RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMNTS

3 Months Ended

Mar. 31, 2017

Restatement Of Previously Issued Financial Statemnts

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMNTS

NOTE 15 – RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMNTS

Subsequent to filing its Quarterly Report on Form 10-Q for the period ended March 31, 2017 (the “Form 10-Q”) with the Securities and Exchange Commission (the “SEC”) on August 4, 2017, the Company determined that a computation error occurred in its calculation of stock-based compensation for the period ended March 31, 2017.

In accounting for the Company’s stock-based compensation for the period ended March 31, 2017, the Company utilized an incorrect common stock fair value as an input in the black-scholes calculation which determines the fair value of one stock option tranche that vested on January 31, 2017. Upon correcting for the previously used option price, the Company determined that stock-based compensation should have been $1,000,000 higher than previously reported.

The Company has restated its previously issued financial statements as of and for the three months ended March 31, 2017, to correct the non-cash error related to its stock-based compensation.

The impact of the restatements is reflected below for the periods indicated:

CONSOLIDATED BALANCE SHEET
	As of March 31, 2017
	As Previously
	Reported			Adjustment			Restated
ASSETS
Total assets	$	17,388,723		$	—		$	17,388,723
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Total current liabilities		2,415,394			—			2,415,394
Total long-term liabilities		2,079,905			—			2,079,905
Total liabilities		4,495,299			—			4,495,299
Commitments and Contingencies (Note 14)
Stockholders’ Deficit:
Common stock, $0.0001 par value, 500,000,000 shares
authorized; 344,093,411 and 234,704,655 shares issued
and outstanding as of March 31, 2017 and December 31, 2016, respectively		34,409			—			34,409
Additional paid in capital		70,952,037			1,000,000			71,952,037
Stock subscription receivable		(830,000	)		—			(830,000	)
Accumulated deficit		(57,595,085	)		(1,000,000	)		(58,595,085	)
Accumulated comprehensive income		332,063			—			332,063
Total stockholders’ deficit		12,893,424			—			12,893,424
Total liabilities and stockholders’ deficit	$	17,388,723		$	—		$	17,388,723

CONSOLIDATED STATEMENTS OF OPERATIONS
	Three months ended March 31, 2017
	As Previously
	Reported			Adjustment			Restated
Total revenues, net	$	584,689		$	—		$	584,689
Operating Expenses:
Cost of Sales		149,129						149,129
General and administrative		4,255,382			1,000,000			5,255,382
Research and development		29,070			—			29,070
Depreciation and amortization		109,534			—			109,534
Total operating expenses		4,543,115			1,000,000			5,543,115
Loss from operations		(3,958,426	)		(1,000,000	)		(4,958,426	)
Other income (expense), net		(4,710,666	)		—			(4,710,666	)
Income loss before income taxes		(8,669,092	)		(1,000,000	)		(9,669,092	)
Income Taxes		—			—			—
Net (loss)	$	(8,669,092	)	$	(1,000,000	)	$	(9,669,092	)
Net (loss) per share - Basic and diluted	$	(0.03	)	$	—		$	(0.03	)
Weighted Average Shares Outstanding - Basic and diluted		295,596,151			—			295,596,151

STATEMENT OF COMPREHENSIVE INCOME (LOSS)
	Three months ended
	As Previously
	Reported			Adjustment			Restated
Net loss	$	(8,669,092	)	$	(1,000,000	)	$	(9,669,092	)
Add:
Foreign currency translation gain		23,452			—			23,452
Comprehensive loss	$	(8,645,640	)	$	(1,000,000	)	$	(9,645,640	)

Certain amounts in the related statement of cash flows have been corrected, but those changes did not impact the cash provided from or used in operating, investing or financing activities.   

The adjustment column for the condensed consolidated financial statement includes the increase in stock compensation by $1,000,000 in the balance sheet as of March 31, 2017 and for the three months ended March 31, 2017.

● The balance sheet reflects an increase by $1,000,000 to accumulated deficit and additional paid in capital.

● The statement of operations increases general and administrative expense and net loss by $1,000,000.

● The statement of comprehensive income reflects on increase in net loss for the increase in stock compensation expense.

● There is no impact on net cash flow from operating activities included on the statement of cash flow for the three months ended March 31, 2017 and earnings per share – basic and diluted is unchanged.