NOTE 2 — Revision of Prior Years’ Financial Statements

While preparing its financial statements for the year ended December 31, 2014, the Company identified a prior period error related to the accounting for patent costs. As disclosed in its prior filings, historically the Company had capitalized patent related costs associated with its drug candidates, enclomiphene and Proellex®. However, the Company has now concluded that these costs should have been expensed as research and development costs since the related products were, at the time the costs were incurred, in the development phase and had not been approved by the FDA. The Company concluded this error was not material individually or in the aggregate to any of the prior reporting periods, and therefore, no restatements of previously issued financial statements were necessary. However, if the entire correction had been recorded in the fourth quarter of 2014, the cumulative impact would have been material to the fourth quarter of 2014, and would have impacted the comparability to prior periods. As such, revisions for the prior periods are reflected in the financial statements herein. The quarter ended September 30, 2015 was not affected.

At December 31, 2013, accumulated deficit and shareholders’ equity were reported as ($237,623) and $75,425, respectively, and were revised to ($240,529) and $72,519, respectively.

The effects of the error correction on the consolidated statements of operations for the three and nine month periods ended September 30, 2014 are as follows (in thousands):

	Three months ended September 30, 2014						Nine months ended September 30, 2014
							As
	As previously						previously
	reported		Correction		As revised		reported		Correction		As revised
Research and development	$	6,107	$	169	$	6,276	$	20,882	$	454	$	21,336
Total expenses		7,384		169		7,553		24,641		454		25,095
Net loss		(7,382)		(169)		(7,551)		(24,634)		(454)		(25,088)
Loss per share – basic and diluted		(0.32)		(0.00)		(0.32)		(1.06)		(0.02)		(1.08)

The effects of the error correction on the consolidated statements of cash flows for the nine month period ended September 30, 2014 are as follows (in thousands):

	Nine months ended September 30, 2014
	As previously
	reported		Correction		As revised
Net cash used in operating activities	$	(22,042)	$	(828)	$	(22,870)
Net cash used in investing activities		(828)		828		(0)