XML 80 R10.htm IDEA: XBRL DOCUMENT v3.20.1
Restatements
 9 Months Ended 12 Months Ended
Dec. 31, 2019
Mar. 31, 2019
Restatement [Abstract]    
RESTATEMENTS

NOTE 3: RESTATEMENTS

 

In connection with the preparation of the Company's consolidated financial statements as of and for the fiscal year ended March 31, 2019, the Company identified inadvertent errors in the accounting for certain embedded derivative liabilities associated with warrants issued as a part of capital raises in 2017 and 2018. In connection with those capital raises, proceeds (net of fees) were accounted for as equity. Upon further evaluation, the Company determined that a portion of the capital raised should have been accounted for as liabilities with fair value changes recorded in the Company's consolidated statements of operations. Accordingly, the Company restated its previously issued consolidated financial statements and the related disclosures for the fiscal year ended March 31, 2018 and interim periods in fiscal years 2018 and 2019 as well as an adjustment to the opening balance sheet for the first interim period of fiscal 2018 (the "Restated Periods"). The adjustment to the opening balance sheet as of April 1, 2017 consisted of establishing a current derivative liability of $3,351, offset by a reduction in additional paid-in-capital of $4,180 and a reduction of accumulated deficit of $829.

 

The categories of misstatements and their impact on previously reported consolidated financial statements are described below:

 

Derivative Liability: The recognition, measurement and presentation and disclosure related to the warrants issued in conjunction with reserved private placements of the Company's common stock.

 

Stockholders' Deficit: The measurement and presentation and disclosure related to the derivative liability associated with the warrants issued in conjunction with the reserved private placements originally classified as additional paid in capital.

 

Change in Fair Value of Derivative Liabilities: The recognition, measurement and presentation and disclosure related to changes in the fair value of the derivative liability

 

In addition to the restatement of the financial statements, certain information within the notes to the financial statements referred to below that were included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019 were impacted. Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report on Form 10-K.

 

Note 1: Organization and Summary of Significant Accounting Policies

 

Note 9: Warrant Derivative Liabilities

 

Note 13: Stockholders' Equity (Deficit)

 

Note 18: Fair Value Measurements

 

The financial statement misstatements reflected in previously issued consolidated financial statements did not impact cash flows from operations, investing, or financing activities in the Company's consolidated statements of cash flows for any period previously presented, however they did impact individual line items.

 

Comparison of restated financial statements to financial statements as previously reported

 

The following tables compare the Company's previously issued Consolidated Balance Sheet, Consolidated Statement of Operations and Consolidated Statement of Cashflows for the periods ended December 31, 2018 to the corresponding restated consolidated financial statements for those periods.

 

CONSOLIDATED BALANCE SHEET

 

    December 31,     Restatement     December 31,  
    2018     Adjustments     2018  
    (As Reported)           (Restated)  
                   
ASSETS                  
CURRENT ASSETS                  
Cash ($35 pledged as collateral for credit)   $ 846             $ 846  
Accounts receivable, net of allowance of $87     1,245               1,245  
Prepaid expenses and other current assets     207               207  
Current assets held for sale     617               617  
Total current assets     2,915               2,915  
NON-CURRENT ASSETS                        
Property and equipment, net     2,132               2,132  
Intangible assets, net     1,130               1,130  
Non-current assets held for sale     820               820  
Other assets     27               27  
Total non-current assets     4,109               4,109  
TOTAL ASSETS   $ 7,024             $ 7,024  
                         
LIABILITIES AND STOCKHOLDERS' EQUITY                        
                         
CURRENT LIABILITIES                        
Accounts payable   $ 1,427             $ 1,427  
Accrued liabilities     919               919  
Notes payable     1,000               1,000  
Warrant derivative liabilities     -     $ 3,641       3,641  
Current liabilities held for sale     10               10  
Total current liabilities     3,356       3,641       6,997  
                         
COMMITMENTS AND CONTINGENCIES                        
Total liabilities     3,356       3,641       6,997  
                         
STOCKHOLDERS' EQUITY (Numbers of shares rounded to thousands)                        
                         
