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Correction of Errors in Previously Reported Consolidated Financial Statements

3 Months Ended

Mar. 31, 2025

Correction of Errors in Previously Reported Consolidated Financial Statements [Abstract]

CORRECTION OF ERRORS IN PREVIOUSLY REPORTED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — CORRECTION OF ERRORS IN PREVIOUSLY REPORTED CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to the issuance of the interim financial information as of and for the period ended September 30, 2024, the Company identified an error related to the accounting for issuance costs associated with convertible notes. Specifically, approximately $2.8 million of non-cash, non-operating stock-based expense related to bonus shares was inadvertently omitted and not reflected in the financial statements for the first quarter of 2024. See Note 10 Convertible Notes for more details.

As a result, the Company has revised its previously issued financial statements to reflect the correction of this material error, recording the issuance cost in issuance of common stock and warrants within non-operating losses. The revision had no impact on total stockholders’ equity or cash flows, but it did increase net loss and increase additional paid-in capital in the affected periods.

The revised quarterly financial information is included in this Quarterly Report on Form 10-Q in the tables that follow. The restatements will also be reflected in the comparative financial statements included in future filings of our 2024 unaudited condensed consolidated and combined financial statements within our 2025 Quarterly Reports on Form 10-Q.

All references to common stock, warrants, and restricted stock units, as well as related per-share amounts in these condensed consolidated and combined financial statements, have been retrospectively adjusted to reflect the 1-for-50 reverse stock split effected on May 12, 2025.

The impact of the restatement on the condensed consolidated and combined statement of operations for the three months ended March 31, 2024 is as follows:

		March 31, 2024 (Unaudited)
		As Reported				Adjustments				As Restated
Other Income (Expense)
Change in fair value of derivative liabilities		$	(8,182,500	)		$	-			$	(8,182,500	)
Issuance of common stock and warrants			(17,820,998	)			(2,769,719	)			(20,590,717	)
Interest income			311				-				311
Interest expense			(3,739	)			-				(3,739	)
Other income (expense)			(1	)			-				(1	)
Total other income (expense)			(26,006,927	)			(2,769,719	)			(28,776,646	)

Net income (loss) before provision for income taxes			(29,766,263	)			(2,769,719	)			(32,535,982	)

Provision for income taxes			-				-				-

Net income (loss)		$	(29,766,263	)		$	(2,769,719	)		$	(32,535,982	)

Weighted average number of shares of common stock outstanding, basic			1,563,968				21,081				1,585,049
Basic net income (loss) per share of common stock		$	(19.03	)		$	(1.50	)		$	(20.53	)
Weighted average number of shares of common stock outstanding, diluted			1,563,968				21,081				1,585,049
Diluted net income (loss) per share of common stock		$	(19.03	)		$	(1.50	)		$	(20.53	)

The impact of the restatement on the condensed consolidated and combined statement of changes in stockholders’ (deficit) equity for the three months ended March 31, 2024 is as follows:

		Three Months Ended March 31, 2024
		Additional								Stockholders’
		Paid-in				Accumulated				Equity
		Capital				Deficit				(Deficit)
As Reported
Balance at January 1, 2024, after retroactive application of recapitalization		$	28,850,985			$	(25,445,506	)		$	3,412,459
Convertible note – stock issuance loss			—				—				—
Net loss			—				(29,766,263	)			(29,766,263	)
Balance at March 31, 2024		$	79,158,563			$	(119,717,769	)		$	(40,630,758	)

Adjustments
Balance at January 1, 2024, after retroactive application of recapitalization			—				—				—
Convertible note – stock issuance loss			2,769,719				—				2,769,719
Net loss			—				(2,769,719	)			(2,769,719	)
Balance at March 31, 2024			2,769,719				(2,769,719	)			—

As Restated
Balance at January 1, 2024, after retroactive application of recapitalization			28,850,985				(25,445,506	)			3,412,459
Convertible note – stock issuance loss			2,769,719				—				2,769,719
Net loss			—				(32,535,982	)			(32,535,982	)
Balance at March 31, 2024		$	81,928,282			$	(122,487,488	)		$	(40,630,758	)

The impact of the restatement on the condensed consolidated and combined statement of cash flows for the three months ended March 31, 2024 is as follows:

		March 31, 2024 (Unaudited)
		As Reported				Adjustments				As Restated
Cash Flows From Operating Activities:
Net income (loss)		$	(29,766,263	)		$	(2,769,719	)		$	(32,535,982	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			94,392				—				94,392
Stock based compensation			1,359,000				—				1,359,000
Equity compensation expense			—				—				—
Non-cash interest expense			—				—				—
Change in fair value of derivative liabilities			8,182,500				—				8,182,500
Issuance of common stock and warrants			17,820,998				2,769,719				20,590,717

There was no impact on net cash used in operating activities or within any line items within investing and financing activities.