Business Context and Reporting Period
Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: July 10, 2024
Reporting Period: This filing addresses the reliability of financial statements for the years ended December 31, 2022 and 2023, and the quarter ended March 31, 2024.
Key Financial Metrics and Material Changes
The filing discloses a requirement to restate financial statements due to accounting errors identified during a re-audit following a cease-and-desist order against the former auditor, BF Borgers CPA PC. The errors relate to stock compensation, convertible notes, promissory notes, warrants, and Series A Convertible Preferred Stock.
Impact on 2022 Financial Statements
- Net Loss: No change to the reported loss of $3.0 million for the year ended December 31, 2022.
- Net Loss Attributable to Common Stockholders: Increased from $3.1 million to $3.7 million (an increase of $0.6 million).
- Balance Sheet Adjustments: Increase to additional paid-in capital of $7.7 million and an offsetting increase to accumulated deficit of approximately $7.7 million.
Impact on 2023 and Q1 2024 Financial Statements
- Balance Sheet Adjustments: Consolidated balance sheets as of December 31, 2023, and March 31, 2024, require adjustments to increase additional paid-in capital by approximately $7.7 million and increase accumulated deficit by approximately $7.7 million.
- Cash Flow: The accounting errors had no impact on cash balances or operating cash flows.
Guidance, Outlook, and Management Commentary
Restatement Plan: The Company anticipates filing an amended annual report on Form 10-K/A for the period ended December 31, 2023, and a quarterly report on Form 10-Q/A for the period ended March 31, 2024, as soon as reasonably practical.
Non-Reliance Notice: Investors should no longer rely on previously issued financial statements for the affected periods or communications based on them.
Internal Controls: The Company previously disclosed a material weakness in internal controls regarding the accounting treatment of significant unusual transactions, including complex debt and equity transactions. The Company continues to evaluate these errors in the context of its internal controls over financial reporting.
Current Auditor: Forvis Mazars LLP.
Investor Verification Checklist
- Verify the upcoming filings of Form 10-K/A (2023) and Form 10-Q/A (Q1 2024) for finalized restated numbers.
- Confirm the specific details of the accounting corrections regarding convertible notes, warrants, and Series A Convertible Preferred Stock once the restatements are filed.
- Monitor the Company's progress in remediating the material weakness in internal controls over financial reporting.
- Review the impact of the $0.6 million increase in net loss attributable to common stockholders on per-share metrics.