Item 4.01. Changes in Registrant’s Certifying Accountant.
(a)(1) On February 12, 2020, the Audit Committee of the Board
of Directors (the “Audit Committee”) of NeuBase Therapeutics, Inc. (the “Company”) approved the dismissal
of CohnReznick LLP (“CohnReznick”) as the Company’s independent registered public accounting firm, effective
immediately.
CohnReznick was engaged on October 2, 2019
to audit the Company’s consolidated financial statements as of and for the fiscal year ended September 30, 2019. The audit
report of CohnReznick on the Company’s consolidated financial statements for the fiscal year ended September 30, 2019 (the
“Audit Report”) was included in the Company’s Annual Report on Form 10-K for the fiscal year ended September
30, 2019, filed with the Securities and Exchange Commission (the “SEC”) on January 10, 2020 (the “Form 10-K”).
The Form 10-K did not identify any changes in and disagreements with CohnReznick on the Company’s accounting or financial
disclosure, nor did it contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principles, except with respect to an explanatory paragraph indicating that there was substantial doubt
about the Company’s ability to continue as a going concern.
During the period from October 2, 2019
through the date of CohnReznick’s termination there were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation
S-K and the related instructions) with CohnReznick on any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedures which, if not resolved to the satisfaction of CohnReznick, would have caused CohnReznick to make
reference to the subject matter of the disagreements in connection with the Audit Report. As reported under Item 4.02 of this Current
Report on Form 8-K (this “Form 8-K”), the Company has determined to restate the unaudited interim condensed financial
statements and related disclosures as of, and for the three months ended, December 31, 2018, and as of, and for the three and six
months ended March 31, 2019, to report the following changes: an increase in total operating expenses of approximately $0.8 million
for the three months ended December 31, 2018, a decrease in total operating expenses of approximately $0.1 million for the three
months ended March 31, 2019, an increase in total operating expenses of approximately $0.7 million for the six months ended March
31, 2019 and a decrease in intangible assets of approximately $1.5 million at each of December 31, 2018 and March 31, 2019.
During the period from October 2, 2019
through the date of CohnReznick’s termination, except for the material weakness in internal control over financial reporting
identified by the Company in Item 9A of the Form 10-K and discussed below, there were no “reportable events” as defined
in Item 304(a)(1)(v) of Regulation S-K.
As previously disclosed in the Form 10-K,
in connection with the preparation of the Company’s consolidated financial statements for the fiscal year ended September
30, 2019, but prior to the issuance of such financial statements, the Company determined the accounting treatment and valuations
pertaining to the PATrOL™ technology license acquired during the three months ended December 31, 2018 should be modified.
The Form 10-K disclosed that the change in accounting treatment and valuations resulted in an increase in total operating expenses
of approximately $0.9 million on the Company’s Consolidated Statements of Operations for the fiscal year ended September
30, 2019 and a decrease in intangible assets of approximately $1.5 million on the Company’s Consolidated Balance Sheet as
of and for the fiscal year ended September 30, 2019, as well as a decrease in total operating expenses of approximately $0.3 million
on the Company’s Consolidated Statements of Operations in connection with the adjustment of the valuation of certain share-based
awards for the fiscal year ended September 30, 2019.
In the Form 10-K, the Company also disclosed
that its management had determined that, as of September 30, 2019, the Company’s internal control over financial reporting
was not effective due to a material weakness due to a lack of expertise in complex accounting transactions. During the fiscal year
ended September 30, 2019, the Company undertook remediation measures by hiring a financial accounting consultant to provide accounting
advisory services on complex transactions and accounting matters. The Company is in the process of implementing these remedial
actions, but these efforts are not complete and are ongoing and subject to ongoing management review and the oversight of the Audit
Committee.
The Company provided CohnReznick with a
copy of the disclosures it is making in this Item 4.01(a) and requested that CohnReznick furnish a letter addressed to the SEC
stating whether or not it agrees with the statements made in this Item 4.01(a). CohnReznick has not provided its letter as of the
time of the filing of this Form 8-K. Accordingly, the Company has requested that CohnReznick provide its letter as promptly as
possible so that the Company can file the letter with the SEC within ten business days after the date of filing of this Form 8-K.
The Company will file such letter by an amendment of this Form 8-K within two business days of receipt.
