Restatement of Previously Issued Financial Statements | 3 Months Ended |
Sep. 30, 2014 |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Changes and Error Corrections [Text Block] | Note 2- Restatement of Previously Issued Financial Statements |
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In connection with the preparation of our unaudited financial statements for the quarter ended December 31, 2014, we determined that in preparing our audited financial statements for the year ended June 30, 2014, we inadvertently overlooked the anti-dilution provisions in certain warrants issued in connection with the company’s private placements of securities. Specifically, the warrants issued contained certain anti-dilution ratchet provisions that provided for an adjustment to the exercise price of the warrants if the company issued any stock equivalent securities at a lower price in the future while the option was still outstanding. Adjustments to settlement amounts by future equity offerings or contractual terms of other equity-linked financial instruments issued in a subsequent period are not inputs to the fair value of a fixed-for-fixed opinion on equity shares. Accordingly, the warrants are not considered indexed to its own stock and thus must be accounted for as derivative liabilities which require initial measurement at fair value and adjustment to fair value in subsequent periods. The Company determined that the error caused a material understatement of its derivative liability for the year ended June 30, 2014. As a result of this error, we restated our audited financial statements for the year ended June 30, 2014 and are restating the unaudited financial statements for the three months ended September 30, 2014 and 2013 contained herein. |
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For the year ended June 30, 2014 this restatement increased the Company’s derivative liability and decreased Additional Paid in Capital by $5,235,682, decreased Accumulated deficit by $504,858 and reduced the Company’s loss for the year ended June 30, 2014 by $504,858. The results of the restatement for the three months ended September 30, 2013 were reflected in the financial statements for the Year ended June 30, 2014. |
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In connection with the preparation of our unaudited financial statements for the quarter ended December 31, 2014 we determined that in preparing our unaudited financial statements for the quarter ended September 30, 2014, we inadvertently did not recognize a single compound embedded derivative included with the issuer’s redemption rights in the Series C Convertible Debenture and the holders conversion right to receive coupon interest in common stock of the issuer. The Series C Convertible Debentures were issued on July 2, 2014. The Company has restated its financial statements for the three month period ended September 30, 2014 to recognize Discount on Series C Debentures of $3,031,125 arising from$1,152,297 relative fair value of the Company’s Series A Preferred shares issued as interest and the fair value of $1,879,428 of the embedded derivative which was recognized as an increase in to derivative liability. Additionally $115,490 of interest expense was recognized due to amortization of the Discount on Series C Convertible Debentures. This resulted in a net adjustment of the originally reported discount of $1,373,479. |
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The combined impacts of all the above adjustments to the line items in our unaudited financial statements for the periods covered by this Form 10Q/A are provided in the tables below: |
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Schedule A – September 30, 2014 |
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Nanoviricides, Inc. |
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Balance Sheets |
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| | September 30, 2014 | | Net Adjustment | | September 30,2014 | | |
| | (Unaudited) | | | | (Unaudited) | | |
| | Original | | | | Restated | | |
| | | | | | | | | | |
ASSETS | | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | |
Cash and cash equivalents | | $ | 41,120,652 | | | | $ | 41,120,652 | | |
Prepaid expenses | | | 59,099 | | | | | 59,099 | | |
Prepaid expenses - related parties | | | 424,402 | | | | | 424,402 | | |
Other current assets | | | - | | | | | - | | |
| | | | | | | | | | |
Total Current Assets | | | 41,604,153 | | - | | | 41,604,153 | | |
| | | | | | | | | | |
PROPERTY AND EQUIPMENT | | | | | | | | | | |
