| Restatement of Previously Issued Financial Statements |
Note 2 – Restatement of Previously
Issued Financial Statements
As previously disclosed, the Company
determined that certain revenue transactions did not qualify for revenue recognition under generally accepted accounting principles.
In the process of this determination, the Company discovered information that existed at June 30, 2017 which affected the revenue
and an obligation. The Company concluded that the impact of applying corrections for these errors and misstatements on the condensed
consolidated financial statements as of and for the three and six months ended June 30, 2017 is material. As a result, the Company
is restating its condensed consolidated financial statements for the periods impacted. See below for a reconciliation of the previously
reported amounts to the restated amounts.
The table below sets forth the consolidated
balance sheets, including the balances originally reported, corrections and the as restated balances:
| |
|
As of June 30, 2017 |
|
| |
|
As Reported |
|
|
Correction |
|
|
As Restated |
|
| Trade Receivables – Related Party, net |
|
$ |
125,001 |
|
|
$ |
(125,001 |
) |
|
$ |
- |
|
| Inventories, net |
|
|
2,166,699 |
|
|
|
62,140 |
|
|
|
2,228,839 |
|
| Total Current Assets |
|
|
4,906,089 |
|
|
|
(62,861 |
) |
|
|
4,843,228 |
|
| Total Assets |
|
|
6,562,562 |
|
|
|
(62,861 |
) |
|
|
6,499,701 |
|
| Trade and Other Payables |
|
|
1,413,141 |
|
|
|
88,500 |
|
|
|
1,501,641 |
|
| Total Current Liabilities |
|
|
1,447,052 |
|
|
|
88,500 |
|
|
|
1,535,552 |
|
| Total Liabilities |
|
|
1,447,052 |
|
|
|
88,500 |
|
|
|
1,535,552 |
|
| Accumulated Deficit |
|
|
(99,495,455 |
) |
|
|
(151,361 |
) |
|
|
(99,646,816 |
) |
| Total Stockholder’s Equity |
|
|
5,115,510 |
|
|
|
(151,361 |
) |
|
|
4,964,149 |
|
| Total Liabilities and Stockholders’ Equity |
|
|
6,562,562 |
|
|
|
(62,861 |
) |
|
|
6,499,701 |
|
The table below sets for the consolidated statements
of income, including the amounts originally reported, corrections, and the restated amounts:
| |
|
For the three months ended June 30, 2017 |
|
| |
|
As Reported |
|
|
Correction |
|
|
As Restated |
|
| Product revenue |
|
$ |
1,097,295 |
|
|
$ |
(370 |
) |
|
$ |
1,096,925 |
|
| Product revenue – Related party |
|
|
100,567 |
|
|
|
(124,631 |
) |
|
|
(24,064 |
) |
| Product Cost of Sales |
|
|
(264,231 |
) |
|
|
(26,360 |
) |
|
|
(290,591 |
) |
| Gross Income |
|
|
933,631 |
|
|
|
(151,361 |
) |
|
|
782,270 |
|
| Loss from Operations |
|
|
(669,301 |
) |
|
|
(151,361 |
) |
|
|
(820,662 |
) |
| Loss Before Income Taxes |
|
|
(666,647 |
) |
|
|
(151,361 |
) |
|
|
(818,008 |
) |
| Net Loss Attributable to Common Stockholders |
|
|
(666,647 |
) |
|
|
(151,361 |
) |
|
|
(818,008 |
) |
| Comprehensive Loss |
|
|
(665,795 |
) |
|
|
(151,361 |
) |
|
|
(817,156 |
) |
| Loss per share |
|
$ |
(0.08 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.09 |
) |
| |
|
For the six months ended June 30, 2017 |
|
| |
|
As Reported |
|
|
Correction |
|
|
As Restated |
|
| Product revenue |
|
$ |
1,740,481 |
|
|
$ |
(370 |
) |
|
$ |
1,740,111 |
|
| Product revenue – Related party |
|
|
124,631 |
|
|
|
(124,631 |
) |
|
|
- |
|
| Product Cost of Sales |
|
|
(522,952 |
) |
|
|
(26,360 |
) |
|
|
(549,312 |
) |
| Gross Income |
|
|
1,342,160 |
|
|
|
(151,361 |
) |
|
|
1,190,799 |
|
| Loss from Operations |
|
|
(2,031,454 |
) |
|
|
(151,361 |
) |
|
|
(2,182,815 |
) |
| Loss Before Income Taxes |
|
|
(2,015,918 |
) |
|
|
(151,361 |
) |
|
|
(2,167,279 |
) |
| Net Loss Attributable to Common Stockholders |
|
|
(2,015,918 |
) |
|
|
(151,361 |
) |
|
|
(2,167,279 |
) |
| Comprehensive Loss |
|
|
(2,014,909 |
) |
|
|
(151,361 |
) |
|
|
(2,166,270 |
) |
| Loss per share |
|
$ |
(0.25 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.27 |
) |
The table below sets forth the condensed consolidated
statements of shareholders’ equity, including the balances originally reported, corrections and the as restated balances:
| |
|
For the six months ended June 30, 2017 |
|
| |
|
As Reported |
|
|
Correction |
|
|
As Restated |
|
| Net loss, for the six months ended June 30, 2017 |
|
$ |
(2,015,918 |
) |
|
$ |
(151,361 |
) |
|
$ |
(2,167,279 |
) |
| Accumulated Deficit, as of June 30, 2017 |
|
|
(99,495,455 |
) |
|
|
(151,361 |
) |
|
|
(99,646,816 |
) |
| Total Equity, as of June 30, 2017 |
|
|
5,115,510 |
|
|
|
(151,361 |
) |
|
|
4,964,149 |
|
The table below sets forth the condensed consolidated
statements of cash flows from operating activities, including the balances originally reported, corrections and the as restated
balances:
| |
|
For the six months ended June 30, 2017 |
|
| |
|
As Reported |
|
|
Correction |
|
|
As Restated |
|
| Net loss |
|
$ |
(2,015,918 |
) |
|
$ |
(151,361 |
) |
|
$ |
(2,167,279 |
) |
| (Increase)/decrease in trade receivables – related party |
|
|
(93,109 |
) |
|
|
125,001 |
|
|
|
31,892 |
|
| Increase in inventories |
|
|
(151,720 |
) |
|
|
(62,140 |
) |
|
|
(213,860 |
) |
| Increase/(decrease) in trade and other payables |
|
|
(50,222 |
) |
|
|
88,500 |
|
|
|
38,278 |
|
| Net cash used in operating activities |
|
|
(2,593,231 |
) |
|
|
- |
|
|
|
(2,593,231 |
) |
The restatement had no impact on cash flows
from investing activities or financing activities.
In addition to the restated condensed consolidated
financial statements, the information contained in Notes 3, 6, 7, 10, 13, 15, 16, 17, and 20 has been restated.
|