Item 4.02. Non-Reliance on Previously
Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On March
8, 2023, the Audit Committee (the “Audit Committee”) of the Board of Directors of Theriva Biologics, Inc. (the “Company”)
in consultation with management and BDO USA, LLP (“BDO USA”), the Company’s
independent registered public accounting firm, met and concluded that the Company’s
(i) unaudited consolidated interim financial statements as of and for the period ended June 30, 2022 included in the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 and the (ii) unaudited consolidated interim financial statements as
of and for the period ended September 30, 2022 included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September
30, 2022 (collectively, the “Specified Financial Statements”), should no longer be relied upon due
to errors in such financial statements, and therefore a restatement of these Specified Financial Statements is required. The
Company has not filed, and does not intend to file, an amendment to the Company’s previously filed Quarterly Reports on Form 10-Q
for the quarters ended June 30, 2022 and September 30, 2022 but intends to restate the Specified Financial Statements, which restated
financial statements will be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
These errors have no effect on the Company’s cash position, pre-tax income or the Company’s operating expenses and
will result in a decrease in the net loss and loss per share for those periods.
During the
preparation of its annual tax provision for the year ended December 31, 2022, the Company determined that a deferred tax asset related
to net operating loss generated during the second and third quarters of 2022 at the Company’s subsidiary, VCN Biosciences S.L.,
should have been established. Further, because an existing deferred tax liability associated with an indefinite-lived intangible asset
is considered a source of income for the future realization of the net operating loss deferred tax asset, the deferred tax asset was determined
to be more likely than not recoverable. Since the deferred tax asset was determined to be more likely than not recoverable, it would have
resulted in an income tax benefit during the interim periods thereby reducing the Company’s consolidated net loss and loss per share
for the three- and six-months period ended June 30, 2022 and the three- and nine-month periods ended September 30, 2022.
The impact
of this restatement on the Company’s second quarter 2022 unaudited condensed consolidated financial statements will be a $532,000
decrease in deferred tax liabilities and a $532,000 decrease in accumulated deficit as of June 30, 2022, and a $532,000 increase in income
tax benefit, a $532,000 decrease in net loss, and a $0.03 decrease in net loss per share for the three months ended June 30, 2022, and
a $532,000 increase in income tax benefit, a $532,000 decrease in net loss and a $0.03 decrease in net loss per share for the six months
ended June 30, 2022.
The impact
of this restatement on the Company’s third quarter 2022 unaudited condensed consolidated financial statements will be a $867,000
decrease in deferred tax liabilities and a $867,000 decrease in accumulated deficit as of September 30, 2022, and a $335,000 increase
in income tax benefit, a $335,000 decrease in net loss and a $0.02 decrease in net loss per share for the three months ended September
30, 2022, and a $867,000 increase in income tax benefit, a $867,000 decrease in net loss and a $0.06 decrease in net loss per share for
the nine months ended September 30, 2022.
Management has concluded that in light of the errors described above
an additional material weakness in the Company’s internal controls over financial reporting existed. The material weakness
identified relates to the effectiveness of the Company’s management review controls over the computation and disclosure of income
taxes . Management has determined that, as a result of the errors described above, management’s
assessment of the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2022 and September 30, 2022 need
to be modified to include a material weakness in its controls over financial reporting related to the accounting for deferred tax assets
in addition to the previously disclosed weakness.
The Company’s remediation plan will be
described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022.