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I. RESTATEMENT

9 Months Ended

Jun. 30, 2017

In October 2008, the Company entered into a lease arrangement whereby the Company leased a building owned by a third party, but to which the owner made tenant-directed improvements. Upon commencement of the lease, the Company accounted for the arrangement as an operating lease under ASC 840, Accounting for Leases, whereby the total minimum lease payment obligations under the leases were recognized as monthly rent expense on a straight-line basis over the term of the lease. The cost of the tenant improvements incurred were capitalized as deferred rent and amortized over the 20-year lease term.

However, in November 2017, the Company discovered an error in the way it accounted for the lease for the building since it was determined that, as the terms of the original lease required the Company to be responsible for possible cost overruns, (but of which there were none), the Company was deemed to be the owner of the leased building for accounting purposes only under ASC 840-40-55. In addition to the costs it incurred and capitalized for the tenant improvements, the Company should have reflected an asset on its balance sheet for the costs paid by the lessor to purchase and improve the building, as well as a corresponding liability. Upon completion of the improvements, the Company did not meet the “sale-leaseback” criteria under ASC 840-40-25, Accounting for Leases, Sale-Leaseback Transactions due to the Company’s significant continuing involvement with the facility which is considered to be other than a normal leaseback as defined in ASC 840-40-25 and therefore should have treated the lease as a financing obligation and the asset and corresponding liability should not be derecognized.

The corrections to the historical financial statements to apply ASC 840-40-25 do not affect the total cash payments the Company has made or is obligated to make under the lease agreement, nor does it change the total expense to be recognized over the lease term. However, the timing and nature of expense is different under this treatment as compared to operating lease treatment. Specifically, the Company should have recognized depreciation, expense on the building it is deemed to own and interest expense on the associated lease financing obligation, instead of rental expense.

The accompanying financial statements for nine and three months ended June 30, 2017 have been restated to reflect the correction of the error for the lease accounting. Accumulated deficit at September 30, 2016, was reduced by $276,855. The following is a summary of the restatements:

	June 30, 2017									September 30, 2016
	PREVIOUSLY REPORTED			ADJUSTMENT			RESTATED			PREVIOUSLY REPORTED			ADJUSTMENT			RESTATED
Total current assets	$	3,366,071		$	(385,076	)	$	2,980,995		$	5,887,646		$	(429,821	)	$	5,457,825
Other assets		5,071,255			13,771,157			18,842,412			5,710,601			13,717,699			19,428,300
Total assets		8,437,326			13,386,081			21,823,407			11,598,247			13,287,878			24,886,125
Total liabilities		13,746,687			13,160,232			26,906,919			12,554,315			13,011,023			25,565,338
Stockholders' deficit		(5,309,361	)		225,849			(5,083,512	)		(956,068	)		276,855			(679,213	)

	Nine Months Ended June 30,
	2017									2016
	PREVIOUSLY REPORTED			ADJUSTMENT			RESTATED			PREVIOUSLY REPORTED			ADJUSTMENT			RESTATED
Research and development expenses	$	14,737,073		$	(1,429,798	)	$	13,307,275		$	14,636,197		$	(1,429,797	)	$	13,206,400
Total operating expenses		19,084,903			(1,429,798	)		17,655,105			18,623,208			(1,429,797	)		17,193,411
Operating loss		(19,033,081	)		1,429,798			(17,603,283	)		(18,439,482	)		1,429,797			(17,009,685	)
Interest income (expense), net		44,709			(1,480,804	)		(1,436,095	)		49,142			(1,461,833	)		(1,412,691	)
Net loss		(9,318,395	)		(51,006	)		(9,369,401	)		(10,352,366	)		(32,036	)		(10,384,402	)

Net loss per share - basic	$	(1.29	)				$	(1.29	)	$	(2.20	)				$	(2.21	)
Net loss per share - diluted	$	(1.33	)				$	(1.34	)	$	(2.20	)				$	(2.21	)

	Three Months Ended June 30,
	2017									2016
	PREVIOUSLY REPORTED			ADJUSTMENT			RESTATED			PREVIOUSLY REPORTED			ADJUSTMENT			RESTATED
Research and development expenses	$	3,657,000		$	(476,599	)	$	3,180,401		$	4,838,108		$	(476,599	)	$	4,361,509
Total operating expenses		5,252,707			(476,599	)		4,776,108			6,512,722			(476,599	)		6,036,123
Operating loss		(5,235,318	)		476,599			(4,758,719	)		(6,382,747	)		476,599			(5,906,148	)
Interest income (expense), net		(755	)		(494,954	)		(495,709	)		24,679			(488,881	)		(464,202	)
Net loss		(4,445,708	)		(18,355	)		(4,464,063	)		(3,849,324	)		(12,282	)		(3,861,606	)

Net loss per share - basic and diluted	$	(0.53	)				$	(0.53	)	$	(0.78	)				$	(0.78	)

	Accumulated Deficit
PREVIOUSLY REPORTED, SEPTEMBER 30, 2016	$	(285,667,977	)
ADJUSTMENT		276,855
RESTATED BALANCE, SEPTEMBER 30, 2016		(285,391,122	)

Net loss - RESTATED		(9,369,401	)
BALANCE, JUNE 30, 2017	$	(294,760,523	)