XML 23 R12.htm IDEA: XBRL DOCUMENT

Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2018

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2018

NOTE 3 - RESTATEMENT OF PREVIOUSLY ISSUED UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018

The financial statements for the three and nine ended September 30, 2018 have been restated. On March 30, 2019, our management determined that the Company erroneously recorded (i) the issuance of 906,666 shares for proceeds of $6,800,000 before costs, and (ii) the issuance of a note receivable to a private company for $6,000,000 as two individual transactions, when the economic substance of the two transactions was a capital transaction with the Company issuing 906,666 shares of its common stock for $6,800,000 comprised of $800,000 cash and $6,000,000 due from a note receivable to be collected in two years. As the Company cannot determine the collectability of the note receivable, the funds will be recognized as a capital contribution when collected. The Company determined the fair value of the 906,666 shares issued was $6 per share based on the Company’s contemporaneous public offering price, or $5,440,000. The Company received net cash of $800,000 and the difference of $4,640,000 was recorded as an expense of the transaction. The Company restated its financial statements as of and for the three and nine months ended September 30, 2018, to reflect the transactions as a capital transaction. As a result, notes receivable decreased by $6,000,000, additional paid in capital decreased by 1,360,000, the fair value of common stock issued in connection with the financing transaction expense increased by $4,640,000, and net loss increased by $4,640,000.

The following table presents the effect of the restatements on the Company’s previously issued balance sheet:

	As of September 30, 2018
	As Previously Reported			Adjustments			As Restated

Note receivable	$	6,300,000		$	(6,000,000	)	$	300,000

Additional paid-in capital		17,736,192			(1,360,000	)		16,376,192

Accumulated deficit		(3,887,080	)		(4,640,000	)		(8,527,080	)

The following table presents the effect of the restatements on the Company’s previously issued statement of operations:

	For the three months ended September 30, 2018
	As Previously Reported			Adjustments			As Restated

Fair value of common stock issued in connection with the financing transaction	$	-		$	4,640,000		$	4,640,000

Net loss		(132,586	)		(4,640,000	)		(4,772,586	)
Net loss attributable to common shareholders		(213,200	)		(4,640,000	)		(4,835,200	)
Comprehensive loss		(288,052	)		(4,640,000	)		(4,928,052	)
Net loss per share, basic and diluted	$	(0.00	)	$	(0.09	)	$	(0.09	)

	For the nine months ended September 30, 2018
	As Previously Reported			Adjustments			As Restated

Fair value of common stock issued in connection with the financing transaction	$	-		$	4,640,000		$	4,640,000

Net loss		(506,255	)		(4,640,000	)		(5,146,255	)
Net loss attributable to common shareholders		(620,767	)		(4,640,000	)		(5,260,767	)
Comprehensive loss		(728,906	)		(4,640,000	)		(5,368,906	)
Net loss per share, basic and diluted	$	(0.01	)	$	(0.09	)	$	(0.10	)

The following table presents the effect of the restatements on the Company’s previously issued statement of cash flows:

	For the nine months ended September 30, 2018
	As Previously Reported			Adjustments			As Restated

Cash flows from operating activities:
Net loss		(506,255	)		(4,640,000	)		(5,146,255	)
Adjustments to reconcile net loss to net cash used in operating activities:
Fair value of common stock issued in connection with the financing transaction		-			4,640,000			4,640,000

Issuance of notes receivable		(6,300,000	)		6,000,000			(300,000	)
Net cash provided by (used in) investing activities		(5,757,920	)		6,000,000			242,080

Proceeds from shares issued for cash		9,463, 705			(6,000,000	)		3,463,705
Net cash provided by financing activities		8,008,063			(6,000,000	)		2,008,063

The information herein amends and supersedes the information contained in our Quarterly Report on Form 10-Q for the nine months ended September 30, 2018. The affected financial statements and related financial information contained in our previously filed reports for those periods should no longer be relied upon and should be read only in conjunction with the Unaudited financial information set forth herein.