(a)(2) On February 9, 2020, CohnReznick
advised the Audit Committee of CohnReznick’s resignation as the Company’s independent registered public accounting
firm, to become effective immediately following the filing of the Company’s Quarterly Report on Form 10-Q for the quarter
ended December 31, 2019 with the SEC. As noted under (a)(1) above, the Audit Committee dismissed CohnReznick as the Company’s
independent registered public accounting firm on February 12, 2020, before such resignation became effective as the Company has
not yet filed its Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 with the SEC.
(b) While the Company has not engaged a new independent
registered public accounting firm, it has begun a search process to identify CohnReznick’s successor. The Company will disclose
its engagement of a new independent registered public accounting firm once the process has been completed and as required by, and
in accordance with, the SEC’s rules and regulations. The Company will not file its Quarterly Report on Form 10-Q for the
quarter ended December 31, 2019 until after the Company engages a new independent registered public accounting firm.
Item 4.02. Non-Reliance on Previously Issued Financial Statements
or a Related Audit Report or Completed Interim Review.
(a) On February 12, 2020, the Company,
in consultation with the Audit Committee, determined that the Company’s unaudited interim condensed financial statements
and related disclosures as of, and for the three months ended, December 31, 2018, and as of, and for the three and six months ended
March 31, 2019 (collectively, the “Fiscal 2019 Quarterly Financials”), which were included in Amendment No. 3, filed
with the SEC on May 22, 2019, and Amendment No. 4, filed with the SEC on June 3, 2019, respectively, to the Company’s Registration
Statement on Form S-4 and incorporated by reference from such filings into the Company’s Current Report on Form 8-K/A filed
with the SEC on July 17, 2019 (the “July 2019 Form 8-K”), should no longer be relied upon because of certain misstatements
contained in those financial statements.
As previously disclosed on July 12, 2019,
Ohr Pharmaceutical, Inc., a Delaware corporation (“Ohr”), completed a reverse merger with NeuBase Therapeutics, Inc.,
a Delaware corporation (“Legacy NeuBase”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization
(as amended, the “Merger Agreement”) entered into on January 2, 2019. Pursuant to the Merger Agreement, (i) a subsidiary
of Ohr merged with and into Legacy NeuBase, with Legacy NeuBase (renamed as “NeuBase Corporation”) continuing as a
wholly-owned subsidiary of Ohr and the surviving corporation of the merger and (ii) Ohr was renamed “NeuBase Therapeutics,
Inc.” (the “Merger”). For accounting purposes, the Merger was treated as a “reverse asset acquisition”
under generally accepted accounting principles in the United States, and Legacy NeuBase was considered the accounting acquirer.
Accordingly, Legacy NeuBase’s historical results of operations replaced the Company’s historical results of operations
for all periods prior to the Merger and, for all periods following the Merger, the results of operations of the combined company
are included in the Company’s consolidated financial statements. The Fiscal 2019 Quarterly Financials were those of Legacy
NeuBase, and as a result of the completion of the Merger and the accounting treatment of the Merger, consequently are the historical
consolidated financial statements of the Company.
The Company has determined that it is appropriate
to correct the misstatements in the Fiscal 2019 Quarterly Financials. Neither the Audit Committee nor the Company’s management
has discussed this assessment with CohnReznick.
Background
As previously disclosed in the Form 10-K,
the Company determined that the accounting treatment and valuations pertaining to the PATrOL™ technology license acquired
during the three months ended December 31, 2018 should be modified. The Form 10-K disclosed that the change in accounting treatment
and valuations resulted in an increase in total operating expenses of approximately $0.9 million on the Company’s consolidated
statements of operations for the fiscal year ended September 30, 2019 and a decrease in intangible assets of approximately $1.5
million on the Company’s consolidated balance sheet as of and for the fiscal year ended September 30, 2019, as well as a
decrease in total operating expenses of approximately $0.3 million on the Company’s consolidated statements of operations
in connection with the adjustment of the valuation of certain share-based awards for the fiscal year ended September 30, 2019.
