Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
(a) On May 8, 2023, the Board of Directors (the “Board”) of CalciMedica, Inc. (the “Company”), following the recommendation of the Audit Committee of the Board (the “Audit Committee”) and after discussion with its independent registered public accounting firm, Ernst & Young LLP, with respect to the valuation of the Company’s convertible promissory notes and warrant liability on the balance sheet at December 31, 2022, concluded that each of (i) the Company’s financial statements as of and for the year ended December 31, 2022, as included in Exhibit 99.1 of the Company’s Form 8-K/A filed on April 4, 2023 (the “Original Report”) with the Securities and Exchange Commission (the “SEC) and (ii) the unaudited pro forma combined financial statements as of and for the year ended December 31, 2022, as included in Exhibit 99.2 of the Original Report (collectively, the “Financial Statements”), should be restated to correct for errors in the valuation of the convertible promissory notes and warrant liability as of December 31, 2022 and accordingly should no longer be relied upon. Similarly, any previously furnished or filed reports or similar communications of the Company describing the Company’s financial results contained in the Original Report should no longer be relied upon.
Based on the Company’s reassessment, the Company determined that the valuation models used to calculate the fair value of the convertible promissory notes and warrant liability balances as of December 31, 2022 did not appropriately consider the existence of the estimated conversion computation included in the Agreement and Plan of Merger and Reorganization, dated as of November 21, 2022, as amended on February 10, 2023, by and among Graybug Vision, Inc. (“Graybug”), Camaro Merger Sub, Inc., a wholly owned subsidiary of Graybug, and CalciMedica, Inc.
As a result of the reassessment discussed above, the Company expects to decrease the carrying value of the convertible promissory notes and the warrant liability on the balance sheet at December 31, 2022, resulting in gains recognized in the change in fair value of the convertible promissory notes and the change in fair value of the warrant liability for the year ended December 31, 2022. The Company expects the effect of these errors will decrease the reported net loss and comprehensive loss and net loss per share attributable to common stockholders in fiscal 2022.
The Company plans to report the impact of the errors by restating the Financial Statements by filing an amendment to the Original Report.
The Audit Committee and senior management has discussed this matter with the Company’s independent registered public accounting firm, Ernst & Young, LLP. The restatement amounts are subject to completion of Ernst & Young’s audit.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements which include, but are not limited to, the expected adjustments and impacts to the Company’s financial statements as a result of the reassessment described under Item 4.02 above. These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. The Company’s expectations and beliefs regarding these matters may not materialize. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of uncertainties, risks, and changes in circumstances, including but not limited to risks and uncertainties related to: the Company’s ability to maintain an effective system of internal control over financial reporting. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and elsewhere in the Company’s subsequent reports on Form 10-K, Form 10-Q or Form 8-K filed with the SEC from time to time.
The forward-looking statements included in this Current Report on Form 8-K are made only as of the date hereof. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.