General form of registration statement for all companies including face-amount certificate companies

RESTATEMENT

v3.19.1
RESTATEMENT
12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
RESTATEMENT

NOTE 13 – RESTATEMENT

 

In connection with the year-end financial statement closing process, the Company determined that its previously issued financial statements included in its Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2018 (“Restated Period”) should be restated due to an error in recording the conversion of debt on September 28, 2018 and the omission of recognizing a modification of debt on July 11, 2018. With the modification on July 11, 2018, the Company should have recorded a loss on extinguishment of debt in the amount of $44,348 and reclassified the derivative liability at its fair value in the amount of $1,141,995 to additional paid in capital (see NOTE 7 for details). On September 28, 2018, the debt conversion was originally recorded as a gain of $3,976,992, however it should have been recorded in common stock and additional paid in capital as a result of the July 11, 2018 debt modification.

 

Impact of this Restatement

 

Based on management’s review and discussions with our external auditors, the Company’s has concluded that the misclassification included on its financial statements filed in our Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2018 (“Q3 10-Q”) requires restatement, included herewith.

 

Condensed Consolidated Balance Sheet 

(Unaudited) 

             
    September 30, 2018  
    As Previously Reported     As Restated     Restatement  
Total assets   $ 1,206,063     $ 1,206,063     $  
                         
Total liabilities   $ 11,101,777     $ 11,101,777     $  
                         
Stockholders’ Deficit:                        
Preferred stock                  
Common stock   $ 5,046       5,046        
Additional paid in capital     14,334,570       17,616,073       (3,281,503 )
Subscriptions receivable     (1,958 )     (1,958 )      
Accumulated deficit     (24,233,372 )     (27,514,875 )     3,281,503  
Total stockholders’ deficit     (9,895,714 )     (9,895,714 )      
Total liabilities and stockholders’ deficit   $ 1,206,063     $ 1,206,063     $  

 

Condensed Consolidated Statement of Operations 

(Unaudited) 

 
   

Three Months Ended 

September 30, 2018 

 
    As Previously Reported     As Restated     Restatement  
Gross profit   $ 28,749     $ 28,749     $  
                         
Operating loss   $ (2,072,459 )   $ (2,072,459 )   $  
                         
Other income (expense)                        
Interest expense     (2,381,602 )     (1,618,834 )     (762,768 )
Change in fair value of derivative liability     22,931             22,931  
Gain (loss) on conversion of debt     3,976,992       (44,348 )     4,021,340  
Interest income     6,606       6,606        
Total other income (expense)     1,624,927       (1,656,576 )     3,281,503  
Net loss   $ (447,532 )   $ (3,729,035 )   $ 3,281,503  
Net loss per share – basic and diluted   $ (0.02 )   $ (0.16 )   $ (0.14 )

 

Condensed Consolidated Statement of Operations 

(Unaudited)  

 

   

Nine Months Ended

September 30, 2018 

 
    As Previously Reported     As Restated     Restatement  
Gross profit   $ 83,180     $ 83,180     $  
                         
Operating loss   $ (3,953,657 )   $ (3,953,657 )   $  
                         
Other income (expense)                        
Interest expense     (2,932,674 )     (2,169,906 )     (762,768 )
Change in fair value of derivative liability     (952,971 )     (975,902 )     22,931  
Gain (loss) on conversion of debt     3,976,992       (44,348 )     4,021,340  
Interest income     13,416       13,416        
Total other income (expense)     104,763       (3,176,740 )     3,281,503  
Net loss   $ (3,848,894 )   $ (7,130,397 )   $ 3,281,503  
Net loss per share – basic and diluted   $ (0.18 )   $ (0.34 )   $ (0.16 )

 

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

   

Nine Months Ended 

September 30, 2018

 
    As Previously Reported     As Restated     Restatement  
CASH FLOWS FROM OPERATING ACTIVITIES                         
Net loss   $ (3,848,894 )   $ (7,130,397 )   $ 3,281,503  
Adjustments to reconcile net lost to net cash flows used in operating activities:                        
Depreciation     15,405       15,405        
Allowance for doubtful accounts     (7,914 )     (7,914 )      
Amortization of debt discount and deferred financing costs     907,891       145,123       762,768  
Amortization of intangible assets     77       77        
Change in fair value of derivative liability     952,971       975,902       (22,931 )
Loss (gain) on conversion     (3,976,992 )     44,348       (4,021,340 )
Changes in operating assets and liabilities:                        
Accounts receivable     1,929       1,929        
Inventory     (137,725 )     (137,725 )      
Other current assets     (110,113 )     (110,113 )      
Accounts payable     45,355       45,355        
Accrued expenses and other current liabilities     1,515,384       1,515,384        
Net cash flows used in operating activities     (4,642,626 )     (4,642,626 )      
                         
CASH FLOWS FROM INVESTING ACTIVITIES                        
Net cash flows used in investing activities     (185,780 )     (185,780 )      
                         
CASH FLOWS FROM FINANCING ACTIVITIES                         
Net cash flows provided by financing activities     4,884,593       4,884,593        
                         
Increase in cash and cash equivalents     56,187       56,187        
Cash and cash equivalents, beginning of period     460,064       460,064        
Cash and cash equivalents, end of period   $ 516,251     $ 516,251     $