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RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 Months Ended

Sep. 30, 2021

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 — RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On February 28, 2022, the Company filed a Form 8-K/A disclosing that on February 17, 2022, the Company’s independent registered public accounting firm informed the Company of a material misstatement in the comparative interim financial statements for the quarter ended September 30, 2021 and 2020 (the “Restatement”) and that it will be required to restate its previously issued unaudited condensed consolidated financial statements for the three months ended September 30, 2021 and 2020 that were previously included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 15, 2021 (the “ Original Form 10-Q”).

NOTE 11 — RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Restatement

The following is a discussion of the restatement adjustments that were made to the Company’s previously issued September 30, 2021 financial statements.

In June 2020, members of MiT LLC created MiT Inc. to facilitate the Company’s initial public offering (“IPO”). Upon formation of MiT Inc., the Company issued an aggregate of 2,000,000 shares of common stock to members of MiT LLC . On July 7, 2021, the members of MiT LLC entered into an exchange agreement (the “Exchange Agreement”) whereby they exchanged their membership interests in MiT LLC for an aggregate of 2,350,000 shares of common stock in MiT Inc. As a result of the Exchange Agreement, the members of MiT LLC obtained ownership of approximately 79%, or 4,452,334 shares, of the outstanding shares of common stock of MiT Inc. on July 7, 2021. MiT LLC (the entity where the Company conducts its business) became a wholly-owned subsidiary of MiT Inc. (the SEC registrant).

The Company is required to account for the above-described transaction as a merger of entities under common ownership (also known as a “pooling of interests”) in accordance with Generally Accepted Accounting Principles. The Company previously filed its Original Form 10-Q incorrectly reflecting the accounting for the transaction prospectively as a reverse merger, where MiT LLC was designated as the accounting acquiror. The Company is amending and restating its condensed consolidated financial statements as of September 30, 2021 and June 30, 2021 and for the three months ended September 30, 2021 and 2020 to reflect the proper accounting for the merger of entities under common ownership. The effects of the Restatement as shown as adjustments in the below table, is to retroactively consolidate MiT Inc. and MiT LLC as if the merger of entities under common ownership occurred on July 1, 2020.

Impact on Condensed Consolidated Statement of Operations

The effect of the Restatement described above on the accompanying condensed consolidated statements of operations for the three months ended September 30, 2021 and 2020 is as follows:

Three Months Ended September 30, 2021:


	As Previously
	Reported		Adjustments		As Restated
Net sales	$	3,474		—	$	3,474
Cost of goods sold		2,752		—		2,752
Gross profit		722		—		722

Operating expenses:
Research and development		54		—		54
Selling and marketing		544		—		544
General and administrative		663		—		663
Total operating expenses		1,261		—		1,261
Operating loss		(539)				(539)
Other expenses:
Interest expense		37		1		38
Total other expense		37		1		38
Net loss	$	(576)	$	(1)	$	(577)


Weighted average shares outstanding: basic and diluted		9,809,264		—		10,254,686
Net loss per common share basic and diluted	$	(0.06)	$	—	$	(0.06)

NOTE 11 — RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Three Months Ended September 30, 2020:


	As Previously
	Reported		Adjustments		As Restated
Net sales	$	1,757		—	$	1,757
Cost of goods sold		1,304		—		1,304
Gross profit		453		—		453

Operating expenses:
Research and development		27		—		27
Selling and marketing		283		—		283
General and administrative		450		—		450
Total operating expenses		760		—		760
Operating loss		(307)				(307)
Other (income) expenses:
Unrealized gain		—		(20)		(20)
Interest expense		82		1		83
Total other (income) expense		82		(19)		63
Net loss	$	(389)	$	19	$	(370)


Weighted average shares outstanding: basic and diluted		5,666,667		—		5,568,660
Net loss per common share basic and diluted	$	(0.07)		—	$	(0.07)

NOTE 11 — RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The effect of the Restatement described above on the accompanying condensed consolidated balance sheets as of September 30, 2021 and June 30, 2021 is as follows:


