Restatement of Previously Issued Financial Statements

12 Months Ended

Jun. 30, 2021

Restatement of Previously Issued Financial Statements

Note 1. Restatement of Previously Issued Financial Statements

MEI Pharma, Inc. has restated our previously issued financial statements and related disclosures as of and for the fiscal years ended June 30, 2021 and 2020 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on September 2, 2021 (the "Original Annual Report"), in order to correct errors resulting from the incorrect application of generally accepted accounting principles relating to revenue recognition as it pertains to the application of the cost-to-cost method for revenue recognition. The applicable Notes to Financial Statements were also updated to reflect the restatement. Our correction to accounting for revenue recognition did not have any effect on our previously reported operating expenses or cash and short-term investments.

Impact of Restatement

We identified and corrected certain errors in the manner in which we recognized revenue from our License, Development and Commercialization Agreement with Kyowa Kirin Company ("KKC") (the "KKC Commercialization Agreement") with the result that revenue was overstated in some quarters and understated in other quarters in our financial statements during 2020 and 2021. The errors relate to the appropriate timing and amounts of revenue recognized over time and under the cost-to-cost method associated with the KKC Commercialization Agreement (Note 2). As a result, we determined that there were errors in the financial statements that required a restatement of the June 20, 2021 and 2020 financial statements included in the Original Annual Report.

The following tables reflect the impact of the restatement adjustments to the specific line items presented in our previously reported financial statements for the annual periods indicated. These errors did not have any effect on our previously reported operating expenses, cash flows or cash and short-term investments. The amounts originally reported were derived from the Original Annual Report (in thousands, except per share amounts):


	June 30, 2021
	As Originally Reported			Adjustments			As Restated
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Deferred revenue	$	14,609		$	(10,083	)	$	4,526
Total current liabilities		30,294			(10,083	)		20,211
Deferred revenue, long-term		72,717			1,979			74,696
Total liabilities		132,736			(8,104	)		124,632
Stockholders’ equity:
Accumulated deficit		(327,809	)		8,104			(319,705	)
Total stockholders’ equity		41,362			8,104			49,466


	June 30, 2020
	As Originally Reported			Adjustments			As Restated
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Deferred revenue	$	14,777		$	(9,548	)	$	5,229
Total current liabilities		23,304			(9,548	)		13,756
Deferred revenue, long-term		67,723			10,705			78,428
Total liabilities		131,510			1,157			132,667
Stockholders’ equity:
Accumulated deficit		(277,234	)		(1,157	)		(278,391	)
Total stockholders’ equity		78,218			(1,157	)		77,061


	Year Ended June 30, 2021
	As Originally Reported			Adjustments		As Restated
Revenue	$	25,535		$	9,261	$	34,796
Loss from operations		(69,685	)		9,261		(60,424	)
Net loss		(50,575	)		9,261		(41,314	)
Net loss:
Basic		(50,575	)		9,261		(41,314	)
Diluted		(77,969	)		9,261		(68,708	)
Net loss per share:
Basic		(0.45	)		0.08		(0.37	)
Diluted		(0.68	)		0.08		(0.60	)


	Year Ended June 30, 2020
	As Originally Reported			Adjustments			As Restated
Revenue	$	28,913		$	(1,157	)	$	27,756
Loss from operations		(24,540	)		(1,157	)		(25,697	)
Net loss		(46,016	)		(1,157	)		(47,173	)
Net loss:
Basic		(46,016	)		(1,157	)		(47,173	)
Diluted		(46,016	)		(1,157	)		(47,173	)
Net loss per share:
Basic		(0.51	)		(0.01	)		(0.52	)
Diluted		(0.51	)		(0.01	)		(0.52	)


	Year Ended June 30, 2021
	As Originally Reported			Adjustments		As Restated
Statement of Stockholders' Equity
Accumulated deficit	$	(327,809	)	$	8,104	$	(319,705	)
Total stockholders' equity		41,362			8,104		49,466


	Year Ended June 30, 2020
	As Originally Reported			Adjustments			As Restated
Statement of Stockholders' Equity
Accumulated deficit	$	(277,234	)	$	(1,157	)	$	(278,391	)
Total stockholders' equity		78,218			(1,157	)		77,061


	Year Ended June 30, 2021
	As Originally Reported			Adjustments			As Restated
Statement of Cash Flows
Cash flows from operating activities:
Net loss	$	(50,575	)	$	9,261		$	(41,314	)
Changes in operating assets and liabilities:
Deferred revenue		4,826			(9,261	)		(4,435	)
Net cash used in operating activities		(31,964	)		—			(31,964	)


	Year Ended June 30, 2020
	As Originally Reported			Adjustments			As Restated
Statement of Cash Flows
Cash flows from operating activities:
Net loss	$	(46,016	)	$	(1,157	)	$	(47,173	)
Changes in operating assets and liabilities:
Deferred revenue		74,726			1,157			75,883
Net cash provided by operating activities		34,258			—			34,258