Preferred stock, $0.001 par value; 5,000 shares authorized; none issued                        
Common stock, $0.001 par value; 100,000 shares authorized, 52,571 shares issued and 51,986 shares outstanding     53               53  
Additional paid-in-capital     129,550       (16,409 )     113,141  
Accumulated deficit     (124,264 )     12,768       (111,496 )
Treasury stock, at cost     (1,671 )             (1,671 )
Total stockholders' equity     3,668       (3,641 )     27  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 7,024     $ -     $ 7,024  

  

CONSOLIDATED STATEMENT OF OPERATIONS

 

    Three Months Ended     Nine Months Ended  
    December 31, 2018     December 31, 2018  
    (As Reported)     Restatement Adjustments     (Restated)     (As Reported)     Restatement Adjustments     (Restated)  
CONTINUING OPERATIONS:                                    
REVENUES   $ 15             $ 15     $ 1,054             $ 1,054  
COST OF REVENUES     17               17       653               653  
GROSS PROFIT (LOSS)     (2 )             (2 )     401               401  
OPERATING EXPENSES:                                                
Selling, general and administrative     1,943               1,943       6,527               6,527  
Depreciation, amortization, and impairment     306               306       924               924  
Research and development     900               900       2,541               2,541  
Total operating expenses     3,149               3,149       9,992               9,992  
Loss from continuing operations before other expenses     (3,151 )             (3,151 )     (9,591 )             (9,591 )
                                                 
OTHER INCOME (EXPENSE):                                                
Change in fair value of derivative liability           $ 1,587     $ 1,587             $ 2,623       2,623  
(Interest expense), net of interest income     (362 )             (362 )     (369 )             (369 )
Total other expenses     (362 )     1,587       1,225       (369 )     2,623       2,254  
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES     (3,513 )     1,587       (1,926 )     (9,960 )     2,623       (7,337 )
DISCONTINUED OPERATIONS:                                                
Loss from discontinued operations     (757 )             (757 )     (1,923 )             (1,923 )
Gain on disposal of discontinued operations     -               -       -               -  
Total discontinued operations     (757 )             (757 )     (1,923 )             (1,923 )
PROVISION FOR INCOME TAXES     -               -       -               -  
NET LOSS   $ (4,270 )     1,587     $ (2,683 )   $ (11,883 )     2,623     $ (9,260 )
                                                 
NET LOSS PER SHARE                                                
Basic and diluted: Continuing operations   $ (0.07 )           $ (0.04 )   $ (0.20 )           $ (0.14 )
Discontinued operations     (0.01 )             (0.01 )     (0.04 )             (0.04 )
Total   $ (0.08 )           $ (0.05 )   $ (0.24 )           $ (0.18 )
                                                 
SHARES USED IN CALCULATION OF NET LOSS PER SHARE                                                
Basic and diluted     51,974               51,974       50,489               50,489  

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

    Nine Months Ended  
    December 31, 2018  
    As
Reported		     Restatement Adjustments     Restated  
Cash flows from operating activities:                  
Net loss   $ (11,883 )   $ 2,623     $ (9,260 )
Adjustments to reconcile net loss to net cash used in operating activities:                        
Depreciation, amortization and impairment     924               924  
Shares of common stock issued for services rendered     305               305  
Share-based compensation – stock – employees     2,604               2,604  
Loss from discontinued operations     1,923               1,923  
Change in fair value of derivative liabilities     -       (2,623 )     (2,623 )
Changes in assets and liabilities:                        
Accounts receivable     1,372               1,372  
Inventory     4               4  
Prepaid expenses     13               13  
Other current assets     45               45  
Accounts payable     (943 )             (943 )
Accrued liabilities     (174 )             (174 )
Net cash used in operating activities of continuing operations     (5,810 )             (5,810 )
Net cash used in discontinued operations     (1,472 )             (1,472 )
Net cash used in operating activities     (7,282 )             (7,282 )
                         
Cash flows from investing activities:                        
Purchases of property and equipment     (21 )             (21 )
Net cash used in investing activities of continuing operations     (21 )             (21 )
Net cash used in investing activities of discontinued operations     (249 )             (249 )
Net cash used in investing activities     (270 )             (270 )
                         
