| 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 |
|
|
$ |
— |
|
|