FGD Purported License Transactions 78. Between January of 2016 and November of 2017, FGD purportedly sold technology license agreements (the "FGD Purported License Transactions") to investors, many of whom are resident in Ontario. The documentation prepared in respect of the FGD Purported License Transactions stated that the funds were advanced in exchange for the issuance of exclusive licenses to market and deploy FGD's technology. Such was not the case. Rather, in many instances, no licences were ever issued, and no steps were intended to be taken, or were in fact taken, to market or deploy the technology. Investors loaned funds to FGD based on representations that such loans would be repaid with interest on agreed upon terms.
79. From 2016 until August of 2018, FGD reported the FGD Purported License Transactions as revenue in its interim financial reports for the quarters ending March 31, June 30 and September 30, 2017, and in its comparative financial statements for the year ended December 31, 2016 (the "Financial Reports"). Because certain of those transactions were, in fact, financial liabilities, the Financial Reports were not prepared in accordance with GAAP and contained material misstatements.
80. Following inquiries from Enforcement Staff, on August 2, 2018, FGD issued its comparative financial statements and Management Discussion and Analysis for the year ended December 31, 2017 and restated its comparative financial statements for the year ended December 31, 2016. On August 29 and November 29, 2018, FGD issued its interim financial statements and Management Discussion and Analysis for the interim periods ending March 31, June 30 and September 30, 2018, and restated its interim financial reports for the periods ending March 31, June 30 and September 30, 2017. The restatements corrected the misstatements relating to the FGD Purported License Transactions (collectively, referred to as the "Restated Financial Reports").
81. For the fiscal year ended December 31, 2016, the restatement resulted in a reported revenue of $3.5 million and a net loss of $3.5 million, down from a previously reported revenue of $6.2 million and a net loss of approximately $655,000. For the nine months ended September 30, 2017, the restatement resulted in reported revenue of $1.2 million, down from a previously reported revenue of $11.2 million, and a restated net loss of $8.9 million, from a previously reported net income of $150,000.