Cash flows from financing activities:                        
Proceeds from issuance of common stock, net of fees     4,221               4,221  
Proceeds from credit facility     1,000               1,000  
Repayment of debt     (500 )             (500 )
Purchase of treasury shares from employees for tax withholdings     (53 )             (53 )
Net cash provided by financing activities     4,668               4,668  
NET DECREASE IN CASH     (2,884 )             (2,884 )
Cash - beginning of period     3,730               3,730  
Cash - end of period   $ 846             $ 846  
                         
SUPPLEMENTAL DISCLOSURES:                        
Cash paid for interest   $ 366             $ 366  
Cash paid for income taxes   $ -             $ -  

NOTE 3: RESTATEMENTS

 

In connection with the preparation of the Company’s consolidated financial statements as of and for the fiscal year ended March 31, 2019, the Company identified inadvertent errors in the accounting for certain embedded derivative liabilities associated with warrants issued as a part of capital raises in 2017 and 2018. In connection with those capital raises, proceeds (net of fees) were accounted for as equity. Upon further evaluation, the Company determined that a portion of the capital raised should have been accounted for as liabilities with fair value changes recorded in the Company’s consolidated statements of operations. Accordingly, the Company is restating herein its previously issued consolidated financial statements and the related disclosures for the fiscal year ended March 31, 2018 and interim periods in fiscal years 2018 and 2019 as well as an adjustment to the opening balance sheet for the first interim period of fiscal 2018 (the “Restated Periods”). The adjustment to the opening balance sheet as of April 1, 2017 consisted of establishing a current derivatives liability of $3,351, offset by a reduction in additional paid-in-capital of $4,180 and a reduction of accumulated deficit of $829.

 

The categories of misstatements and their impact on previously reported consolidated financial statements for the 2018 and 2017 annual periods are described below:

 

Derivative Liability: The recognition, measurement and presentation and disclosure related to the warrants issued in conjunction with reserved private placements of the Company’s common stock.

 

Stockholders’ Deficit: The measurement and presentation and disclosure related to the derivative liability associated with the warrants issued in conjunction with the reserved private placements originally classified as additional paid in capital.

 

Change in Fair Value of Derivative Liabilities: The recognition, measurement and presentation and disclosure related to changes in the fair value of the derivative liability

 

In addition to the restatement of the financial statements, certain information within the following notes to the financial statements have been restated to reflect the corrections of misstatements discussed above as well as to add disclosure language as appropriate:

 

Note 1: Organization and Summary of Significant Accounting Policies

 

Note 9: Warrant Derivative Liabilities

 

Note 13: Stockholders’ Equity (Deficit)

 

Note 18: Fair Value Measurements

 

The financial statement misstatements reflected in previously issued consolidated financial statements did not impact cash flows from operations, investing, or financing activities in the Company’s consolidated statements of cash flows for any period previously presented, however they did impact individual line items.

 

Comparison of restated financial statements to financial statements as previously reported

 

The following tables compare the Company’s previously issued Consolidated Balance Sheet, Consolidated Statements of Operations, Consolidated Statement of Cashflows, and Consolidated Statement of Changes in Stockholders’ Equity as of and for the year ended March 31, 2018 to the corresponding restated consolidated financial statements for that year.

 

       (Dollars in thousands, 
       except per share data) 
   March 31,   Restatement   March 31, 
   2018   Adjustment   2018 
   As Reported       As Restated 
ASSETS            
CURRENT ASSETS            
Cash ($265 pledged as collateral for credit)  $3,730   $-   $3,730 
Accounts receivable, net of allowance of $87   2,617    -    2,617 
Prepaid expenses and other current assets   242    -    242 
Current assets held for sale   645    -    645 
Total current assets   7,234    -    7,234 
NON-CURRENT ASSETS               
Property and equipment, net   2,619    -    2,619 
Intangible assets, net   1,545    -    1,545 
Non-current assets held for sale   1,023    -    1,023 
Other assets   26    -    26 
Total non-current assets   5,213    -    5,213 
TOTAL ASSETS  $12,447    -   $12,447 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)               
                