The Fiscal 2019 Quarterly Financials previously
accounted for the acquisition of the PATrOL™ technology license as the acquisition of a license and the license was capitalized
as an intangible asset. The fair value of the common stock and warrant consideration transferred for the license was initially
estimated using the per share price observed in Legacy NeuBase’s private placement commitments entered into with prospective
investors, which was approximately $1.61 per share of Legacy NeuBase common stock. The aggregate value of the license capitalized
was approximately $1.5 million.
Evaluation
In November 2019, CohnReznick informed
the Company that it believed the acquisition of the PATrOL™ technology license should be accounted for as an asset acquisition
and determined the PATrOL™ technology license did not meet the criteria to be capitalized as it had not achieved regulatory
approval. In November 2019, following the Company’s further evaluation of the treatment of the acquisition and discussions
with CohnReznick, the Company determined that it agreed with CohnReznick’s assessment. The Company then engaged a third party
valuation firm to value the Legacy NeuBase common stock and warrants issued in exchange for the license and the Company identified
all components of consideration transferred, including cash consideration of approximately $0.05 million and acquisition costs
of approximately $0.04 million. The fair value of Legacy NeuBase common stock and warrants issued in exchange for the license was
determined to be approximately $0.8 million and $0.1 million, respectively, based upon the ultimately-determined fair value of
Legacy NeuBase common stock of $1.03 per share. The PATrOL™ technology license was the only identified asset in the transaction
and, accordingly, in the Company’s consolidated financial statements as of, and for the fiscal year ended, September 30,
2019, the Company expensed amounts allocated to in-process research and development, which was approximately $1.0 million in
aggregate.
In connection with the valuation adjustments
to the PATrOL™ technology license consideration, the Company also determined that valuations pertaining to certain share-based
awards, due to the grants thereof being made in close proximity to the valuation of the consideration issued in connection with
the PATrOL license, should be adjusted as the share-based awards were initially valued using the per share price observed in Legacy
NeuBase’s private placement commitments entered into with prospective investors, which was approximately $1.61 per share
of Legacy NeuBase common stock. The fair value of share-based awards granted in the three months ended December 31, 2018 was recalculated
using a per share-price of $1.03 of Legacy NeuBase common stock and the correction resulted in a restatement of share-based compensation
expense and a net decrease of approximately $0.2 million in share-based compensation expense for the three months ended December
31, 2018. The fair value of share-based awards granted in the three months ended March 31, 2019 were recalculated using a per share-price
of $1.27 per share of Legacy NeuBase, which was based upon a third party valuation of Legacy NeuBase common stock. The correction
of the valuations and timing of recognizing the share-based awards granted in the three months ended December 31, 2018, and March
31, 2019, resulted in a restatement of share-based compensation expense and a net decrease of approximately $0.1 million in share-based
compensation expense for the three months ended March 31, 2019.
Collectively, these changes in accounting
treatment and valuations resulted in an increase in total operating expenses of approximately $0.8 million for the three months
ended December 31, 2018, a decrease in total operating expenses of $0.1 million for the three months ended March 31, 2019 and an
increase in total operating expenses of $0.7 million for the six months ended March 31, 2019, and a decrease in intangible assets
of $1.5 million at each of December 31, 2018 and March 31, 2019.
Determinations and Conclusions
Based on the foregoing, the Company reported
in the Form 10-K that the accounting treatment and valuations of Legacy NeuBase pertaining to the PATrOL™ technology license,
which was acquired during the three months ended December 31, 2018, should be modified.
In connection with the preparation of the
Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 and in consultation with the Audit Committee,
the Company concluded that the Fiscal 2019 Quarterly Financials should no longer be relied upon because of the errors in such financial
statements. The restatement of the Fiscal 2019 Quarterly Financials will be effective with the filing of the Company’s future
unaudited interim condensed consolidated financial statements and related information in filings in Quarterly Reports on Form 10-Q
for the period ended December 31, 2019 and for the period ending March 31, 2020. The Company also intends to file an amended Form
8-K/A with the SEC restating the Fiscal 2019 Quarterly Financials of Legacy NeuBase as soon as practicable hereafter. The descriptions
of the foregoing errors and restatements are qualified in their entirety by reference to the restated financial statements to be
included in an amendment to the July 2019 Form 8-K.
Other
Prior to terminating CohnReznick as the
Company’s independent registered public accounting firm, the Audit Committee and management discussed the matters disclosed
in this Item 4.02(a) with CohnReznick.