| Restatement of Condensed Consolidated Financial Statements |
| Note 4. |
Restatement of Condensed Consolidated Financial Statements (unaudited) |
|
Subsequent to filing of its Form 10-Q
on August 14, 2020, the Company during the course of its review of the financial statements for September 30, 2020 identified
several accounting issues which resulted in the overstatement of revenues and understatement of expenses during the three
months ended June 30, 2020. These errors resulted in accounts receivable being overstated by $446,000, prepaid expenses being
overstated by $123,000, accrued expenses being understated by $175,000 in the consolidated balance sheet in the Original
Report. The errors further resulted in revenues being overstated by $1,487,000, cost of revenue being overstated by $779,000
and gross profit being overstated by $708,000, total operating expenses being understated by $75,000, other income (expense)
being overstated $35,000, and income from discontinued operations being overstated 5,000 in the consolidated statements of
comprehensive income (loss) in the Original Report. With the errors being corrected in this Amended Report, net income (loss)
decreased by $753,000 to $240,000. Additionally, the changes resulted in a decrease of basic and diluted net income (loss)
per common share of $0.41.
As a result, the Company restated its previously
issued unaudited consolidated financial statements, included in its Amendment to the Company’s Quarterly Report on Form 10-Q/A
for the three months ended June 30, 2020.
The following tables present the effects
of the restatement on the Company’s condensed consolidated balance sheet as of June 30, 2020, the condensed consolidated
statements of comprehensive income for the three months ended June 30, 2020 and the condensed consolidated cash flows for the three
months ended June 30, 2020. In addition to the tables presented below, the Company’s accumulated deficit per the condensed
consolidated statements of stockholders’ equity as of June 30, 2020 increased from ($171,253,000) to ($172,006,000) as a
result of the decrease in net income from $993,000 to $240,000 for the three months ended June 30, 2020.
Condensed Consolidated Balance Sheet
| |
|
June 30, 2020 |
|
| |
|
As Originally Reported |
|
|
Adjustments |
|
|
As Restated |
|
| |
|
(in thousands) |
|
|
(in thousands) |
|
|
(in thousands) |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
4,551 |
|
|
$ |
– |
|
|
$ |
4,551 |
|
| Accounts receivable, net |
|
|
5,220 |
|
|
|
(446 |
) |
|
|
4,774 |
|
| Inventories, net |
|
|
4,193 |
|
|
|
– |
|
|
|
4,193 |
|
| Prepaid expenses and other current assets |
|
|
2,937 |
|
|
|
(123 |
) |
|
|
2,814 |
|
| Current portion of deferred consideration, net of discount |
|
|
188 |
|
|
|
– |
|
|
|
188 |
|
| Total current assets |
|
|
17,089 |
|
|
|
(569 |
) |
|
|
16,520 |
|
| Operating lease right-of-use assets |
|
|
343 |
|
|
|
– |
|
|
|
343 |
|
| Property and equipment, net |
|
|
372 |
|
|
|
– |
|
|
|
372 |
|
| Deferred consideration, net of discount, less current portion |
|
|
779 |
|
|
|
– |
|
|
|
779 |
|
| Other assets |
|
|
69 |
|
|
|
– |
|
|
|
69 |
|
| Total assets |
|
$ |
18,652 |
|
|
$ |
(569 |
) |
|
$ |
18,083 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
4,133 |
|
|
$ |
– |
|
|