Property and equipment | | | 7,299,254 | | | | | 7,299,254 | | |
Accumulated depreciation | | | -1,291,318 | | | | | -1,291,318 | | |
| | | | | | | | | | |
Property and equipment, net | | | 6,007,936 | | | | | 6,007,936 | | |
| | | | | | | | | | |
TRADEMARK | | | | | | | | | | |
Trademark | | | 458,954 | | | | | 458,954 | | |
Accumulated amortization | | | -52,889 | | | | | -52,889 | | |
| | | | | | | | | | |
Trademark, net | | | 406,065 | | | | | 406,065 | | |
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SECURITY DEPOSIT | | | 1,000,000 | | | | | 1,000,000 | | |
| | | | | | | | | | |
Total Assets | | $ | 49,018,154 | | | | $ | 49,018,154 | | |
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LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | |
Accounts payable | | $ | 155,978 | | | | $ | 155,978 | | |
Accounts payable – related parties | | | 331,448 | | | | | 331,448 | | |
Accrued expenses | | | 265,463 | | | | | 265,463 | | |
| | | | | | | | | | |
Total Current Liabilities | | | 752,889 | | | | | 752,889 | | |
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Debentures payable - Series B Net of discount | | | 4,195,296 | | | | | 4,195,296 | | |
Derivative Liability - Series B Debentures | | | 3,785,385 | | | | | 3,785,385 | | |
Derivative Liability - Warrants | | | - | | 4,558,581 | | | 4,558,581 | | |
Debentures Payable - Series C, Net of discount | | | 3,457,244 | | -1,373,479 | | | 2,083,765 | | |
Derivative Liability - Series C Debentures | | | - | | 1,453,122 | | | 1,453,122 | | |
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Total Long Term Liabilities | | | 11,437,925 | | 4,638,224 | | | 16,076,149 | | |
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Total Liabilities | | | 12,190,814 | | | | | 16,829,038 | | |
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COMMITMENTS AND CONTINGENCIES | | | | | | | | | | |
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STOCKHOLDERS' EQUITY: | | | | | | | | | | |
Series A Convertible Preferred stock, $0.001 par value, 4,000,000 shares designated, 3,387,795 and 3,193,079 shares issued and outstanding, respectively | | | 3,389 | | | | | 3,389 | | |
Series B Convertible Preferred stock, $0.001 par value, 10,000,000 shares designated, 0, and 0 shares issued and outstanding, respectively | | | - | | | | | - | | |
Series C Convertible Preferred stock, $0.001 par value, 10,000,000 shares designated, 0 and 0 shares issued and outstanding, respectively | | | - | | | | | - | | |
Common stock, $0.001 par value; 85,714,285 shares authorized; 56,535,135 and 54,620,993 shares issued and outstanding, respectively | | | 56,535 | | | | | 56,535 | | |
Additional paid-in capital | | | 89,412,744 | | -6,233,849 | | | 83,178,895 | | |
Accumulated deficit | | | -52,645,328 | | 1,595,625 | | | -51,049,703 | | |
| | | | | | | | | | |
Total Stockholders' Equity | | | 36,827,340 | | -4,638,224 | | | 32,189,116 | | |
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Total Liabilities and Stockholders' Equity | | $ | 49,018,154 | | | | $ | 49,018,154 | | |
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Nanoviricides, Inc. |
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Statements of Operations |
(Unaudited) |
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| | For the Three Months | | | | For the Three Months | | |
| | Ended | | | | Ended | | |
| | September 30, 2014 | | Net Adjustments | | 30-Sep-14 | | |
| | (Unaudited) | | | | (Unaudited ) | | |
| | Original | | | | Restated | | |
OPERATING EXPENSES | | | | | | | | | | |
Research and development | | $ | 811,107 | | | | $ | 811,107 | | |
Refund credit research and development costs | | | - | | | | | - | | |
General and administrative | | | 876,026 | | | | | 876,026 | | |
| | | | | | | | | | |
Total operating expenses | | | 1,687,133 | | | | | 1,687,133 | | |
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LOSS FROM OPERATIONS | | | -1,687,133 | | | | | -1,687,133 | | |
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OTHER INCOME (EXPENSE): | | | | | | | | | | |
Interest income, net | | | 39,323 | | | | | 39,323 | | |
Interest expense | | | -245,000 | | | | | -245,000 | | |
Discount on convertible debentures | | | -260,578 | | -12,640 | | | -273,218 | | |
Beneficial conversion feature of convertible debentures | | | - | | | | | - | | |
Change in fair market value of derivatives | | | 1,914,318 | | 1,103,407 | | | 3,017,725 | | |
| | | | | | | | | | |
Other income (expense), net | | | 1,448,063 | | 1,090,767 | | | 2,538,830 | | |
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INCOME (LOSS) BEFORE INCOME TAXES | | | -239,070 | | 1,090,767 | | | 851,697 | | |
