v3.25.2
Restatement of Previously Issued Financial Statements
12 Months Ended
Dec. 31, 2024
Accounting Changes and Error Corrections [Abstract]  
Restatement of Previously Issued Financial Statements

Note 2 – Restatement of Previously Issued Financial Statements

 

Management, in concurrence with the Company’s Audit Committee, concluded that the Company’s previously issued financial statements included in the Company’s previously issued audited year end financial information included in the Company’s Annual Report on Form 10-K for the annual period ended December 31, 2024 (“the Affected Financial Statements”) should no longer be relied upon. Details of the restated consolidated financial statements as of and for the period ended December 31, 2024 are provided below (“Restatement Items”). The Company evaluated the materiality of these errors both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality and SAB No. 108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements, and determined the effect of these corrections were material to the Affected Financial Statements. As a result of the material misstatements, the Company has restated our Affected Financial Statements, in accordance with ASC 250, Accounting Changes and Error Corrections.

 

The Restatement Items primarily reflect adjustments to correct errors with respect to the accounting for its preferred dividends and earnings per share.

 

The Company has also updated all accompanying footnotes and disclosures affected by the Restatement Items, within Note 9. Shareholders’ Equity (Deficit).

 

Summary Impact of Restatement Items

 

The following table presents the effect of the Restatement Items on the Company’s consolidated balance sheet for the period indicated:

 

   As Previously Reported   Restatement Adjustment   As Restated 
   As of December 31, 2024 
   As Previously Reported   Restatement Adjustment   As Restated 
ASSETS            
Current assets:               
Cash  $504,189   $-   $504,189 
Accounts receivable, net   28,030    -    28,030 
Prepaid expenses and other current assets   152,122    -    152,122 
Note receivable, net   -    -    - 
Assets of discontinued operations   -    -    - 
Total current assets   684,341    -    684,341 
                
Property and equipment, net   904,680    -    904,680 
                
Total assets  $1,589,021   $-   $1,589,021 
                
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)               
                
Current liabilities:               
Accounts payable and accrued expenses  $2,714,102   $3   $2,714,105 
Dividends payable   1,250,979    (755,458)   

495,521

 
Liabilities of discontinued operations   4,017,920    -    4,017,920 
Total current liabilities   7,983,001    (755,455)   

7,227,546

 
                
Commitment and Contingencies - Note 12   -    -    - 
                
Stockholders’ deficit:               
Preferred stock - $0.001 par value, 5,000,000 authorized, Preferred stock at September 30, 2024 and 4,550 at December 31, 2023 issued and outstanding.   51    -    51 
Common stock - $0.001 par value, 60,000,000 authorized; 2,013,199 at September 30, 2024 and 1,148,321 at December 31, 2023 issued and outstanding.   1,168    -    1,168 
Additional paid-in capital   58,588,953    

755,455

    

59,344,408

 
Accumulated deficit   (64,984,152)   -    (64,984,152)
Total stockholders’ deficit   (6,393,980)   

755,455

    (5,638,525)
                
Total liabilities and stockholders’ deficit  $1,589,021   $-   $1,589,021 

 

 

The following table presents the effect of the Restatement Items on the Company’s consolidated statement of operations for the year indicated:

 

   As Previously Reported   Restatement Adjustment   As Restated 
   Year Ended December 31, 2024 
   As Previously Reported   Restatement Adjustment   As Restated 
Revenues, net   72,050    -    72,050 
Cost of revenues   305,248    -    305,248 
Gross profit   (233,198)   -    (233,198)
                
Operating expenses:               
                
General and administrative   5,390,069    -    5,390,069 
Total operating expenses   5,390,069    -    5,390,069 
                
Operating loss   (5,623,267)   -    (5,623,267)
                
Other income (expense):               
Interest income   3,470    -    3,470 
Interest expense   (677,981)   -    (677,981)
Total other income (expenses)   (674,511)   -    (674,511)
                
Net loss before income taxes   (6,297,778)   -    (6,297,778)
                
Income taxes   -    -    - 
                
Net loss from continuing operations   (6,297,778)   -    (6,297,778)
                
