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Restatement of Previously Issued Unaudited Condensed Financial Statements

3 Months Ended

Mar. 31, 2023

Restatement of Previously Issued Unaudited Condensed Financial Statements

Restatement of Previously Issued Unaudited Condensed Financial Statements

(11) Restatement of Previously Issued Unaudited Condensed Financial Statements

As disclosed in the Form 10-K filed with the SEC on March 31, 2023, during its preparation of its 2022 audited combined financial statements and notes thereto, the Company concluded that there were material research and development expenses and related balance sheet errors in its previously issued unaudited condensed financial statements for the quarter ended March 31, 2022, primarily relating to the timing of payments for research and development expenses and recognition of expenses.

The Company noted the following items were improperly expensed during the three months ended March 31, 2022:

●

Payments, in the amount of $800,840, were improperly recorded in research and development expenses during the three months ended March 31, 2022. These amounts should have been recorded as prepaid expenses and other current assets as of March 31, 2022.

●

Research and development expense amounts totaling $140,690 were not recorded during the three months ended March 31, 2022. This amount should have been recorded in accrued expenses and other current liabilities as of March 31, 2022.

These errors in the accounting for research and development expenses resulted in an understatement of prepaid assets and other current assets of $800,840, accrued expenses and other current liabilities of $140,690 and an overstatement of operating expenses and net loss of $660,150 as of and for the three months ended March 31, 2022

See Note 12 – Restatement of Previously Issued Unaudited Condensed Financial Statements, to the Financial Statements in the Form 10-K for additional information related to the restatements.

In connection with the filing of this Quarterly Report on Form 10-Q, the Company has restated the accompanying interim Condensed Financial Statements for the quarter ended March 31, 2022 to correct for the impact of the misstatements. The applicable notes to the accompanying financial statements have also been corrected to reflect the impact of the restatement. Below, we have presented a reconciliation from the "As Reported" to the "As Restated" amounts for each of our interim Condensed Financial Statements as of and for the three months ended March 31, 2022.

The amounts "As Reported" are from the "As Reported" amounts as disclosed in Note 12 – Restatement of Previously Issued Unaudited Condensed Financial Statements (Unaudited) in the Form 10-K.


	As of March 31, 2022
	(unaudited)
	As		Restatement		As
	Reported		Impacts		Restated
Assets
Current assets:
Cash and cash equivalents	$	42,668,838	$	—	$	42,668,838
Prepaid expenses and other current assets		627,902		800,840		1,428,742
Deferred clinical materials		—		—		—
Total current assets		43,296,740		800,840		44,097,580
Total Assets	$	43,296,740	$	800,840	$	44,097,580
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	928,997	$	—	$	928,997
Accrued expenses		327,435		140,690		468,125
Total current liabilities		1,256,432		140,690		1,397,122
Total liabilities	$	1,256,432	$	140,690	$	1,397,122
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock – $0.0001 par value, 2,000,000 shares authorized and 0 shares issued and outstanding		—		—		—
Common stock – $0.0001 par value, 35,000,000 shares authorized and 8,163,923 and 8,100,570 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		816		—		816
Additional paid-in capital		76,659,912		—		76,659,912
Accumulated deficit		(34,620,420)		660,150		(33,960,270)
Total stockholders’ equity		42,040,308		660,150		42,700,458
Total liabilities and stockholders’ equity	$	43,296,740	$	800,840	$	44,097,580


	Three Months Ended March 31, 2022
	As		Restatement		As
	Reported		Impacts		Restated
Operating expenses:
Research and development	$	2,809,791	$	(660,150)	$	2,149,641
General and administrative		3,104,071		—		3,104,071
Total operating expenses		5,913,862		(660,150)		5,253,712

Operating loss		(5,913,862)		660,150		(5,253,712)
Other income:
Interest income		19,649		—		19,649
Grant Income		—		—		—
Total other income		19,649		—		19,649

Loss before income taxes		(5,894,213)		660,150		(5,234,063)
Income tax expense (benefit)		—		—		—
Net loss	$	(5,894,213)	$	660,150	$	(5,234,063)
Basic and diluted loss per common share	$	(0.72)		—	$	(0.64)
Weighted average number of common shares outstanding, basic and diluted		8,157,445		—		8,157,445


	Three Months Ended March 31, 2022
	As			As
	Reported		Restatement Impacts	Restated
Cash flows from operating activities:
Net loss	$	(5,894,213)	660,150	$	(5,234,063)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		3,434,944	—		3,434,944
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(312,438)	(800,840)		(1,113,278)
Accounts payable		240,923	—		240,923
Accrued expenses		(491,005)	140,690		(350,315)
Net cash used in operating activities		(3,021,789)	—		(3,021,789)
Cash flows from financing activities:
Proceeds from exercise of stock options		4,613	—		4,613
Net cash used in financing activities		4,613	—		4,613
Net (decrease) increase in cash and cash equivalents		(3,017,176)	—		(3,017,176)
Cash and cash equivalents, beginning of period		45,686,014	—		45,686,014
Cash and cash equivalents, end of period	$	42,668,838	—	$	42,668,838