$ |
4,133 |
|
| Accrued expenses and other current liabilities |
|
|
743 |
|
|
|
175 |
|
|
|
918 |
|
| Deferred revenue |
|
|
150 |
|
|
|
– |
|
|
|
150 |
|
| Deferred revenue Invekra |
|
|
46 |
|
|
|
– |
|
|
|
46 |
|
| Operating lease liabilities |
|
|
135 |
|
|
|
– |
|
|
|
135 |
|
| Current portion of long-term debt |
|
|
265 |
|
|
|
– |
|
|
|
265 |
|
| Total current liabilities |
|
|
5,472 |
|
|
|
175 |
|
|
|
5,647 |
|
| Operating lease liabilities-non-current |
|
|
220 |
|
|
|
1 |
|
|
|
221 |
|
| Long-term deferred revenue Invekra |
|
|
240 |
|
|
|
– |
|
|
|
240 |
|
| Long-term debt |
|
|
1,310 |
|
|
|
– |
|
|
|
1,310 |
|
| Total liabilities |
|
|
7,242 |
|
|
|
176 |
|
|
|
7,418 |
|
| Commitments and Contingencies (Note 7) |
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Convertible preferred stock, $0.0001 par value; 714,286 shares authorized at June 30, 2020 and March 31, 2020, respectively, 0 and 1.55 shares issued and outstanding at June 30, 2020 and March 31, 2020, respectively |
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Common stock, $0.0001 par value; 24,000,000 shares authorized at June 30, 2020 and March 31, 2020, 1,966,958 and 1,777,483 shares issued and outstanding at June 30, 2020 and March 31, 2020, respectively |
|
|
2 |
|
|
|
– |
|
|
|
2 |
|
| Additional paid-in capital |
|
|
188,112 |
|
|
|
– |
|
|
|
188,112 |
|
| Accumulated deficit |
|
|
(171,253 |
) |
|
|
(753 |
) |
|
|
(172,006 |
) |
| Accumulated other comprehensive loss |
|
|
(5,451 |
) |
|
|
8 |
|
|
|
(5,443 |
) |
| Total stockholders’ equity |
|
|
11,410 |
|
|
|
(745 |
) |
|
|
10,665 |
|
| Total liabilities and stockholders’ equity |
|
$ |
18,652 |
|
|
$ |
(569 |
) |
|
$ |
18,083 |
|
Condensed Consolidated Statement of Comprehensive Income (Loss)
| |
|
For the Three Months Ended June 30, 2020 |
|
| |
|
As Originally Reported |
|
|
Adjustments |
|
|
As Restated |
|
| |
|
(in thousands) |
|
|
(in thousands) |
|
|
(in thousands) |
|
| |
|
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
7,254 |
|
|
$ |
(1,487 |
) |
|
$ |
5,767 |
|
| Cost of revenues |
|
|
4,291 |
|
|
|
(779 |
) |
|
|
3,512 |
|
| Gross profit |
|
|
2,963 |
|
|
|
(708 |
) |
|
|
2,255 |
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Research and development |
|
|
476 |
|
|
|
– |
|
|
|
476 |
|
| Selling, general and administrative |
|
|
2,369 |
|
|
|
75 |
|
|
|
2,444 |
|
| Total operating expenses |
|
|
2,845 |
|
|
|
75 |
|
|
|
2,920 |
|
| Income (Loss) from operations |
|
|
118 |
|
|
|
(783 |
) |
|
|
(665 |
) |
| Interest expense |
|
|
(2 |
) |
|
|
– |
|
|
|
(2 |
) |
| Interest income |
|
|
2 |
|
|
|
– |
|
|
|
2 |
|
| Other (expense) income, net |
|
|
(156 |
) |
|
|
35 |
|
|
|
(121 |
) |
| Gain on sale of assets |
|
|
77 |
|
|
|
– |
|
|
|
77 |
|
| Income (loss) from continuing operations |
|
$ |
39 |
|
|
$ |
(748 |
) |
|
$ |
(709 |
) |
| Income from discontinued operations (Note 5) |
|
|
954 |
|
|
|
(5 |
) |
|
|
949 |
|
| Net income |
|
$ |
993 |
|
|
$ |
(753 |
) |
|
$ |
240 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income per share: basic |
|
|
|
|
|
|
|
|
|
|
|
|
| Continuing operations |
|
$ |
0.02 |
|
|
$ |
(0.41 |
) |
|
$ |
(0.39 |
) |
| Discontinued operations |
|
|
0.52 |
|
|
|
– |
|
|
|
0.52 |
|
| |
|
$ |
0.54 |
|
|
$ |
(0.41 |
) |
|
$ |
0.13 |
|