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INCOME TAX PROVISION | | | - | | | | | - | | |
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NET INCOME (LOSS) | | $ | -239,070 | | 1,090,767 | | $ | 851,697 | | |
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NET INCOME (LOSS) PER COMMON SHARE | | | | | | | | | | |
- BASIC AND DILUTED: | | $ | -0.004 | | | | $ | 0.015 | | |
| | | | | | | | | | |
Weighted average common shares outstanding | | | | | | | | | | |
- basic and diluted | | | 55,576,200 | | | | | 55,576,200 | | |
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Nanoviricides, Inc. |
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Statements of Cash Flows |
(Unaudited) |
|
| | For the Three Months | | | | Fot the Three Months | | |
| | Ended | | | | Ended | | |
| | September 30, 2014 | | Net Adjustment | | Septembr 30,2014 | | |
| | | | | | | | | | |
| | Original | | | | Restated | | |
| | | | | | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | |
Net loss | | $ | -239,070 | | 1,090,767 | | $ | 851,697 | | |
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Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | | | |
Preferred shares issued for license | | | | | | | | | | |
Series A Preferred shares issued as compensation | | | 72,980 | | | | | 72,980 | | |
Common shares and warrants issued for services | | | 38,250 | | | | | 38,250 | | |
Common shares issued for interest | | | | | | | | | | |
Warrants granted to scientific advisory board | | | 22,292 | | | | | 22,292 | | |
Amortization of deferred compensation | | | | | | | | | | |
Depreciation | | | 51,332 | | | | | 51,332 | | |
Amortization | | | 2,193 | | | | | 2,193 | | |
Change in fair value of derivative liability | | | -1,914,318 | | -1,103,407 | | | -3,017,725 | | |
Amortization of deferred financing expenses | | | | | | | | - | | |
Discount convertible debentures | | | 260,578 | | 12,640 | | | 273,218 | | |
Beneficial conversion feature of convertible debentures | | | | | | | | | | |
Changes in operating assets and liabilities: | | | | | | | | | | |
Prepaid expenses | | | 48,990 | | | | | 48,990 | | |
Prepaid expenses - Related parties | | | 284,819 | | | | | 284,819 | | |
Other current assets | | | 150,000 | | | | | 150,000 | | |
Deferred expenses | | | | | | | | | | |
Accounts payable - trade | | | -220,468 | | | | | -220,468 | | |
Accounts payable - related parties | | | -427,228 | | | | | -427,228 | | |
Accrued expenses | | | 173,625 | | | | | 173,625 | | |
Accrued payroll to officers and related payroll tax expense | | | | | | | | | | |
| | | | | | | | | | |
NET CASH USED IN OPERATING ACTIVITIES | | | -1,696,025 | | - | | | -1,696,025 | | |
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CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | |
Security deposit | | | - | | | | | | | |
Purchase of property and equipment | | | -562,512 | | | | | -561,512 | | |
Purchase of trademark | | | - | | | | | - | | |
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NET CASH USED IN INVESTING ACTIVITIES | | | -562,512 | | | | | -562,512 | | |
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CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Proceeds from issuance of convertible debentures | | | | | | | | | | |
Proceeds from issuance of Convertible Preferred Series B stock, net | | | | | | | | | | |
Proceeds from issuance of Convertible Preferred Series C stock, net | | | | | | | | | | |
Proceeds from issuance of common stock and warrants in connection with private placements of common stock, net of issuance costs | | | | | | | | | | |
Proceeds from exercise of stock options | | | | | | | | | | |
Proceeds from exercise of warrants | | | 6,682,297 | | | | | 6,682,297 | | |
Collection of stock subscriptions received | | | | | | | | | | |
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NET CASH PROVIDED BY FINANCING ACTIVITIES | | | 6,682,297 | | | | | 6,682,297 | | |
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NET CHANGE IN CASH | | | 4,423,760 | | - | | | 4,693,131 | | |
| | | | | | | | | | |
Cash at beginning of period | | | 36,696,892 | | | | | 36,696,892 | | |
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Cash at end of period | | $ | 41,120,652 | | | | $ | 41,120,652 | | |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | | | | | | | | | | |
Interest paid | | $ | - | | | | $ | - | | |
Income tax paid | | $ | - | | | | $ | - | | |
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NON CASH FINANCING AND INVESTING ACTIVITIES: | | | | | | | | | | |
