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RESTATEMENT | 9 Months Ended
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Sep. 30, 2018
Accounting Changes and Error Corrections [Abstract] |
Restatement | RESTATEMENT Throughout 2019, the Company made efforts to remediate its material weaknesses in internal control as of December 31, 2018, including investing in new personnel that have expertise in a broad array of accounting topics. As a result of these investments and remediation efforts, the Company reevaluated the accounting for a broad array of items and discovered numerous immaterial errors. On March 12, 2020, our Management and the Audit Committee of the Board of Directors, following discussion with our predecessor independent registered public accounting firm, concluded that the Company's previously filed financial statements as of and for three and nine months ended September 30, 2018, were no longer able to be relied upon as the result of the aggregation of errors identified by Management and the Company’s new accounting personnel during 2019 related to the following: As identified during preparation of the fiscal year 2019 Form 10-K:
• | During the first quarter of 2020, while reconciling the 2019 income tax provision back to the corresponding records, we determined that when employees exercised non-qualified stock options, we did not collect and remit the employee’s income and payroll taxes on the exercises and did not accrue and remit the employer portion of payroll taxes. Due to statutory requirements, we have joint and several liability on the amounts that we did not withhold from employees and remit to the proper taxing authorities. While further investigating the issue, we determined that during 2018 we did not report the correct amount of income to employees on their form W-2 for both non-qualified and incentive stock option exercises and misclassified some non-qualified stock option exercises as incentive stock option exercises.
◦ | For the three and nine months ended September 30, 2018 and year ended December 31, 2018, the total aggregated impact included an increase of approximately $51,000 to operating expenses, an increase of approximately $713,000 to other losses and an increase to net loss of approximately $764,000.
• | Other minor items primarily related to the appropriate cutoff of transactions at the balance sheet date and the duplicate recording of a State income tax payment.
◦ | For the three and nine months ended September 30, 2018, the total aggregated impact included an increase of approximately $59,000 to operating expenses, operating loss and net loss.
A reconciliation of the originally reported amounts to the restated amounts for the adjustments noted above for each of the affected periods is presented below. Consolidated Balance Sheet as of September 30, 2018:
(In thousands) | As Originally Reported |  | Adjustments |  | As Restated
ASSETS |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 40,663 |  |  | $ | — |  |  | $ | 40,663 |
Short term investments | 55,480 |  |  | — |  |  | 55,480 |
Trade accounts receivable, net | 4,080 |  |  | 59 |  |  | 4,139 |
Inventories, net | 6,037 |  |  | — |  |  | 6,037 |
Prepaid expenses and other current assets | 627 |  |  | — |  |  | 627 |
Total current assets | 106,887 |  |  | 59 |  |  | 106,946 |
Property and equipment, net | 5,842 |  |  | — |  |  | 5,842 |
Purchased technology and license rights, net | 32 |  |  | — |  |  | 32 |
Goodwill | 185 |  |  | — |  |  | 185 |
Deposits | 46 |  |  | — |  |  | 46 |
Other assets | 122 |  |  | — |  |  | 122 |
Total assets | $ | 113,114 |  |  | $ | 59 |  |  | $ | 113,173 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 2,348 |  |  | $ | — |  |  | $ | 2,348 |
Accrued severance and related | 95 |  |  | — |  |  | 95 |
Accrued payroll | 163 |  |  | — |  |  | 163 |
Accrued expenses and other current liabilities | 19,066 |  |  | 764 |  |  | 19,830 |
Total current liabilities | 21,672 |  |  | 764 |  |  | 22,436 |
Related party note payable | 140 |  |  | — |  |  | 140 |
Total liabilities | 21,812 |  |  | 764 |  |  | 22,576 |
STOCKHOLDERS' EQUITY |  |  |  |  |
Common stock, $0.001 par value; 75,000,000 shares authorized; 33,763,019 issued and 33,620,444 outstanding | 33 |  |  | — |  |  | 33 |
Additional paid-in capital | 51,798 |  |  | — |  |  | 51,798 |
Retained earnings | 39,471 |  |  | (705 | ) |  | 38,766 |
