Item 4.02 Non-Reliance on
Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On August 10, 2021, the Board
of Directors (the “Board”) of the Registrant was notified by Art Abraham, PCT’s CFO (“Abraham”)
and after consultation with its independent registered public accounting firm, Sadler, Gibb & Associates, LLC (“Sadler”),
the Board determined that the following previously filed financial statements of the Registrant should not be relied upon:
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(1)
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The Registrant’s unaudited financial statement for the quarterly period ended June 30, 2020, contained in the Registrant’s Quarterly Report on Form 10-Q, originally filed with the Securities and Exchange Commission (“SEC”) on August 31, 2020 (the “Q2 2020 Report”);
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(2)
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The Registrant’s unaudited financial statement for the quarterly period ended September 30, 2020, contained in the Registrant’s Quarterly Report on Form 10-Q, originally filed with the SEC on November 16, 2020 (the “Q3 2020 Report”);
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(3)
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The Registrant’s audited consolidated financial statements for the fiscal year ended December 31, 2020, contained in the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, originally filed with the SEC on April 13, 2021 (the “2020 Annual Report”); and
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(4)
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The Registrant’s unaudited financial statement for the quarterly period ended March 31, 2021, contained in the Registrant’s Quarterly Report on Form 10-Q, originally filed with the SEC on June 25, 2021 (the “Q1 2021 Report”, which along with the Q2, Q3 and Annual Report are referred to herein as the “Reports”).
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Abraham informed the Board that,
in August 2021, information was found regarding previously issued warrants to a debt holder which should have been accounted for as cancelled
along with the settlement of all outstanding debt with such holder back in May of 2020. Abraham then informed Sadler of his findings,
which was:
In May of 2020 the Registrant
entered into a debt settlement agreement with one of its debt holders, which settled all debt and warrants held by such holder. However,
due to a misunderstanding of the facts and circumstances related to this settlement agreement, the Company did not reflect the warrants
as settled at that time. In addition, the debt holder inadvertently conveyed to Sadler, in its annual audit confirmation letter dated
March 11, 2021, that the warrants were still outstanding and not cancelled.
On a call and subsequently in
writing in August 2021 the debt holder confirmed to Abraham and Sadler that the annual confirmation was wrong, and the warrants should
have been cancelled effective the second quarter ended June 30, 2020. Due to the provisions of the warrants, they are being accounted
for as derivative liabilities.
Correcting this error will result
in a three and six-month 2nd Quarter 10-Q adjustment to reflect the following:
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1.
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$7,025,392 REDUCTION in Derivative Liability and Accumulated Deficit
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2.
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$7,025,392 REDUCTION on the Loss on change in fair value of derivative liability
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3.
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$7,025,392 REDUCTION in the net loss for the six-month period
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4.
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CANCELLATION of 197,190,272 warrants
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Correcting this error will result
in a nine-month 3rd Quarter 2020 10-Q adjustment to reflect the following:
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1.
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$6,572,222 REDUCTION in Derivative Liability and Accumulated Deficit
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2.
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$6,572,222 REDUCTION on the Loss on change in fair value of derivative liability
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3.
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$6,572,222 REDUCTION in the net loss for the nine-month period
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4.
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REDUCTION in the number of outstanding warrants of 197,190,272
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Correcting
this error will result in the annual 2020 10-K adjustment to reflect the following:
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1.
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$4,326,242 REDUCTION in Derivative Liability and Accumulated Deficit
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2.
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$4,326,242 REDUCTION on the Loss on change in fair value of derivative liability
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3.
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$4,326,242 REDUCTION in the net loss
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4.
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REDUCTION in the number of outstanding warrants of 197,190,272
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Correcting
this error will result in the three-month 1st Quarter 10-Q adjustment to reflect the following:
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1.
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$4,719,236 REDUCTION in Derivative Liability and Accumulated Deficit
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2.
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$392,994 REDUCTION on the Loss on change in fair value of derivative liability
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3.
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$392,994 REDUCTION in the net loss
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4.
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REDUCTION in the number of outstanding warrants of 197,190,272
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The Registrant will, as soon as
is practicable, make the appropriate adjustments to the above referenced Reports by filing amendments to the Reports with the SEC which,
in each case, will include restated consolidated financial statements and notes thereto and any other appropriate revisions.
In compliance with section (c)(3)
of Item 4.02, we have obtained a letter from Sadler, attached as Exhibit 7.1, addressed to the SEC stating that Sadler agrees with the
statements made by the Registrant in response to this Item 4.02.
The information in this Item
4.02, including the exhibit attached hereto, is furnished solely pursuant to Item 4.02. Consequently, such information is not deemed “filed”
for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
Moreover, the information in this Item 4.02, including this exhibit, shall not be deemed to be incorporated by reference into the filings
of the registrant under the Securities Act of 1933, as amended.
Cautionary Statement Regarding Forward-Looking
Information
This current report on Form
8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended.
The Registrant intends forward-looking terminology such as “believes,” “expects,” “may,” “should,”
“anticipates,” “plans,” or similar expressions to identify forward-looking statements. Such statements are subject
to certain risks and uncertainties, which could cause the Registrant’s actual results to differ materially from those anticipated
by the forward-looking statements. These risks and uncertainties include, but are not limited to, risks described more fully in Item 1A
in the Registrant’s Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically
be described in the Registrant’s filings with the SEC.