Summary of increases (decreases) in Net Loss for the years ended December 31, 2012 and 2011
| December 31, | ||||||||
| 2012 | 2011 | |||||||
| Net loss, as previously reported | $ | (28,526,261 | ) | $ | (72,795,119 | ) | ||
| Net adjustments | ||||||||
| Research and development | (3,124,100 | ) | 199,465 | |||||
| General and administrative expenses | (980,636 | ) | 3,589,750 | |||||
| Adjustments to fair value of unsettled warrant obligation | (1,953,118 | ) | 13,813,101 | |||||
| Net loss, restated | $ | (34,584,115 | ) | $ | (55,192,803 | ) | ||
| Basic loss per share: | ||||||||
| Net loss, as previously reported | $ | (0.01 | ) | $ | (0.05 | ) | ||
| Net adjustments | ||||||||
| Research and development | 0.00 | 0.00 | ||||||
| General and administrative expenses | (0.01 | ) | 0.00 | |||||
| Adjustments to fair value of unsettled warrant obligation | (0.00 | ) | 0.02 | |||||
| Net loss, restated | $ | (0.02 | ) | $ | (0.03 | ) | ||
| Diluted loss per share: | ||||||||
| Net loss, as previously reported | $ | (0.01 | ) | $ | (0.05 | ) | ||
| Net adjustments | ||||||||
| Research and development | 0.00 | 0.00 | ||||||
| General and administrative expenses | (0.01 | ) | 0.00 | |||||
| Adjustments to fair value of unsettled warrant obligation | (0.00 | ) | 0.02 | |||||
| Net loss, restated | $ | (0.02 | ) | $ | (0.03 | ) | ||
| Weighted average shares used in computing net loss per share: | ||||||||
| Basic | 2,086,619,741 | 1,582,095,095 | ||||||
| Diluted | 2,086,619,741 | 1,582,095,095 | ||||||
Restatement adjustments on our Accumulated deficit as of January 1, 2011
| Amount | ||||
| Accumulated deficit, January 1, 2011, as previously reported | $ | (180,949,523 | ) | |
| Restatement adjustments: | ||||
| Adjustments to Additional Paid in Capital for tainted shares | 1,064,499 | |||
| Adjustments to fair value of unsettled warrant obligation | (13,145,436 | ) | ||
| Accumulated deficit, January 1, 2011, as restated | $ | (193,030,460 | ) | |
Consolidated Balance Sheet impact as of December 31, 2012
| As of December 31, 2012 | ||||||||||||
| As Previously Reported | Adjustments | As Restated | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 7,241,852 | $ | – | $ | 7,241,852 | ||||||
| Grants receivable | 96,425 | – | 96,425 | |||||||||
| Deferred royalty fees, current portion | 82,435 | – | 82,435 | |||||||||
| Prepaid expenses | 132,044 | – | 132,044 | |||||||||
| Total current assets | 7,552,756 | – | 7,552,756 | |||||||||
| Property and equipment, net | 175,256 | – | 175,256 | |||||||||
| Deferred royalty fees, less current portion | 170,216 | – | 170,216 | |||||||||
| Deposits | 29,856 | – | 29,856 | |||||||||
| Deferred costs, net | 568,458 | – | 568,458 | |||||||||
| Total assets | $ | 8,496,542 | $ | – | $ | 8,496,542 | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 2,956,743 | $ | – | $ | 2,956,743 | ||||||
| Accrued expenses | 3,210,908 | – | 3,210,908 | |||||||||
| Accrued settlement | 6,807,891 | – | 6,807,891 | |||||||||
| Convertible promissory notes, current portion | 256,850 | – | 256,850 | |||||||||
| Senior secured convertible promissory notes, current portion | 2,110,000 | – | 2,110,000 | |||||||||
| Embedded conversion option liabilities, current portion | 460,668 | – | 460,668 | |||||||||
| Unsettled warrant obligation | – | 3,791,953 | 3,791,953 | |||||||||
