3. Restatement of the Unaudited Condensed Consolidated Financial Statements

During the preparation of the Company’s financial statements for the period ended June 30, 2018, management determined that the Company’s excess and obsolete inventory reserve as of March 31, 2018 was understated by approximately $750,000, and its stock-based compensation expense and discretionary bonus accrual was overstated by $730,000 and $1,000,000, respectively.

The effect of the restatement on the Company’s unaudited condensed consolidated balance sheet as of March 31, 2018 are as follows:


	March 31, 2018
	As Previously Reported		Restatement Adjustment		As Restated
Inventory (1)	$	8,544,854	$	(3,034,700)	$	5,510,154
Total Current Assets (1)		44,245,771		(3,034,700)		41,211,071
Non-Current Inventory (1)		3,722,901		2,284,700		6,007,601
Total Assets		51,956,679		(750,000)		51,206,679
Accrued Liabilities		4,191,501		(1,000,000)		3,191,501
Current Portion of Deferred Revenue (1)		-		2,285,932		2,285,932
Total Current Liabilities (1)		8,438,920		1,285,932		9,724,852
Deferred Revenue (1)		16,150,609		(2,285,932)		13,864,677
Total Liabilities (1)		24,589,529		(1,000,000)		23,589,529
Accumulated Deficit		(246,791,897)		980,000		(245,811,897)
Total Shareholders’ Equity		27,367,150		250,000		27,617,150
Total Liabilities and Shareholders’ Equity		51,956,679		(750,000)		51,206,679

(1)

Includes the reclassification of $2.3 million of its inventory from a current asset to a non-current asset and $2.3 million of its deferred license revenue from long-term liabilities to current liabilities.

The effect of the restatement on the Company’s unaudited condensed consolidated statement of operations for the three months ended March 31, 2018 are as follows:


	For the Three Months Ended March 31, 2018
	As Previously Reported		Restatement Adjustment		As Restated
Cost of Sales	$	14,919,072	$	750,000	$	15,669,072
Gross Profit		29,507		(750,000)		(720,493)
Selling, General and Administrative		5,061,955		(1,730,000)		3,331,955
Operating Loss		(6,698,804)		980,000		(5,718,804)
Net Loss		(6,529,521)		980,000		(5,549,521)
Basic and Diluted Loss per Share		(0.13)		0.02		(0.11)
Basic and Diluted Shares		51,288,424		-		51,288,424

The effect of the restatement on the Company’s unaudited condensed consolidated statement of comprehensive loss for the three months ended March 31, 2018 are as follows:


	For the Three Months Ended March 31, 2018
	As Previously Reported		Restatement Adjustment		As Restated
Comprehensive Loss		$ (6,722,001)		$ 980,000		$ (5,742,001)

The effect of the restatement on the Company’s unaudited condensed consolidated statement of changes in shareholders’ equity for the three months ended March 31, 2018 are as follows:


	For the Three Months Ended March 31, 2018
	As Previously Reported		Restatement Adjustment		As Restated
Common Stock		$ 274,386,910		$ (730,000)		$ 273,656,910
Total shareholders' equity as of March 31, 2018		27,367,150		250,000		27,617,150

The effect of the restatement on the Company’s unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2018 are as follows:


	For the Three Months Ended March 31, 2018
	As Previously Reported		Restatement Adjustment		As Restated
Net Loss	$	(6,529,521)	$	980,000	$	(5,549,521)
Stock-Based Compensation		1,176,003		(730,000)		446,003
Increase in Inventory Reserves		1,296,954		750,000		2,046,954
Decrease in Other Liabilities		(494,969)		(1,000,000)		(1,494,969)
Cash Used In Operating Activities		(4,604,561)		-		(4,604,561)

There was no impact to net cash used in investing activities or net cash used in financing activities within our condensed consolidated statement of cash flows nor was there an impact on the net decrease in cash resulting from restatement.

The impacts of the restatement has been reflected throughout these unaudited financial statements, including the applicable footnotes, as appropriate.