Revision of Prior Year Financial Statements

9 Months Ended

Sep. 30, 2015

Accounting Changes and Error Corrections [Abstract]

Revision of Prior Year Financial Statements

Note 4. Revision of Prior Year Financial Statements

It was determined during the preparation of the first quarter 2015 interim financial statements that the Series A Warrant Agreement contained provisions that if, at any time while the Series A Warrants are outstanding, the Company enters into a “Fundamental Transaction” (as defined in the Series A Warrant Agreement), which includes, but is not limited to, a purchase offer, tender offer or exchange offer, a stock or share purchase agreement or other business combination including, without limitation, a reorganization, recapitalization, spin-off or other scheme of arrangement), then each registered holder of outstanding Series A Warrants as at any time prior to the consummation of the Fundamental Transaction, may elect and require the Company to purchase the Series A Warrants held by such person immediately prior to the consummation of such Fundamental Transaction by making a cash payment in an amount equal to the Black Scholes Value of the remaining unexercised portion of such registered holder’s Series A Warrants. The Company determined that upon issuance in November 2014 the Series A Warrants should have been classified as a liability, with any changes in the fair value of the warrants between November 2014 and December 31, 2014 being recorded in other income (expense) in the statement of operations.

Management has evaluated the effect of the error and determined that it is immaterial to the Company’s financial position and results of operations for the year ended December 31, 2014 and, therefore, amendment of the previously filed annual report on Form 10-K is not considered necessary. However, if the adjustments to correct the cumulative errors had been recorded in the first quarter of 2015, management believes the impact would have been significant to the first quarter and would impact comparisons to prior periods. In accordance with guidelines issued in Staff Accounting Bulletin No. 108, the Company recorded adjustments in the current year’s beginning additional paid in capital, long term liabilities and accumulated deficit accounts to correct this error. The Company has also revised in this current Form 10-Q filing, and plan to revise in future filings of our Form 10-K, the previously reported annual financial statements for 2014 on Form 10-K for these amounts.

The following table sets forth the revised prior period balances reported in the Company’s comparative financial statements as if adjustments had been made:

(in thousands except per share data)	Previously reported			Adjustment			Revised
Balance sheet items at December 31, 2014:
Current liabilities	$	1,290		$	—		$	1,290
Series A warrant liability		—			857			857
Series B warrant liability		17,439			—			17,439
Total liabilities		18,729			857			19,586
Additional paid-in capital		60,636			(1,494	)		59,141
Accumulated deficit		(70,975	)		637			(70,338	)
Total stockholders’ deficit		(10,333	)		(857	)		(11,190	)
Liabilities and stockholders’ deficit	$	8,396		$	—		$	8,396
(in thousands except per share data)	Previously reported			Adjustment			Revised
Statement of operations items for the year ended December 31, 2014
Other income (expense)	$	(4,585	)	$	637		$	(3,949	)
Net loss	$	(13,875	)	$	637			(13,238	)
Basic and diluted net loss per common share	$	(10.92	)	$	0.50			(10.42	)