	September 30,
	2021
	As
	Previously
	Reported		Adjustments		As Restated
Assets
Current Assets:
Cash and cash equivalents	$	11,029	$	1	$	11,030
Accounts receivable, net		898		—		898
Inventories, net		1,911		—		1,911
Prepaid expenses and other		642		—		642
Total Current Assets		14,480		1		14,481
Long-Term Assets:
Property, plant and equipment, net		8		—		8
Intangibles, net		911		—		911
Goodwill		287		—		287
Other assets		16		—		16
Total Long-Term Assets		1,222		—		1,222
Total Assets	$	15,702	$	1	$	15,703

Liabilities And Stockholders’ Equity (Deficit)
Current Liabilities:
Accounts payable	$	1,841	$	—	$	1,841
Accrued expenses		402		—		402
Customer deposits		2,709		—		2,709
Line of credit		—		—		—
Notes payable – current		110		—		110
Unearned warranty revenue		34		—		34
Total Current Liabilities		5,096		—		5,096

Long-Term Liabilities:
Notes payable, net of current portion		588		—		588
Deferred rent		25		—		25
Total Long-Term Liabilities		613		—		613
Total Liabilities		5,709		—		5,709
Stockholders’ Equity (Deficit)
Common stock, $0.00001 par value, 100,000,000 shares authorized, 10,636,278 shares issued and outstanding at September 30, 2021		—		—		—
Additional paid-in capital		10,172		2,139		12,311

Accumulated deficit		(179)		(2,138)		(2,317)
Total Stockholders’ Equity (Deficit)		9,993		1		9,994
Total Liabilities and Stockholders’ Equity (Deficit)	$	15,702	$	1	$	15,703

NOTE 11 — RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


	June 30,
	2021
	As
	Previously
	Reported		Adjustments		As Restated
Assets
Current Assets:
Cash and cash equivalents	$	1,269	$	1	$	1,270
Accounts receivable, net		454		—		454
Inventories, net		1,534		—		1,534
Prepaid expenses and other		86		9		95
Total Current Assets		3,343		10		3,353
Long-Term Assets:
Property, plant and equipment, net		21		—		21
Intangibles, net		935		—		935
Goodwill		287		—		287
Other assets		1,133		—		1,133
Total Long-Term Assets		2,376		—		2,376
Total Assets	$	5,719		10	$	5,729

Liabilities And Stockholders’ Equity (Deficit)
Current Liabilities:
Accounts payable	$	1,911		—	$	1,911
Accrued expenses		620		—		620
Customer deposits		1,339		—		1,339
Line of credit		590		—		590
Notes payable – related party		1,272		(1,272)		—
Notes payable – current		237		—		237
Unearned warranty revenue		34		—		34
Total Current Liabilities		6,003		(1,272)		4,731

Long-Term Liabilities:
Notes payable, net of current portion		1,702		—		1,702
Deferred rent		25		—		25
Total Long-Term Liabilities		1,727		—		1,727
Total Liabilities		7,730		(1,272)		6,458
Stockholders’ Equity (Deficit)
Common stock, $0.00001 par value, 100,000,000 shares authorized, 5,666,667 shares issued and outstanding at June 30, 2021		—		—		—
Additional paid-in capital		—		1,011		1,011
Members deficit		(2,011)		2,011		—
Accumulated deficit		—		(1,740)		(1,740)
Total Stockholders’ Equity (Deficit)		(2,011)		1,282		(729)
Total Liabilities and Stockholders’ Equity (Deficit)	$	5,719		10	$	5,729

NOTE 11 — RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The effect of the Restatement described above on the accompanying condensed consolidated statements of cash flows is as follows:


	Three months ended				Three months ended
	September 30,				September 30,
	2021				2021
	As Previously Reported		Adjustments		As Restated
Cash flows from operating activities:

