Note 8 - Revision of Prior Period Financial Statement Presentation

During the preparation of the current period consolidated financial statements, management reevaluated the classification of the Company’s Series A Convertible Preferred Stock under ASC 480, Distinguishing Liabilities from Equity (including ASC 480-10-S99). The Company determined that the Series A Preferred Stock contains contingent redemption features upon the occurrence of Deemed Liquidation Events that are not solely within the Company’s control. Accordingly, the instrument should be classified as temporary (mezzanine) equity rather than permanent equity.

The Company has concluded that the prior classification constituted an immaterial error. After evaluation under SEC Staff Accounting Bulletin Nos. 99 and 108 and ASC 250, management (in consultation with the Board of Directors) determined that the previously issued financial statements were not materially misstated. The correction is therefore being made through a revision of the comparative prior-period amounts in the current filing (The previously issued financial statements and reports will not be amended, but historical amounts presented in the current and future filings will be recast to be consistent with the current presentation.

As a result of the revision, the $750,000 carrying amount of the Series A Preferred Stock has been reclassified from permanent equity to temporary (mezzanine) equity on the consolidated balance sheets as of the prior period end dates. This revision had no effect on the Company’s consolidated statements of operations, comprehensive income, cash flows, total assets, total liabilities, or total equity for any period presented.