$ |
(83,776,020) |
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$ |
(264,598) |
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$ |
(84,040,618) |
Decrease (increase) in prepaid expenses and other assets |
$ |
(2,352,547) |
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$ |
767,567 |
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$ |
(1,584,980) |
(Decrease) increase in accrued expenses and other current liabilities |
$ |
8,698,314 |
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$ |
(502,969) |
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$ |
8,195,345 |
The remainder of the notes to the Company’s consolidated financial statements have been updated and restated, as applicable, to reflect the impacts of the restatement described above and have been notated as such.
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