| Loss contingency accrual | 6,176,787 | (2,506,500 | ) | 3,670,287 | ||||||||
| Deferred revenue, current portion | 224,935 | – | 224,935 | |||||||||
| Total current liabilities | 22,204,782 | 1,285,453 | 23,490,235 | |||||||||
| Senior secured convertible promissory notes, less current portion | 3,165,000 | – | 3,165,000 | |||||||||
| Embedded conversion option liabilities, less current portion | 507,033 | – | 507,033 | |||||||||
| Warrant and option derivative liabilities | 972,381 | – | 972,381 | |||||||||
| Deferred revenue, less current portion | 1,907,574 | – | 1,907,574 | |||||||||
| Total liabilities | 28,756,770 | 1,285,453 | 30,042,223 | |||||||||
| Series A-1 redeemable preferred stock | 1,598,533 | – | 1,598,533 | |||||||||
| Stockholders' Deficit: | ||||||||||||
| Preferred stock, Series B | 1 | – | 1 | |||||||||
| Preferred stock, Series C | 2 | – | 2 | |||||||||
| Common stock | 2,232,721 | – | 2,232,721 | |||||||||
| Additional paid-in capital | 289,842,597 | (748,978 | ) | 289,093,619 | ||||||||
| Promissory notes receivable, net | (31,622,696 | ) | – | (31,622,696 | ) | |||||||
| Accumulated deficit | (282,311,386 | ) | (536,475 | ) | (282,847,861 | ) | ||||||
| Total stockholders' deficit | (21,858,761 | ) | (1,285,453 | ) | (23,144,214 | ) | ||||||
| Total liabilities and stockholders' deficit | $ | 8,496,542 | $ | – | $ | 8,496,542 | ||||||
Consolidated Statement of Operations impact for the year ended December 31, 2012
| For the Year Ended December 31, 2012 | ||||||||||||
| As Previously Reported | Adjustments | As Restated | ||||||||||
| Revenue | $ | 466,487 | $ | – | $ | 466,487 | ||||||
| Cost of revenue | 117,436 | – | 117,436 | |||||||||
| Gross profit | 349,051 | – | 349,051 | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | 11,034,836 | 3,124,100 | 14,158,936 | |||||||||
| General and administrative expenses | 10,452,230 | 980,636 | 11,432,866 | |||||||||
| Total operating expenses | 21,487,066 | 4,104,736 | 25,591,802 | |||||||||
| Loss from operations | (21,138,015 | ) | (4,104,736 | ) | (25,242,751 | ) | ||||||
| Non-operating income (expense): | ||||||||||||
| Interest income | 15,581 | – | 15,581 | |||||||||
| Interest expense and late fees | (1,104,602 | ) | – | (1,104,602 | ) | |||||||
| Finance gain (cost) | (3,671,970 | ) | (3,343,500 | ) | (7,015,470 | ) | ||||||
| Gain (loss) on disposal of fixed assets | (17,138 | ) | – | (17,138 | ) | |||||||
| Fines and penalties | (3,500,000 | ) | – | (3,500,000 | ) | |||||||
| Adjustments to fair value of unsettled warrant obligation | – | 1,390,382 | 1,390,382 | |||||||||
| Adjustments to fair value of derivatives | 889,883 | – | 889,883 | |||||||||
| Total non-operating expense | (7,388,246 | ) | (1,953,118 | ) | (9,341,364 | ) | ||||||
| Loss before provision for income tax | (28,526,261 | ) | (6,057,854 | ) | (34,584,115 | ) | ||||||
| Provision for income tax | – | – | – | |||||||||
| Net loss | $ | (28,526,261 | ) | $ | (6,057,854 | ) | $ | (34,584,115 | ) | |||
| Loss per share: | ||||||||||||
| Basic | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | |||
| Diluted | (0.01 | ) | (0.01 | ) | (0.02 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 2,086,619,741 | 2,086,619,741 | 2,086,619,741 | |||||||||
| Diluted | 2,086,619,741 | 2,086,619,741 | 2,086,619,741 | |||||||||