Total stockholders’ equity | 91,302 |  |  | (705 | ) |  | 90,597 |
Total liabilities and stockholders’ equity | $ | 113,114 |  |  | $ | 59 |  |  | $ | 113,173 |
Consolidated Statement of Operations for the three months ended September 30, 2018:
(In thousands) | As Originally Reported |  | Adjustments |  | As Restated
Sales | $ | 3,672 |  |  | $ | — |  |  | $ | 3,672 |
Cost of sales | 1,151 |  |  | — |  |  | 1,151 |
Gross profit | 2,521 |  |  | — |  |  | 2,521 |
Other costs and expenses: |  |  |  |  |
Research and development | 613 |  |  | — |  |  | 613 |
Professional services | 628 |  |  | — |  |  | 628 |
Salaries and related costs | 2,119 |  |  | 51 |  |  | 2,170 |
Selling, general and administrative | 1,957 |  |  | (59 | ) |  | 1,898 |
Total other costs and expenses | 5,317 |  |  | (8 | ) |  | 5,309 |
Loss from operations | (2,796 | ) |  | 8 |  |  | (2,788 | )
Interest income (expense), net | 105 |  |  | — |  |  | 105 |
Other losses | (155 | ) |  | (713 | ) |  | (868 | )
Total other losses, net | (50 | ) |  | (713 | ) |  | (763 | )
Loss from continuing operations before income taxes | (2,846 | ) |  | (705 | ) |  | (3,551 | )
Income tax benefit | (2,408 | ) |  | — |  |  | (2,408 | )
Net loss from continuing operations | (438 | ) |  | (705 | ) |  | (1,143 | )
Income from discontinued operations, net of tax | 540 |  |  | — |  |  | 540 |
Gain on sale of the Core Business, net of tax | 69,072 |  |  | — |  |  | 69,072 |
Total income from discontinued operations, net of tax | 69,612 |  |  | — |  |  | 69,612 |
Net income (loss) | $ | 69,174 |  |  | $ | (705 | ) |  | $ | 68,469 |
Loss per share from continuing operations |  |  |  |  |
Basic and Diluted | $ | (0.01 | ) |  | $ | (0.02 | ) |  | $ | (0.03 | )
Income per share from discontinued operations |  |  |  |  |
Basic | 2.09 |  |  | — |  |  | 2.09 |
Diluted | 1.99 |  |  | — |  |  | 1.99 |
Income (loss) per share from all operations |  |  |  |  |
Basic | 2.08 |  |  | (0.02 | ) |  | 2.06 |
Diluted | 1.98 |  |  | (0.02 | ) |  | 1.96 |
Weighted average number of shares outstanding basic | 33,275 |  |  | 33,275 |  |  | 33,275 |
Weighted average number of shares outstanding diluted | 34,934 |  |  | 34,934 |  |  | 34,934 |
Consolidated Statement of Operations for the nine months ended September 30, 2018:
(In thousands) | As Originally Reported |  | Adjustments |  | As Restated
Sales | $ | 10,760 |  |  | $ | — |  |  | $ | 10,760 |
Cost of sales | 3,490 |  |  | — |  |  | 3,490 |
Gross profit | 7,270 |  |  | — |  |  | 7,270 |
Other costs and expenses: |  |  |  |  |
Research and development | 1,890 |  |  | — |  |  | 1,890 |
Professional services | 1,815 |  |  | — |  |  | 1,815 |
Salaries and related costs | 5,734 |  |  | 51 |  |  | 5,785 |
Selling, general and administrative | 6,280 |  |  | (59 | ) |  | 6,221 |
Total other costs and expenses | 15,719 |  |  | (8 | ) |  | 15,711 |
Loss from operations | (8,449 | ) |  | 8 |  |  | (8,441 | )
Interest income (expense), net | 33 |  |  | — |  |  | 33 |
Other losses | (155 | ) |  | (713 | ) |  | (868 | )
Change in fair value of derivative liabilities | 20 |  |  | — |  |  | 20 |
Total other losses, net | (102 | ) |  | (713 | ) |  | (815 | )
Loss from continuing operations before income taxes | (8,551 | ) |  | (705 | ) |  | (9,256 | )
Income tax benefit | (2,384 | ) |  | — |  |  | (2,384 | )
Net loss from continuing operations | (6,167 | ) |  | (705 | ) |  | (6,872 | )
Income from discontinued operations, net of tax | 5,062 |  |  | — |  |  | 5,062 |
Gain on sale of the Core Business, net of tax | 69,072 |  |  | — |  |  | 69,072 |
Total income from discontinued operations, net of tax | 74,134 |  |  | — |  |  | 74,134 |
Net income (loss) | $ | 67,967 |  |  | $ | (705 | ) |  | $ | 67,262 |
Loss per share from continuing operations |  |  |  |  |
Basic and Diluted | $ | (0.19 | ) |  | $ | (0.02 | ) |  | $ | (0.21 | )
Income per share from discontinued operations |  |  |  |  |
Basic | 2.25 |  |  | — |  |  | 2.25 |
Diluted | 2.19 |  |  | — |  |  | 2.19 |
Income (loss) per share from all operations |  |  |  |  |
Basic | 2.06 |  |  | (0.02 | ) |  | 2.04 |
Diluted | 2.00 |  |  | (0.02 | ) |  | 1.98 |
Weighted average number of shares outstanding basic | 33,014 |  |  | 33,014 |  |  | 33,014 |
Weighted average number of shares outstanding diluted | 33,952 |  |  | 33,952 |  |  | 33,952 |

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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