Note 2 - Restatement Related to Quarter Ended September 30, 2018

3 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Accounting Changes and Error Corrections [Text Block]

2. Restatement Related to Quarter Ended September 30, 2018

               On

January 23, 2019

the Audit Committee of the Board of Directors determined that the unaudited interim financial statements included in the Company's Quarterly report on Form

10

-Q for the fiscal quarter ending

September 30, 2018,

previously filed on

November 9, 2018,

should

no

longer be relied upon and that the Company will restate its previously-filed interim financial statements for the fiscal quarter ended

September 30, 2018. 

The Audit Committee concluded that the unaudited interim financial statements for the

three

month period ended

September 

30,

2018

contains material errors related to the classification and valuation of the embedded derivative related to an aggregate principal amount of

$1,698,169

of convertible notes.     As described in more detail in this Note

2

to the unaudited condensed consolidated financial statements included in this Amended Form

10

-Q, the restatement of the unaudited interim financial statements included in the Original Form

10

-Q corrects an error in the Company's classification of  

$1,698,169

of notes payable as current liabilities instead of long-term liabilities on the condensed consolidated balance sheet included in the Original Form

10

-Q, which resulted in an overstatement of the Company's working capital deficit for such period.  In addition, the change in classification of such notes payable required the Company to revalue the beneficial conversion feature of such notes, which resulted in an expense increase of $(

185,851

) to "Other (expense) income" on the condensed consolidated statement of operations.  As a result of such additional expense, the net loss and net loss available to common shareholders increased by the same amount.  The adjustments to the fair value of the notes payable are further described in greater detail in Note

11

to the unaudited condensed consolidated financial statements included in this Amended Form

10

-Q.  

                The following summarizes the effects of restatement:

				Three Months Ended
				September 30,
				(Unaudited)
	As
	Previously
	Reported			Adjustment			Restated
Consolidated Statement of Operations
Change in fair value of derivative liabilities	$	50,966		$	(185,851	)	$	(134,885	)
Income (loss) before provision for income taxes		(214,206	)		(185,851	)		(400,057	)
Net (loss)		(223,372	)		(185,851	)		(409,223	)
Net (loss) available to common shareholders		(309,087	)		(185,851	)		(494,938	)
Basic (loss) per share		(0.04	)		(0.03	)		(0.07	)
Diluted (loss) per share		(0.04	)		(0.03	)		(0.07	)

				Three Months Ended
				September 30,
				(Unaudited)
	As
	Previously
	Reported			Adjustment			Restated
Consolidated Balance Sheets
Related parties - notes payable - current	$	1,698,169		$	(1,698,169	)	$	-
Related parties - notes payable - noncurrent		1,415,449			1,698,169			3,113,618
Derivative liabilities		815,001			(815,001	)		-
Derivative liabilities - warrants		-			440,736			440,736
Derivative liabilities - related party notes payable - noncurrent		-			560,116			560,116
Total current liabilities		7,603,762			(2,072,434	)		5,531,328
Retained earnings		(44,998,449	)		(185,851	)		(45,184,300	)