CURRENT LIABILITIES               
Accounts payable  $2,350   $-   $2,350 
Accrued liabilities   1,080    -    1,080 
Derivative liabilities   -    3,694    3,694 
Current portion of long-term debt   500    -    500 
Current liabilities held for sale   43    -    43 
Total current liabilities   3,973    3,694    7,667 
NON-CURRENT LIABILITIES               
Long-term debt, net of current portion   -    -    - 
Long-term debt, net of current portion - related party   -    -      
COMMITMENTS AND CONTINGENCIES               
Total liabilities   3,973    3,694    7,667 
                
STOCKHOLDERS’ EQUITY (DEFICIT) (Numbers of shares rounded to thousands)               
                
Preferred stock, $0.001 par value; 5,000 shares authorized; none issued   -    -    - 
Common stock, $0.001 par value; 100,000 shares authorized, 49,468 shares issued and 48,923 shares outstanding as of March 31, 2018   49    -    49 
Additional paid-in-capital   122,424    (13,839)   108,585 
Accumulated deficit   (112,381)   10,145    (102,236)
Treasury stock, at cost   (1,618)   -    (1,618)
Total stockholders’ equity (deficit)   8,474    (3,694)   4,780 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)  $12,447    -   $12,447 

 

   Year Ended       Year Ended 
   March 31,   Restatement   March 31, 
   2018   Adjustment   2018 
   As
Reported		       As
Restated		 
CONTINUING OPERATIONS:            
             
REVENUES  $558   $-   $558 
                
COST OF REVENUES   243    -    243 
                
GROSS PROFIT (LOSS)   315    -    315 
OPERATING EXPENSES:               
Salaries and salary related costs, including share-based compensation   25,962    -    25,962 
Professional fees and consulting, including share-based compensation   4,812         4,812 
Selling, general and administrative   1,677    -    1,677 
Depreciation, amortization, and impairment   818    -    818 
Research and development   5,576    -    5,576 
Total operating expenses   38,845    -    38,845 
Loss from continuing operations before other expenses   (38,530)   -    (38,530)
                
OTHER EXPENSE:               
Change in fair value of derivative liabilities   -    9,316    9,316 
Interest expense, net of interest income   (55)   -    (55)
Total other expenses   (55)   9,316    9,261 
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES   (38,585)   9,316    (29,269)
DISCONTINUED OPERATIONS:               
Income (loss) from discontinued operations   (4,181)   -    (4,181)
Gain on disposal of discontinued operations   636    -    636 
Total discontinued operations   (3,545)   -    (3,545)
PROVISION FOR INCOME TAXES   22    -    22 
NET LOSS   (42,152)   9,316    (32,836)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST   -         - 
NET LOSS ATTRIBUTABLE TO CONTROLLING INTEREST  $(42,152)  $9,316   $(32,836)
                
NET LOSS PER SHARE               
Basic and diluted: Continuing operations  $(0.85)  $(0.21)  $(0.64)
Discontinued operations  $(0.08)   -   $(0.08)
Total  $(0.93)  $0.21   $(0.72)
                
SHARES USED IN CALCULATION OF NET LOSS PER SHARE               
Basic and diluted   45,500         45,500 

 

   Year Ended
March 31,		  Restatement  Year Ended
March 31,
   2018  Adjustment  2018
   As Reported     As Restated
Cash flows from operating activities:               
Net loss attributable to controlling interest  $(42,152)  $9,316   $(32,836)
Adjustments to reconcile net loss to net cash used in operating activities:               
Depreciation, amortization and impairment   3,041    -      3,041 
Shares of common stock issued for services rendered   2,860    -      2,860 
Share-based compensation – stock - employees   20,592    -      20,592 
Share-based compensation due to employment agreements   1,500    -      1,500 
Change in value of derivative liabilities        (9,316)   (9,316)
(Income) loss from discontinued operations   4,181         4,181 
Gain on sale of discontinued operations   (636)   -      (636)
Loss on retirement of assets   61    -      61 
Changes in assets and liabilities:               
Accounts receivable   (1,060)   -      (1,060)
Inventory   (983)   -      (983)
Prepaid expenses   90    -      90 
Other current assets   (56)   -      (56)
Other assets   6    -      6 
Accounts payable   634    -      634 
Accrued liabilities   (1,691)   -      (1,691)
Net cash used in operating activities of continuing operations   (13,613)   -      13,613)
Net cash used in discontinued operations   (4,030)   -      (4,030)
Net cash used in operating activities   (17,643)   -      (17,643)
                
