Devonian Announces Delay in Financial Results Release
Devonian Health Group Inc. (“Devonian” or the “Company”) (TSXV: GSD; OTCQB: DVHGF), a clinical-stage biopharmaceutical company specializing in the development of innovative therapies for inflammatory diseases, has announced a delay in filing its unaudited quarterly financial statements for the second quarter ended January 31, 2025. The delay extends beyond the prescribed deadline due to necessary adjustments in previously reported financial periods, requiring the preparation and filing of amended and restated financial statements.
The delay primarily stems from Devonian’s recent discovery of certain financial inaccuracies in its audited financial statements for the fiscal year ended July 31, 2024, as well as in the quarterly financial statements for the quarter ended October 31, 2024. Specifically, the Company identified an omission in its income tax expense and accumulated tax liability, as well as misclassified selling expenses that necessitate reclassification to maintain accurate reporting.
Details of Financial Statement Adjustments
Upon a comprehensive review, Devonian found that its audited financial statements for the fiscal year ended July 31, 2024 (“2024 Financial Statements”) had not properly recognized a current income tax expense and accumulated tax liability amounting to $782,273. This discrepancy, outlined in Note 17 of the financial statements, was a key factor in the necessary restatement. Additionally, the Company identified an overstatement of an expense amounting to $245,000, which was recorded prior to the receipt of a corresponding invoice. This adjustment results in a net increase in the Company’s net loss and a corresponding increase in current liabilities of $537,273 for the fiscal year ended July 31, 2024.
While these adjustments affect the overall financial picture of the Company, it is important to note that their impact remains relatively minor. Specifically, these changes represent only 3% of revenues, 4% of total expenses, and 4% of net assets for the fiscal year 2024. Nonetheless, the Company is taking immediate steps to ensure the accuracy and transparency of its financial reporting.
Reclassification of Selling Expenses
In addition to the adjustments noted above, Devonian identified selling expenses that had been incorrectly classified as a reduction of revenue instead of being properly categorized as selling and administrative expenses. As a result, a reclassification is necessary within the Company’s Consolidated Statements of Net Loss and Comprehensive Loss for both the fiscal years ending July 31, 2024, and July 31, 2023. This reclassification will increase distribution revenue and administrative expenses by $1,245,477 for fiscal year 2024 and $271,754 for fiscal year 2023.
While these changes do not affect the Company’s cash position or overall financial health, the adjustments are crucial for ensuring accurate financial reporting and compliance with accounting standards.
Impact on Filing Deadlines
Due to the need for these restatements, Devonian requires additional time to complete its analysis, finalize the necessary adjustments, and ensure accuracy before submitting its financial reports. The Company is working closely with its auditors to address these matters as quickly as possible.
Consequently, Devonian will be unable to file its financial statements for the second quarter ended January 31, 2025, along with the related Management’s Discussion and Analysis (MD&A) before the prescribed deadline of April 1, 2025. However, the Company expects to file both the prior period financial statements and the current period financial statements during April 2025. By doing so, Devonian aims to regain compliance with all of its continuous disclosure obligations as required under applicable Canadian securities laws.
Commitment to Transparency and Compliance
Despite these challenges, Devonian remains committed to upholding the highest standards of financial transparency and compliance. The Company recognizes the importance of timely and accurate financial reporting for its investors, stakeholders, and regulatory authorities. As such, it is making every effort to complete the restatements and file the necessary documents as promptly as possible.
The Company reassures its investors that these adjustments do not signify any operational weaknesses but rather reflect an ongoing commitment to improving financial reporting practices. Ensuring accuracy in financial documentation remains a top priority for Devonian, as it continues to advance its mission of developing innovative treatments for inflammatory diseases.
While the financial reporting delay represents a temporary setback, Devonian continues to focus on its core objectives in drug development and clinical research. The Company is actively advancing its pipeline of therapies targeting inflammation-driven diseases, and it remains confident in the long-term potential of its proprietary drug candidates.
As Devonian moves forward, it will continue to provide updates on its financial reporting status, as well as on its broader corporate and clinical developments. The Company appreciates the patience and support of its shareholders and stakeholders as it works through this process and reaffirms its commitment to delivering value to all stakeholders.
Devonian Health Group Inc. is taking all necessary steps to rectify the financial reporting inaccuracies identified in its prior statements. With a clear plan to restate and refile its financials in a timely manner, the Company is prioritizing transparency and regulatory compliance. Devonian remains focused on its mission of developing innovative pharmaceutical solutions while maintaining its integrity in financial reporting.
Investors and stakeholders are encouraged to stay informed through official Company announcements as Devonian continues working towards full compliance with reporting requirements. Additional updates on the filing status will be provided as soon as more information becomes available.
For further inquiries, stakeholders are encouraged to contact Devonian’s investor relations team or visit the Company’s website for the latest updates on its financial and corporate developments.
