Item 4.01 Changes in Registrant’s Certifying Accountant.
On October 22, 2018, the Board of Directors (the “Board”) of RenovaCare, Inc. (the “Company”) notified Peterson Sullivan LLP (“PSLLP”), the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2017 and 2016, that the Company and the Board of Directors terminate PSLLP’s engagement effective as of such date. Additionally, on and effective as of October 22, 2018, the Company entered into an engagement letter with Marcum LLP (“Marcum”) as approved by the the Board, and engaged Marcum to act as the Company’s independent registered public accounting firm for the Company’s fiscal year ended December 31, 2018.
As a result of the appointment of Harmel S. Rayat (‘Rayat”), for whom PSLLP provided personal tax preparation services, as the Company’s Chief Executive Officer, PSLLP had advised the Company that PSLLP had determined it no longer could satisfy the independence criteria required in connection with it’s services as the Company’s auditor and declined to stand for reelection.
PSLLP advised the Company that it was obligated under applicable law and professional standards to notify the Company and that its decision was made exclusively due to the lack of independence in question.
PSLLP also advised that it would continue to provide services for a period not to exceed 180 days per Public Company Accounting Oversight Board Rule 3523 pending the Company’s identification and engagement of a new auditing firm.
PSLLP’s audit reports on the Company’s financial statements for the years ended December 31, 2017 and 2016 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.except as follows: The PSLLP audit report for the fiscal year ended December 31, 2016 stated that the accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred net operating losses and operating cash flow deficits that raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1. The consolidated financial statements for the fiscal year ended December 31, 2016 do not include any adjustments that might result from the outcome of this uncertainty.
During the two most recent fiscal years ended December 31, 2017, and through October 22, 2018, (i) there were no disagreements with PSLLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to PSLLP’s satisfaction, would have caused PSLLP to make reference in connection with its opinion to the subject matter of the disagreement in connection with its reports on the Company’s financial statements as of December 31, 2017 and 2016, and for the two years then ended, and (ii) there were no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K.
The Company provided PSLLP with a copy of disclosures it is making in this Form 8-K and requested that PSLLP furnish a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements above. A copy of PSLLP’s letter dated October 26, 2018 is filed as Exhibit 16.1 to this Current Report on Form 8-K.
During the Company’s two most recent fiscal years and any subsequent period through October 22, 2018, neither the Company nor anyone acting on its behalf consulted Marcum regarding the application of accounting principles to any completed or proposed transactions nor regarding any matter that was the subject of a disagreement with the Company’s independent accountant or any reportable event, as defined in Item 304(a)(1)(v) of Regulation S-K of the Securities and Exchange Commission.
In deciding to appoint Marcum, the Board reviewed auditor independence issues and existing commercial relationships with Marcum and concluded that Marcum has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2018.