Cheer Holding, Inc. 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. Item 4. Control and Procedures. Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of the end of the period covered by this report, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be included in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, relating to the Company, including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that as a result of the material weakness in our internal control over financial reported in our Annual Report on Form 10-K for the year ended December 31, 2019, our disclosure controls and procedures were not effective as of March 31, 2020. Notwithstanding the material weaknesses, our management has concluded that the financial statements included elsewhere in this report present fairly, and all materials respects, our financial position on results of operation and cash flow in conformity with GAAP. Changes in Internal Control Over Financial Reporting As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2019, management concluded that the internal control over financial reporting of Glory Star, as a private company before the closing of the Business Combination, was ineffective due to material weakness in Glory Star’s internal control over financial reporting. The material weakness related to the deficiency in the ability of Glory Star’s in-house accounting professionals to generate financial statements in the form required by applicable SEC requirements. In order to address and resolve the foregoing material weakness, during the three months ended March 31, 2020, we made the following change to our internal control over financial reporting: · we hired a Finance Controller, who is experienced in the preparation of financial statements in compliance with applicable SEC requirements. The measure we are implementing is subject to continued management review supported by confirmation and testing, as well as audit committee oversight. Management remains committed to the implementation of remediation efforts to address these material weaknesses. Although we will continue to implement measures to remedy our internal control deficiencies, there can be no assurance that our efforts will be successful or avoid potential future material weaknesses. In addition, until the remediation step has been completed and/or operated for a sufficient period of time, and subsequent evaluation of their effectiveness is completed, the material weakness identified and described above will continue to exist. 29 PART II – OTHER INFORMATION