Common stock issued for services rendered | | $ | 38,250 | | | | | 38,250.00 | | |
Common stock for interest | | | | | | | | | | |
Preferred stock issued as compensation | | | 72,980 | | | | | 72,980.00 | | |
Series A Preferred stock issued as discount on Debentures | | | 1,645,606 | | | | | 1,645,606.00 | | |
Stock options issued to the officers as compensation | | | | | | | | | | |
Stock warrants granted to scientific advisory board | | | 22,292 | | | | | 22,292.00 | | |
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Schedule B – September 30, 2013 |
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Nanoviricides, Inc. |
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Balance Sheets |
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| | September 30, 2013 | | | | | September 30,2013 | |
| | (Unaudited) | | | | | (Unaudited) | |
| | As Original Reported | | Net Adjustment | As Restated | |
| | | | | | | | | | |
ASSETS | | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | |
Cash and cash equivalents | | $ | 19,200,882 | | $ | | | $ | 19,200,882 | |
Prepaid expenses | | | 805,145 | | | | | | 805,145 | |
| | | | | | | | | | |
Total Current Assets | | | 20,006,027 | | | | | | 20,006,027 | |
| | | | | | | | | | |
PROPERTY AND EQUIPMENT | | | | | | | | | | |
Property and equipment | | | 3,779,636 | | | | | | 3,779,636 | |
Accumulated depreciation | | | -1,089,471 | | | | | | -1,089,471 | |
| | | | | | | | | | |
Property and equipment, net | | | 2,690,165 | | | | | | 2,690,165 | |
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TRADEMARK | | | | | | | | | | |
Trademark | | | 458,954 | | | | | | 458,954 | |
Accumulated amortization | | | -44,114 | | | | | | -44,114 | |
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Trademark, net | | | 414,840 | | | | | | 414,840 | |
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SECURITY DEPOSIT | | | 2,000,000 | | | | | | 2,000,000 | |
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Total Assets | | $ | 25,111,032 | | | | | $ | 25,111,032 | |
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LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | |
Accounts payable | | $ | 408,058 | | | | | $ | 408,058 | |
Accounts payable – related parties | | | 1,139,825 | | | | | | 1,139,825 | |
Accrued expenses | | | 319,612 | | | | | | 319,612 | |
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Total Current Liabilities | | | 1,867,495 | | | | | | 1,867,495 | |
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Debentures payable | | | 3,603,554 | | | | | | 3,603,554 | |
Derivative liability - Debenture | | | 7,888,736 | | | | | | 7,888,736 | |
Derivative liability - Warrants | | | - | | | 3,443,717 | | | 3,443,717 | |
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Total Long Term Liabilities | | | 11,492,290 | | | 3,443,717 | | | 14,936,007 | |
| | | | | | | | | | |
Total Liabilities | | | 13,359,785 | | | 3,443,717 | | | 16,803,502 | |
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COMMITMENTS AND CONTINGENCIES | | | | | | | | | | |
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STOCKHOLDERS' EQUITY: | | | | | | | | | | |
Series A Convertible Preferred stock, $0.001 par value, 2,990,000 shares designated, 2,990,000 shares issued and outstanding | | | 2,990 | | | | | | 2,990 | |
Series B Convertible Preferred stock, $0.001 par value, 10,000,000 shares designated, 0, and 0 shares issued and outstanding, respectively | | | - | | | | | | - | |
Series C Convertible Preferred stock, $0.001 par value, 10,000,000 shares designated, 0 and 0 shares issued and outstanding, respectively | | | - | | | | | | - | |
Common stock, $0.001 par value; 85,714,285 shares authorized; 50,028,701 and 47,026,173 shares issued and outstanding, respectively | | | 50,029 | | | | | | 50,029 | |
Additional paid-in capital | | | 56,270,792 | | | -3,154,975 | | | 53,115,817 | |
Deficit accumulated during the development stage | | | -44,572,564 | | | -288,742 | | | -44,861,306 | |
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Total Stockholders' Equity | | | 11,751,247 | | | -3,443,717 | | | 8,307,530 | |
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Total Liabilities and Stockholders' Equity | | $ | 25,111,032 | | $ | | | $ | 25,111,032 | |
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Nanoviricides, Inc. |
|
Statements of Operations |
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| | For the Three Months | | | | For the Three Months | | |
| | Ended | | | | Ended | | |
| | September 30, 2013 | | | | September 30, 2013 | | |
| | (Unaudited) | | | | (Unaudited) | | |