Net income (loss) from discontinued operations   (2,748,049)   -    (2,748,049)
                
Net loss   (9,045,827)   -    (9,045,827)
                
Preferred dividends   (1,250,979)   (1,881,671)   (3,132,650)
                
Net loss available to common stockholders  $(10,296,806)  $(1,881,671)  $(12,178,477)
                
Net loss per share from continuing operations - Basic and diluted  $(4.01)  $(2.00)  $(6.01)
                
Income (Loss) per share from discontinued operations - Basic and diluted  $(1.75)  $-   $(1.75)
                
Net loss per share - Basic and diluted  $(5.76)  $(2.00)  $(7.76)
                
Weighted average common shares outstanding               
Basic and diluted   1,569,627    -    1,569,627 

 

The following table presents the effect of the Restatement Items on the Company’s consolidated statement of stockholders’ equity:

 

   Number of Shares   Par   Number of Shares   Par   Additional Paid-In-Capital   Accumulated Deficit   Total 
BALANCE - December 31, 2024   50,502   $51    2,029,832   $1,168   $58,588,953   $(64,984,152)  $(6,393,980)
Cumulative adjustments   -    -    -    -    

755,455

    -    

755,455

 
BALANCE - December 31, 2024 (As Restated)   50,502   $51    2,029,832   $1,168   $

59,344,408

   $(64,984,152)  $(5,638,525)

 

 

The following table presents the effect of the Restatement Items on the Company’s consolidated statement of cash flows:

 

   As Previously Reported   Restatement Adjustment   As Restated 
   Year Ended December 31, 2024 
   As Previously Reported   Restatement Adjustment   As Restated 
Cash flows from operating activities:               
Net loss  $(9,045,827)  $-   $(9,045,827)
Net income (loss) from discontinued operations   (2,748,049)   -    (2,748,049)
Net loss from continuing operations   (6,297,778)   -    (6,297,778)
Adjustments to reconcile net loss to net cash used in operating activities:               
Depreciation and amortization   139,182    -    139,182 
Interest expense - OID   640,000    -    640,000 
Share based compensation, net   35,415    -    35,415 
Changes in operating assets and liabilities:               
Accounts receivable   (28,030)   -    (28,030)
Prepaid expenses and other current assets   33,360    -    33,360 
Accounts payable and accrued expenses   5,063,810    -    5,063,810 
Net cash provided (used) in operating activities from continuing operations   (414,041)   -    (414,041)
Net cash provided (used) in operating activities from discontinued operations   (2,748,049)   -    (2,748,049)
Net cash used in operating activities   (3,162,090)   -    (3,162,090)
                
Cash flows from investing activities:               
Note receivable   (375,000)   -    (375,000)
Net cash used in investing activities   (375,000)   -    (375,000)
                
Cash flows from financing activities:               
Proceeds from issuance of preferred stock, net of offering costs   2,221,492    -    2,221,492 
Proceeds from notes payable   1,600,000    -    1,600,000 
Payments on finance lease obligation   (1,724)   -    (1,724)
Net cash provided in financing activities   3,819,768    -    3,819,768 
                
Net increase (decrease) in cash   282,678    -    282,678 
                
Cash, beginning of period   221,511    -    221,511 
                
Cash, end of period  $504,189   $-   $504,189 
                
Supplemental cash flow information:               
Interest paid  $-   $-   $- 
Income tax  $-   $-   $- 
                

Non-cash investing and financial activities:

               
Preferred stock conversion  $2   $-   $2 

Converted accrued C1 dividends

  $-   $

29,000

   $

29,000

 
Accrued dividends  $1,251,000   $(1,251,000)  $

-

 
Preferred dividends accrued – C-1 & C-2  $-   $306,000   $306,000 
Preferred dividends accrued – B-1  $-   $88,000   $88,000
Preferred dividends accrued converted into C-1  $-   $(218,000)  $(218,000)
Capitalized dividends – D, E, F & G  $-   $

2,738,000

   $

2,738,000

 
Settlement of notes receivable in connection with asset purchase agreement  $1,044,000   $-   $1,044,000