Item 4. Controls and Procedures
Item 4. Controls and
Procedures.
Our
management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal
financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021. The
term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that
it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal
executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes
that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of
our disclosure controls and procedures as of September 30, 2021, our Chief Executive Officer and Chief Financial Officer concluded that,
as of such date, because we were required to restate our financial statements for the quarterly period ended September 30, 2021, and of
the material weaknesses identified, our disclosure controls and procedures, as defined above, was not effective as of September 30, 2021.
We had limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent
registered public accounting firm did not conduct an audit of our internal control over financial reporting. However, in connection with
the audit of our consolidated financial statements as of and for year ended December 31, 2020, we and our independent registered public
accounting firm identified the following material weaknesses in our internal control over financial reporting.
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The material weaknesses identified
were:
●
a lack of accounting resources required to fulfill US GAAP and SEC reporting requirements;
●
a lack of comprehensive US GAAP accounting policies
and financial reporting procedures;
●
a lack of adequate procedures and controls to appropriately account for accounting transactions including liability and the valuation allowance on the deferred tax asset relating to the net operating losses; and
●
a lack of segregation of duties given the size of our finance and accounting team.
The material weaknesses resulted
in accounting errors in our financial statements, relating to the accounting of derivative liability of certain warrants, liability relating
to promissory note, and valuation allowance on the deferred tax asset relating to the net operating losses as discussed in Note 2, Restatement
of Previously Issued Audited Financial Statements of our Notes to Condensed Consolidated Financial Statements included under Item 1 of
this Form 10-Q/A.
We have implemented and are
continuing to implement various measures to address the material weaknesses identified; these measures include:
●
the hiring of a chief financial officer that is a CPA in the U.S.;
●
The hiring of a Director of Financial Reporting, a CPA (Illinois) who is experienced with public company reporting and is conversant in US GAAP and SEC accounting issues. With this hire we are addressing our ongoing development of our comprehensive US GAAP accounting policies, financial reporting procedures and internal controls over financial reporting;
●
retaining consulting services to assist with the accounting treatment of complex financial instruments and tax; and
●
engaged independent US GAAP consulting firm.
A significant deficiency is
a control deficiency, or a combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process,
or report external financial data reliably in accordance with US GAAP such that there is more than a remote likelihood that a misstatement
of our annual or interim financial statements that is more than inconsequential will not be prevented or detected by our employees.
A material weakness is a significant
deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of
our annual or interim financial statements will not be prevented or detected by our employees. In response, we have begun the process
of evaluating our internal control over financial reporting and to address the material weaknesses identified.
We intend to continue to take
steps to remediate the material weaknesses described above and further evolve our accounting processes, controls, and reviews. We plan
to continue to assess our internal controls and procedures and intend to take further action as necessary or appropriate to address any
other matters we identify or are brought to our attention.
We believe we are making progress
toward achieving the effectiveness of our internal controls and disclosure controls. The actions that we are taking are subject to ongoing
senior management review, as well as audit committee oversight. We will not be able to conclude whether the steps we are taking will fully
remediate the material weaknesses in our internal control over financial reporting until we have completed our remediation efforts and
subsequent evaluation of their effectiveness. We may also conclude that additional measures may be required to remediate the material
weaknesses in our internal control over financial reporting, which may necessitate further action.
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PART II – OTHER
INFORMATION
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.