Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On
The condensed consolidated interim financial statements as of and for the fiscal
periods ended
Subsequent to the filing of the Q2 2021 Form 10-Q, the Company identified the
following material errors in the unaudited condensed consolidated interim
financial statements included in the Q2 2021 Form 10-Q related to the accounting
for and disclosure of a transaction between the Company and
? The Company reported approximately$5.1 million in revenues for the three months endedJune 30, 2021 ; ? The reported revenues included a sale onJune 30, 2021 of approximately$4.7 million of inventory to theRelated Party in exchange for reducing the outstanding principal of a note payable between the Company and theRelated Party (the "Transaction"); ? The Transaction accounted for approximately 92% and 83% of the Company's reported revenue for the three months and six months endedJune 30, 2021 , respectively; ? The Company failed to disclose the Transaction as a related party transaction in the financial statements and notes thereto included in the Q2 2021 Form 10-Q; and ? The Company has concluded that the Transaction should have been accounted for and disclosed as a transfer of assets in exchange for reduction of related party indebtedness rather than as income.
The Company's condensed consolidated statement of cash flows for the six months
ended
Additionally, the Company is reviewing with RBSM a number of other identified errors in the unaudited condensed consolidated interim financial statements included in the Q2 2021 Form 10-Q related to the accounting and disclosure of right to use assets and related right to use liabilities, accounts payable and accrued expenses, operating expenses, and other income and expenses, and is evaluating their materiality.
Based on the foregoing determination, the Company intends to correct the
material errors in the Company's previously issued condensed consolidated
interim financial statements as of and for the fiscal periods ended
The Chairman of the Board of Directors and Chief Executive Officer discussed the matters described in this Item 4.02 with representatives of RBSM.
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