Item
4.01 Changes in Registrant’s Certifying Accountant.
On
November 1, 2017, the Company dismissed Pinaki & Associates LLC (the “Former Accountant”) as the Company’s
independent registered public accounting firm and the Company engaged GBH CPAs, PC (the “New Accountant”) as the Company’s
independent registered public accounting firm. The engagement of the New Accountant was approved by the Company’s Board
of Directors.
The
SEC has informed the Company that the Public Company Accounting Oversight Board has revoked the registration of the Company’s
Former Accountant.
The
Former Accountant’s audit report on the financial statements of the Company for the year ended December 31, 2016 contained
no adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles,
except that the audit report on the financial statements of the Company for the year ended December 31, 2016 contained an uncertainty
about the Company’s ability to continue as a going concern.
For
the year ended December 31, 2016 and through the period ended November 1, 2017, there were no “disagreements” (as
such term is defined in Item 304 of Regulation S-K) with the Former Accountant on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to the satisfaction of the
Former Accountant would have caused them to make reference thereto in their reports on the financial statements for such periods.
For
the year ended December 31, 2016 and through the period ended November 1, 2017, there were the following “reportable events”
(as such term is defined in Item 304 of Regulation S-K). As disclosed in Part I, Item 4 of the Company’s Form 10-Q/A for
the quarterly period ended June 30, 2016, the Company’s management determined that the Company’s internal controls
over financial reporting were not effective as of the end of such period due to the existence of material weaknesses related to
the following:
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The
Company does not have written documentation of its internal control policies and procedures. Written documentation of key
internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act as of the period ending
September 30, 2016. Management evaluated the impact of the Company’s failure to have written documentation of our internal
controls and procedures on its assessment of the Company’s disclosure controls and procedures and has concluded that
the control deficiency that resulted represented a material weakness.
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The
Company does not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due
to the Company’s size and nature, segregation of all conflicting duties may not always be possible and may not be economically
feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions
should be performed by separate individuals. Management evaluated the impact of its failure to have segregation of duties
on the Company’s assessment of our disclosure controls and procedures and has concluded that the control deficiency
that resulted represented a material weakness.
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Effective
controls over the control environment were not maintained. Specifically, a formally adopted written code of business conduct
and ethics that governs the Company’s employees, officers, and directors was not in place. Additionally, management
has not developed and effectively communicated to employees its accounting policies and procedures. This has resulted in inconsistent
practices. Further, the Company’s Board of Directors does not currently have any independent members and no director
qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level
programs have a pervasive effect across the organization, management has determined that these circumstances constitute a
material weakness.
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These
material weaknesses have not been remediated as of the date of this Current Report on Form 8-K.
Other
than as disclosed above, there were no reportable events for the year ended December 31, 2016 and through the period ended November
1, 2017. The Company’s Board of Directors discussed the subject matter of each reportable event with the Former Accountant.
The Company authorized the Former Accountant to respond fully and without limitation to all requests of the New Accountant concerning
all matters related to the audited period by the Former Accountant, including with respect to the subject matter of each reportable
event.
Prior
to retaining the New Accountant, the Company did not consult with the New Accountant regarding either: (i) the application of
accounting principles to a specified transaction, either contemplated or proposed, or the type of audit opinion that might be
rendered on the Company’s financial statements; or (ii) any matter that was the subject of a “disagreement”
or a “reportable event” (as those terms are defined in Item 304 of Regulation S-K).
On
November 2, 2017, the Company provided the Former Accountant with its disclosures in the Current Report on Form 8-K disclosing
the resignation of the Former Accountant and requested in writing that the Former Accountant furnish the Company with a letter
addressed to the Securities and Exchange Commission stating whether or not they agree with such disclosures. The Former Accountant’s
response is filed as an exhibit to this Current Report on Form 8-K.