| | As Original Reported | | Net Adjustment | | As Restated | | |
OPERATING EXPENSES | | | | | | | | | | |
Research and development | | $ | 1,174,221 | | | | $ | 1,174,221 | | |
Refund credit research and development costs | | | - | | | | | - | | |
General and administrative | | | 714,561 | | | | | 714,561 | | |
| | | | | | | | | | |
Total operating expenses | | | 1,888,782 | | - | | | 1,888,782 | | |
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LOSS FROM OPERATIONS | | | -1,888,782 | | - | | | -1,888,782 | | |
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OTHER INCOME (EXPENSE): | | | | | | | | | | |
Interest income, net | | | 9,560 | | | | | 9,560 | | |
Interest expense | | | -120,986 | | | | | -120,986 | | |
Discount on convertible debentures | | | -135,481 | | | | | -135,481 | | |
Beneficial conversion feature of convertible debentures | | | - | | | | | - | | |
Change in fair market value of derivatives | | | -4,137,091 | | -288,742 | | | -4,425,833 | | |
| | | | | | | | | | |
Other income (expense), net | | | -4,383,998 | | -288,742 | | | -4,672,740 | | |
| | | | | | | | | | |
LOSS BEFORE INCOME TAXES | | | -6,272,780 | | -288,742 | | | -6,561,522 | | |
| | | | | | | | | | |
INCOME TAX PROVISION | | | - | | - | | | - | | |
| | | | | | | | | | |
NET LOSS | | $ | -6,272,780 | | -288,742 | | $ | -6,561,522 | | |
| | | | | | | | | | |
NET LOSS PER COMMON SHARE | | | | | | | | | | |
- BASIC AND DILUTED: | | $ | -0.13 | | | | $ | -0.14 | | |
| | | | | | | | | | |
Weighted average common shares outstanding | | | | | | | | | | |
- basic and diluted | | | 47,672,029 | | | | | 47,672,029 | | |
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Nanoviricides, Inc. |
Statements of Cash Flows |
|
| | For the Three Months | | | | | For the Three Months | |
| | Ended | | | | | Ended | |
| | September 30, 2013 | | | | | September 30, 2013 | |
| | (Unaudited) | | | | | (Unaudited) | |
| | As Original Reported | | Net Adjustment | | As Restated | |
| | | | | | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | |
Net loss | | $ | -6,272,780 | | $ | -288,742 | | $ | -6,561,522 | |
| | | | | | | | | | |
Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | | | |
Common shares and warrants issued for services | | | 32,250 | | | | | | 32,250 | |
Warrants granted to scientific advisory board | | | 106,050 | | | | | | 106,050 | |
Depreciation | | | 52,719 | | | | | | 52,719 | |
Amortization | | | 2,193 | | | | | | 2,193 | |
Change in fair value of derivative liability | | | 4,137,091 | | | 288,742 | | | 4,425,833 | |
Discount convertible debentures | | | 135,481 | | | | | | 135,481 | |
Changes in operating assets and liabilities: | | | | | | | | | | |
Prepaid expenses | | | -206,765 | | | | | | -206,765 | |
Accounts payable - trade | | | 144,802 | | | | | | 144,802 | |
Accounts payable - related parties | | | 429,258 | | | | | | 429,258 | |
Accrued expenses | | | 115,253 | | | | | | 115,253 | |
| | | | | | | | | | |
NET CASH USED IN OPERATING ACTIVITIES | | | -1,324,448 | | | - | | | -1,324,448 | |
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | |
Security deposit | | | -1,000,000 | | | | | | -1,000,000 | |
Purchase of property and equipment | | | -2,273,989 | | | | | | -2,273,989 | |
| | | | | | | | | | |
NET CASH USED IN INVESTING ACTIVITIES | | | -3,273,989 | | | - | | | -3,273,989 | |
| | | | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Proceeds from issuance of common stock and warrants in connection with private placements of common stock, net of issuance costs | | | 9,690,450 | | | | | | 9,690,450 | |
Proceeds from exercise of warrants | | | 185,624 | | | | | | 185,624 | |
| | | | | | | | | | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | | | 9,876,074 | | | | | | 9,876,074 | |
| | | | | | | | | | |
NET CHANGE IN CASH | | | 5,277,637 | | | | | | 5,277,637 | |
| | | | | | | | | | |
Cash at beginning of period | | | 13,923,245 | | | | | | 13,923,245 | |
| | | | | | | | | | |
Cash at end of period | | $ | 19,200,882 | | | | | $ | 19,200,882 | |
| | | | | | | | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | | | | | | | | | | |
Interest paid | | $ | - | | | | | $ | - | |
Income tax paid | | $ | - | | | | | $ | - | |
| | | | | | | | | | |
NON CASH FINANCING AND INVESTING ACTIVITIES: | | | | | | | | | | |
Common stock issued for services rendered | | $ | 32,250 | | | | | $ | 32,250 | |
Stock warrants granted to scientific advisory board | | $ | 106,050 | | | | | $ | 106,050 | |
Stock warrants granted to brokers | | $ | 113,696 | | | | | $ | 113,696 | |
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