Cash flows from investing activities:               
Proceeds from sale of Eco3d   2,029    -      2,029 
Purchases of short-term investments   (1,001)   -      (1,001)
Redemption of short-term investments   1,001    -      1,001 
Purchases of property and equipment   (277)   -      (277)
Net cash provided by (used in) investing activities   1,752    -      1,752 
                
Cash flows from financing activities:               
Proceeds from issuance of common stock, net of fees   12,693    -      12,693 
Purchase of treasury shares from employees   (1,618)   -      (1,618)
Repayments of debt - related parties   (100)   -      (100)
Net cash provided by financing activities   10,975    -      10,975 
NET INCREASE (DECREASE) IN CASH   (4,916)   -      (4,916)
Cash - beginning of period   8,646    -      8,646 
Cash - end of period  $3,730   $-     $3,730 
                
SUPPLEMENTAL DISCLOSURES:               
Cash paid for interest  $60   $-     $60 
Cash paid for income taxes  $-     $-     $-   
                
SUMMARY OF NONCASH ACTIVITIES:               
Inventory reclassified to property and equipment  $2,477   $-     $2,477 
                
Assets and liabilities acquired via acquisition of companies:               
Identifiable intangible assets  $1,435   $-     $1,435 
Goodwill  $65   $-     $65 
Other assets  $28   $-     $28 

 

The Company’s financial statements as of March 31, 2017, contained the following adjustments: (1) overstatement of additional-paid-in-capital by $4,180, (2) understatement of warrant liability by $3,351, and (3) overstatement of net loss due to change in fair value of warrant liability by $829. Accumulated deficit as of April 1, 2017, has been reduced by $4,180 to correct the aggregate effect of the adjustments, net of their related income tax effect of $0. Had the errors not been made, net loss for fiscal 2017 would have been decreased by $829, net of income tax of $0 due to the Company having a full valuation allowance for its net deferred tax assets. These adjustments were made to correct an error made in fiscal year 2017 of classifying certain warrants issued in May 2017 as a component of equity rather than as a liability at inception and changes in the fair value of the warrant liability not being recognized in the statement of operations.

 

   Preferred   Common   Additional
Paid-In-		   Accumulated   Treasury     
   Shares   Amount   Shares   Amount   Capital   Deficit   Stock   Total 
Balances at April 1, 2017 (Restated)   -   $-    42,330   $42   $80,845   $(69,400)  $-   $11,487 
                                         
Shares issued for cash in private placement, net of expenses (Restated)   -    -    5,000    5    3,029    -    -    3,034 
                                         
Share-based compensation – stock – Board of Directors   -    -    201    -    550    -    -    550 
                                         
Share-based compensation – stock – services rendered   -    -    65    -    596    -    -    596 
                                         
Share-based compensation – stock – employees   -    -    1,783    2    20,590    -    -    20,592 
                                         
Purchase shares from employees in lieu of taxes   -    -    -    -    -    -    (1,618)   (1,618)
                                         
Stock issued to purchase 440 Labs   -    -    300    -    1,500    -    -    1,500 
                                         
Share-based compensation due to employment agreements   -    -    300    -    1,500    -    -    1,500 
                                         
Warrant conversion – cashless   -    -    49    -    -    -    -    - 
                                         
Sale of Eco3d, shares received and cancelled   -    -    (560)   -    (25)   -    -    (25)
                                         
Net loss for the period (Restated)   -    -    -    -    -    (32,836)   -    (32,836)
                                         
Balances at March 31, 2018 (Restated)   -    -    49,468    49    108,585    (102,236)   (1,618)   4,780