| Net income per share: diluted |
|
|
|
|
|
|
|
|
|
|
|
|
| Continuing operations |
|
$ |
0.02 |
|
|
$ |
(0.40 |
) |
|
$ |
(0.38 |
) |
| Discontinued operations |
|
|
0.52 |
|
|
|
(0.01 |
) |
|
|
0.51 |
|
| |
|
$ |
0.54 |
|
|
$ |
(0.41 |
) |
|
$ |
0.13 |
|
| Weighted-average number of shares used in per common share calculations: basic |
|
|
1,839 |
|
|
|
– |
|
|
|
1,839 |
|
| Weighted-average number of shares used in per common share calculations: diluted |
|
|
1,843 |
|
|
|
– |
|
|
|
1,843 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
993 |
|
|
$ |
(753 |
) |
|
$ |
240 |
|
| Foreign currency translation adjustments |
|
|
159 |
|
|
|
8 |
|
|
|
167 |
|
| Comprehensive income |
|
$ |
1,152 |
|
|
$ |
(745 |
) |
|
$ |
407 |
|
Condensed Consolidated Statement of Cash Flows
| |
|
For the Three Months Ended June 30, 2020 |
|
| |
|
As Originally Reported |
|
|
Adjustments
|
|
|
As Restated
|
|
| |
|
(in thousands) |
|
|
(in thousands) |
|
|
(in thousands) |
|
| Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
993 |
|
|
$ |
(753 |
) |
|
$ |
240 |
|
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
53 |
|
|
|
– |
|
|
|
53 |
|
| Stock-based compensation |
|
|
63 |
|
|
|
– |
|
|
|
63 |
|
| Gain on sale of assets |
|
|
(872 |
) |
|
|
– |
|
|
|
(872 |
) |
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts receivable |
|
|
(724 |
) |
|
|
446 |
|
|
|
(278 |
) |
| Inventories |
|
|
(1,945 |
) |
|
|
– |
|
|
|
(1,945 |
) |
| Deferred consideration |
|
|
31 |
|
|
|
– |
|
|
|
31 |
|
| Prepaid expenses and other current assets |
|
|
(323 |
) |
|
|
123 |
|
|
|
(200 |
) |
| Operating lease right-of-use assets |
|
|
49 |
|
|
|
– |
|
|
|
49 |
|
| Accounts payable |
|
|
1,660 |
|
|
|
– |
|
|
|
1,660 |
|
| Accrued expenses and other current liabilities |
|
|
(1,122 |
) |
|
|
175 |
|
|
|
(947 |
) |
| Operating lease liabilities |
|
|
(46 |
) |
|
|
– |
|
|
|
(46 |
) |
| Deferred revenue |
|
|
(99 |
) |
|
|
– |
|
|
|
(99 |
) |
| Net cash (used in) provided by operating activities |
|
|
(2,282 |
) |
|
|
(9 |
) |
|
|
(2,291 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Purchases of property and equipment |
|
|
(52 |
) |
|
|
– |
|
|
|
(52 |
) |
| Deposits |
|
|
(4 |
) |
|
|
– |
|
|
|
(4 |
) |
| Proceeds from sale of assets |
|
|
610 |
|
|
|
– |
|
|
|
610 |
|
| Net cash provided by (used in) investing activities |
|
|
554 |
|
|
|
– |
|
|
|
554 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from exercise of common stock purchase warrants |
|
|
1,490 |
|
|
|
– |
|
|
|
1,490 |
|
| Proceeds from new debt |
|
|
1,310 |
|
|
|
– |
|
|
|
1,310 |
|
| Principal payments on capital leases |
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Principal payments on long-term debt |
|
|
(216 |
) |
|
|
– |
|
|
|
(216 |
) |
| Net cash provided by (used in) financing activities |
|
|
2,584 |
|
|
|
– |
|
|
|
2,584 |
|
| Effect of exchange rate on cash and cash equivalents |
|
|
4 |
|
|
|
9 |
|
|
|
13 |
|
| Net increase in cash and cash equivalents |
|
|
860 |
|
|
|
– |
|
|
|
860 |
|
| Cash and cash equivalents, beginning of period |
|
|
3,691 |
|
|
|
– |
|
|
|
3,691 |
|
| Cash and cash equivalents, end of period |
|
$ |
4,551 |
|
|
$ |
– |
|
|
$ |
4,551 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash paid for interest |
|
$ |
2 |
|
|
$ |
– |
|
|
$ |
2 |
|
|