PharmaCyte Biotech, Inc. (“Company”) restated its condensed consolidated financial statements as of and for the period ended July 31, 2015 to reflect adjustments made due to the correction of the treatment of the issuance of certain shares of the Company’s common stock, $0.0001 par value per share (“common stock”), and warrants and certain other matters, as further described below, resulting in a material understatement to assets, a material overstatement to liabilities and a material understatement to stockholders’ equity. The nature and impact of these adjustments are more particularly described below. 

The adjustments described above relate to the Company’s issuance of certain warrants to purchase common stock with a cashless exercise feature (“cashless warrants”) in connection with its entry into a marketing and consulting agreement (“Consultant Agreement”) with a consultant during the prior year ended April 30, 2015 (for more information, see the Amendment No. 1 on Form 10-K/A (“Amended Form 10-K”) to our Annual Report on Form 10-K for the year ended April 30, 2015, originally filed July 29, 2015 (“Original Form 10-K”)).  The Company accounted for the cashless warrants as a derivative liability in the Original Form 10-K. However, upon further analysis, the Company determined that the cashless warrants should have been accounted for as equity in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) in the Original Form 10-K. Additionally, the Company determined that the Consultant Agreement, issuance of shares of common stock to the consultant pursuant to the Consultant Agreement and the issuance of certain warrants to purchase common stock with a cash exercise feature (“cash warrants”) and the cashless warrants to the consultant should have been recorded as a prepaid asset and amortized over the term of the Consultant Agreement in accordance with U.S. GAAP in the Original Form 10-K. As a result of the Company’s determination that the cashless warrants should be accounted for as equity, and that the Consultant Agreement, stock issuance, cash warrants and cashless warrants should be accounted for as a prepaid asset, the Company increased general and administrative expenses by the net amount of $506,571 on its condensed consolidated statements of operations for the period ended July 31, 2015, and increased prepaid expenses and other assets by the amount of $842,451, net of amortization, and decreased by the amount of $29,746 its total current liabilities on its condensed consolidated balance sheet as of July 31, 2015, as set forth in the Restated Financial Statements.  As a result of these adjustments, and the adjustments to our consolidated financial statements for the year ended April 30, 2015 as set forth in the Amended Form 10-K, the Company also recorded a net increase to its accumulated deficit in the amount of $42,074 and an increase to total stockholders’ equity in the amount of $872,196.

As set forth in the Restated Financial Statements, the effect of the timing of the recognition of the cashless warrant expense resulted in a decrease in the amount of $462,303 to total other income, an increase to general and administrative expenses of $506,571 (amortization of prepaid expenses) and an increase to reported net loss in the amount of $968,874.

The impact of the adjustments to the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss, condensed consolidated statements of stockholders’ equity (deficiency) and condensed consolidated statements of cash flows for the period ended July 31, 2015 is as follows: