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Restatement of Previously Issued Unaudited Condensed Financial Statements

9 Months Ended

Sep. 30, 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 three and nine months ended September 30, 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 and nine months ended September 30, 2022:

● Payments, in the amount of $1,320,321, were improperly recorded in research and development expenses during the three months ended September 30, 2022. These amounts should have been recorded in prepaid expenses and other current assets as of September 30, 2022. Additionally, $130,826 was expensed during the three months ended September 30, 2022 related to the prior quarter restatements.

These errors, including the errors from the six months ended June 30, 2022, in the accounting for research and development expenses resulted in an understatement of prepaid assets and other current assets of $4,631,390 as of September 30, 2022, and an overstatement of operating expenses and net loss of $1,189,495 and $4,631,390 for the three and nine months ended September 30, 2022, respectively.. 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 three and nine months ended September 30, 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 and nine months ended September 30, 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 September 30, 2022
	(unaudited)
	As		Restatement		As
	Reported		Impacts		Restated
Assets
Current assets:
Cash and cash equivalents	$	31,987,091	$		$	31,987,091
Prepaid expenses and other current assets		499,947		4,631,390		5,131,337
Deferred clinical materials		—		—		—
Total current assets		32,487,038		4,631,390		37,118,428
Total assets	$	32,487,038	$	4,631,390	$	37,118,428
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,845,705	$		$	1,845,705
Accrued expenses		680,830				680,830
Total current liabilities		2,526,535		—		2,526,535
Total liabilities	$	2,526,535	$	—	$	2,526,535
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 September 30, 2022 and December 31, 2021, respectively		816				816
Additional paid-in capital		80,919,684				80,919,684
Accumulated deficit		(50,959,997)		4,631,390		(46,328,607)
Total stockholders' equity		29,960,503		4,631,390		34,591,893
Total liabilities and stockholders' equity	$	32,487,038	$	4,631,390	$	37,118,428


	Three Months Ended September 30, 2022
	As		Restatement		As
	Reported		Impacts		Restated
Operating expenses:
Research and development	$	5,313,033	$	(1,189,495)	$	4,123,538
General and administrative		2,361,299		—		2,361,299
Total operating expenses		7,674,332		(1,189,495)		6,484,837

Operating loss		(7,674,332)		1,189,495		(6,484,837)
Other income:
Interest income		52,886		—		52,886
Grant Income
Total other income		52,886		—		52,886

Loss before income taxes		(7,621,446)		1,189,495		(6,431,951)
Income tax expense (benefit)		—		—		—
Net loss	$	(7,621,446)	$	1,189,495	$	(6,431,951)
Basic and diluted loss per common share	$	(0.93)		—	$	(0.79)
Weighted average number of common shares outstanding, basic and diluted		8,163,923		—		8,163,923


	Nine Months Ended September 30, 2022
	As		Restatement		As
	Reported		Impacts		Restated
Operating expenses:
Research and development	$	14,938,532	$	(4,631,390)	$	10,307,142
General and administrative		7,403,817		—		7,403,817
Total operating expenses		22,342,349		(4,631,390)		17,710,959

Operating loss		(22,342,349)		4,631,390		(17,710,959)
Other income:
Interest income		108,559		—		108,559
Grant Income
Total other income		108,559		—		108,559

Loss before income taxes		(22,233,790)		4,631,390		(17,602,400)
Income tax expense (benefit)		—		—		—
Net loss	$	(22,233,790)	$	4,631,390	$	(17,602,400)
Basic and diluted loss per common share	$	(2.72)		—	$	(2.16)
Weighted average number of common shares outstanding, basic and diluted		8,161,787		—		8,161,787


	Nine Months Ended September 30, 2022
	As		Restatement	As
	Reported		Impacts	Restated
Cash flows from operating activities:
Net loss	$	(22,233,790)	4,631,390	$	(17,602,400)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		7,694,716	—		7,694,716
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(184,483)	(4,631,390)		(4,815,873)
Accounts payable		1,157,631	—		1,157,631
Accrued expenses		(137,610)	—		(137,610)
Net cash used in operating activities		(13,703,536)	—		(13,703,536)
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		(13,698,923)	—		(13,698,923)
Cash and cash equivalents, beginning of period		45,686,014	—		45,686,014
Cash and cash equivalents, end of period	$	31,987,091	—	$	31,987,091