Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

On May 18, 2020, the Company's Board of Directors, after consultation with Sadler Gibb & Associates, LLC, the Company's independent registered public accounting firm, determined that it will be required to restate its previously issued unaudited financial statements for the second and third quarters of 2019 that were previously filed on Form 10-Q on August 14, 2019 and on November 14, 2019, respectively and the previously issued audited financial statements that were filed on Form 10-K on March 30, 2020. The Company's prior financial statements for these periods should therefore no longer be relied upon.

The restatements will be required because of the valuation method used on a convertible note and warrants that were entered into during the second quarter of 2019. The Company originally used a binomial method to value the derivative liability associated with this convertible note. However, it was determined that a more complex valuation method was needed to correctly value the derivative liability. Therefore, the restatements will reflect the revised valuations of the derivative liability on this convertible note during the periods mentioned.

The corrections to the aforementioned financial statements will be summarized in amendments to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019, Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019, and Annual Report on Form 10-K for the annual period ended December 31, 2019 which will have been reviewed by the Company's independent registered public accounting firm, and which the Company expects to file as soon as practicable after the filing of this Current Report on Form 8-K.

© Edgar Online, source Glimpses