What changed in this filing

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Item 4. Controls and Procedures

2020-11-12 compared with 2020-08-20 · 29 added, 51 removed, 6 unchanged (93% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in

Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed

to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized

and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such

information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial

and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation under the

supervision and with the participation of management, including our Principal Executive Officer and Principal Financial and Accounting

Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2020.

on that evaluation, our Chief Executive Office and Principal Financial and Accounting Officer have concluded that, our disclosure

controls and procedures were not effective as of June 30, 2020 because of a material weakness in our internal control over financial

We did not maintain effective controls over the accounting for the anti-dilution adjustment provisions contained in

the 2019 Warrants.

Specifically, the control did not operate effectively relating to the accuracy and presentation and disclosure

of the accounting for certain outstanding warrant agreements.

This control deficiency resulted in the misstatement of liability

warrants and the misstatement of non-cash expense resulting from required periodic “mark-to-market”

adjustments of

the aforementioned warrants.

If not remediated, this control deficiency could result in future material misstatements of these

accounts and disclosures that would not be prevented or detected on a timely basis.

Accordingly, our management has determined

that this control deficiency constitutes a material weakness.

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is

accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial and Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2020.

Based on that evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer have concluded that, our disclosure controls and procedures were not effective as of September 30, 2020 because of a material weakness in our internal control over financial reporting.

We did not maintain effective controls over the accounting for the anti-dilution adjustment provisions contained in the 2019 Warrants.

Specifically, the control did not operate effectively relating to the accuracy and presentation and disclosure of the accounting for certain outstanding warrant agreements.

This control deficiency resulted in the misstatement of liability warrants and the misstatement of non-cash expense resulting from required periodic “mark-to-market” adjustments of the aforementioned warrants.

If not remediated, this control deficiency could result in future material misstatements of these accounts and disclosures that would not be prevented or detected on a timely basis.

Accordingly, our management has determined that this control deficiency constitutes a material weakness.

Restatement of Consolidated Financial Statements

On July 1, 2020, the audit committee of the board of

directors and management of the Company concluded that the Company’s previously issued audited consolidated financial

statements for the year ended December 31, 2019, should no longer be relied upon because of an error in the Company’s

accounting for the 2019 Warrants.

As previously described, the error relates to the determination of the number of shares of

common stock subject to the 2019 Warrants as of December 31, 2019 as a result of certain anti-dilution adjustment provisions

contained in the 2019 Warrants.

The Company filed an amended annual report on Form 10-K/A on July 7, 2020 to restate the

Company’s audited consolidated financial statements for the year ended December 31, 2019 to correctly account for the

anti-dilution adjustment provisions contained in the 2019 Warrants.

On July 1, 2020, the audit committee of the board of directors and management of the Company concluded that the Company’s previously issued audited consolidated financial statements for the year ended December 31, 2019, should no longer be relied upon because of an error in the Company’s accounting for the 2019 Warrants.

As previously described, the error relates to the determination of the number of shares of common stock subject to the 2019 Warrants as of December 31, 2019 as a result of certain anti-dilution adjustment provisions contained in the 2019 Warrants.

The Company filed an amended annual report on Form 10-K/A on July 7, 2020 to restate the Company’s audited consolidated financial statements for the year ended December 31, 2019 to correctly account for the anti-dilution adjustment provisions contained in the 2019 Warrants.

Remediation Plan

Management has developed a remediation plan to address the material

Implementation of the remediation plan consists of redesigning existing quarterly control procedures to enhance management's

accounting for any derivative or convertible securities issued by the Company.

Management believes the foregoing efforts will effectively

remediate the material weakness.

As the Company continues to evaluate and work to improve its internal control over financial reporting,

management may execute additional measures to address potential control deficiencies or modify the remediation plan described above.

Management will continue to review and make necessary changes to the overall design of the Company's internal control environment,

as well as to policies and procedures to improve the overall effectiveness of internal control over financial reporting.

We have commenced measures to remediate the identified material weakness.

These measures include adding personnel as well as redesigning existing quarterly control procedures to enhance management’s accounting for any derivative or convertible securities issued by the Company.

The actions we are taking are subject to ongoing senior management review, as well as audit committee oversight.

Management believes the foregoing efforts will effectively remediate the material weakness.

As the Company continues to evaluate and work to improve its internal control over financial reporting, management may execute additional measures to address potential control deficiencies or modify the remediation plan described above.

Management will continue to review and make necessary changes to the overall design of the Company’s internal control environment, as well as to policies and procedures to improve the overall effectiveness of internal control over financial reporting.

Changes in Internal Control over Financial Reporting

Management recognizes the Company’s operations and business

have been disrupted to an unprecedented degree due to the conditions surrounding the COVID-19 pandemic spreading throughout the

United States.

These disruptions have resulted in limited access to the Company’s facilities and have interfered with

management’s ability to work with its independent accountants, professional advisors and support staff in order to complete

the Company’s financial statements and related disclosures.

Management is also making necessary changes to the Company’s

internal control environment and policies and procedures to improve the overall effectiveness of the Company’s internal control

in light of the disruptions caused by the ongoing COVID-19 pandemic.

We are taking actions to remediate the material weakness relating to our internal control over financial reporting, as described above.

Except as otherwise described herein, there was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud.

A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are

The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes.

Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

OTHER INFORMATION

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 4. Controls and Procedures