Net loss	$	(576)	$	(1)	$	(577)
Adjustments to reconcile net loss to net cash used in operating activities:				—
Provision for doubtful accounts		(90)		—		(90)
Depreciation expense		13		—		13
Amortization expense		24		—		24
Stock option compensation expense		56		—		56
Changes in operating assets and liabilities
Accounts receivable		(354)		—		(354)
Inventories		(377)		—		(377)
Prepaid expenses and other		(554)		7		(547)
Accounts payable		(70)		—		(70)
Accrued expenses		(219)		2		(217)
Customer deposits		1,370		—		1,370
Net cash used in operating activities		(777)		8		(769)
Cash flows from financing activities
Cash acquired through Exchange Agreement		8		(8)		—
Net proceeds from initial public offering		12,360		—		12,360
Net payments on notes payable		(1,241)		—		(1,241)
Payments on line of credit		(590)		—		(590)
Net cash provided by financing activities		10,537		(8)		10,529
Net increase in cash and cash equivalents		9,760				9,760
Cash and cash equivalents, beginning of the period		1,269		1		1,270
Cash and cash equivalents, end of the period	$	11,029	$	1	$	11,030

NOTE 11 — RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


	Three months ended				Three months ended
	September 30,				September 30,
	2020				2020
	As Previously Reported		Adjustments		As Restated
Cash flows from operating activities:

Net loss	$	(389)	$	19	$	(370)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts		40		—		40
Depreciation expense		34		—		34
Amortization expense		24		—		24
Deferred rent		2		—		2
Unrealized gain on investments		—		(20)		(20)
Changes in operating assets and liabilities
Accounts receivable		171		—		171
Inventories		(25)		—		(25)
Prepaid expenses and other		(148)		1		(147)
Accounts payable		(167)		(1)		(168)
Accrued expenses		(133)		1		(132)
Unearned warranty revenue		(9)		—		(9)
Customer deposits		(249)		—		(249)
Net cash used in operating activities		(849)				(849)
Cash flows from financing activities
Net borrowings on notes payable		14		—		14
Payments on line of credit		(60)		—		(60)
Proceeds from private placement		784		—		784
Net cash provided by financing activities		738		—		738
Net decrease in cash and cash equivalents		(111)				(111)
Cash and cash equivalents, beginning of the period		1,058		1		1,059
Cash and cash equivalents, end of the period	$	947	$	1	$	948

NOTE 11 — RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The effects of the restatement described above on the accompanying condensed consolidated financial statements of stockholders’ equity is as follows:

(in thousands except share amounts)


	Common Stock				Additional Paid-In		Accumulated		LLC Members
	Shares	Amount		Capital		Deficit		Equity (Deficit)		Total

Balance as of July 1, 2020, as previously reported	—	$	—	$	—	$	—	$	(969)	$	(969)
Adjustment	—		—		—				969		969
Outstanding shares of MiT, Inc., as of July 1, 2020 (see note 1)	2,650,000		—		101		—		—		101
Share exchange (see note 1)	2,350,000		—		126		(1,095)		—		(969)
Balance as of July 1, 2020, as restated	5,000,000				227		(1,095)				(868)
Shares issued in Private placement	666,667				784						784
Net loss, as previously reported	—		—		—		(389)		—		(389)
Adjustment to net loss for restatement	—		—		—		19		—		19
Balance as of September 30, 2020, as restated	5,666,667	$	—	$	1,011	$	(1,465)	$	—	$	(454)

Balance as of July 1, 2021, as previously reported	—	$	—	$	—	$	—	$	(2,011)	$	(2,011)
Adjustment	5,666,667		—		1,011		(1,740)		2,011		1,282
Balance as of July 1, 2021, as restated	5,666,667		—		1,011		(1,740)		—		(729)
Reverse recapitalization, as previously reported	3,316,667		—		—		—		1,280		1,280
Adjustment	(3,316,667)		—		—		—		1,280		(1,280)
Common shares issued for LLC Members’ interest, as previously reported	2,350,000		—		(1,128)		397		731		—
Adjustment	(2,350,000)		—		1,128		(397)		(731)		—
Shares of common stock issued for cash, net of costs	4,830,000		—		11,244		—		—		11,244
Cashless exercise of warrants	139,611		—		—		—		—		—
Stock option compensation expense	—		—		56		—		—		56
Net loss, as previously reported	—		—		—		(576)		—		(576)
Adjustment to net loss for restatement	—		—		—		(1)		—		(1)
Balance as of September 30, 2021, as restated	10,636,278	$	—	$	12,311	$	(2,317)	$	—	$	9,994