Consolidated Statement of Operations impact for the year ended December 31, 2011
| For the Year Ended December 31, 2011 | ||||||||||||
| As Previously Reported | Adjustments | As Restated | ||||||||||
| Revenue | $ | 506,419 | $ | – | $ | 506,419 | ||||||
| Cost of revenue | 343,950 | – | 343,950 | |||||||||
| Gross profit | 162,469 | – | 162,469 | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | 9,953,224 | (199,465 | ) | 9,753,759 | ||||||||
| General and administrative expenses | 11,025,459 | (3,589,750 | ) | 7,435,709 | ||||||||
| Loss on settlement of litigation | 294,144 | – | 294,144 | |||||||||
| Total operating expenses | 21,272,827 | (3,789,215 | ) | 17,483,612 | ||||||||
| Loss from operations | (21,110,358 | ) | 3,789,215 | (17,321,143 | ) | |||||||
| Non-operating income (expense): | ||||||||||||
| Interest income | 35,114 | – | 35,114 | |||||||||
| Interest expense and late fees | (1,510,693 | ) | – | (1,510,693 | ) | |||||||
| Finance gain (cost) | (60,834,170 | ) | 5,850,000 | (54,984,170 | ) | |||||||
| Loss attributable to equity method investments | (820,000 | ) | – | (820,000 | ) | |||||||
| Adjustments to fair value of unsettled warrant obligation | – | 7,963,101 | 7,963,101 | |||||||||
| Adjustments to fair value of derivatives | 11,444,988 | – | 11,444,988 | |||||||||
| Total non-operating expense | (51,684,761 | ) | 13,813,101 | (37,871,660 | ) | |||||||
| Loss before provision for income tax | (72,795,119 | ) | 17,602,316 | (55,192,803 | ) | |||||||
| Provision for income tax | – | – | – | |||||||||
| Net loss | $ | (72,795,119 | ) | $ | 17,602,316 | $ | (55,192,803 | ) | ||||
| Loss per share: | ||||||||||||
| Basic | $ | (0.05 | ) | $ | 0.02 | $ | (0.03 | ) | ||||
| Diluted | (0.05 | ) | 0.02 | (0.03 | ) | |||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 1,582,095,095 | 1,582,095,095 | 1,582,095,095 | |||||||||
| Diluted | 1,582,095,095 | 1,582,095,095 | 1,582,095,095 | |||||||||
Consolidated Statement of Stockholders’ Deficit Impact
| For the Year Ended December 31, | ||||||||
| 2012 | 2011 | |||||||
| Stockholders’ deficit, as previously reported | $ | (21,858,761 | ) | $ | (46,123,844 | ) | ||
| Effect of restatement adjustment on net loss for the current period | (6,057,854 | ) | 17,602,316 | |||||
| Adjustment to additional paid-in capital for the current period | (748,978 | ) | (7,953,597 | ) | ||||
| Cumulative adjustment to accumulated deficit | 5,521,379 | (12,080,937 | ) | |||||
| Total restatement adjustments | (1,285,453 | ) | (2,432,218 | ) | ||||
| Stockholders’ deficit, as restated | $ | (23,144,214 | ) | $ | (48,556,062 | ) | ||
Consolidated Statement of Cash Flows Impact
| For the Year Ended December 31, | ||||||||||||||||
| 2012 | 2011 | |||||||||||||||
| As Previously Reported | As Restated | As Previously Reported | As Restated | |||||||||||||
| Net loss | $ | (28,526,261 | ) | $ | (34,584,115 | ) | $ | (72,795,119 | ) | $ | (55,192,803 | ) | ||||
| Stock based compensation | 3,691,149 | 7,795,885 | 3,856,501 | 67,286 | ||||||||||||
| Adjustments to fair value of unsettled warrant obligation | – | (1,390,382 | ) | – | (7,963,101 | ) | ||||||||||
| Non-cash financing costs | 3,671,970 | 7,015,470 | 60,834,170 | 54,984,170 | ||||||||||||
| Net cash used in operating activities | (14,606,357 | ) | ||||||||||||||